cannibalization
In marketing, 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 an important 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.
