Threat of Alternate Product

Alternate product refers to a product developed by the other industry but is capable of providing functions similar to those of the original product. For example, electronic musical instruments in place of piano or laser disk in place of video are the typical example. Rental car service is also another type of alternate product in place of the automobile as a product.

The alternate products which have shown remarkable trend of better price-performance ratio and those supplied by the industries which have shown very high yields need careful attention. Presence of an alternate product does not allow the cost hike easily even when there is a lot of demand. Therefore, the latent profits get restricted inspite of all the efforts. A joint action by all the members is very effective in the case of an industry facing the threat of offensive by the alternate products.