Product Cannibalization

Product Cannibalization

Product Cannibalization Jonathan Poland

Product cannibalization refers to the situation in which the sales of one product within a company’s portfolio negatively impact the sales of a similar or related product. This can happen when a new product is introduced that directly competes with an existing product, or when an existing product is modified in a way that makes it more similar to another product within the same company.

Cannibalization can be a concern for businesses because it can lead to reduced overall sales and profits, as well as customer confusion and dissatisfaction. For example, if a company introduces a new product that is similar to an existing product but priced lower, customers may be more likely to purchase the new product instead of the more expensive one, leading to a decline in sales for the original product.

There are several strategies that companies can use to manage product cannibalization. One approach is to carefully segment the market and position products in a way that minimizes overlap and competition. Another strategy is to differentiate products through branding, pricing, or other marketing efforts to make them more distinct from one another. Additionally, companies can use targeted promotions or discounts to encourage customers to purchase one product over another.

Overall, product cannibalization can be a challenging issue for businesses to navigate, but with careful planning and strategy, it is possible to minimize its negative effects and maximize the benefits of a diverse product portfolio.

Here are some examples of product cannibalization:

  1. A food manufacturer introduces a new line of frozen dinners that directly competes with their existing line of microwaveable meals. The new frozen dinners are priced lower and have similar ingredients, leading to a decline in sales for the microwaveable meals.
  2. A smartphone manufacturer releases a new model that is similar to an existing model but has some upgraded features and a higher price point. The new model takes market share away from the existing model, leading to a decrease in sales.
  3. A cosmetics company releases a new line of skincare products that overlap with their existing line of makeup. Customers may be more likely to purchase the new skincare products instead of the makeup, leading to a decline in sales for the makeup products.
  4. A car manufacturer releases a new model that is similar to an existing model but has a more modern design and additional features. The new model takes market share away from the existing model, leading to a decrease in sales.
Learn More
Lifetime Customer Value Jonathan Poland

Lifetime Customer Value

Lifetime customer value (LCV) is a measure of the total value that a customer will bring to a business over…

Niche vs Segment Jonathan Poland

Niche vs Segment

A niche is a specific, identifiable group of customers who have unique needs and preferences that are not shared by…

Business Decisions Jonathan Poland

Business Decisions

A business decision is a commitment made by a company, team, or individual employee to a specific course of action.…

Product Management Jonathan Poland

Product Management

Product management is the practice of managing a portfolio of products throughout their lifecycle from concept to end-of-life. It can…

Economic Moat Jonathan Poland

Economic Moat

An economic moat is a concept in business strategy that refers to a company’s ability to maintain a competitive advantage…

Credit Risk Jonathan Poland

Credit Risk

Credit risk refers to the likelihood that a borrower will default on their debt obligations. When an entity has a…

Marketing Media Jonathan Poland

Marketing Media

Marketing media refers to the channels or platforms that businesses use to deliver their marketing messages to their target audiences.…

Soft Skills Jonathan Poland

Soft Skills

Soft skills are a broad and diverse set of abilities that are essential for success in many areas of life,…

The Power of Compound Interest Jonathan Poland

The Power of Compound Interest

Traditional finance will explain compound interest as the interest paid on a loan or deposit calculated based on both the…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Sales Tactics Jonathan Poland

Sales Tactics

Sales tactics are specific strategies or approaches that salespeople use to persuade customers to buy a product or service. Sales…

Competitive Differentiation Jonathan Poland

Competitive Differentiation

Competitive differentiation refers to the unique value that a company’s product, service, brand, or experience offers in comparison to all…

Examples of Customer Needs Jonathan Poland

Examples of Customer Needs

Customer needs refer to the specific requirements, desires, or expectations that a customer has for a product or service. These…

Sales Planning Jonathan Poland

Sales Planning

Sales planning is the process of setting revenue and unit targets for a sales team, and developing a plan to…

Attention Economics Jonathan Poland

Attention Economics

Attention economics is a field of study that focuses on the value of human attention as a limited and highly…

Team Management Jonathan Poland

Team Management

Team management involves directing and controlling an organizational unit. Some common team management functions include setting goals and objectives, assigning…

What is Design Risk? Jonathan Poland

What is Design Risk?

Design risk refers to the potential negative consequences that a business may face as a result of problems or issues…

Product-as-a-Service Jonathan Poland


The Product-as-a-Service business model involves offering a service in areas that were traditionally sold as products. This model involves ongoing…

Cross Sellilng Jonathan Poland

Cross Sellilng

Cross-selling is the practice of selling additional products or services to existing customers. In a single transaction, this might involve…