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A cannibalization zone occurs when two outlets of the same brand are in direct competition, resulting in decreased sales for each. This situation manifests as an overlap in the areas where potential customers are located. Cannibalization zones are primarily observed in banking and insurance agency networks, chain stores, and franchises. They are generally analyzed during location planning or relocation studies and are used to define advertising and marketing investment strategies to avoid wasting resources. In the example given, the cannibalization zone is represented by the hatching on the map.

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