What is the role of substitute products?

Substitute products play a crucial role in the market by providing alternatives that can fulfill the same needs or desires as the original product but often at lower prices. When consumers have access to substitute products, they are more likely to seek out options that offer better value for their money. This competition can drive prices down and lead to improved quality, as companies must innovate and enhance their offerings to retain customers.

In addition to cost savings, substitutes also promote variety and choice for consumers. This can lead to greater overall satisfaction as people can select products that best suit their preferences and budgets. The presence of substitutes in the market encourages businesses to stay proactive in meeting consumer needs, as failing to do so may result in losing market share to alternative products.

While other answers may touch on aspects of market dynamics, they do not capture the salient role of substitutes in providing consumers with cost-effective alternatives that empower their purchasing decisions.