To prevent cannibalization, what guardrails should be set for a price promotion?

• A. Guardrails on promotion depth/duration
• B. Cross-elasticities with other products
• C. Communication of value
• D. Ensuring alternative channels remain profitable

Answer: (A)

Cannibalization happens when a price promotion on one product simply shifts sales away from other items in the same brand, without expanding overall demand or profit. The most direct way to prevent that is to set guardrails on how deep the discount can go and how long the promotion lasts. Limiting promotion depth stops the promotion from being strong enough to lure customers away from core items, while limiting duration prevents a short-term impulse promo from permanently reordering purchase patterns. Together, these controls keep promotions from eroding margins on other SKUs and keep overall profitability intact.

While understanding cross-elasticities, communicating value, or keeping channels profitable are important, they don’t directly cap a specific promotion’s impact on other products. Cross-elasticities help forecast effects, value communication shapes customer perception, and channel profitability concerns relate to distribution—none of these by themselves set the concrete limits that prevent cannibalization.