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A threat of substitutes is the potential that customers will replace your product or service with something completely different outside your market.Food & HealthcareIn the long run, healthy food can be a substitute for healthcare. For example, if a nation began to consume less sugar demand for diabetes treatments may drop.
Toothpaste & DentistsIn theory, some leap forward in the effectiveness of toothpaste could cause reduced demand for dentists.Radio & TelevisionAn improvement in technology that causes a growing market to suddenly contract such as the impact of the television on radio stations in the 1950s whereby TV quickly became the dominant form of home entertainment.Bicycles & CarsA culture can shift towards living close to the things people need and travel with bicycles as opposed to cars.
Restaurants & SupermarketsIf people eat out more, supermarket sales go down.Nightlife & GamesAs games become more entertaining people may socialize in virtual worlds as opposed to going out at night.Video Rentals & Streaming MediaVideo rental shops were largely replaced by internet services in the early 2000s. The first wave of this were internet-based mail order rentals with no late fees. Later, these services switched to streaming media.
Long Distance & VOIPLong distance telephone services were threatened by internet-based substitutes as early as 1995 including email, messaging and voice over IP.Education & TravelIf college is perceived as overpriced and out-of-touch with real life, people may spend their money on travel experiences.Flights & TrainsIn theory, high speed trains could compete with air travel on many domestic routes when the full round trip time including transit to an airport is considered.
Bottled Water & Tap WaterIf people have confidence in the quality of their local water supply they may stop buying as much bottled water.Software & OutsourcingFirms can purchase software to automate their processes or they can outsource the entire process.Hotels & Short-term RentalsHotels that face competition from short term rentals of apartments and homes.Robots & LaborIn the labor market, robots and automation are often perceived as a substitute for the work of employees. Historically, automation has caused a shift in demand for skill sets but not necessarily a drop in the overall employment rate.
Locations & TransportThe only hotel on a prime beach may face declining demand if competing hotels sponsor a convenient and free shuttle service to the beach.|
Type | | Definition | The potential that customers will replace your product or service with a substitute good. | Related Concepts | |
Competition
This is the complete list of articles we have written about competition.
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