Question

Sierra Hats Inc. previously sold just ten types of hats and cornered the market in hat sales for years. Eight months ago the company decided to add 20 new hats and since many of the hats are similar to the original ten hats, sales have been lost on the existing brands. In other words, sales of the new hats have ________ the existing brands.

Answer 1

The sales of the new hats by Sierra Hats Inc have cannibalized the existing brands.

Cannibalization is a term in marketing strategy and refers to the reduction in sales volume, revenue or market share of a product because of the introduction of new product by same producer.

In the question, we observed that the introduction of the new hats have reduced the performance of existing brands.

Therefore, the sales of the new hats by Sierra Hats Inc have cannibalized the existing brands.

Learn more about Cannibalization here

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