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Theodore Levitt (1960) explained in "Marketing Myopia” companies must ascertain and act on their customers’ needs and desires. Indirect competition is part of a much broader view of the competitive environment.
To succeed strategists should focus their thinking on meeting needs and wants and not focus solely on current, established products. The substitute products may improve and better meet needs at a better price.
from Levitt, Theodore (1960, reprinted 1975). "Marketing myopia". Harvard Business Review 53 (5): 26–183
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