Question

When prisly inc. introduced a liquid detergent in the market, it noticed that the sales of its detergent powder significantly declined. prisly inc.'s loyal customers who previously purchased detergent powder switched to liquid detergent. as a result, prisly inc. was forced to reduce production of its detergent powder. this scenario exemplifies?

Answer 1

The sales of Prisly Inc.'s detergent powder significantly declined after the introduction of liquid detergent in the market. This exemplifies cannibalization. Cannibalization occurs when sales of a new product cut into sales of a firm's existing products.