Cannibalization

For the act or practice of eating members of one's own species, see Cannibalism.

In marketing

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.

In project evaluation, the estimated profit generated from the new product must be reduced by the earnings on the lost sales.

In maintaining or building equipment

In maintenance of mechanical or electronic equipment, "cannibalization" refers to the practice of obtaining the spare parts necessary to repair one device by removing them from another similar device, rather than from a pool of spare parts. The device used as a source of spare parts is often crippled as a result, if only temporarily, in order to allow the recipient device to function properly again. Cannibalization can usually occur only with devices that use interchangeable parts.

Sometimes particularly in electronic experimentation, parts will be removed from defective, obsolete or surplus equipment for use in building new unrelated equipment. Ham radio operators will often refer to their stash of partly disassembled donor equipment as the junk box even though the collection may take up an entire basement or outbuilding. Removing parts from old equipment is sometimes the only way for an individual to obtain some types of parts, either because they are no longer made, or can only be ordered in large quantiles.

At the end of the Second world war a large quantity of high quality, but unusable war surplus equipment such as radar devices made a ready source of parts to build radio equipment.

Cannibalization can be a sign of extreme budgetary pressure that prevents the purchase of adequate spare parts, or some other emergency such as time constraints and physical distance from a source of spare parts. At other times, it is a reflection of a surplus of equipment relative to current needs or usage, making some devices unnecessary except as a source of parts for cannibalization. An example of this is the many 30- and 40-year-old railway locomotives being run by small operators in the United Kingdom. These operators will often buy more locomotives than they actually require, and keep a number of them stored as a source of spare parts.

Sometimes cannibalization can occur if the equipment in question is obsolete, with the manufacturer(s) of the device or the spare parts no longer in existence. For example, Union Pacific's 4-8-4 locomotive 838 is used as a spare parts source for 844 since the type has been out of production for decades and the builder itself is no longer in existence.

Gourt Home::Gourt :: Cannibalization

In marketing

In maintaining or building equipment