All companies want to launch new products that steal customers away from competitors. But sometimes you just end up stealing sales away from yourself.

Product cannibalization can affect companies of all shapes and sizes. It's happened to Kodak and Coca-Cola while the likes of Apple and P&G have done it intentionally. Read on to find out everything you need to know about product cannibalization.

Defining Product Cannibalization

Product cannibalization - also known as corporate cannibalism or market cannibalization - happens when a company's new product displaces an existing one.

In other words it reduces purchases of an older product and eats away at your own sales.

Total product cannibalization results in sales growth for a new product but the company's overall market share doesn't increase. This can happen when a company launches a completely new product or a variation of an older product.

Depending on production costs product cannibalization can really hurt a company's bottom line. But sometimes companies deliberately do it to stay competitive and provide their customers with more choices.

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What causes product cannibalization?

Prior to launching it's important to make sure new products are significantly different from older models in terms of design features audience or pricing.

Let's take a closer look at some of the causes of product cannibalization:

1.Failing to Reach New Audiences

If a new item shares the same customer base as an already existing product it's bound to attract the same audience and split sales.

2.Creating Comparable Products

If a new product doesn't offer something different like a quirky feature a unique aesthetic or a new use case you'll attract the same customers and product cannibalization could become a problem.

3.Miscalculated Pricing

If not carefully implemented low-priced products can steal significant sales away from more expensive products - particularly if there is little to differentiate them in terms of features or design. This can devastate profits.

Deliberate product cannibalization

Market cannibalization isn't always a bad thing. Many companies do it deliberately to stay competitive put customers first or expand their market share just a little.

For example back in 2006 when Coca-Cola launched Coke Zero in the UK it aimed to attract male consumers who were concerned about their sugar intake. While this took away sales from its original drink as well as its female-focused Diet Coke brand it attracted lots of 18-25 year old males back to the cola market. So its sales increased overall.

Other leading companies such as Apple Google and Facebook proactively self-cannibalize so that they can improve their products and prevent new startups from taking their place.

In his biography Steve Jobs is quoted as saying: If you don't cannibalize yourself someone else will . So when the iPod's popularity was still through the roof he launched the iPhone. While this hurt iPod sales it attracted new customers and helped Apple stay ahead of competitors. Similarly newly released iPhones make older models obsolete but the company remains a market leader.

Apple overlooked fears of product cannibalization to pursue larger objectives. While this could impact short-term profits it can benefit a company in the long-term.

If your brand is looking to launch a new product and you want to offload old stock try using a Where to Buy Software Platform to send consumers to retailer sites. This means you'll avoid having to incur direct to consumer costs for old products.