Does Cannibalisation cause carnage or not? with few Indian market/brands as examples. *Presented by LSBU student for academic purpose

1. Cannibalisation can cause carnage
Cannibalisation cant cause carnage
Vasanthan Manoharan
2929643
Unit: MSc. Mar Comm
International Product and
Brand 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
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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)
Cannibalisation
the loss of sales of an existing product to a new offering in the product line
http://www.babylon.com/definition/Cannibalisation/English
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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 competitor’s 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 fmcg
categories, were line extensions.
Source
Wendy Lomax and Gil McWilliam (2001) Journal of Marketing Management, 17, 391-406 (online)
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6. Origin of cannibalisation
Line Stretching
When a company lengthens its product line upward or downward in the same
product category.
Kotler P, Keller KL et al (2007) “Marketing Management” Pearson New Delhi
Down - 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
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7. Brand Extension
As Kotler states, brand extension is when a company introduces new
products under a same brand name.
e.g. Dettol  Antiseptic lotion, Soap, Hand wash.
“Laggards and Early Majority. I call them Life savers.”
Early Majority
Those who adopt a product/service after it has been established.
Laggards
Those who adopt the product/service as it reaches the end of its lifecycle. They
usually pay a competitive price for the benefit of waiting.
http://www.learnmarketing.net/glossary.htm
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8. Look forward
If the planners always look on what might disrupt current sales, nothing
would get kick started with a fear of upsetting the status quo.
One may occasionally cannibalize its own product, but that is a price that
a 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 we’re 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

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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#02
http://www.fadaweb.com/two_wheel
er_industry.htm
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11. Planned Cannibalisation
The expected loss of sales of a product in a line to a more recent product
introduction; planned cannibalisation might occur when a company wants its
customers to switch to another of its own products rather than to a product of
a 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)
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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 market
primary driver of a 31% market share
leadership with growth in the MPV
segment, increasing the 2009 and has
in the MPV segment in market share
of the segment in the Indian automobile
maintained the No. 1 status since its
industry 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
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13. http://www.siamindia.com/scripts/market-
share.aspx
Toyota 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.
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14. Success story – inevitable example
October 4, 2010
sales of laptops had halved since Apple’s slate was launched.
- CEO of Best Buy
http://www.techwatch.co.uk/2010/10/04/npd-claims-ipad-not-cannibalising-notebook-market/
October 30, 2010
Kelkoo’s findings - 35% of UK consumers would buy a tablet instead of a laptop.
Also 69% said they would go for Ipad.
18 January 2011
the 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 Apple
product to Apple product – Cook T, Apple
http://www.pocket-lint.com/news/38001/apple-to-increase-attack-market
18 January 2011, Pocket-lint
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15. Success Story - Titan Industries
In 1995, the company launched its first jewellery brand, Tanishq,
in India.
In 2005, the company launched its second jewellery brand, Gold
Plus, to capitalise on opportunities in small towns and rural India.
In 2011
Tanishq: 118 outlets
Gold plus: 29 outlets
28th Jan,2011.
Despite a 19% increase in gold price this year in Q3, Tanishq has
recorded 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
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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
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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 innovator’s 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
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18. 12. http://fadaweb.com/review_06.htm
13. http://www.surfindia.com/automobile/industry-growth.html
14. http://ia.rediff.com/money/2003/mar/26hot7.htm
15. http://www.pocket-lint.com/news/38001/apple-to-increase-attack-market
16. http://www.articlesbase.com/cars-articles/five-top-selling-suvs-in-india-
1034248.html
17. http://www.techwatch.co.uk/2010/10/04/npd-claims-ipad-not-cannibalising-
notebook-market/
18. http://www.titan.co.in/press-releases/titan-industries-ltd-%E2%80%93-income-
grows-469-and-net-profit-824-q3
19. http://autonews.indiacar.com/news/n1052.htm
20. http://www.herohonda.com/media_archives02.htm#02
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