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Pricing and Retail Definitions for eCommerce

Substitute goods

Category/tag: Marketing

Added 24.08.2022

The term substitute goods refers to goods or products that are completely or partially substitutes for each other in the way they are used. In this context, the use of one good (product A) may necessarily substitute for the use of the other good (product B). An example of a substitutive relationship is butter and margarine.

The price policy effects of substitute goods have positive cross-price elasticity. This means that a price change (e.g. price reduction) of one good (product A) not only leads to a (in this case positive) change in sales of this good, but also - in the opposite direction - to a negative change in sales of the complementary good (product B), without a price change being present here.