Types of Competitors
In our previous article about the significance of competitive analysis, one of the points that was discussed seemed rather simple: compiling a list of all your competitors. This step is not as simple as it may appear, however, due to the classification of competitors targeting your consumers. For a robust competitive analysis, you must not only know who your competitors are, but what kind they are.
A direct competitor can be defined as someone who delivers the same products or services as your business. They are the first and most ‘visible’ competitors that you consider for a competitive analysis due to their business’ similarity to yours.
Generally, companies aim to overshadow any competitor that offers similar products and services. Because your company is targeting the same audience as your direct competitors, knowing your competition is the first step toward beating your competition and getting your product in the hands of the consumer first. Examples of direct competitors include Yahoo mail, Hotmail and Gmail. These companies all offer the same services (e.g. email) to the same target audience.
Indirect competitors refer to those that deliver different products or services than you offer but share your same target audience. Kentucky Fried Chicken and Dominos, for example, are indirect competitors. While both are considered fast food, KFC specializes in burgers and fried chicken while Dominos is known for its pizza. Ultimately, both are targeting the same consumers.
A replacement competitor is considered someone who can replace your products or services altogether by providing a new solution. These competitors provide obstacles in market analysis because of their inherent unpredictability. They can create and provide a newer, faster and more productive solution or product, and there is little you can do to prevent consumers from preferring those options.
With the emergence of smart phones and digital cameras, for example, older versions of those devices could not compare to the newer technology and product features of the newer models. Now, even smart phones can replace digital cameras altogether because of the improved camera specs and photo quality. With the added benefit of the all-in-one convenience of the smart phone, stand-alone digital cameras just cannot compete.
Understanding all of your competitors – the products and services they offer and don’t offer– will give you a better idea of who is competing for your constituents’ loyalty. The better you know your competition, the more equipped you are to market your products or services effectively!
So, who are your competitors? Want to find out?