Question
The ease of product substitution significantly affects industry competition. If a product can be easily substituted, it means that there are similar products in the market that can serve the same purpose. This increases competition as customers have more options to choose from. Furthermore, if the switching costs are low, customers can easily switch from one product to another, making the market more competitive. Companies in such industries need to constantly innovate and improve their products to maintain their market share.
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There are large volume purchases Other products can easily substitute the product Lower switching costs Low-profit buyers tend to lower purchasing costs Buyers threaten backward integration as a bargaining lever The product does not affect the quality of the buyer's products The buyer has complete information about demand, market prices, and supplier costs
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