Question

PowerLife Inc. is a food company that has several product lines, including dairy products and powdered fruit-flavored drink mixes. The company recently introduced ready-to-drink packaged fruit juices. The company is now experiencing a fall in the sales of its powdered drink mix as an increasing number of consumers are preferring to buy the packaged juice instead. Which of the following is illustrated in this scenario?

1. Product bundling
2. Canniblization
3. Segmentation
4. Market penetration

Answer 1

2. Cannibalization

Step-by-step explanation:

Cannibalization is the situation whereby an organization or a producer faces reduction in sales volume, sales revenue or market share of one product as a result of the introduction of a new product to the market by thesame organization or producer. It occurs as a result of developing a new product or service that takes away market share from one or more of the existing products or services. In this case, the ready to drink package fruit juice is stealing the market share of powdered drink mix.

Answer 2

The correct option is Cannibalization

Step-by-step explanation:

Cannibalization is the reduction in sales of an existing brand due to introduction of a new brand which could occur because both products share the same customer base or that they are competing brands due to the need they serve.

This implies that the new product is winning the hearts of the older product's customers rather than capture a new set of consumers,hence it could be said that the strategy of new product introduction has failed to yield the desired results since market share overall is not growing.