Channel conflict resolution
Borders Books established an online store without considering the ramifications this decision would have on its existing brick and mortar stores. Borders soon realized that their online store was decreasing the traffic in their brick and mortar stores.
Despite increasing its sales channels, Borders was hurting its overall business.
To address this problem and increase the foot traffic in its brick and mortar stores, Borders transformed itself into a meeting
place. By establishing coffee shops within their stores and hosting live musical events, Borders was able to create a sense of
community within the stores and maintain customer traffic in their stores.
This solution has proved to be very successful for Borders. Today, Borders Books, along with its subsidiaries, Walden Book Company Inc. and Books etc., is the second largest operator of book superstores and the largest operator of mall-based bookstores in the world.
Some companies intentionally cannibalize their retail sales through lower prices of their online product offerings.
Consumers usually buy the discounted products, especially if they would have been mapped to the retail prices.
Even though their in-store sales might decline, the company may see overall gains as a result.
Another example of cannibalization occurs when a retailer discounts a particular product. The tendency of consumers is to buy the discounted product rather than the competing product with a higher priced. After the promotion and prices return to normal, however, the effect will tend to disappear.
This temporary change in consumer behavior can be described as cannibalization.
In project evaluation, the estimated profit generated from the new product must be reduced by the earnings on the lost sales. Another case of cannibalization is when companies open retail outlets too close to each other, in effect, competing for the same customers. The potential for cannibalization is often discussed when considering companies with many outlets in an area, such as Starbucks or Panera Bread.
Cannibalization is an important consideration when an organization aims to carry out
Normally, when a brand extension is carried out from one sub-category (Corona Extra) to another sub-category (Corona Light), there is a probability that part of the former's sales will be taken away by the latter.
However, if the strategic intent
of such an extension is to capture a larger market of a different market segment notwithstanding the potential loss of sales in an existing segment. Hence, the move to launch the new product can be termed as "cannibalization strategy". In Japan, where the passenger-car segment is going up dramatically since the turn of this century, the launch of Nissan Note in the same sub-category as Nissan Dayz,
which was the leader of the small-car segment to counter the competition from Hyundai is seen to be a classic case of cannibalization strategy.
A company engaging in corporate cannibalism is effectively competing against itself. There are two main reasons companies do this. Firstly, the company wants to increase its market share and is taking a gamble that introducing the new product will harm other competitors more than the company itself. Secondly, the company may believe that the new product will sell better than the first, or will sell to a different sort of buyer.
For example, a company may manufacture mobile phones, and later begin manufacturing tablets.
While both products appeal to the same general market (web users) one may fit an individual's needs better than the other. However, corporate cannibalism often has negative effects. For example, the car manufacturer's customer base may begin buying trucks instead of cars, resulting in good truck sales, but not increasing the company's market share.
There may even be a decrease, which is also called market cannibalization.
an instance of using an established brand name or trademark on new products, so as to increase sales.
Strategic intent is the term used to describe the aspirational plans, overarching purpose or intended direction of travel needed to reach an organisational vision.