ABSTRACT
For decades, a common strategy of firms has been to offer multiple brands and/or brand variants which compete within the same product category. In many categories, dozens or even hundreds of brands are produced by a few dominant firms. Recently, however, manufacturers, retailers, and consumers are increasingly concerned about product proliferation and parity products. Constraints on retail shelf space and manufacturing considerations are examples of pressures leading firms to prune items from their product lines. When reviewing strategy and performance, a critical issue is cannibalization, or the extent to which one product’s customers are at the expense of other products offered by the same firm. With the exception of new product models, there is little research on cannibalization. In this paper, we propose an approach for identifying cannibalization in mature markets. We empirically illustrate our approach for the cigarette market with 188 brands and brand variants.
Reprinted with permission from Journal of Business Research, Vol. 31, Charlotte H. Mason and George R. Milne, “An Approach for Identifying Cannibalization Within Product Line Extensions and Multibrand Strategies,” pp. 163-170, copyright 1994, with permission from Elsevier.
The authors gratefully acknowledge Simmons Market Research Bureau for providing the data for the study discussed in this chapter.
