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Can Existing Products be Threatened by Replacement Products or Services?

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Increasingly, more providers changed their products on the basis of the wishes of the user, thereby creating new products and services that competed with the old products and services. Examples include Nokia, which allowed its mobile phone to remain solely a telephone, while Apple turned its phone into a computer with Internet access. Restaurants offered meals in the restaurant itself or as a takeaway option, while Thuisbezorgd offered to bring meals to the home. Webshops enabled customers to order online and try out the product at home, while the shops on the high street clung onto their physical locations and limited opening hours. E-Bikes changed the options people had regarding bicycles, thereby offering possibilities to new entrants such as Stella. Traditional providers remained sluggish and were slow to make changes to their distribution model (via dealers), while customers started to buy more online (fietsenwinkel.nl), or the shop actually came to the customers (as with Stella). In many cases, traditional providers were too late in identifying the threat posed by substitute products and services. In the old sales model too little account is taken of the buying elements of the product (sales arguments must change to purchase arguments).

These buying arguments comprise the physical product, the services and perception. This used to be regarded as a single entity, whereby one party (the manufacturer) supplied the product and usually ensured there was a positive perception with a product guarantee and advertising for the product (brands). The shop/dealer took care of the delivery, along with some extra services. This is the strength of a dealer/shop in the linear supply chain. Due to the role of the Internet in the buying process (both with webshops and platforms as well as through searches) these days it provides the information that allows customers to become more assertive, while webshops offer services that regular shops cannot provide. As a result, a shop has become merely a distribution point for products. The costs of the physical location, however, are too high. This creates unequal competition with on the one hand manufacturers, who started to supply directly (via a platform, an aggregator, such as Bol.com or Aamazon.com or a Multisided platform, an MSP platform), and with webshops on the other hand, which due to the possibility of direct communication have more information on the customers and their buying motives. The physical sales outlets have to figure out their role anew or will disappear.1

End Of Competition, The: The Impact Of The Network Economy

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