The substitution strategy dilemma: substitute selection versus substitute effectiveness

Many brands build market share by acting as a substitute when competitive brands become undesirable or difficult to obtain. Notably, prior research offers competing strategic recommendations for marketers hoping to encourage consumers to engage in substitution. Past research examining substitute selection—measuring consumers’ beliefs about how well one product will substitute for another—suggests that marketers should offer replacements that are similar to the initially preferred product. In contrast, research examining substitute effectiveness—the consequences of substitution—suggests that differentiated brands will enjoy more long-term success. We integrate these two streams of research, explaining why there is a mismatch between substitute selection and substitute effectiveness, replicating and showing boundary conditions for the effects, and testing a managerial intervention that encourages consumers to choose more dissimilar (and more effective) substitutes.