Question

Capitalizing on its high brand equity, ReInforay, an established retail and grocery brand, introduces a new product, ReNew, which is an improved variant of its existing hair protein serum, ReVitalize. After the successful rollout and high sales of ReNew, ReInforay soon discovers that the sales volume of the existing ReVitalize product have dropped significantly. Which of the following phenomena does this scenario exemplify?

market development
market diversification
cannibalization
rebranding
co-branding

Answer 1

The scenario in which ReInforay's new product ReNew leads to a decline in sales of its existing product ReVitalize is an example of cannibalization, not market development, market diversification, rebranding, nor co-branding.

Step-by-step explanation:

When ReInforay introduced a new product named ReNew, an improved variant of its existing hair protein serum ReVitalize, and saw high sales for the new product but a significant drop in sales for ReVitalize, this scenario exemplifies cannibalization. Cannibalization occurs when a company's new product eats into the sales of one of its older products. This can often result from market strategies where a well-respected brand leverages its brand equity to introduce upgrades or variations, inadvertently shifting consumer demand from the original product to the new offering.

This phenomenon is different from market development, where a company expands into new areas; market diversification, where a new product line is introduced; rebranding, which involves changing the brand's identity; or co-branding, where two brands collaborate on a product.