Understanding Substitute Products in Management

hi today i would like to tell you about substitute products something which

seems to be basics of the basics of management but is very often used when you describe

different methods methodologies in management one of them is for example five forces by

porter in which one of the fours is using substitute products because many times

the question is how or which products are substituted to what i offer which practically means

which products offer or perform same or similar functions in our very

basic colloquial way of thinking we always think about the examples like butter or marge

but when you start thinking a bit more deep about that problem try to imagine that you have a case like

coca-cola the question is what is a substitute product to cover cola what comes first into our mind is pepsi

right yeah of course that's a substitute product but the question in here is

once again perform equal or similar functions the question is which functions

uh performs coca-cola you buy it when you want to have the cola taste then if there is no

coca-cola you can select right pepsi but you can also select the products like tesco cola virgin cola and

most of the drinks with a cola in its name but that's what you do when you want to

have the product with the taste of cola is it the only function why people buy coca-cola

what happens if you have super hot day you went into the shop you're touristy and there is no cola in there does it

mean that in every situation you decide to leave the shop

if i'm thirsty it's a very hot summer day i can buy water instead of cola

i can buy juice i can buy beer or i can buy tea why because if i'm thirsty that

pure performs equal or similar functions like cola right that means that tea or water might be a substitute

product to call what else thinking about the same example

if you decide to do it in the way that what else what are the reasons other reasons why

people buy coal for some people they buy cola if they need to drink or just to have

something which is sweet and you need to drink something which is sweet that will give you the energy what can

you use in here well there is no cola in the shop i can decide to buy

a red bull there is no red bull in the shop and i still need something that gives me

some energy i can decide to buy a green tea or i can just decide to buy a chocolate

yes chocolate might be a substitute product to cola as well because it performs equal or similar

functions what else in here you can think that you can buy cola if you want to mix

it with some alcohol at night sitting in the club somewhere

if there is no cola in there what else can you use you can decide to buy a red bull and mix

for example vodka with red bull or you can decide to buy juice and use it instead of cola

when you think about it at all the examples they are i mean the main role of them

were just to show you that key aspect in here is the description of substitute

what the substituted product means it performs equal or similar functions don't use

only your colloquial way of thinking then take into consideration what has same or similar functions to

our product and then you might be surprised that even chocolate

or beer might be a substitute product to cola and it's worth to take all of them into

consideration because all these functions are important

because they decide in which areas we sell our product and in the end you might be surprised

that not all people buy coca-cola only to have a taste of cola but they buy it because of

millions of other reasons and for each reason there might be a different substitute

products which you should take into consideration with when you analyze the market thank

you