In 1991, through Frito-Lay, PepsiCo launched Sun Chips, a multi-cereal snack, as a healthy alternative to the classic Lay’s chips. However, according to the test market results, about 30% of Sun Chips sales came not from the new audience, but from consumers of Lay’s, Doritos and other Frito-Lay brands who switched to the healthier Sun Chips. Eventually, PepsiCo changed the brand’s positioning and distinguished it as a functional multi-cereal snack, while Lay’s remained a mass indulgence, which diminished the conflict between the brands.
This example shows that when you launch a new brand in an established portfolio, it may take sales from existing ones instead of attracting new buyers. When consumers see similar messages from different brands, they choose based on price, not value. In my experience, brand competition starts inside the company, not the market.
Why Brand Cannibalization Happens
There are typical reasons why a new brand may start competing with the existing ones rather than strengthen the portfolio:
Lack of clear positioning. Brands are associated with the needs they meet. For example, quickly get rid of a headache, boost your energy or emphasize your status. Positioning determines how strong this association will be: it will motivate people to choose your product in a particular situation. If multiple brands solve the same problem, cannibalization is inevitable.
Imagine a cosmetics company with a premium brand that promises skin renewal at the cellular level, appealing to consumers seeking quality at a fair price. The company then launches a super-premium brand with the same promise but in a more expensive segment. Even if it offers better content, the cheaper brand is likely to win—because the value of the more expensive one isn’t clearly justified.
Brands from different segments are sold in the same channels. The place where the consumer encounters the brand carries the same message as the design or price. If a brand claims exclusivity, it should appear in premium or specialized outlets. Placed next to standard-segment products, it loses its value perception.
An exception may be a trial, when a company temporarily enters various sales channels to increase the brand’s outreach at the launch stage. However, the reason for the distribution that devalues brand perception may be that the sales team does not understand its positioning. They then explain to the buyers the difference between the products, highlighting that they are the same thing, but more expensive. As a result, a premium brand can end up among mass market products.
Insufficient investment in brand development. At some point, a brand may seem stable—with rising sales, strong recognition and loyal customers. The marketing budget is then shifted toward smaller brands, assuming the strong one will hold its ground while others grow. In practice, however, the big brand slowly loses market share, and the smaller ones don’t make up for the loss.
Brand perception devaluation due to discounts. This risk is especially high for brands in the premium segment and above. The optimal discount for them is 10–15%. But sometimes, in order to fulfill its sales plan, a company goes for more aggressive price cuts: up to 20–30% or more. If these promotions become regular because the sales plan is growing, then the premium brand falls to the standard level in terms of price and this changes its consumer perception.
Decisions are made without considering the marketing strategy. A recent McKinsey study showed that 70% of CEOs evaluate marketing through revenue growth and margins, while only 35% of CMOs use the same metrics. This discrepancy in metrics leads to lack of coordination: top management may decide to launch new products, change pricing strategies or expand distribution channels based on financial performance alone and ignore the marketing strategy. In the long run, this can erode brand positioning.
How to Avoid Cannibalization
It is those brands that understand why and for what purpose they are chosen that grow. To structure your portfolio around the consumer’s motivation to buy, you can use the Jobs to be Done framework, which is based on the idea that people hire products or brands to get a specific task done, be it practical, emotional or social. People don’t want abstract benefits; they want results: soda doesn’t cause calorie anxiety and skin looks well-groomed with minimal effort. If your product helps solve a problem of this kind, the consumer will choose it.
I work with a portfolio of pet food brands across different segments—standard, premium and super-premium. When we researched the motivations of pet parents, we found that there is a growing segment of people who want to pamper their pets and offer them a new taste experience that brings emotion. The classic snacks available on the market didn’t meet this need. We created a brand with a wide assortment of products for pampering, but also added super-premium meals for complete nutrition.
The audience understood the new brand thanks to its clear positioning. It’s a product that helps show love to a pet and treat them—just like people treat themselves to a dessert after a hard day. And even though the brand includes complete nutrition, it doesn’t take share from the more established super-premium brand, which speaks to a different motivation—supporting the pet’s health and longevity through high-quality daily nutrition. It’s another type of care, based on a deep sense of responsibility for the animal’s well-being.
When each brand is clearly linked to a distinct motivation, they don’t compete for the same audience or consumption context. In my case, one brand is about health, longevity and everyday choices; the other—about emotional connection and moments of joy.
To avoid cannibalization, it’s important to understand what job people are “hiring” your brand to do—and use that to shape its positioning. Strengthen the brand association: even products in the same segment can be perceived differently if each one consistently communicates its unique idea. With a clear message, brands can coexist within the same portfolio without interfering with each other.
Igor Blystiv is a Global Marketing and Innovation Officer at pet food manufacturer Kormotech.
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