Evaluating Cannibalization Effects in Multi-Product FirmsA Strategic and Analytical Perspective on Internal Market Competition

Abstract

Product cannibalization occurs when a firm’s new product draws sales away from its existing products instead of generating incremental demand. While often perceived negatively, cannibalization is not inherently harmful and can, under certain conditions, represent successful market self-disruption and portfolio optimization. This study develops a comprehensive conceptual evaluation of cannibalization effects in multi-product firms by integrating insights from microeconomic theory, marketing strategy, and product portfolio management. Using a systematic literature synthesis, the paper categorizes types of cannibalization, identifies key determinants, and examines methods for measuring and managing cannibalization. A multi-layered conceptual framework is proposed that links product overlap, consumer substitution, competitive structure, and managerial strategy to financial and strategic outcomes. The study demonstrates that effective cannibalization management can lead to long-term growth, defensive innovation, and improved portfolio efficiency. Managerial implications and future research directions are discussed