Brand Cannibalization Examples

The following academic paper highlights the up-to-date issues and questions of Brand Cannibalization Examples. This sample provides just some ideas on how this topic can be analyzed and discussed.

In brand marketing, the term “cannibalization” refers to a new product eating into the profits of a current product from the same company. It’s a fairly common business strategy, and while the idea of cannibalizing your own product sounds bad, it can actually be a successful business practice. In 2010 for example, when Apple introduced the iPad, it took sales away from the original Mac computer.

However, the iPad ultimately led to an expanded market for consumer computing hardware and was quite a successful venture for Apple.

Brand management is a process that involves every part, bit and employee of the company to capture the true essence of the brand. Brand Value cannot be built in a day. It is a long process of building inseparable attributes in consumers mind. Consumers take time to adjust and bond well with a brand.

They, like any other child, need to be taken care of, served well and be communicated as well as educated with the correct knowledge at every touch point. Over a period of time, as the brand ages, the loyalty within their minds evolve into an inseparable bond. Hence, brand Value cannot be created by the company alone; it requires to be co-created by the consumers too. The process of brand management is not the role of the marketing department but of the top management of the company.

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The paper will discuss the theory of creating a brand strategy for a company as a tool for managing a brand and developing it. Now at Present the role of branding is of great importance in the business world and its role is quite hard to ignore. Branding helps differentiate goods or services of one firm from another. It is because of branding that customers are able to identify and prefer the products and services of one firm over another. The paper will examine a uniform knowledge of what the brand stands for and how it will be communicated to the general public and serve as a framework for strategic decision-making for the company management and employees.

What Is Cannibalization

Brands are in stores, in advertisements, television commercials and with the internet, they are everywhere we look, while browsing through the vast networks of our interests. In brand management, brand contains manager-based and customer-based functions. Brand managers usually stand from the marketer’s and the firm’s perspectives, stressing the perceptions they accrue to a brand to promote products, differentiate companies from their competitors and satisfy short-term commercial goals [5, 6]. From the customer’s point of view, brands not only sign to differentiate products from competing goods but also a semiotic engine producing meaning and values [13]. Therefore a brand is the product as it is experienced and valued in social life, and branding refers to all the activities that shape customer perceptions, particularly the firm’s activities. Today brand management’s importance lays company′s outside the business itself, in the minds of potential buyers [16]. These values of brands are reflected in the, anchors of company. Products are introduced, they live and disappear but brands never ended [16]. The term “brand” holds multiple meanings. According to John Murphy, founder of Interbrand, a brand is not only an actual product, but also the unique property of a specific owner.

Brands are increasingly considered to be the primary capital in many businesses. Sterne [26] argues that “a brand is not a name. A brand is not a positioning statement. It is not a marketing message. It is a promise made by a company to its customers and supported by that company. Sterne’s statement indicated a phenomenon of how consumers give their passion and loyalty to a brand. We can explain this phenomenon in a more straight forward way via taking an example of Apple. Apple maintains its consumers by creating a brand connecting with an image of imagination, design and innovation, which is the key to its survival. This phenomenon indicates a brand has an additional value that enables marketers to maintain current consumers and attract new consumers. This value is “brand equity.” Brand equity means raising brand awareness, maintaining brand loyalty, building up positive associations about brand, and spread product or service information via words-of-mouth communication. How to achieve these goals via optimizing of brand management resources becomes the challenge for today’s marketers [1]. Hence, the paper begins by giving a background of the happening of brand and brand equity valuation are the centre of interest of both academic and business experts in today’s world. The paper also highlights how a company can build, and use a brand in order to obtain and sustain the competitive advantage in the market place. Therefore a brand is a name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers.

Branding is the main important strategy of any business. Branding or Brand is not important only for companies but it takes equal importance for customers. Brand for customers will indicate commitment towards quality from sellers there by reducing time spent in coming to a purchase decision. Brand for companies will indicate a sort of benchmark in quality as well as customer expectation, a point of differentiation from competitors and a steady stream of profit. The brand value can be shown in to four dimensions like Reputation Value, Relationship Value, Experiential Value, and Symbolic Value.

Working with a scarcity mentality will help maximize returns for every dollar spent by answering the question, “Is this the best way to spend dollars on marketing my brand, or is this money better spent elsewhere to generate greater returns?” Like Starbucks, instead of spending money on TV advertising, clusters an area with its stores, increasing total revenue and market share. This was contrary to what established retailing houses did, which was to avoid placing stores near each other so as not to cannibalize sales at existing outlets. For Starbucks, doing so resulted in reduced supply costs and made management of the stores cheaper, which more than made up for sales lost to cannibalization. Thus, funding for expansion from internal cash flow was a judicious use of money. Until recently, Starbucks spent just 1% of its revenues on marketing and advertising (compared to more than 10% for companies of the same size).