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In this video tutorial, Phillip Burton demonstrates how to replace parts of a string using string manipulation functions. He starts with an example string "hello there philip" and shows how to change "philip" to "john" using the replace function. The process involves starting with the initial string, identifying the part to be replaced, and specifying the replacement. He mentions the use of placeholders, such as a hash or pound sign, to facilitate bulk replacements in larger datasets with multiple names. The video builds on previous lessons about substring extraction and string replacement, showcasing practical applications of these techniques.