Each person at the time of shopping more than once chose from different but equally necessary things cheaper. These are interchangeable products. Let us give them a scientific definition.
Interchangeable goods are substitutes, characterized in that the increase in the price of one of the substitutes causes an increase in demand for the other substitute.
In simple terms, a product whose price has risen is already in less demand than other goods that have a lower price.
From the foregoing, we can conclude that price gives demand the main direction.
So, interchangeable products, examples:
1. Consider an average family of three. Mother needs to buy a down jacket for 7 thousand rubles, and his son winter boots for 3 thousand rubles. It is not possible for the family to purchase both at once, but the down jacket and boots are equally important. What thing will the family buy first? Boots, because they are cheaper.
2. Again, an average family of three goes on a picnic. It is necessary to choose water, the question arises of which? Lemon-flavored water costs 10 rubles, and strawberry-flavored water costs 7 rubles. Lemon-flavored water and strawberry-flavored water are interchangeable products. Which family will choose? Water with strawberry flavor worth 7 rubles.
But interchangeable goods can change places among themselves. Back to the water. A week later, manufacturers of lemon-flavored water will notice that sales have declined, and when analyzing the consumer market, it will become clear why. The question will be what to do? How to beat competitors? In this case, there are two legitimate ways out of this situation:
1. Lower or equalize the price.
Water with strawberry flavor costs 7 rubles, at an equal price, the buyer will choose the product according to taste preference. If the price is lower, for example, 6 rubles, of course, lemon-flavored water will be more popular than strawberry-flavored water. But how will the price of 6 rubles affect the enterprise? Payback will become less, therefore, profit will decrease, which in turn will lead to a reduction in the wages of workers or a reduction in the number of employees. Both that, and another will reduce the volume of supply of goods to stores, and hence the volume of sales. Ultimately, low price, but high demand can lead to bankruptcy of the enterprise. Strawberry-flavored water will no longer have a competitor, which benefits its producers. This means that the option of lowering or equalizing the price is not suitable, as it is fraught with sad consequences.
2. Making the product unique.
You can not change the price of the goods, but go a more creative and profitable way - to make the goods unique. Let the buyer receive a gift together with lemon-flavored water - a chewing gum or a straw. You can do it another way: let lemon water be sparkling. In both cases, the price of 10 rubles will be fully justified, and lemon-flavored water and strawberry-flavored water will cease to be competitors.
To summarize our example, the conclusion: when one of them acquires uniqueness, interchangeable goods cease to be interchangeable, which is beneficial for both enterprises.
So, acquiring a product with uniqueness is an excellent way out of competition. Let's give unique products a scientific definition.
Unique goods are products characterized by individual unique properties and not participating in competition issues.
Unfortunately for all manufacturers, there is one important rule of the market: all products cannot be unique. As mentioned above, unique products do not participate in competition, if there is no competition, there is no incentive to update, therefore, there will be no progress. But society must develop, society requires a new one, which means that all enterprises of unique goods without updating their products will sooner or later go bankrupt.