A Study on Brand Extension and Cannibalization of Color Cosmetics

Purpose: TIncorrect brand expansion could cause image failure of existing brands and create cannibalization among family brands. It could reduce sales and decrease market efficiency, bringing about a worst-case fatal loss scenario. Methods: This study used the Bass diffusion model, positioning map analysis, and cannibalization analysis by introducing a cross analysis to understand the cannibalization phenomenon within the field of color cosmetics. Specifically, we focused on subsidiaries of a big cosmetics company. We administered questionnaires to 286 female college students who used color cosmetics. We then performed a frequency analysis using the Statistical Package for the Social Sciences to carry out a demographic statistical analysis and biplot analysis. We also performed positioning map analysis and cross analysis to understand color cosmetics brand loyalty, transfer intention, breakaway rate, future market share rate, and the cannibalization phenomenon. Results: The Bass Diffusion Model for cannibalization analysis showed that cannibalization was present throughout all family groups. The cannibalization phenomenon happened only at MISSHA and A'fieu color cosmetics of Able C&C cosmetics brand, according to positioning map analysis. All of the cross-analysis estimation alternatives exhibited a cannibalization phenomenon. Conclusion: These results hold implications for expanded brand portfolio performance measures in an intensely competitive market, launching new products, launching new brands in the new market, analyzing the market competition structure with competitive brands, and developing strategies to defend cannibalization.