Coinage and Cannibalization

As weird as these two words may sound , these are two terms from Consumer Goods Industry .

Coinage:
In India when a quick single bite chocolates are launched they are usually for Re.1 or Rs.2  or may be Rs.5 ,have you wondered why. Well this is more to do with Reserver Bank of India .

The reason is because we have currency coins of those denominations . That puts these companies in a fix, as they cannot change price from say Rs.2 to Rs.3 , as doing so would be disastrous and they would immediately lose market share. So either they would need to reduce size of the chocolate or try some other internal cost cutting mechanism

This constraint where the product price need to match the denomination of a currency coin is called Coinage

Cannibalization:
This term has nothing remotely violent about it . This term is used when a certain new product launched by a company starts eating into the market share of another product of the same company . Net result,company sees that sales of its new product has increased but it does not see any increase in its profits and later realises other product has lost market share to its new product

This is a nightmare for any company as the intent was that the new product was suppose to take the market share from its competitor not from its own product