What is cannibalization???? Can be explained by taking the example of Maruti Suzuki. Consider that maruti hs launched a new car to expand in its product line or what you call it as line filling in marketing terminology. Say the car is Ritz. Now say some of the customers who come to showroom to buy say Maruti Swift ends up finally buying Ritz. Now from the company point of view the profit made by the company on that particular customer comes down because if Ritz would not have existed the customer would have bought swift which is more profitable for the company. So this jump of customers from higher profitable product to lower one for the company is called Cannibalization...
The reverse is brand laddering.....
Hyundai is able to make more profits with the launch of i20. Customers coming to buy i10 are purchasing i20 thus company is able to fill its pockets more....
This is called brand laddering..
If you look at brand cannibalization: as long as the ratio - contribution of new pdt./contribution of old product is greater than cannibalization rate then the company should continue with its new product because the overall gain is more.... Ram Kumar
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Nice piece of marketing info.
ReplyDelete..Sweta
hey this one is a new thing... i think laddering can be employed by companies to acheive higher profits.
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