1 Cannibalisation can cause carnage NO Cannibalisation cant cause carnage Vasanthan Manoharan 2929643 MSc. Mar Comm International Product and Brand management & Strategy Unit:
Does Cannibalisation cause carnage or not? with few Indian market/brands as examples. *Presented by LSBU student for academic purpose
Text of Does Cannibalisation cause carnage to brands?
1. Cannibalisation can cause carnage Cannibalisation cant cause
carnage Vasanthan Manoharan 2929643Unit: MSc. Mar CommInternational
Product andBrand management & Strategy 1
2. Agenda Introduction Cannibalisation Academicians say Line
stretching Product proliferation Brand Extension Early Majority
Laggards Look forward Success Stories Conclusion Exceptions are not
examples. - Anonymous 2
3. Cannibals: An animal that feeds on flesh of its own species.
(online source - oxford dictionary -) Cannibalism: In Zoology,
cannibalism is the act of one individual of a species consuming all
or part of another individual of the same species as food. In
business, cannibalism is the act of one product of the Brand
consuming all or part of market share of another product of the
same brand. (online source - Encyclopaedia
Britannica)Cannibalisationthe loss of sales of an existing product
to a new offering in the product line
http://www.babylon.com/definition/Cannibalisation/English 3
4. 4
5. First order cannibalisation - loss in parent brands revenue.
Second order cannibalisation - share loss by other brands in the
corporate portfolio. Cannibalisation and trial are both potential
consequences of line extension strategies with, normally, the
former to be controlled and the latter encouraged. Line extensions
may also play an important defensive role as Me too products,
designed to match a competitors breadth of range and, as such, are
more likely to gain volume from competitor brands. (Quelch and
Kenny 1994).P.S. In the UK (Somji 2000) shows that, over the period
1995-1999, 95% of new product launches, in selected fmcgcategories,
were line extensions. Source Wendy Lomax and Gil McWilliam (2001)
Journal of Marketing Management, 17, 391-406 (online) 5
6. Origin of cannibalisationLine StretchingWhen a company
lengthens its product line upward or downward in the sameproduct
category. Kotler P, Keller KL et al (2007) Marketing Management
Pearson New DelhiDown - Market Strategy Up - Market Strategy Middle
Up-Market Market Down- Middle market market Product proliferation
Product proliferation is the expansion of the number of product
offerings in a product category.
http://american-business.org/672-product-proliferation.html 6
7. Brand ExtensionAs Kotler states, brand extension is when a
company introduces newproducts under a same brand name. e.g. Dettol
Antiseptic lotion, Soap, Hand wash. Laggards and Early Majority. I
call them Life savers.Early MajorityThose who adopt a
product/service after it has been established.LaggardsThose who
adopt the product/service as it reaches the end of its lifecycle.
Theyusually pay a competitive price for the benefit of waiting.
http://www.learnmarketing.net/glossary.htm 7
8. Look forwardIf the planners always look on what might
disrupt current sales, nothingwould get kick started with a fear of
upsetting the status quo.One may occasionally cannibalize its own
product, but that is a price thata company practising incremental
innovation can afford to pay. Smith P G & Reinertsen D G
(1991), Developing Product in half the time. Van Nostrand Reinhold
(pg 78), NY. Apple is doing its best work ever, and were very happy
with the products in the pipeline. We feel very very confident
about the future of our company Cook T, COO, Apple Support Argument
To move forward - its better to start with an optimistic approach
over being pessimistic and stand still. 8
9. 9
10. Success Story Hero Honda, India 1994 Splendor 2001 Passion
For February 2003, The company derived over 80% of its revenues
from the Splendor-Passion combine in the executive segment the most
crowded section of the motorcycle market
http://www.herohonda.com/media_archives02.htm#02http://www.fadaweb.com/two_wheeler_industry.htm
10
11. Planned CannibalisationThe expected loss of sales of a
product in a line to a more recent productintroduction; planned
cannibalisation might occur when a company wants itscustomers to
switch to another of its own products rather than to a product ofa
competitor. http://www.salesopedia.com/ Either you put your product
out of business or your competitors will do it for you. Ted Levitt
(1960s) Support Argument When the competitors throw your product
out, you are defeated and hence it causes carnage to the brand. The
market share is eaten by competitor. But cannibalization helps in
defending the market share and brand image. (even if its not
planned) 11
12. Success story - Toyota - Planned Cannibalisation June 2010
- Toyota introduced the Innova Special Edition to commemorate five
successful years of the Innova in India.Between 2000 and 2004,
Qualis was the The Innova has continued its marketprimary driver of
a 31% market share leadership with growth in the MPVsegment,
increasing the 2009 and has in the MPV segment in market shareof
the segment in the Indian automobile maintained the No. 1 status
since itsindustry from less than 9% in 2000 to launch.over 11% in
2003. Source: JD Power survey
http://www.toyotabharat.com/inen/news/inn_ special_edition.asp
12
13. http://www.siamindia.com/scripts/market- share.aspxToyota
had registered 77% increase in its sales in April 2010.
http://www.toyotabharat.com/inen/news/inn_special_edition.asp
Support Argument Inspite of passenger cars lesser market share in
automobile sector, Toyota has shown a tremendous growth. With the
launch of Fortuner in same category as Innova, Innova is still the
number 1 in MPV. 13
14. Success story inevitable exampleOctober 4, 2010sales of
laptops had halved since Apples slate was launched. - CEO of Best
Buyhttp://www.techwatch.co.uk/2010/10/04/npd-claims-ipad-not-cannibalising-notebook-market/October
30, 2010Kelkoos findings - 35% of UK consumers would buy a tablet
instead of a laptop.Also 69% said they would go for Ipad.18 January
2011the ipad eating PC sales is good for Apple.with low share in
the PC market, if the competitors lose share, we gain.they call it
cannibalisation, but I think there is some halo effect from
Appleproduct to Apple product Cook T, Apple
http://www.pocket-lint.com/news/38001/apple-to-increase-attack-market
18 January 2011, Pocket-lint 14
15. Success Story - Titan IndustriesIn 1995, the company
launched its first jewellery brand, Tanishq,in India.In 2005, the
company launched its second jewellery brand, GoldPlus, to
capitalise on opportunities in small towns and rural India.In
2011Tanishq: 118 outletsGold plus: 29 outlets28th Jan,2011.Despite
a 19% increase in gold price this year in Q3, Tanishq hasrecorded
high sales growth in both plain and studded jewellery.
http://www.titan.co.in/press-releases/titan-industries-ltd-%E2%80%93-
income-grows-469-and-net-profit-824-q3 15
16. Finally All the stories that we discussed have shown that
cannibalisation is good for any brand. It could be a strategy.
Cannibalisation prevents the brand from being a late entrant in the
market. Cannibalisation adds value and profit to the brand.
Cannibalisation helps in being an innovator. It will never cause
carnage to the brand but will cause to the competitors 16
17. References 1. Smith P G & Reinertsen D G (1991),
Developing Product in half the time. Van Nostrand Reinhold (pg 78),
NY. 2. Crawford M & Benedetto A D (2008) New Product
Management, McGraw-hill, Singapore 3. Christensen C M (1997) The
innovators Dilemma when new technologies cause great firms to fail,
Harvard, USA. 4. Kotler P, Keller KL et al (2007) Marketing
Management Pearson, New Delhi 5. Wendy Lomax and Gil McWilliam
(2001) Journal of Marketing Management, 17, 391-406 (online) 6.
http://www.titan.co.in/press-releases/titan-industries-ltd-%E2%80%93-income-
grows-469-and-net-profit-824-q3 7.
http://www.britannica.com/EBchecked/topic/92695/cannibalism 8.
http://www.learnmarketing.net/glossary.htm 9.
http://american-business.org/672-product-proliferation.html 10.
http://www.toyotabharat.com/inen/news/qua_withdrawl.asp 11.
http://www.siamindia.com/scripts/market-share.aspx 17
