Cannibalize

Business, Legal & Accounting Glossary

Definition: Cannibalize



Full Definition of Cannibalize


Cannibalize, is a business strategy, to reduce the volume of sales of any product due to the induction of a new product by the same producer. Cannibalize or cannibalization is a decrease of demand for any existing product, which occurs as any vendor releases a latest and similar product.

The concept of cannibalizing can be explained better by simple examples. Suppose Hewlett-Packard launches a new printer in the market then the existing will suffer attrition of sales and there will be a reduction in market share, this type of attrition is termed cannibalize in business. Another example could be if Coca Cola introduces any similar product like Diet Coke or Cherry Coke, then this new product will hamper the sales record of the earlier products. This is what is termed as cannibalization in business terms. The term cannibalize is mainly borrowed from hardware, where it means removing a part from any type of machine in order to replace any non-working part. Cannibalize is a role played in the function of product management for any company.

Why Cannibalization Occurs?

There can be several arguments that can be put forward on why a business adopts the strategy of cannibalization. We often observe that there are two stores owned by the same owner operates is close locations. Here, the psychology of the owner can be that the size of the market is large enough to support two stores and they can afford drop in sales as long as their total sales are in upward trend.

Sometimes it may happen that any company in order to push out a competitor off-market launches a revised version of its own product. Introducing a revised version of own product definitely leads to a reduction of sales of the old version but it also lowers the market share of the competitive product.

Product Management

Product management is referred to as an organizational function performed for planning or marketing of a product at all stages of production. Product management is an amalgamation of two complementary efforts, product planning also known as inbound marketing) and product marketing or outbound marketing. The purpose of product management is to increase sales revenues and market share to the maximum level. Product management has various roles and functions, depending on the size of the company and the background of the company. Product planning and product marketing are the most significant roles played by a product management committee of any company.

There are several steps involved in the function of product planning. The first step is defining new products, assembling market requirements, building roadmaps for the product and preparing the product life cycle. In the case of product marketing also there are several steps to be followed. Firstly, product placement is necessary, and then promotion is required. Product promotion can be done externally by means of media, customers, and partners. Scrutinizing the level of competition is an essential role involved in product marketing.


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Cannibalize. PayrollHeaven.com. Retrieved November 25, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/cannibalize/

Definition Sources


Definitions for Cannibalize are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 28th March, 2020 | 0 Views.