James Schramko here. Today, I’m going to talk about cannibalization. So cannibalization is a marketing term and often it’s talked about in relation to pricing and product lineups. And what can happen is, sometimes, you can actually have one product start eating into another one. I want to give you an example.
Many, many years ago, I remember a customer walked into the Mercedes-Benz dealership and they used a black American Express to pay for their car. And everyone was talking about it. It was very special. We didn’t even know if these things were real until we saw one. And then a few years later, I quit my job and I actually got invited to get a black American Express, a Centurion card. And it was pretty special and I valued things like that at that time because these were signposts that I was making it. I was on my way. And I got this big box and in it was a titanium card. It was metal, a black metal card, and it was very rare. And when you would use it at shops, people would say, “Oh, Wow!” It was remarkable!
And then over the years, when they brought in the chips that you put into the machine, they turned the card back into plastic. And then they’ve sort of elevated the Platinum card benefits so there’s virtually no difference that I can tell between a Platinum card and a black American Express. Not only that, the Platinum card is less than a third of the price of a black card. And these days, this is the funny thing, the Platinum card is actually metal just like the old black ones.
So here’s the difference here: black plastic, metal Platinum card. So American Express, what they’ve done is actually squeeze out the specialty. The wow factor of the black card is basically faded. And someone like me won’t justify paying a premium for no other difference other than a color. And almost every other credit card out there, all the banks have some kind of a card that’s black, that looks (for old intents and purposes) exactly the same as the black Amex. So a couple of lessons there: if you’re first to market and you’ve got something special, try and preserve that. And watch out for cannibalization because often if you bring your products too close together, people won’t see why they would pay a premium.
Hope this has been a useful tip.
I’m James Schramko. This is SuperFastBusiness.
See our products HERE