CANNIBALIZATION and Channel Conflict

.

..	This unit is used in   MGT D06 MRK 610 / MRK 410 IEC 719 IEC 818 BCS 421 BCS 555 MGD 415 / MGT 471

.
 

Channel Conflict and Cannibalization

Schneider/Perry Electronic Commerce   KEY POINTS Channel conflict and cannibalization are increasingly important for marketing students to understand in the context of an increasingly competitive marketplace employing so many new technologies. Additionally, there are retail conglomerates which are very desirable for manufacturers and vendors and there is developing intense competition for access to these. If you can't get into the major chains, you will not have the volume of sales to grow from a medium sized company to a large sized company. WTGR . "Companies that have existing sales outlets and distribution networks often worry that their web sites will take away sales from those outlets" page 90 Schneider, 3rd Edition Example of how you avoid cannibalization Larkhill.com gets many more hits on its website compared to the small stores carrying the product - however Larkhill does not sell its clothing online by not selling online you avoid the hassles of dealing direct with the public you do not have to worry about payment systems your retail customers do not see you as competition Larkhill however does use the web site to promote sales to the public by listing all the stores where you can go to buy the clothing - see http://www.larkhill.com/retailers.htm

dd

Cannibalization

article in BusinessWeek, July 5, 1999 "There's a reason that retailers are so hesitant to push their online channels. They're worried about cannibalizing their existing store traffic. And it's no small concern. To the consumer, a dollar spent at a Web store is the same as a dollar spent at the traditional store. But the retail community isn't ready to see it that way. Many retailers -- and their employees -- see even their own Web sites as new competition. "Retailer CEOs have to cope with the fact that their downtown store may take a hit when the online store opens,... Many companies, even as they forge ahead online, are clearly treading lightly to avoid this problem. Home Depot's relaunch of its Web site is designed to "drive traffic into our stores," execs say." written by ellen_neuborne@ebiz.businessweek.com   KEY POINTS Tim Richardson cites the example of one Toronto store that bought Larkhill Lingerie, but then cut out all the labels that say www.larkhill.com and affixed a sticker with the website of the store. .

Cannibalization an example

student Victor L. at in MGD415 at UTM in January 2009 emailed some interesting "local" examples of cannibalization. Victor began by saying "The term "Cannibalization" that was discussed during class is  very interesting to me.  So, from what I learn, Cannibalization is  basically a company store stealing customers from one of their other  stores. It like people or animals that feed off from each other. I  have some examples of cannibalization that I would like to share. "

d

Cannibalization an example

Victor's examples are Example 1. Wal-Mart "I work at Wal-Mart and everyone is talking about profit sharing this year. Wal-Mart has a profit sharing program for their  employees and the amount of profit sharing the employees receives depends on  how well the store does at the end of the year. I work at the Wal-Mart  located in South Common and many people are saying that our profit sharing won't be much this year because a new Wal-Mart SuperCenter is recently built in Heartland. The sales in my Wal-Mart have declined because many  customer from the Heartland area that used to shop at my Wal-Mart are  taking their business to the Heartland instead - it much closer.  So, the cannibalization in this example is probably the Wal-Mart  SuperCenter stealing customer from my local Wal-mart."

d

Cannibalization an example

Example 2. NBA at the Olympics "I remember reading an article entitle " An online failure  for NBC at the Olympic". This is a time in which NBC is supposed to make  big profit, however that is not the case. NBC ratings for the Olympics were excellent, but the internet revenue has been small with just 5.75  million. This is because many users prefer to experience the Olympics on  television rather then watch web video. The television medium has  stolen the traffic from the NBC internet website. The cannibalization  in this example is probably the television rating for the Olympics  compared to the web video."

d
 

WTGR notes "In my local grocery store i noticed a tall display featuring Heinz Ketchup right beside the Loblaws "President's Choice" ketchup and the sign above the display showed the price difference, and begged customers to save money and buy the cheaper "President's Choice" ketchup. "If I was the Heinz rep to that store I'd definitely consider this cannibalization and worry that such a marketing tactic would cause a decline in sales of the Heinz brand - even if Heinz is also producing the "President's Choice" ketchup brand for Loblaws to sell."

 
 
 

...

witiger.com	CONTACT I MAIN PAGE I NEWS GALLERY I E-BIZ SHORTCUTS I INT'L BIZ SHORTCUTS I MKTG&BUSINESS SHORTCUTS I TEACHING SCHEDULE
	.
	MISTAKES ITEXTS USED I IMAGES I RANK IDISCLAIMER I STUDENT CONTRIBUTORS I FORMER STUDENTS I PUBLICATIONS I TIPS I
	.