SWOT Analysis: Threatening Substitute Products - dummies

SWOT Analysis: Threatening Substitute Products

By Erica Olsen

With the continual flux of technologies and the speed of development, the threat of substitute products taking the place of yours is greater than ever before. Substitute products can be an area of opportunity or an area of threat, depending on when you catch wind of the change. If you’re on top of it, you can produce the new product. If you’re behind the change curve, you may likely see a decline in demand. The probability that customers will move to a new product or service is based on three areas:

  • The customers’ willingness to change or do without (cigarettes)

  • The price and performance of the new product (mail to e-mail)

  • The generic substitution (vacation to staycation)

The popularity of satellite radio has exploded over the past several years, with the two main companies — XM Radio and Sirius — grabbing market share as fast as possible. With more and more consumers tuning in to satellites instead of radio tuners, traditional radio stations are finding their listener base declining rapidly. Who knows the ultimate fate of AM and FM, but media companies are scrambling to reposition themselves because a substitute product is whisking its customers away.