An accomplished marketing expert with more than a decade of experience, April Grams is highly skilled in various areas of marketing. In her current role, she works as a marketing specialist at Dichtomatik Americas. As part of her duties, April Grams conducts market sales analyses to predict business trends.
A sales analysis provides crucial data that includes sales team performance and customer shopping patterns, as well as revenue. There are multiple key performance indicators (KPIs) which are evaluated, including the cannibalization rate. Cannibalization rate measures how new products impact the sales of already existing products.
As a business launches new products, there’s a possibility this will result in a reduced interest in and subsequently lower sales of existing products. This happens in cases where new products seem to be superior or offer better value than similar existing products. Organizations have to carefully formulate new product strategies to avoid cannibalization, which in extreme cases can result in a net loss of revenue.
It is challenging to determine the impact of launching a new product and whether it will affect sales of existing products. However, cannibalization rate can be determined by dividing the sales loss of an existing product by the sales of the similar product. Managing the cannibalization rate requires sales teams to focus their attention on related but different markets when launching new products, as well as utilize product introduction strategies against competitors and not against their own company’s products.
April Grams 