Product cannibalization due to new product has been studied by many researchers and hence before studying the cannibalization issue due to remanufactured product, it is necessary to understand the cannibalization due to launching of a new product in detail. Study of Product Life Cycle (PLC) of an existing product is very much necessary for successful launching of a new product. Perfect Launching of new product is necessary for getting maximum share in the market for remanufacturing industries, otherwise early or late cannibalization may cause huge loss for organization (Ferrer and Swaminathan, 2006; Vasudevan et al., 2011). Demand of new product depends upon the product life cycle of existing products. Prediction of the demand of new product and its perfect launching is not easy task for any company (Ostlin et al., 2009). Study of disposal rate of existing product t is also another crucial issue for remanufacturing industries. Perfect launching of new product and its product life cycle play a major role for getting maximum profit share. It is also interesting to study the product cannibalization due to entry of new products (Hermansson and Sundin., 2005; Butner et al., 2006; Sarvary and Wassenhove., 2009; Terkar et al., 2011).
Small and Medium Enterprises (SMEs) constantly work under tremendous pressure to generate revenue and improve operating efficiency. Challenges in meeting targets include changes in consumer’s demographics, competition in mature markets, expenditure on services, rise of private labels and the low success rate of new brands (Butner et al.,2006). Today market is in the era of innovation and heavy competition. It is pervasive and influencing on every industry or company. Moreover, companies think about virtually every aspect of research, marketing, PDP, suppliers, materials management, manufacturing, distribution, warranty & defect management, maintenance repair and overhaul, & product end-of- life & disposal (Kotler and Wong., 2006). Innovation is global and without any boundaries. Its growth is being nurtured by active investments, grants, and tax incentive policies of established industrialized nations and emerging economies (Kotler and Armstrong., 2002). In this era of innovation, the Perfect Product Launch, Product Cannibalization, Product Lifecycle Management (PLM) and Product life Cycle management (PLCM) are now viewed in a different and expanded way (Terkar et al., 2011).
All products and services have certain life cycles. The life cycle refers to the period from the product’s first launch into the market until its final withdrawal and it is split up in phases (Vasudevan et al., 2011). Product cannibalization occurs when a company decides to replace an existing product and introduce a new one in its position in the market (Ioannis, 2002). This is due to newly introduced technologies and it is most common in LSI. In product life cycle, there is negative and positive cannibalization (Ioannis, 2002; Mazumdar et al., 1996). In the normal case of cannibalization, an improved version of a product replaces an existing product as the product reaches its sale peak in the market. The new product is sold at a high price to sustain the sales, as the old product approaches the end of its life cycle (Terkar et al ., 2011). Nevertheless, there are times when companies have introduced a new version of a product, when the existing product has only started to grow. In this way the company sustains peak sales all the time and does not wait for the existing product to enter its maturity phase. The trick in cannibalization is to know when and why to implement it, since bad, late or early cannibalization can lead to bad result for company sales (Terkar et al., 2011 ; Gupta, 2011). Product Cannibalization refers to reduction in sales volume, sales revenue, or market share of existing product as a result of the introduction of a new product and/or remanufactured product by same manufacturer or by competitors. Normally product cannibalization may be considered negative, even in the context of a carefully planned strategy. It can be efficient by eventually raising the total sales volume of a company’s product or superior consumer demands. Cannibalization is a key consideration in Product Portfolio Analysis (PPM). Product cannibalization is defined as the process by which a new product gains sale by diverting sales from an existing product (Frederic, 2001). Cannibalization is a real threat for vast majority, prevalence of line extensions as manufacturers struggle to maximize the leverage of their brand equity (Mason and Milne, 1994; Terkar et al., 2011).
Product Life Cycle
It is important to study the Product Life Cycle and study of the product sale behavior with respective to profit is very interesting. Need of Product Cannibalization depends upon the condition of the market. Here, perfect product cannibalization is the trick for getting more profit. Perfect product development and perfect product launching are essential for getting maximum profit in product life cycle. In this context, study of strategies related to perfect product development and perfect product launching are very necessary.
DR. KOMAL J KHATTER
Associate Professor
