Certified Professional Category Analyst (CPCA) Practice Questions 2025 – All-In-One Guide to Exam Success

The phenomenon where a retailer introduces a discounted new item in the widget category, leading buyers to switch from existing products to this new offering, is known as cannibalization. Cannibalization occurs when a new product takes sales away from an existing product within the same category or brand, rather than gaining new customers or increasing overall sales in the market. This is particularly common in retail settings, where discounts or promotions on new items entice customers to try the new option, often at the expense of previously purchased items.

In this scenario, the introduction of the discounted item has effectively redirected consumer demand from other products in the widget category to the newly introduced item, illustrating a classic case of cannibalization within the retailer’s product lineup. Understanding this concept is crucial for retailers, as it impacts inventory management, overall sales strategies, and profitability analysis.

The other choices do not accurately describe this situation. Incremental contribution refers to the additional profit generated by new products rather than the loss of sales from established products. Product line extension involves adding new items under a brand that may not directly compete with existing products, while brand extension refers to introducing a new product in a different category using an established brand name.