Can launching new products lead to sales cannibalisation?
You're worried a new product will steal sales from an existing product, what do you do?
Surprisingly this is a common battle within large organisations. The paradox is that launching the new product may mean a decline in sales for another product line, not launching the new product will leave a gap in the market, or a target audience under-serviced.
If your sales team are hungry for new products to take to customers, then you may have to look at opportunities that steal revenue from existing, mature products. If your sales team are hungry for leads then you need to feed them!
This fear can often come about when the new product is cheaper but equally capable, when compared to an existing offering. Not every business is in a position to develop a product road map where every new product is higher spec and more expensive than the existing offering. Apple has it easy by comparison, aside from the 5C mobile phone they rarely launch products that can take chunks out of their core product offering.
I recently watched a discussion on the UK car forum Pistonheads about Aston Martin. The brand had launched a new model last year called the DB11. Fitted with a V12 engine, it sat in the GT category (cars that are powerful, but designed for long road trips more than hitting the track).
It's been well published that the current V8 sports car in the range, the Vantage, will be replaced soon. The argument stemmed around whether launching a V8 version of the DB11 tourer would cannibalise sales of the V12 version, or if the new V8 Vantage meant that there was already a sufficient V8 engine offering different enough to not trouble the DB11.
The whole conversation is theoretical as there is no V8 offering for the DB11 on the cards as far as we know, but one of the points raised was very topical. If Aston Martin don't offer a V8 version of a car in their 'GT' category, would customers looking for a more economical, more efficient but less powerful GT car go to Bentley's V8 instead?
Is it better to cannibalise your own product, or lose out to a competitor? Are you evolving to changing customer demands and new markets or undercutting your own products by offering cheaper versions of your existing products?
Scott Anthony put it very well in his HBR article on the subject.
"...,if an opportunity is large enough, someone is going to find a way to realize it. Wouldn't you rather it be you who seizes the opportunity than a competitor?"
If you're struggling with your product road map or positioning strategy then why not talk to one of our consultants and use a one day strategy session to explore options and work on a solution.