What is brand cannibalization? Why is it dangerous to the retailer?

What will be an ideal response?

ANSWER: One risk associated with store promotions is brand cannibalization: a situation whereby the promotion intended to draw in new customers simply shifts current customers from buying one brand to another brand. Brand cannibalization is dangerous to the retailer for two reasons. First, the retailer incurs significant expense in executing the promotion itself. Second, the promotion creates inaccurate sales forecasts for both the promoted and cannibalized products, leading to stockouts of the promoted brand and financial losses from discounting surplus inventory of the cannibalized brand. The latter losses can sometimes be significantly greater than the cost of the promotion itself. Therefore, retail managers should design their promotional activities carefully, with gaining new customers being the primary objective.