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What is the Threat of Substitution?
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:
- Is it easy for consumers to switch to another product/service?
- What are the major substitute products?
- What are the trends in market share of the product and its substitutes?
- What are the growth rates?
- What are the price/value characteristics?
- Are consumer preferences or consumer demographics changing?
Identify Company Products & Brands
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:
EDGAR Company Filings
The Securities and Exchange Commission's (SEC) Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system provides free access to company filings, including 10-K reports.
Perform a Company search. Under "Company Details,' choose "SEC Filings." Use ""Filing Type filters" to access 10K reports.
Perform a Company Search. Select "Filings" tab. Use "Click here for EDGAR Search" to narrow results to 10Ks.
Perform Company Search. Choose "SEC Filings" link under "Financials" heading of the Company Index. On left-side of page, "Refine By Form Type" by choosing "Annual Reports -10-K."
LEXISNEXIS CORPORATE AFFILIATIONS
To locate information about a company's products and their brand names in LexisNexis® Corporate Affiliations, go to:
Market Share of Products and/or Brands
Consumer Preferences/Consumer Demographics
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
- Claritas lifestyle segmentation systems define every household in the U.S. by distinct lifestyle types, called "segments," to provide a comprehensive picture of who lives where and what they are like. Information on Claritas PRIZM Premier (shopping), Claritas P$YCLE (financial and technology preferences), and Claritas ConneXions (media habits). Case studies on using segmentations. FAQs. ZIP Code Look-up tool.
ESRI Tapestry Segmentation
- Divides all U.S. residential neighborhoods into segments based upon socioeconomic & demographic characteristics which are then grouped in LifeMode Summary Groups describing lifestyle & lifestage, and Urbanization Summary Groups describing affluence & population density. An ESRI ZIP Code Look-up tool is available.
- Reports on global innovations
- Source for global innovation intelligence
Brand Equity News & Research
Search Google with the term "challenger brands" and a product/industry to find trends.
Innovation and New Product News
Business Source Complete
Search using one of these subjects: technological innovation, new product development, product launches, innovations in business, research & development or disruptive technologies.