Financial Glossary: Corporate Cannibalism


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Corporate Cannibalism

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Corporate Cannibalism

Corporate Cannibalism

An act of self-infringement upon market share by corporations through the issuance of new products.

Also known as "market cannibalization".

Corporate cannibalism occurs when companies introduce new products into a market where these products are already established. In effect, the new products are competing against their own incumbent products. It is the practice (on the part of a company) of slashing the price of a product or introducing a new product into a market of established product categories. If a company is practicing market cannibalization, it is seen to be eating its own market and in so doing, hoping to get a bigger share of it.

Market cannibalism can be distinguished from corporate cannibalism: in the latter case the Corporation is cannibalizing its own market share.

A typical example of corporate cannibalism is auto company producing electrical vehicles. EVs are simpler, cleaner, cheaper (on large scale of production), more economical and easier to build than the ordinary ICE automobiles. Thus a EV Will be much more competitive than all other automobiles produced by that company.

Posted by EBD Group AG

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