Cannibalization

In business

In marketing and strategy, cannibalization refers to a reduction in the sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.

For example, if Coca Cola were to introduce a similar product (say, Diet Coke or Cherry Coke), this new product could take some of the sales away from the original Coke. Cannibalization is a key consideration in product portfolio analysis.

A second common case of cannibalization is when companies, particularly retail companies, open outlets too close to each other. Much of the market for the new outlet could have come from the old outlet. The potential for cannibalization is often discussed when considering companies with many outlets in an area, such as Starbucks or McDonald's.

In project evaluation, the estimated profit generated from the new product must be reduced by the earnings on the lost sales.

See also: Product management, New Product Development, marketing, brand, product, product portfolio, strategy.

In maintaining or building equipment

In maintenance of mechanical or electronic equipment, "cannibalization" refers to the practice of obtaining the spare parts, or whole sections of a system, necessary to repair one device by removing them from another similar device, rather than from a pool of spare parts. The device used as a source of spare parts is often crippled as a result, if only temporarily, in order to allow the recipient device to function properly again. Cannibalization can usually occur only with devices that use interchangeable parts.

Sometimes, particularlymay take up an entire basement or outbuilding. Removing parts from old equipment is sometimes the only way for an individual to obtain some types of parts, either because they are no longer made, or can only be ordered in large quantities.

At the end of World War II a large quantity of high quality, but unusable war surplus equipment such as radar devices made a ready source of parts to build radio equipment.

Cannibalization can be a sign of extreme budgetary pressure that prevents the purchase of adequate spare parts, or some other emergency such as time constraints and physical distance from a source of spare parts. At other times, it is a reflection of a surplus of equipment relative to current needs or usage, making some devices unnecessary except as a source of parts for cannibalization. An example of this is the many 30- and 40-year-old railway locomotives being run by small operators in the United Kingdom. These operators will often buy more locomotives than they actually require, and keep a number of them stored as a source of spare parts.

This is often the case in the military, and ships and aircraft, as well as other particularly expensive equipment. Such is the case with the aircraft carrier USS Kitty Hawk, the sole survivor of a class of three ships built during the early-1960s. The ship herself is over forty years old, and having manufacturers build individual custom replacement parts would be highly impractical, and thus decommissioned ships, such as the USS Independence, have been utilized for the necessary parts to keep the Kitty Hawk in operation.

Sometimes cannibalization can occur if the equipment in question is obsolete, with the manufacturer(s) of the device or the spare parts no longer in existence. For example, Union Pacific's 4-8-4 locomotive 838 is used as a spare parts source for 844 since the type has been out of production for decades and the builder itself is no longer in existence.

In fiction

Cannibalization in fiction refers to the adapting, borrowing and/or stealing of plots, characters, themes and/or ideas from one story for use in another and/or from one medium to another, such as a film adaptation of a book.

Authors Michael Baigent and Richard Leigh alleged that fellow author Dan Brown had cannibalised their book The Holy Blood and the Holy Grail in writing The Da Vinci Code.

The Doctor Who television episode "Dalek" is an example of legitimate cannibalisation, the writer having adapted elements of the Doctor Who audio drama Jubilee for this television episode.

See also

• Boat anchor

References