The threat of potential substitutes is larger when:
A)the product market is differentiated.
B)the substitutes are more expensive.
C)switching costs are low.
D)barriers to entry are high.

Question

Quizplus · Accepted Answer

When switching costs are low, it is easier for customers to switch to potential substitutes, making the threat of substitutes much larger. Therefore, choice C is the correct answer. The other options, such as product market differentiation, expensive substitutes, and high barriers to entry, are not necessarily indicators of a larger threat of substitutes.

The Threat of Potential Substitutes Is Larger When