Cannibalization refers to the phenomenon where a company's new product introduction leads to a reduction in sales of its existing products, often seen in businesses with strong, established brand names.
The loss of sales of an existing brand when a new item or product family is introduced is referred to as cannibalization. This occurs when a company's new product eats into the sales of one of its older products, rather than solely gaining sales from competing brands.
It's a common issue in monopolistic competition where multiple products of the same brand compete against each other, as well as against products of different brands. Cannibalization is seen in the context where a well-respected brand name has been built up over many years, but a new product intrudes on the market segment of an existing product from the same company, thereby splitting the sales.