When your new product ‘eats’ sales your older product that is called ‘cannibalisation’, and it’s the crucial element to take into account when launching new products.
Procter & Gamble is a company that has become expert in limiting uncertainty through rigorous testing and analysis.
There is usually a high uncertainty in any new product launch so I was curious when I saw a new Ariel product in my supermarket. I don’t want to bore with details about detergents, but in a few words this is a product that can be used with any detergent, so basically you can buy a cheap supermarket detergent (50% cheaper than Ariel?) and adding this product you will get Ariel whiteness.
Many would think this product would cannibalise Ariel sales thinking why would people keep buying Ariel if they can get Ariel benefits much cheaper. Well you never know for sure what will happen when the product hit the shelves but it is fair to assume that the P&G has thought and tested the following:
– Will grow the amount of people who use the Ariel brand? This is a cheaper product so Ariel non-buyers (those who buy other brands) might give it a try… and if they like it (wow, it does improve the results!) they might realise that it’s worth trying the real thing. With retailer brands (ie private labels) being more and more popular, this might be a very smart way to get the consumers of retailer brands to give Ariel a try…
– Will it increase the awareness of the Ariel? More space on the shelves with the Ariel brand… and less for competition.
– Will it increase the
Just remember that P&G leaves very little to chance. Significant launches can easily take 3 years of preparation because the product must be a winner and all risks need to have been identified and dealt with.
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