Understanding Substitute Products in Management
Overview
This video discusses the concept of substitute products in management, emphasizing their role in market analysis and decision-making. It explores how various products can serve as substitutes based on their functions, using Coca-Cola as a primary example to illustrate the broader implications of substitute products in different contexts.
Key Points
- Definition of Substitute Products: Substitute products are those that perform equal or similar functions to another product. Understanding this concept is crucial in management and market analysis. For a deeper understanding of how these products fit into broader strategic frameworks, refer to Understanding Strategic Analysis: Key Concepts in Business Growth.
- Porter's Five Forces: Substitute products are one of the key forces in Porter's Five Forces model, which helps analyze competition and market dynamics. This model is essential for understanding the competitive landscape, as discussed in the context of various business strategies.
- Examples of Substitutes:
- Coca-Cola: While Pepsi is a direct substitute, other beverages like Tesco Cola, Virgin Cola, and even water or juice can serve as substitutes depending on the consumer's needs. The implications of these choices can be further explored in Exploring the Product Life Cycle in Today's Market.
- Functionality: The reasons consumers choose Coca-Cola can vary, including thirst, sweetness, or as a mixer for alcoholic drinks. Each reason opens up different substitute options, such as Red Bull for energy or chocolate for sweetness. Understanding these dynamics is crucial, as highlighted in Understanding Product Life Cycle (PLC) and Its Impact on Business.
- Broader Implications: The analysis of substitute products should consider all potential alternatives that fulfill similar consumer needs, which can significantly impact market strategies and product positioning. This comprehensive approach can reveal surprising substitutes and inform better management decisions.
Conclusion
Understanding substitute products goes beyond simple comparisons; it requires a deep dive into consumer behavior and the various functions products serve in different contexts. This comprehensive approach can reveal surprising substitutes and inform better management decisions.
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
Heads up!
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