Cheaper Substitutes Are Hazardous to Your Profits
Availability of Substitutes and Price Elasticity
Price/Performance Trade-off
A firm’s biggest challenge is maximizing profits in a world in which consumers have alternatives. Consumers have choices: they can buy an identical product from a rival firm, they can look for reasonable substitutes that offer a better value, or they can do without entirely. Firms need to identify industries in which their income opportunities will be greater and more secure over the long term. They also need proactive strategies that allow them to establish and maintain a competitive advantage for as long as possible.
The first of the Five Forces that we will discuss is the threat of substitute goods. ...
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