Threat of substitute products
Threat of Substitutes
▪ With so many firms in the quick service/burger industry, low switching costs, similar products, and healthier options, the threat of substitutes is very high.
▪ There are many substitutes in this industry. Since there are a wide variety of products that people can choose, they could either be substituted by MDC Burgers, beverages, dairy products and others.
Threat of Substitutes
Definition of substitute products: product that fulfil the same generic important product abilities.
The generic product of fast food is mainly considered as convenience.
Convenience and availability are the main drivers for choosing fast food. But this is backed up by focus on value. Since the market as a whole consists of many differentiated fast food companies, then the customers are used to having the option of choosing the best value products.
The threat of substitute products is mainly found in the frozen food section of the supermarkets.
Frozen reheatable prepared food offers a strong competitive strength against regular take away fast food. Since the whole “convenience” industry is still growing as a result of people’s trend towards having less time to spend in the kitchen.
Since consumers like having a large variety of convenience food (Datamonitor 2006a) at hand, and the market size is a multi billion dollar industry, then the fast food industry can expect severe competition from the frozen reheatable prepared food to get a bite of the market.
The value of the substitute products in general matches the fast food products and the consumer preferences of the consumers. The substitute product offers both cheap value meals and quality products for both ends of the quality scale that the fast food industry normally targets. Furthermore it offers healthy alternatives to match the consumer needs and wishes.
But still the frozen food industry has a image problem with their food. Even though...