Define cannibalization in the context of business.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Cannibalization, in the context of business, occurs when a company comes out with a new product that takes customers away from another product that the firm sells.  For example, when a firm like Barnes and Noble creates a major online presence for itself, it can take customers away from its physical stores.  Companies often see cannibalization as a bad thing, but it can have good points as well.  Cannibalization can be a good way of preparing for the future by moving customers away from an outdated product and towards a product that will have more staying power.  In the example of Barnes and Noble, you can argue that the company has to cannibalize customers from its physical stores to ensure that they do not simply leave the stores and go to some other internet seller like Amazon.