What are Substitute Products?
- Products that can replace another product
- A substitute product’s demand usually fluctuates depending on the costs of the product it is substituting
Life Application/Analogy
Say you open a tea store next to a coffee shop. Both drinks work in similar effect, so your store provides a substitute product for tea. If the coffee shop raises its prices then there will be an expected increase in customers going to your store per the law of demand.
The Biggest Example of Substitute Products in the Real World
- McDonald’s → Burger King
- Coke → Pepsi
- iPhone → Samsung Galaxy
- Playstation → Xbox
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