Cannibalize, or else your rivals will

If Chapter 12, "more complex and realistic pricing," we give advice on how to price commonly owned products: First, raise both prices above that which would be implied by simple (MR=MC) pricing because common ownership reduces the MR of each product. Second, try to "move" the products apart in product space to reduce cannibalization. If you cannot do this, do NOT make the mistake of suppressing or delaying new product introduction.

Historically, firms ... have tried to hang on to declining market shares for too long before deciding to introduce new products that compete with their own. Kodak, for example, refused for years to introduce the 35mm camera for fear of cannibalising its older products. Likewise, years later, it was late to embrace the market for digital imagery. Bausch & Lomb invented the soft contact lens but failed to launch it because the firm did not want to lose the lucrative business of selling the drops that hard lenses require. As a result, Johnson & Johnson swept into soft lenses, and the market for hard lenses (and their drops) disappeared.