Cannibalizing or defending its market position?

As stated in previous entries, launching new products on totally different markets is not possible for every company. In addition, creating a new product for a similar market as your original products’ can also cause damage to the company.

This phenomenon is described with the term “cannibalization”. In case of cannibalization, the new product’s sales will rise, while the sales of the older ones will decrease. Hopefully the brand extension’s sales can compensate the losses in sales of the other products. I think Coca Cola could be used as an example of this. With the introduction of Coca Cola Zero, some Coca Cola consumers have switched to buying Coca Cola Zero instead, but I don’t think the total sales will have grown. The reason why Coca Cola may have carried through the extension was to limit the possibilities of competitors in its market. Brand extensions are often done because of sort like defensive grounds.

So extending your brand on a close market can be beneficiary, but only for defensive reasons.

Source: hh.diva-portal.org/smash/get/diva2:238026/FULLTEXT01

I agree with Bram on the blog entry about the range of brand extensions. I think the concept of BiC’s disposable phone is good, but the price should be lowered in order to distinct itself from other brands.

Alexandre Van Laere