Product cannibilisation is said to occur when one product starts 'eating' into the sales of the other product. For example when a 1 litre bottle of juice is offered at a 8 % discount its conceivable that a consumer purchases that instead of a 1.5 litre bottle juice or a 0.5 litre bottle juice. There are 2 types of cannibilisation
1) Internal cannibilisation
2) External cannibilisation
Internal product cannibilisation can happen when a companys own product eats into the sales of the other product. External cannibilisation occurs when a competitive product eats into the sales of the companys product
Another way to classify cannibilisation is on the trigger which was responsible for the cannibilisation to begin. It could have been triggered by 2 events
1) New product launch triggered cannibilization.
For Ex : A new lemon flavored juice is introduced which cannibalized apple juice
2) Promotion triggered cannibilisation
For Ex : A temporary price reduction scheme has been introduced on a particular soap which induces price sensitive customers to switch to the new soap
In subsequent postings we can discuss a quantitative framework to measure cannibilisation. How do we quantify cannibilisation ? What data is required to quantify cannibilisation
1) Internal cannibilisation
2) External cannibilisation
Internal product cannibilisation can happen when a companys own product eats into the sales of the other product. External cannibilisation occurs when a competitive product eats into the sales of the companys product
Another way to classify cannibilisation is on the trigger which was responsible for the cannibilisation to begin. It could have been triggered by 2 events
1) New product launch triggered cannibilization.
For Ex : A new lemon flavored juice is introduced which cannibalized apple juice
2) Promotion triggered cannibilisation
For Ex : A temporary price reduction scheme has been introduced on a particular soap which induces price sensitive customers to switch to the new soap
In subsequent postings we can discuss a quantitative framework to measure cannibilisation. How do we quantify cannibilisation ? What data is required to quantify cannibilisation
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