Threat of substitutes

The risk that customers meet the same need a different way, which caps prices even when direct competition is limited.

The important substitutes are usually not the obvious ones. Cinema competes with streaming, but it also competes with any other evening out. A bank branch competes with an application, and the application competes with not needing the service at all.

The measurable trace is a price ceiling that appears without a competitor appearing. When a company cannot raise prices despite a strong position, something is substituting for it.

Ask what the customer did before this product existed.