Netflix is a famous example of cannibalization in marketing. They began by sending DVDs to people's homes after renting them online. When more people liked Netflix, the company decided to do something new. In 2007, they started letting users watch movies and shows online, right away, using the internet. It was a truly impressive change.
So, how did they cope with internal competition? When they introduced streaming, they were worried it might hurt their DVD rental business. They thought people might choose the easier and cheaper streaming instead of renting DVDs, which made more money.
Netflix had a plan to deal with this problem:
- Gentle Shift. They didn't stop the DVD service right away. They let both DVD rental and streaming exist together. People could pick what they liked.
- Differentiated Content. At first, the streaming had fewer shows and movies. They put special stuff on each service to make people want both or pick the one they liked more.
- Cost Strategy. They made different prices for streaming and DVDs. So, people who liked DVDs could still use them, and others could pick streaming for less money.
Curious about the results it led Netflix to? As time passed, more and more people liked using Netflix for streaming because it was easy and had lots of shows and movies. But fewer people used the DVD rental service because they liked streaming more. So, Netflix started to focus more on streaming than DVDs.
Long story short, by planning carefully, Netflix was able to switch from DVDs to streaming and become a big player in digital entertainment. Today, lots of people use Netflix for streaming all over the world. It shows that if you change with the times and handle internal competition challenges like a pro, it can actually be good for business. So, when things change, it's not always a bad thing, as Netflix has proven.
Below, you’ll find a list of some more examples of internal competition:
- Coca-Cola and the Cola Market. Coca-Cola's introduction of multiple cola brands, such as Diet Coke and Coca-Cola Zero, led to internal competition and confusion among consumers in the cola market.
- Apple's iPhone Models. Apple's release of various iPhone models created overlapping target audiences and features, potentially cannibalizing sales of older models.
- Amazon's Kindle vs. Fire Tablets. Amazon's Kindle e-readers and Fire tablets initially targeted distinct markets. Over time, their features began to overlap, causing internal competition.
All these case studies highlight how ASO cannibalization can occur across various industries and the importance of managing it strategically to maintain a strong market presence.