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What is Cannibalization?

Cannibalization refers to the process in which the sales of a new product or service begin to eat into the sales of an existing product or service offered by the same company. This can occur when the new product or service is perceived as being superior to the existing one, or when it is marketed in such a way that it attracts customers who might have otherwise purchased the existing product or service.

Cannibalization can have a negative impact on a company's profits, as the new product or service may not generate enough additional revenue to offset the decline in sales of the existing product or service. However, it can also have positive effects, such as forcing the company to improve the existing product or service in order to remain competitive, or allowing the company to capture a larger share of the market.

Cannibalization is a common concern for companies that are introducing new products or services, and it can be difficult to predict and manage. Companies may try to minimize cannibalization by carefully planning the introduction of new products or services, or by segmenting their markets in order to target different customer groups with different offerings.

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