According to a recent survey, most companies tend to have about 30 market competitors, and it’s important for businesses to know who theirs are.
Every business has its competitors, and knowing one’s competitors is essential for product, service, and marketing innovation.
However, it’s not always easy to identify market competitors, because while some companies are direct competitors, there are others that take some time to uncover.
Direct competitors to a business are the companies that offer similar or even identical products or services to the same consumer base. There are plenty of popular examples of direct competitors, such as Apple and Android, Netflix and Hulu, and Nike and Adidas. But direct competitors aren’t only exclusive to the brands that are popular nationally or internationally, because even two different shoe stores can be direct competitors to each other.
Companies that shift their strategies can also become direct competitors, such as when Facebook noticed the success of Twitter’s Periscope feature and decided to shift its strategy toward live video. Because direct competitors are selling similar products or services in similar ways, the competition between them tends to be a zero-sum game. That means if a consumer makes a purchase from a competitor, they’re not going to purchase from the business.
Indirect market competitors are the companies that are in the same category of business but that tend to sell different products or services that solve the same problem. For example, Subway and Chipotle tend to fall under the same category, as they’re both fast-food chains.
However, the two chains have completely different menu options for their customers, which means they’re both trying to solve the same problem with different products. Indirect competitors like these aren’t always in a zero-sum game.
This is because if a customer that makes a purchase from a competitor isn’t satisfied with the results, they can rely on the other business to solve the same problem in a different manner.
Replacement market competitors tend to offer alternatives to the products or services that a business offers. In this case, both companies are trying to solve the same pain points for consumers through different means.
For instance, a cafe and a restaurant on the same street can be seen as replacement competitors. That’s because consumers can walk down that street and choose to grab a meal from either spot, depending on their preferences.
The idea with replacement competitors is that the consumers are using the same resources to make a purchase of an item or service from a competitor that they could have used to buy a company’s solutions instead.
These are potentially dangerous competitors for a business– when there are multiple different ways that pain points can be resolved for consumers.
One of the easiest ways that companies can figure out who their market competitors are is to search Google for the keywords that most consumers use to find the business and to take note of the other companies that show up for the same keywords or phrases.
Companies can also utilize social listening by monitoring conversations on social media platforms to find other market competitors.
Alternatively, they can perform market research for their own products or services.