I have a question regarding cannibalization which I have a bit of a hard time understanding currently. The question in short is whether cannibalization is something you only talk about regarding revenues or if it should also take into account the variable cost that is also gone with the cannibalization?
A gym wants to open up another gym facility 2km away from its current facility. Should I in this case mention cannibalization as a loss of revenues from the first gym or as a own branch under profits where the effect from cannibalization is really: #Number of members leaving first gym * contribution margin/member
Which one is most correct?