Cannibalization

Cannibalization occurs when a company launches a new product that replaces one of its older products which leads to a decrease in sales. The cannibalization of existing products mostly causes a company to go into the red since there is no increase in the company’s overall market share, even if there is a large number of sales provided by the new product. 

There are some conditions for a product to cause cannibalization. Cannibalization can occur when a new product to be served is similar to the existing product. It can also occur when new and old products share the same customer base.

Types of Cannibalization 

In the world of marketing, cannibalization can come in many forms. However, as Screpy experts, we divide them into five different categories: intentional, unplanned, cannibalization based on discounts, cannibalization for competition, and cannibalization based on e-commerce.

• Intentional cannibalism, which companies often apply, is the situation in which companies release new products even though they are aware that new ones get more attention. While the old products still maintain their popularity, the new products are aimed at attracting people from both the current audience using the old products and the new customer bases.
• Unplanned cannibalism is often the result of blind strategy steps taken without careful planning. While the new product is supposed to increase the revenue, it both reduces the company’s market share and increases the production cost without providing any profit.
• Cannibalization based on discounts is seen when retailers reduce service/product prices so that they can gain more cash flow while getting rid of the old ones to make room for new models. As a result of regular discounts, the company’s customer base expects regular discounts and may refuse to buy the product when there is no discount. This causes cannibalism as the seller is forced to offer regular discounts.
• Cannibalization for competition occurs when a company deliberately enters a market to reduce the profit share of a competitor, despite the possibility of reducing its own profit share.
• Cannibalization due to e-commerce is observed when a brand sells in an e-commerce environment, reducing its profit in its physical store.

The Importance Of Cannibalization in Marketing

Cannibalization is an undesired result unless it is done intentionally. Imagine a company aiming to increase its market share by engaging its current customer base more instead of reaching out to the new ones. To achieve this, the company produces a product and lets it enter the market. However, things go the other way around than expected, and cannibalization becomes observable when the new product’s marketing strategies and advertising campaigns distract customers from a current-existed product. As a result, the newly-released product steals the main position from the old product while the company’s production costs increase and its market share decreases.

Advantages and Disadvantages Of Cannibalism in Marketing

Cannibalism has both advantages and disadvantages for each company and brand. If it is not planned well and in detail, it can cause serious damage to your brand and market share. On the other hand, a well-thought-out cannibalism strategy provides both innovation, a new customer base, and more market share. However, both are actually quite risky and require courage to take action.

Advantages Of Cannibalization

As Screpy experts, we would like to list what the advantages of cannibalism can be!

1. Cannibalism can provide new market share for your company:

Let’s say there is a famous company known by people for a care product based solely on hand cream. The company owes most of its annual revenue to this product. It sells 100,000 creams annually. However, one day, the company decides to produce shampoo and launches it into the market. While people buy shampoo, some of them give up on the hand cream. Cream sales, which used to be 100,000 in the past, decrease to 75,000, but now shampoo sales are 75,000. As a result, annual sales increase from 100,000 to 150,000, although shampoo production reduces hand cream sales.

2. If you plan well, you won’t lose when replacing your old products with new ones:

Apple demonstrates the best example of planned cannibalism every year as a lesson. Introducing a new iPad, iPhone, or Mac model almost every year, Apple can easily replace old products with new products. Although it seems to reduce the market share for old products, the company can successfully hold its user base thanks to its innovations and the right marketing tactics.

3. You can cross the old-profit line with multiple products instead of a single product type:

The examples above have one thing in common. Instead of the revenue provided by a single product, annual revenue is increased through various products. The combined shares of all of these products lead to an extended share overall. 

Disadvantages Of Cannibalization

The advantages of cannibalization seem quite logical, don’t they? However, when these advantages are done blindly and without considering, they can turn into disadvantages and cause temporary/permanent damage to your company. Let’s examine the disadvantages of cannibalization in marketing.

Overbranching In The Market

If a brand opens a store or service point in the same or close location, it may result in two stores extinguishing each other. Having two service points of a brand on the same street reduces the profitability of other stores. In such a case, the amount of profit can get cannibalized and may cause both stores to close with a loss.

Causes Delays in Innovation

Remember the Apple example above? It would have been self-cannibalizing if Apple had launched an extension product as a sub-branch instead of producing a higher model of the old products. 

Discounts Reduce Your Profit

Cannibalization can occur when a company cannibalizes its profit as a result of a discount strategy. The products or product groups that you constantly sell to your consumer base at a discount may cause customers to internalize the price in a discounted form rather than in its original form. As a result, they may stop buying unless they see the discounted price they are used to on the shelves.

How To Prevent Cannibalization In Marketing 

As you’ve read up to here, cannibalization in marketing has good and bad sides. However, these bad sides are not completely unavoidable, and there are approaches to work around. So, as Screpy experts, we’ll talk about what you can do to prevent your website from cannibalization.

Conduct A Field/ Customer Research

Conduct extensive research to both reach a new customer base and not lose the customer base you already have. Examine the characteristics, economic status, and demographics of your potential new audience and your old audience, and analyze the results. What are the demands of your customers, what do these people want to buy, what do they want to spend money on? What are their expectations from you? Answering these questions is of great importance. In this way, you can both understand what people want and get ahead of your competitors by identifying the undiscovered gold mines in the market.

Identify The Gaps

You must understand what gap the current product fills by identifying the specific consumer bases. For people to buy, it is vital that the product you will launch is addressed to the right people and is suitable for the right target audience. You should not take a blind step without determining and deciding on all these. Remember, if you are going to introduce a similar or new product to people, you need to have this kind of information. You need to place your product on sale carefully. 

Identify Your Competitors

While analyzing your customers, it would be a very logical move to analyze the situation of your competitors. What is the type of product your competitors compete with you the most? What do people like most about your competitors’ products? Your aim should be determined by finding a gap in your competitors so that you can direct the cannibalism that lowers their profits to your competitors, not your own company.

Product With Unique Features

Your product or service will have no influence on the market if it does not offer newer features than the old ones or if it already has features that your competitors offer. You need to make sure your products have something more distinctive than those that already exist. For example, upgrade the product or offer premium versions where people can pay more to get better quality service.

Apply Pre/Pro-Tests And Analyzes

You have made all the plans, analyzed the data, and your product is ready to be launched to the moon! However, you still don’t know how people will react to the new product/service. Therefore, you can introduce the product through famous influencers to get comments from different user bases or conduct surveys to understand how people feel. Moreover, you can share interviews based on experts’ opinions about your product.

You did these before providing the product to customers. Then what is left? Next, what you need to do next is to lend an ear to your customers. Observe them carefully and see their reactions so that you can take quick action if required. 

Cannibalization in SEO: Keyword Cannibalization

Up to this point, we talked about the place of cannibalization in the world of marketing. However, cannibalization is not limited to marketing, and there is a branch that extends to SEO, which is called keyword cannibalization. As Screpy experts, we also want to talk to you about keyword cannibalization.

Keyword Cannibalization

As you know, Google has hundreds of criteria to rank billions of websites. Some best-known criteria are title, meta-description, headings, and words relevancy. Another factor is the keywords you place on your page. The more appealing-to-your-audience and relevant these keywords, search engines will like you more and rank your website higher.

However, this kind of keyword usage can cause problems when keywords appear on more than one page on the site. It is mainly based on that Google cannot prioritize which page in the ranking and cannot decide keywords to index. In summary, the pages on your website cause cannibalization by extinguishing each other.

Consequences Of Keyword Cannibalization

The consequences of keyword cannibalization will negatively affect your SEO ranking and make you more unhappy at the end of the day. So what are these possible endings? Here are some of them:

• It creates unnecessary competition between the two pages of your website, which results in a division in traffic and click-through rates. These similar two pages negatively impact each other’s ranking. 
• Even though backlinks target the same keyword, backlinks provided to two pages will be wasted for different pages. These split-backlinks also lead to the weakening of authority. So instead of building more and all quality backlinks for a single page, it is not wise to share backlinks to two separate content with the almost-similar content that shares a common aim.
• Your website’s crawl budget is wasted unnecessarily. Search engine algorithms do index pages on your website that cannibalize each other instead of the most important and ranking-increaser pages on your site. As a result, cannibalization negatively affects your SEO ranking.

Common Keyword Cannibalization Mistakes

Many websites may become the victim of cannibalization, whether they pave the way for it intentionally or unintentionally. As a result, their SEO rankings fall into the endless pit. For you to avoid common keyword cannibalization mistakes and not experience such a decrease in your ranking, we will examine which mistakes you may have been making.

Similar Products

Cannibalization is one of the problems experienced by e-commerce websites with a limited product range. Naturally, they are faced with this problem because they offer dozens of names that are similar to each other. 

However, as a solution to this, you can group products accurately while renaming them as unique as possible without losing their originality to prevent your products from cannibalizing each other.

Similar Content Topics

Websites that include endless content or are based on a particular topic may experience cannibalization if they don’t pay attention to details or ex-published pages. After a certain period, the contents become so similar to each other that they will extinguish each other’s authority.

In such cases, you can get rid of your old posts by content pruning, update your posts to be more original, or combine the contents on a single page. However, after doing this, you should not forget the URL redirections of the removed pages. 

Similar Pages With Almost-Same Structure

Websites that contain many product types or produce content on similar topics in a specific field and websites that don’t have an SEO-friendly site hierarchy will inevitably experience cannibalization at some point regardless of their type.

For example, you are a veterinarian, and your website involves a blog page. If you name two supposed-to-be-different categories/sections as Puppy and Dog, you pave the way for cannibalization. Likewise, giving the same name to a subcategory within the main category will also cause problems.

In such cases, it will be necessary to review and change the site categorization structure and hierarchy. You can start with determining different keywords in the title, descriptions, headings.

We have covered two aspects of cannibalism, which are cannibalism in marketing and keyword cannibalism so far. Now let’s dive into the frequently asked questions about cannibalization.

FAQ

Conclusion

Cannibalization is a situation that can be defined as a new service or step taken leading an extinguish an old product.  It often occurs in the commerce world. There are types of cannibalization such as unplanned, intentional, e-commerce cannibalization, and discount cannibalization. If it is conducted deliberately and well-planned, it can provide a lot to a brand. However, cannibalizations that are not planned or considered blindly can do great harm to companies. 

Cannibalization as a marketing term can be a very powerful gun if used correctly.