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In this video tutorial, Phillip Burton from filecats.co.uk demonstrates how to replace a part of a string using the replace function. He begins with the string "hello there philip" and shows how to change "philip" to "john" easily. Additionally, he references a previous video where substring extraction was discussed. The replace function requires the original string, a target substring to find, and a replacement substring. Phillip illustrates this with a potential scenario involving multiple names, aiming to replace placeholders like the hash or pound sign with specific names. He sets up for further exploration of string manipulation techniques.