What term does Porter use to describe firms offering alternatives to a consumer's preferred product?

Porter uses the term "substitutes" to refer to firms offering alternatives to a consumer's preferred product. The concept of substitutes is essential in understanding competitive dynamics within an industry. Substitutes can fulfill the same need or function but may come from a different category of products. For instance, if a consumer prefers drinking cola, products like lemon-lime soda or iced tea can serve as substitutes.

The presence of substitutes can limit a firm's ability to raise prices, as consumers may switch to alternatives if a product becomes too costly or unappealing. This aspect of competition is crucial for strategic management, as businesses must constantly assess the options available to consumers and how they can differentiate their offerings.

The other concepts, while relevant in different contexts, do not specifically address the idea of alternatives that can replace a preferred product like substitutes do. Understanding substitutes helps firms craft strategies to maintain their competitive advantage.