Substitute product
A substitute product or service meets a similar customer need through a different offering or approach. Availability and attractiveness of substitutes can constrain pricing and influence strategy, even when suppliers are not direct rivals in the narrowly defined industry. Assess switching costs, performance and customer preferences. A substitute differs from a complementary product used together with the original.
Worked example
Remote meetings can substitute for some business travel; they are not simply another airline brand.
Common mistake
Do not classify every competitor as a substitute under industry analysis or assume customers switch solely on price.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | APM | Supporting | September 2026–June 2027 |
| ACCA | BT | Direct | September 2026–June 2027 |
| ACCA | PM | Supporting | September 2026–June 2027 |
| ACCA | SBL | Direct | September 2026–June 2027 |
| FIA | FBT | Direct | September 2026–June 2027 |