A New Product Introduced By Company

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A new product introduced by company always impacts its existing products of same or similar category. Cannibalization in economics is defined as “The negative impact of a company 's new product on the sales performance of its existing related products. Market cannibalization refers to a situation where a new product "eats" up the sales and demand of an existing product.” (Investopedia). The energy bars are one of the best selling products of HPC. The introduction of the new Energy Gel product will cannibalize the sales of energy bar and may reduce the company’s overall profitability. Though in future, the energy gel will provide HPC with product differentiation approach, but in short term it will impact the sales of the best selling energy bars. Mr. Leiter the product manager of the energy bars projects that energy gel will reduce the energy bar sales by roughly 10% per year. That argument does not holds true as first year the energy gel will only be producing 4.2 Million units and against project 43.3 Million units of energy bar. The segment and demography of the energy gel and energy bar are slightly different, not everyone who buys energy gel will buy it in lieu of energy bar which is best selling product at present and it may take few years before market will get use and acquainted by the advantageous energy gel product. Since, no big companies are in energy gel market, its more probable that HPC’s energy gel product may put a dent on the other small companies selling

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