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Group 3

Mohini Sahu A07

Prabhu Das A20

Rohan Singh A26

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1/11/2015Food Brands - Cannibalization 2

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The first documents the growing percentage of LaTreat

sales connected with promotional offers

A second graph disaggregates LaTreat's promotion-

related sales by four buyer categories Bill had created

from BehaviorScan data

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"Loyalists" werelong-time

customers whoincreased their

purchases inresponse to a

deal

"Trial users"bought LaTreat

forthe first timebecause of thepromotion; whoseemed to be

turning

into loyalcustomers

"Accelerators“customers: Used

coupons orrebates to

stock up onproduct theywould have

bought anyway

"Switch-on-deal“ were

nonusers:Bought LaTreatwhen there

werepromotions butdemonstrated

little

long-termloyalty

A majority ofredeemers fall

into the last

two categories

 “Loyalists"accountfor a shrinking

percentage

of sales

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Conflict of opinion arising in the top management

regarding the cannibalization of the product

Bill approaches Bob Murphy; Barbara Mayer

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WHAT WENT WRONG

WITH PARADISE FOODS 

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“STATUS QUO” is the

religion for the senior

management

It sent a message

that it is not serious

about new products

Withdrawal of a new

product is the right

decision” Personal Interest over

Organizational goalsand objectives

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1/11/2015Food Brands - Cannibalization 11

Not prepared forcompetition

COMPETITOR CAME UP WITH A RIVALPRODUCT CALLED SWEET FANTASY

SWEET FANTASY HAD A QUICK ANDSUCCESSFUL PRODUCT LAUNCH

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No marketing research techniques were used appropriately and

effectively

No consumer behaviour data on the frozen specialty dessert

category

No proper research done by Bill Horten

Lacked Objectivity

Experience in applying complex research

The perspective that comes from having wrestled with many

previous launches

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  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

Eg: Introduction of diet coke may eat up some of its sales ofregular coke

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vs

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KEEP YOUR

CANNIBALS INTHE FAMILY

JERRY DELLA FEMINA 

IF YOU MUST BE THE VICTIM OF ACANNIBAL, MAKE SURE THE CANNIBAL IS A

MEMBER OF YOUR FAMILY

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SWEET DREAM NEEDS

A CHAMPION TO BEAT

THE ABOMINABLE NO

MEN

JERRY DELLA FEMINA 

EVERY NEW PRODUCT NEEDS A CHAMPIONIN UPPER MANAGEMENT

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New power tools of the packaged goods industry

Supermarket scanners

Electronic test market facilities

Computer based marketing models

Easier for companies to get data, rather thaninterpreting with necessary sophistication

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Marketing plan to launch a new Carpet

Deodorizer

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• They Became their own cannibals

•  Knocked off own product

•  Priced it a few cents below that of competitors

•  Introduced product within four months

What did they use?

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Quick planning &

executionHighly visible

advertising launch

They cut their

budget down to

nothing

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Incorporating a new character, Joe’s way of functioning 

 A test marketing analyst with a deal of experience in new

product launches

Designing a research program after consulting with the

managers

Would help in reducing the risk of launching Sweet Dream

and increase brand competition

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La Treat alone

La Treat + Sweet Dream

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Eating into existing product line?

Attracting new consumers?

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Extrapolating from test markets-difficult

Freezer space availability

Attention from sales force & distributors

Regular & heavy promotion required

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 Joe, would anticipate cannibalization

Developing “source of volume” 

He would help in forecasting Sweet Dream’s post launchperformance based on the test market results and Paradise’sagenda for the product

 Joe can present the final presentation to the managingcommittee as they would require (long or short)

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Successful Cannibalization Successful Line  Extensions

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LaTreat is now an oldproduct in a novelty

driven category 

Fate of the entire

frozen specialitiesline is endangered 

New premium-pricedindulgent dessert

required 

LaTreat will anywaysbe cannibalized by

competitors 

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GraduallyCannibalize

LaTreat

Favorableabsolute

contributionmargin level

Overallprofits

increasewith more

SKUs

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More shelf space

Incentivize retailers

Coordinate strategy tomaximize combined

profits

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Priority: Retainingexisting customers 

PenetrativeMarketing

Improved share infrozen specialties

category 

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End divisionbetween new &

establishedproducts 

Senior managersshould be new

productchampions 

Formulatestrategic plansto strengthen

productofferings 

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Generate consumerattitude data 

Are product offeringspalatable? 

Perception of SweetDream relative to

LaTreat

Differentiate productcharacteristics 

Taste 

Texture 

Calorie content 

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Why there is a market opportunity for

Sweet Dream in the first place

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1/11/2015Food Brands - Cannibalization 33Bill Horton Senior Management

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• Attacking LaTreat with the mined data

• Barbara’s career thrives on established products 

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No launch decision should be based on a false sense

of security rather than hard data

Novelty is critical asset in frozen goods category

Product Life Cycle should not be miscalculated

If need be, be your own cannibal

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