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15 Examples of a Threat Of Substitutes

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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 & Healthcare

In 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 & Dentists

In theory, some leap forward in the effectiveness of toothpaste could cause reduced demand for dentists.

Radio & Television

An 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 & Cars

A culture can shift towards living close to the things people need and travel with bicycles as opposed to cars.

Restaurants & Supermarkets

If people eat out more, supermarket sales go down.

Nightlife & Games

As games become more entertaining people may socialize in virtual worlds as opposed to going out at night.

Video Rentals & Streaming Media

Video 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 & VOIP

Long distance telephone services were threatened by internet-based substitutes as early as 1995 including email, messaging and voice over IP.

Education & Travel

If college is perceived as overpriced and out-of-touch with real life, people may spend their money on travel experiences.

Flights & Trains

In 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 Water

If people have confidence in the quality of their local water supply they may stop buying as much bottled water.

Software & Outsourcing

Firms can purchase software to automate their processes or they can outsource the entire process.

Hotels & Short-term Rentals

Hotels that face competition from short term rentals of apartments and homes.

Robots & Labor

In 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 & Transport

The only hotel on a prime beach may face declining demand if competing hotels sponsor a convenient and free shuttle service to the beach.


The threat of substitutes is the potential for consumers to shift to new goods and services to meet existing needs.
Overview: Threat Of Substitutes
The potential that customers will replace your product or service with a substitute good.
Related Concepts
Next: Substitute Goods
More about competition:
Captive Market
Competitive Environment
Competitive Factors
Competitive Parity
Competitive Pressure
Competitive Threat
Cost Competition
Fair Competition
Greed Is Good
Imperfect Competition
Market Change
Market Economy
Outrun The Bear
Perfect Competition
Substitute Good
More ...
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