3 Types Of Competitors Every Business Shares
No matter how unique your business or product and service offerings, there are three types of competitors every business shares: Direct, Indirect, and Everyone/Everything Else.
That third one might sound a little far-fetched, but let’s break this down with the consumer’s perspective in mind.
Every Business Has 3 Types Of Competitors:
1) Direct Competitors
These are business with multiple facets very similar to yours. They won’t necessarily compare head-to-head with all aspects of your business, but will likely be competing with you based on at least a few of the following:
- industry and sector
- target market(s) / consumer type(s) served
- product/service offerings
- pricing of product/service offerings
- company size (revenue and number of employees/staff)
- length of time doing business
- shared geographic location, or customer pool
Again, the main thing in determining your direct competition is to look at similarities, not exactilarities. (No, that’s not a “real” word, but feel free to add it to Wikipedia if you’d like to help make it one…) Anyway, the point is to not get hung up on the specific differences. Mac vs. PC is a good example of direct competitors.
Consumers are looking at the big picture of meeting their needs first and foremost. After they’ve determined you’re in the playing field (along with your other direct competitors), then they’ll look to the differences to help with their buying decision.
2) Indirect Competitors
These are business not necessarily similar to yours at all, but who compete for the same piece of the pie. Basically, their product and service offerings may be different, but are intended to solve the same consumer need as yours. Typically your indirect competitors are in the same industry and might also share several other similar factors to direct competitors, so it’s not always easy to determine indirect vs. direct competition.
To help differentiate, focus on the consumer need you’re filling in the marketplace. For example: If you own a restaurant business, the need you’re filling is hunger. If your restaurant offers gourmet hamburgers, it’s pretty easy to understand that your direct competitors would be other restaurants that offer gourmet (and non-gourmet) hamburgers. Your indirect competitors would be other restaurants that offer any type of food at all. Both of you are serving the same target market; both of you are meeting the same consumer need of hunger.
3) Everyone/Everything Else
(How many of you just skipped to this one first?)
So if they’re not a direct competitor, and not an indirect competitor, they must not be a competitor at all, right? Nope. Not only is your business competing with all the other business in your industry, you’re also competing against almost every other product and service available to consumers. In short — whatever your potential customer might spend their money on instead of buying what you offer.
Sometimes called phantom competitors, or replacement competitors, these are almost impossible to identify and can vary dramatically with the economy, or even by just the way the wind blows. As an example: Suzy may have every intention of buying your latest widget gizmo this week. However, if her refrigerator goes out before she does, it’s quite possible she’ll postpone her purchase, purchase a lesser cost model (from a direct competitor), purchase something different (from an indirect competitor), or decide to do without entirely.
Just be sure you factor this everyone/everything else competitor group into your target marketing, and understand that your specific industry pie gets nibbled on by consumer’s other needs, and by many other business offerings.
Need help identifying your competitors? Contact BRANDgfx to discuss a Competitive Analysis and targeted Marketing Strategy for your business. We’d love to help!