Substitution+Effect

The substitution effect refers to a consumer's ability to substitute other products for the focal brand. The greater the avaliability of substitute products, the higher the price elasticity of demand for any given product will be.



This picture is a great example of the substitution effect. There are plenty of close substitutes for bread. I usually buy Sara Lee, however, Target has raised the price this week. Since the Target brand is more cost efficient, that will be the one I will buy. Caresse Ward