Companies are concerned that substitute products or services may displace their own. The threat of substitution is high when rivals, or companies outside the industry, offer more attractive and/or lower cost products. Buyers then have the opportunity to make a performance/price trade-off. The cost of switching is also a factor. If it is high, the threat of substitution is low.
Questions to ask include:
Companies describe their business and list their business segments, products and brands in Item 1 of Form 10-K which is filed annually with the Securities & Exchange Commission (SEC).
Form 10-K may be obtained through corporate websites by clicking on links such as "About Us" or "Investor Relations." The following databases are also authoritative sources for Form 10-K:
Demographic data provides information about basic human characteristics of a market or population. Demographic segmentation divides consumers into groups based on variables such as age, gender, income, occupation, stage in lifecycle, generation, nationality, race or ethnicity, religion, and social class.
Psychographics, also known as the IAO variable (interest, activities, and opinions), is not quantitative and does not use simple numbers and figures. It classifies the target market's feeling toward consumer goods (e.g., what they want & why, how they carry on their everyday lives, what they value, how they make choices when it comes to what they purchase, etc.) by groups of people based on attitudes or beliefs and is sometimes referred to as "lifestyles." This category builds on demographics which look at groups based on quantifiable things like race, age, income, etc.
CONSUMER SEGMENTATION SYSTEMS