What is cannibalization in SAP SCM-APO-FCS - Demand Planning?

SAP Term: cannibalization

• Component: SCM-APO-FCS

• Component Name: Demand Planning

• Description: Phenomenon whereby sales of a product have a negative effect on - literally "eat into" - sales of another product in the same category.

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• Key Concepts: 
  Cannibalization is a term used in SAP SCM-APO-FCS Demand Planning to describe the situation when one product takes away sales from another product within the same company. This can happen when a company introduces a new product that is similar to an existing one, or when a company changes the pricing of its products. 
  
  How to use it: 
  In SAP SCM-APO-FCS Demand Planning, cannibalization can be used to analyze the impact of introducing a new product or changing the pricing of existing products. The system can be used to simulate different scenarios and predict how much sales will be taken away from existing products. This can help companies make informed decisions about their product offerings and pricing strategies. 
  
  Tips & Tricks: 
  When using SAP SCM-APO-FCS Demand Planning to analyze cannibalization, it is important to consider all factors that could affect sales, such as customer preferences, competitive offerings, and market trends. It is also important to consider the long-term effects of introducing a new product or changing pricing, as these decisions can have lasting impacts on a company’s bottom line. 
  
  Related Information: 
  Cannibalization is closely related to another concept in SAP SCM-APO-FCS Demand Planning called “cross-elasticity”. Cross-elasticity measures the degree to which changes in one product’s price will affect the demand for another product. This can be used to analyze how changes in pricing or product offerings will affect overall sales and profits.