Definition : Product cannibalization

Product cannibalization refers to the phenomenon in which a company’s new or existing product competes with and ultimately diminishes the sales and market share of its own products. This can occur when a company introduces a new product that is similar to or overlaps with its existing products, causing customers to switch from one product to another instead of purchasing both. This can result in a decrease in overall revenue and profitability for the company. Product cannibalization can also occur when a company’s new product is priced lower than its existing products, leading customers to choose the cheaper option and reducing the sales of the higher-priced products. In order to avoid product cannibalization, companies must carefully strategize and differentiate their products to target different customer segments and avoid direct competition within their own product lines.

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