Why Is Trust Important for Your Business?

Marketing Viewpoint by Ruth Winett

The Threat of Substitutes -
a Challenge and an Opportunityhy

What, No More Red M&Ms?

When products or services become unavailable or less desirable for various reasons, customers and clients find substitutes. If your business senses that customers or clients are seeking substitute solutions, it is time to be creative and develop new or improved offerings.

Why People Seek Substitutes

Features/benefits—switching from a long-time mechanic to one who also gives your car a quick checkup when changing the oil
Price—streaming on iPads and dropping a $200+ a month cable subscription.
Convenience—going to urgent care clinics, not emergency rooms or primary care doctors.
Changes in tastes and preferences—migrating to cell phones while abandoning landline phones.
Values—purchasing electric vehicles or hybrids.
Politics—boycotting a company with unacceptable politics and buying from the company’s competitors instead.
Scarcity—making eggless cakes if bird flu makes eggs expensive or unavailable.
Disappointing service—changing CPAs to make sure your taxes are filed on time.
Regulations--replacing incandescent bulbs with LED bulbs.
Technology—replacing consultants and using AI to bring market research projects in-house.

Food Industry Substitutes: Opportunities and Challenges

Home-brewed Starbucks - Starbucks sells ground roast coffee in its cafés and supermarkets to attract those customers who want the Starbucks taste without the expense and the travel time. A twelve-ounce bag of Starbucks’ coffee beans averages about $13 and makes about 34 cups for about $0.38 per cup, compared with an in-store serving ranging from $2.25-$7.50 each, depending on type of preparation and size of drink.

M&Ms and Food Dyes - Most major food companies are complying with directives from RFK Jr., HHS Secretary, to substitute beets and other more expensive plant-based food dyes for harmful chemical dyes. Mars, makers of M&Ms, and Kellogg, makers of Froot Loops, are resisting the directive, however. M&Ms colored with red dye 2 are especially attractive to children. "“Masking that [beet] taste is really, really difficult…. If people are celebrating and eating treats, they don’t want to be tasting beets," observes Kirk Vashaw of Spangler Candy.

Communicate regularly with your clients and customers to identify changes in tastes and preferences. Such changes can signal a growing interest in finding substitutes for your offerings. Then, provide choices that address concerns, such as high prices. Developing new offerings with compelling new features or new services also helps attract new customers.

While substitutes challenge many businesses, they represent an opportunity for others. With emphasis on sustainability, opportunities are arising for new, reusable products, such as cheaper disposable containers for take-out foods and hybrid and electric trucks and buses. In addition, AI companies are providing new services for business, technology, healthcare, and other organizations.

Sources:

Kennedy’s Battle Against Food Dyes Hits a Roadblock: M&M’s

ChatGPT provided prices for Starbucks products.

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