Threat of Substitutes Product Essay Example

The Threat of Substitute Products

The Impact of Switching Costs

The concept of switching costs refers to the negative cost that consumers face when they decide to change their suppliers, brands, or products (Investopedia 2012).

There are four methods of switching costs involved when substituting to another product: learning cost, opportunity cost, implementation cost, and conversion cost. Each method has its own values, but these costs do not apply to the electronic industry (Lash 2010). For individuals willing to switch to another brand, they typically spend more time searching for the product they prefer.

Shopping in physical stores and online stores both require a significant amount of time to find the desired item. Sometimes, people waste their leisure time browsing around and looking for substitute products. This process also involves comparing prices between different products.

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Buyer loyalty

Buyer or consumer loyalty refers to the ability to attract and retain consumers, encouraging them to make purchases frequently and in larger quantities. It also involves them bringing in other potential consumers, such as friends or relatives. Building consumer loyalty is crucial for establishing a long-term mutually beneficial relationship with consumers. There are various ways to cultivate consumer loyalty, including email marketing, remembering and catering to consumer preferences, and providing rewards. In the electronic industry, consumer loyalty plays a particularly significant role.

When a brand has a reputation for advanced technology, high-quality materials, and an established reputation, customers are more likely to trust and continue shopping from that brand. This is evident in Australia, where the sales of iPads exceeded 250,000 (Colley 2010). The Australian population is familiar with the excellence of

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