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IMPACT OF CANNIBALIZATION ON MARKET SHARE RETENTION

CHAPTER ONE

INTRODUCTION

Background of the Study

Product cannibalization occurs when a current product’s sales volume, revenue, or market share is reduced as a result of the introduction of a new product by the same manufacturer or competitors. Even in the context of a well-planned strategy, product cannibalization is usually regarded as a negative. It can be effective by eventually increasing a company’s total sales volume or meeting higher consumer needs. Cannibalization is an important factor to consider when analyzing a product portfolio. By definition, product cannibalization is “the process of a new product gaining sales by diverting sales from an old product” (Heskett, 1976, Harvey and Kerin, 1979). Product cannibalization is defined by Copulsky (1976) and Mason & Milne (1994) as the extent to which one product’s customers are attracted to another.

According to Ulrich and Tung (1991), excessive use of commonality could lead to similar-looking products and product cannibalism. Paley (1991) defined modification as changing a product’s feature to generate “newer” ones that replace the old. It was defined by Reddy et al. (1994) as a percentage of new product sales derived from sales of an existing product in the company’s portfolio.

When a corporation decides to replace an existing product with a new one, regardless of its market position (i.e., the product’s life cycle phase is ignored), this is known as product cannibalization. According to reports, branded companies have employed a range of delaying measures to avoid “cannibalization” of their products.

Statement of Problem

The primary goal of this study is to look into the impact of a company’s willingness to cannibalize on brand loyalty, using customer happiness as a moderating variable. 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 promote new goods more aggressively than others. Companies conduct research and development in this field as needed to design more advanced products and gain a competitive advantage in the marketplace. The issue emerges when a new product is introduced that not only competes with competitors’ products, but also threatens the firm’s current product. This provides a competitive space in the market for items from the same company. Such rivalry can be harmful rather than beneficial because the current product’s potential is diminished as a result of the arrival of newer and better products.

Research Objectives

The study’s main goal is to investigate the impact of product cannibalism on market share retention in Nigeria’s manufacturing industry, with customer happiness serving as a mediating factor. The following are the specific objectives:

The purpose of this study is to look into the relationship between product cannibalism and market share retention in Nigeria’s manufacturing industry.

 

The purpose of this study is to look into the relationship between customer satisfaction and market share retention in Nigeria’s manufacturing industry.

 

In the Manufacturing Industry in Nigeria, to investigate the mediating impact of customer satisfaction in the relationship between product cannibalization and market share retention.

 

Research Questions

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

In Nigeria’s Manufacturing Industry, what is the relationship between product cannibalization and market share retention?

In Nigeria’s manufacturing industry, what is the relationship between customer happiness and market share retention?

What role does customer satisfaction play as a mediating factor in the link between product cannibalization and market share retention in Nigeria’s manufacturing industry?

Significance of the Study

The importance of researching sound product cannibalization in developing countries like Nigeria’s manufacturing industry cannot be overstated. Product cannibalization has been identified as the most important competitive weapon for an organization’s market retention. This study aims to contribute to the existing body of knowledge in the area of product 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.

This research would restore credibility and confidence in manufacturing activities to the general population.

Scope of the Study

This research is being conducted out in the Asaba metropolitan, which is home to the study’s chosen company. The research focused on the manufacturing industry 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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