EXAMINING THE IMPACT OF BRAND CANNIBALIZATION TO RETAILERS
CHAPTER ONE
INTRODUCTION
- Background of the Study
- There is no one generally accepted definition of cannibalization. Kerin et al. (1978) use Heskett’s (1976) definition:
“the process by which a new product gains sales by diverting them from an existing product”. Mason and Milne (1994)
use Copulsky’s (1976) definition and are less concerned with process than with magnitude. They define
cannibalization as “the extent to which one product’s customers are at the expense of other products offered by the
same firm.” But it is difficult for any manager to determine this – managers tend to take a more aggregate approach
and look at sales volumes and shares, not at an individual’s buying patterns. It also oversimplifies the construct which
can be viewed on a number of levels.
The work of Ehrenberg (1988) and others would suggest that any new product entering a market will take share from
all the existing players in proportion to their size. Reddy et al. (1994) define it as a percentage of total category sales.
Buday (1989, p. 29) suggests that: Excessive cannibalization is one of the common arguments against brand
extending. Common branding implies a similarity: similarity invites replacement. The problem of the extension merely
becoming a replacement purchase for the parent is only likely to occur where the products are substitutes, as was
noted by Sullivan (1990). This is often assumed to be the case with line extensions
Bunten and Simmons (1993) cite the example of Alka Seltzer Plus whose sales volume was derived largely at the
expense of the core brand. This effect can also be seen operating in the reverse direction. Birds Eye Walls’
rationalization of their Arctic Roll range, from two red berry flavors with strawberry and raspberry to one only, had a
negligible impact on sales. Previous purchases of raspberry were replaced with strawberry.
Lomax, Hammond, East and Clemente (1997) describe cannibalization as the situation when a new product in a line
extension becomes popular, but at the expense of other existing products within the category and this encourages the
customer to buy the line extension and to stop buying the original product. It is stated by Reddy, Holak and Bhat
(1994) that cannibalization is the risk that does not occur in brand extensions, but in line extensions the potential for
cannibalization is severe. Speed (1998) says that the risk of cannibalization is larger when the new product offer
superior benefits compared to the original product is still similar to the original product, and the risk is also higher if
the price of the new product is lower than the original. He also adds that though, the risk of cannibalization is modest
when the prices of the two are the same.
Brand cannibalization occurs when a company decides to replace an existing product and introduce a new one in its
place, regardless of its position in the market (i.e. the product’s life cycle phase does not come into account). Reports
have alleged that branded producers have used a variety of delaying tactics to avoid this “cannibalization” of their
profits in the branded segment. One common means is for the branded firm to introduce and promote a new form of
the concerned brand with strategic effects, or tactic effects. - 1. Statement of Problem
Definition of cannibal by Oxford dictionary is “A person who eats human flesh”. Generally this term is defined as “An
animal that eats animals of his own kind”. Heskett (1976) is the first person who introduced this term in area of
marketing. In view of Kotler& Keller (2009) cannibalization is a system in which a firm’s existing brand is competed by
a new brand of its own. Chandy & Tellis (1998) claimed that cannibalization is a fundamental variable to determine
why certain firms introduce new brands more profoundly than others. This creates a space of competition between
brands of same firm in the market. Such competition sometimes proves damaging rather than brandive because the
potential of the present brand declines because of introduction of newer and a more - Research Objectives
The main aim of the study is to explore the effect of brand cannibalization to retailers in Nigeria. The specific
objectives would be as follows: - 1. To examine the relationship between brand cannibalization and market share retention in retail stores in
Nigeria - To examine the relationship between customer satisfaction and market share retention in retail stores in
Nigeria - Research Questions
Based on the objectives set above, the study seeks to answer the following questions: - What are the relationship between brand cannibalization and market share retention in retail stores in Nigeria?
- What are the relationship between customer satisfaction and market share retention in retail stores in Nigeria?
Significance of the Study
The benefit to study a sound brand cannibalization in retail stores of developing countries like Nigeria cannot be
over. Emphasize brand cannibalization has been seen to be the most importance competitive weapon to boost
market retention of organization. This study is aimed at adding to the existing body of knowledge in the area of brand
cannibalization, and also aid fellow student and researcher, teacher and principal persons in the area of marketing in
future research work also this research work would improve the knowledge of the managers, supervisors as well as
the respondent as it has potential of widerning their horizon in modern business operation for profitability and
continuity.
To general public, this research work would restore credibility and confidence in manufacturing activities and in
manufacturing with banks.
To company′s management, it will assist them in their formulation and implementation of strategies aimed at satisfying
customer. - 1. Scope of the Study
This study is carried out within Abuja metropolis this is where the organization selected for the study is situated. The
study forcus on the retail stores in general. The sampling object or population element used in the study are
employees, manager, customer and other stakeholder these categories are able to identify and ascertain the impact
of customer relationship on market share retention the adoption indicators in the study include trust, empathy,
promise fulfillment and bonding others ones can be used in other studies but these would make for easy
measurement of market share retention
EXAMINING THE IMPACT OF BRAND CANNIBALIZATION TO RETAILERS