Product cannibalization occurs when a new product reduces the sales of an existing product within the same company instead of expanding market share. An example is the iPhone SE, which may lead customers to choose it over a higher-priced model, potentially redistributing revenue rather than increasing it. Additionally, brand cannibalization happens when a new product adversely affects the demand for another, especially prevalent in fast-paced markets like SaaS.

1. What is Product
Cannibalization?
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What is product
cannibalization?
Product cannibalization occurs
when a company’s new product
eats into the sales of one of its
existing products, rather than
expanding the company’s overall
market share.
Essentially, instead of attracting
new customers or creating new
revenue streams, the new product
merely shifts the existing revenue
from one product to another within
the same company.

3. What is an example of a
cannibalization
strategy?
For example, let’s consider the
launch of the iPhone SE. If customers
who would have purchased the
older, higher-priced model now opt
for the new one, the company may
not see the overall revenue increase
it anticipated.
Instead, it may simply redistribute its
revenue, or worse, experience a drop
in profitability due to the lower price
point of the new model.
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4. How do you determine
product cannibalization?
To get the number of sales lost you
can subtract this year's sales from last
year's.
So for example if an existing product
sold 5000 units last year but just 4000
this year the number of lost sales
would stand at 1000.
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5. What is cannibalization
between brands?
Brand cannibalization occurs when
the introduction of a new product
negatively impacts the demand for
another.
For SaaS products, the fast-paced
nature of the SaaS market,
combined with the need to
continuously improve and release
new features, can lead to
unintended cannibalization of
existing services.
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