What Is Corporate Cannibalism?
Corporate cannibalism is the point at which a product sees a diminishing in sales volume or market share due to the release of some new product that has been presented by a similar company. The new product winds up "eating" demand for the current product, hence diminishing overall sales. This descending pressure can negatively influence both the sales volume and market share of the existing product.
Corporate cannibalism is likewise alluded to as market cannibalism.
Figuring out Corporate Cannibalism
Corporate cannibalism happens when companies bring new products into a market where these products are as of now settled. In effect, the new products are going up against their own incumbent products.
On the off chance that the new conditions are taken care of appropriately and on purpose, the company will start to see a shift from the old product line to the upgraded one. The company might even wind up taking advantage of a whole new market with its new product. Any drop in sales in arranged corporate cannibalism is normally expected.
Notwithstanding, when it is done unexpectedly (and without legitimate planning), corporate cannibalism can have an enormous — and negative — impact on a company's bottom line as well as its collection of products. Most companies that fall prey to it might need to stop making a product and may in this way lose a devoted customer base. The sales drop in spontaneous corporate cannibalism is typically unexpected.
How could a Company Use Corporate Cannibalism?
While the possibility of corporate cannibalism might evoke negative pictures, it can, on occasion, be a beneficial strategy. If, as we said in the last section, it is arranged, it can give a few decent outcomes to a firm.
One of the benefits of utilizing corporate cannibalism as a business strategy is to keep steady over the competition. For instance, Company X might have released another PC on the market with a great screen and heaps of highlights. Company Y might turn out to be forced to do likewise to stay competitive, even however it might as of now have several different PCs (without as many highlights) out on the market.
Furthermore, companies may likewise find it valuable to assist with making small improvements to previously existing products. Sales might drop for a decent or service, yet delivering a better than ever rendition of it might help support revenue. Take for example Kit Kat bars in Britain. As indicated by the Guardian, sales were estimated to have dropped by in excess of 5 percent somewhere in the range of 2002 and 2004. To assist with supporting sales, Nestl\u00e9 — the company that makes the chocolate bar in the U.K. — released a thicker, stout variant of the bar, taking market share from the bar's ancestor.
Why Is Corporate Cannibalism Important?
On the off chance that it isn't done as expected, corporate cannibalism can monetarily affect a corporation. There are a couple of things firms need to consider before involving it as a strategy. The best thing any company can do is to direct sound market research before sending off a product. On the off chance that another product is released too soon, it can hurt sales, on the grounds that the new product will eclipse the one that is now on the market.
Different Examples of Corporate Cannibalism
Corporate cannibalism is more plentiful in the marketplace than we think. A genuine model is Apple, which utilizations arranged, purposeful cannibalism to sell its products. In addition to the fact that the company keeps on delivering new adaptations of its iPhones, iPads, iMacs, and MacBooks (among others), these products are likewise rivaling one another.
Yet, in Apple's case, the cannibalism is working on the grounds that every product likewise supplements the others. What's more, even on the off chance that one product tears up the other (i.e., an iPad consuming market share of a MacBook), the company realizes it will in any case hold a reliable customer base.
- Corporate cannibalization is sometimes an intentional strategy to blow out the competition while different times it is an inability to arrive at another target market.
- Corporate cannibalization alludes to sales that are lost by a company due to its presentation of another product that uproots one of its own more established products.
- Corporate cannibalization can happen when another product is like an existing product and both share a similar customer base, for example while delivering a more current or updated rendition of a gadget.