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Originally Posted by CWatkinsNash
Out of the mouths of CEOs... When they use the negative word "cannibalise" it's just more proof that they were woefully unprepared.
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No, it means that the new format is not taking away business from competitors, it's taking away business from the existing sales structure.
It's a commonly used term, and she is using it properly.
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Originally Posted by CWatkinsNash
....Honeywell would plan accordingly, keep a close eye on the wrench market and adjust production as needed. What they would NOT do is compensate by pulling their products from tool rental shops or padlock the new wrenches to the purchaser so that no one else can use them.
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Your wrench example does not match the paper/ebook example. Here's a better one.
Honeywell puts out a series of high-quality wrenches for $1000, and makes $100 in profit off of each set. A competitor puts out a set of wrenches that are not quite as good for $600, and Honeywell's wrench sales plummet. Honeywell decides to compete, and puts out a set of lower-quality wrenches for $500, and makes $50 in profit off of each set. The lower-quality wrenches sell very well, but the higher-end sales continue to fall.
In that scenario, Honeywell chose to sacrifice the higher-end higher-margin sales to its own lower-cost lower-margin sales, rather than let the competition take its business away. Any time a customer chooses a Honeywell lower-end wrench set over the higher-end wrench set, that is a "cannibalized" sale.
It is very rare for any business that is actually good at what it does to be able to turn around its entire business model on a dime. In fact, that isn't always a good thing to do -- since a likely result is that the company will expend lots of time, energy, and scarce resources pursuing the Unprofitable and Unsustainable Fad of the Week.
Oh, and I'm guessing that at least the American publishers realized well over a year ago that ebooks were going to cannibalize print sales. That's why they leaped at Apple (and Google) offering them agency pricing, and proceeded to ram it down Amazon's throat.