Which phenomenon occurs when brands from the same company compete directly with each other?

Which phenomenon occurs when brands from the same company compete directly with each other?

• A. Product differentiation
• B. Cost-plus pricing
• C. Product cannibalization
• D. Prototype

Answer: (C)

When brands from the same company compete directly with each other, the situation is called product cannibalization. It happens when a new or existing brand in the same category targets the same customers and fulfills similar needs, causing customers to shift their purchases within the company’s own lineup rather than to an outside competitor. This can reduce the sales of the older brand, and sometimes even the company's overall profits if the new brand doesn’t fully offset the lost sales. The overlap arises because both brands share the same market space, distribution channels, and consumer attention. Sometimes this is intentional to capture trends or preempt competitors, but the phenomenon itself describes internal competition rather than genuine, external differentiation. By comparison, product differentiation is about making offerings distinct to reduce overlap; cost-plus pricing is a pricing method; and a prototype is a preliminary model used for testing ideas.

When brands from the same company compete directly with each other, the situation is called product cannibalization. It happens when a new or existing brand in the same category targets the same customers and fulfills similar needs, causing customers to shift their purchases within the company’s own lineup rather than to an outside competitor. This can reduce the sales of the older brand, and sometimes even the company's overall profits if the new brand doesn’t fully offset the lost sales. The overlap arises because both brands share the same market space, distribution channels, and consumer attention. Sometimes this is intentional to capture trends or preempt competitors, but the phenomenon itself describes internal competition rather than genuine, external differentiation. By comparison, product differentiation is about making offerings distinct to reduce overlap; cost-plus pricing is a pricing method; and a prototype is a preliminary model used for testing ideas.