The ultimate guide to leveraging cannibalization analysis
Blog post from Felt
Cannibalization analysis is a strategic tool used by businesses to evaluate the potential negative impact of expanding into new locations or launching new products that might compete with existing ones, thus diluting demand and weakening overall performance. This analysis employs geospatial methods to model overlap in service areas, assess customer flow, and identify gaps in market coverage to determine whether expansions will genuinely increase reach and revenue or merely redistribute existing demand. Cannibalization occurs when a company's new offerings draw customers away from its own existing products or locations, leading to increased operational costs without corresponding revenue growth, and weakening marketing efficacy. By analyzing catchment areas, network overlaps, and customer behavior, businesses can predict and mitigate the risks associated with internal competition, ensuring that expansions result in net value rather than internal rivalry. Platforms like Felt facilitate this process by enabling teams to map and visualize trade areas, model potential overlaps, and align on data-driven decisions collaboratively, thus reducing risks and optimizing resource allocation.
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