Market Cannibalization
Categories: Marketing, Company Management
Why are upsells key in business? Because selling more, different things is better for a company than selling upgraded versions of old things. Sure, buying a newer microwave that doesn’t burn your popcorn in 10 seconds is great for you, the consumer, but that’s market cannibalization for the company making the microwaves (maybe they should focus on making blenders, too...if they want to grow, that is).
Market cannibalization is when a company cannibalizes itself, making new products or services that replace old ones that they made. No wonder Apple isn’t sticking to the iPhone biz...they don’t just want you to keep upgrading your phone. They want you to upgrade your phone and get a phone bracelet (Apple watch) and a Macbook.
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Finance: What is Cannibalization?14 Views
finance a la shmoop -what is cannibalization ? pass me some more leg.
yeah the real Paleo diet. so yeah cannibalization in the business [leg and foot on a plate]
world isn't all that different from this. you'll hear the catchphrase you'd better
cannibalize your own business before someone else does. well what does that
mean? well the newspaper industry had a great gig for about 250 years. its profit
Center was the help-wanted slash classified ad pages. in a major Metro
like Los Angeles they'd sell one page for 80 grand. that's ink on paper and had
a whole bunch of help-wanted ads on it and that page would cost them about 10 [classified page shown]
grand to produce. 70 grand in profit for a big page like that LA. yeah great great
work. if you can get it well then came along the commercial
Internet in the mid-1990s. instead of cannibalizing itself and building or
buying its own classifieds business albeit at lower margin it more or less
hid like a scared ostrich from the much more competitive and lower profit margin
world of the internet. cannibalizing for the industry would have meant that yes
they put out Help Wanted sections at vastly lower prices like the equivalent
of a page that instead of charging advertisers in LA 80 grand charging them [business models listed]
12 grand or less on a page that cost them maybe 5 grand to put out. and why
did it cost less? like not 10 grand but just 5 ? well a web server is way cheaper
to run then killing and pressing a bunch of dead trees, printing them with union
labor, delivering them and so on. so less revenues less profits but still
a relevant player in the help-wanted category. so what happened? well
Craigslist happened. and so did monster.com and indeed and Glassdoor and
a bunch of other specialty market players like dice in technology. while [glassdoor website pictured]
the newspaper industry acted like the local monopoly it was for 250 years and
instead of cannibalizing itself and living with lower profit margins, but
still living well it ignored the new threat of the internet and well it
starved to death. and now it's the internet company
tasting the sweet flavor of victory and the newspaper companies have well turned
into the modern-day Donner Party, sadly. [Donner party defined]