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Understanding substitute products can help you choose which products to offer and which products can help your company retain customers as the market fluctuates. In this article, we discuss what substitute goods are, and we explore 20 examples of substitute goods and services.
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測試版A substitute product means a primary goods alternative, backup, or replacement. It is related to any antiques, a combination of goods, or a commodity that, in typical situations, would be a more popular item alternative or replacement without affecting the appearance, composition, or the resulting product utility.
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測試版Direct substitute goods have a characteristic known as high cross-elasticity of demand.This means that two products can be easily interchanged. For example, there may be a branded bag of flour and an own-branded one. Customers’ preferences may be heavily
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測試版Direct and indirect competition Close substitute goods are in indirect competition, i.e., they are similar products that target the same customer group and satisfy the same needs. For example, a frozen yogurt shop and an ice cream shop sell different goods.
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測試版Let's take an example: A company's primary product is a brand of cola. Primary Product: The cola itself. Substitute Products: Other cola brands (Pepsi, etc.), other carbonated soft drinks (ginger ale, lemon-lime soda), juices, water, tea. All of these can replace
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測試版For example, if they are aware of substitute goods, they can make smart decisions when prices fluctuate, ensuring that they get the best value for their money. The concept of cross-price elasticity To understand the relationship between complementary and substitute goods, we need to first understand the concept of cross-price elasticity.
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測試版If substitute products are highly differentiated and are of high quality, a consumer is likely to switch to a product that offers better quality. For example, users of aesthetic products like skin lightening creams are very sensitive to quality.
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測試版Primary Product: Oven - used for baking goods (Standard, Electronic/Manual, Expensive) Substitute Product: Traditional Oven/ "Hornohan" - also used for baking goods (Traditional. Manual, Cheaper, can be Improvised) Primary Product: Aircon - cooling device
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測試版Close Substitute Goods If two goods are close substitutes, there will be a high cross-elasticity of demand. Example, if the price of Sainsbury’s flour increases 10%, demand for Hovis flour may increase by 20%. To consumers, there is little difference between the
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測試版Examples of Substitute Products The following products are often used interchangeably by consumers since they either find them almost the same or the price for one product increases. McDonald’s — KFC and Burger King. Coke — Pepsi. iPhone — Samsung ...
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