How to Tackle Cannibalization - Marketing Channel

by Fred Victor

Not surprisingly, I was asked recently on the issue of cannibalization, where a company faces the dilemma of promoting a similar product range (under different branding strategy, perhaps) within the same retail environment.

Accordingly, one brand outclasses another. How?

I wrote this to reply:

Dear Madam,

I’m just pragmatic enough to share more ideas on the issue discussed via our tele-con last Saturday. Further to my very-short explanation on cannibalize as “cut-throat” (“yoi” in Cantonese), here’s a slightly long story to begin with.

It’s in fact a marketing strategy, cannibalization occurs when decreased demand on an existing product due to the “same” vendor releases another new “similar” product.

It sounds negative but can be extremely effective if it’s planned accordingly (to target customer) and stealing (expanding) market share quietly.

Let’s think outside the box, it’s all about our brand/product portfolio strategy!

Allow me to recap – cannibalization is an important issue in marketing strategy when a company aims to carry out brand/product extension (for itself and others).

Let’s take a real life example, when Philip Morris introduced Marlboro Light, a sub-category and similar product (to Marlboro Classic); such extended brand/product portfolio strategy is to “capture” a “broader” market segment (for those who love light smoking, for ladies, for new smoker etc.) although losing “some” sales in an existing segment (from Marlboro Classic). Marlboro stole market shares from Salem … quietly.

Accordingly, in effect, Marlboro Classic and Marlboro Light aren’t really competing for the same customer segment. Price is same, but taste lighter and smoother, packaging differs, marketing elements vary etc.

As per your case, is your “brand A” direct competing with your “brand B”? Should re-consider?

In my 2-cent opinion, to tackle cannibalization, brand/product differentiation strategy should exist – you should really differentiate both brand A and brand B. In short, the brand A should maintain its “major” entity, brand B should re-define its niche … quickly.

Have fun ;-)

Cheers,
Fred

PLC Management on The American Idol Season 10

By Fred Victor

The premiere American Idol (hereinafter called AI) auditions have finally returned on the 19^th day of January 2011, the first episode was aired with New York / New Jersey.

After 9 years of running, the American Idol Season 10 is a classical example of maintaining a product in a declining stage (in my personal opinion) within the Product Life Cycle (PLC) process – possibly rejuvenating it by adding “new features” and finding “new users” and “viewers”.

Instead of using unfashionable ways like price theory. Some tactical strategies have been deployed by the FOX and AI show producers. Let’s take a shot:-

The show’s producers lowered the minimum age requirement from 16 to 15 years old (market development strategy of Ansoff Matrix); the FOX and show producers intended to further develop “new” market so to access broader market consumption (e.g. new participants and viewership).

Stunning new judges hired (celebrity endorsement of A&P Strategy) – Jennifer Lopez and Steven Tyler feat. Jimmy Lovine (Chairman of Interscope Geffen A&M Records who acts as in-house mentor) to replace Simon Cowell, Kara DioGuardi and Ellen Degeneres. The show producers have tempted to further qualify the use of celebrities in their marketing campaigns, thus enhancing the AI’s awareness, appeal, and relevance to AI’s brand image – ultimately, influence hits on consumer buying behaviour.   

Moreover, the AI promos for idol were aired earlier on TV – round the clock since 7^th January 2011 (repetition theory of communication and/or consumer buying behaviour).

The first AI promo video reveals Kelly Clarkson, Lee DeWyze, Ruben Studdard etc. that “where they came from” before this AI season 10. The AI 10^th season’s slogan – “Who’s next?” appears (hero effect of consumer behaviour).

In another AI promo video, you’ll see footage from the audition rounds featuring Carrie Underwood, Taylor Hicks and Fantasia Barrino. To witness the powerful promo video which attacks both potential participants’ and viewers’ emotions and dreams, click here http://www.youtube.com/geconsultgroup#p/a/f/0/vZP0TTzWCmg.

So what do you think about the changes of American Idol Season 10 is making? As a Marketer’s point of view, are you getting excited for the new season?

Like Randy always says: “Yo dog (dawg) / dude, that was hot!”

What do you think? ;-)

End Note

This article is about the marketing term (of PLC management) to describe the life of a particular product in a particular market. PLC management in marketing term refers to the management through a sequence of stages from introduction to growth, maturity and decline. The American Idol Season 10 is a classical example – maintaining the product, possibly rejuvenating it by adding new features and finding new users.

The PLC management in engineering term refers to managing product design and production details.

Celebrity endorsements have proven successful in China recently where, due to increasing consumerism. In fact, it is considered a status symbol to purchase an endorsed product.