Whenever a product line or a product family is extended, there is a risk of ________, which occurs when sales of an existing brand decline as the firm's current customers switch to the new product.
A) product line contraction
B) disintermediation
C) cannibalization
D) brand inequity
E) brand equity

Question

Quizplus · Accepted Answer

Cannibalization occurs when sales of an existing product decline due to the introduction of a new product within the same product line or family. This new product may attract the existing customers of the older product, resulting in a decrease in sales of the older product. Option A, product line contraction, refers to a reduction in the number of products offered by a firm. Disintermediation (B) refers to the elimination of intermediaries in a distribution channel. Brand equity and inequity (D and E) refer to the perceived value and strength of a brand.

Whenever a Product Line or a Product Family Is Extended