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EXAMINING THE IMPACT OF BRAND CANNIBALIZATION TO RETAILERS

CHAPTER ONE

INTRODUCTION

Background of the Study

There is no universally agreed-upon definition of cannibalism. Heskett’s (1976) definition is used by Kerin et al. (1978): “the process by which a new product wins sales by diverting sales from an established product.” Mason and Milne (1994) employ Copulsky’s (1976) concept and focus on magnitude rather than procedure. “The extent to which one product’s clients are at the expense of other products offered by the same organization,” they describe cannibalization. However, it is difficult for any management to establish this because managers tend to look at sales numbers and shares rather than individual buying patterns. It also oversimplifies a concept that can be interpreted in a variety of ways. Cannibalization is defined by Lomax, Hammond, East, and Clemente (1997) as a situation in which a new product in a line extension becomes popular at the expense of other existing items in the category, encouraging customers to buy the line extension rather than the original product. According to Reddy, Holak, and Bhat (1994), cannibalization is a risk that does not occur in brand extensions, but it is a significant concern in line extensions. According to Speed (1998), the danger of cannibalism is higher when the new product offers superior benefits to the original product while remaining identical to the original product, and the risk is also higher if the new product’s price is lower than the original product’s. When a corporation decides to replace an old product with a new one, regardless of its market position (i.e., the product’s life cycle phase is ignored), this is known as brand cannibalization. Branded producers have allegedly employed a variety of delaying strategies to avoid this “cannibalization” of their profits in the branded market, according to reports. One popular method is for the branded company to launch and promote a new version of the concerned brand with strategic or tactic implications.

Statement of Problem

The Oxford dictionary defines a cannibal as “a person who eats human flesh.” This phrase is generally defined as “an animal that eats other animals of its own species.” Heskett (1976) was the first to coin this word in the field of marketing. According to Kotler& Keller (2009), cannibalization is a system in which a company’s existing brand is challenged by its own new brand. According to Chandy & Tellis (1998), cannibalism is a key factor in determining why some companies introduce new brands more aggressively than others. This creates a competitive space in the market amongst brands from the same company. Such competition can be harmful rather than beneficial because the current brand’s potential diminishes due to the entrance of newer and better brands.

Research Objectives

The study’s main goal is to investigate the impact of brand cannibalism on Nigerian merchants. The following are the specific objectives:

To investigate the association between brand cannibalism and market share retention in Nigerian retail establishments.

 

To investigate the relationship between customer happiness and the retention of market share in Nigerian retail stores.

Research Questions

The study aims to address the following questions based on the aforementioned objectives:

In Nigerian retail outlets, what is the relationship between brand cannibalism and market share retention?

In Nigerian retail stores, what is the link between customer happiness and market share retention?

Significance of the Study

The importance of researching sound brand cannibalization in developing countries like Nigeria’s retail outlets cannot be overstated. Emphasize brand cannibalization as the most important competitive weapon for increasing organization market retention. This study aims to contribute to the existing body of knowledge in the area of brand cannibalization, as well as to assist fellow students, researchers, teachers, and principal persons in the field of marketing in future research work. Additionally, this research work will improve the knowledge of managers, supervisors, and respondents by broadening their horizons in modern business operations for profitability and continuity.

To the general public, this research would re-establish credibility and trust in manufacturing and manufacturing-related activities.

Scope of the Study

This research is being conducted out in Abuja, Nigeria, because that is where the study’s chosen organization is located. The study focused on retail stores as a whole. Employees, managers, customers, and other stakeholders are the sampling objects or population elements employed in the study. These categories are able to identify and determine the influence of customer relationships on market share retention. Trust, empathy, promise fulfillment, and bonding are among the adoption indicators employed in the study; other indications might be included in subsequent studies, but these would allow for straightforward monitoring of market share retention.

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