• imissbalance

4 types of competition every marketer should know about!

Updated: Oct 14, 2018


More often than not when I talk to the CEOs about their competitors, they put up a stern face & then go on to tell me their USPs or how they are catering to an unmet need. All I want to tell them is - Please wake up & take a walk!


Let me word it out clearly: All companies have competitors. The first step in solving a problem is to recognising there is one. The sooner you make peace with it, the better you can strategise to combat your competition. You are never the only choice of the customers & that’s why it is imperative that you understand all types of competitions that your company is facing.


On a macro level, there are four types of competitors & it’s imperative that you customise your communication according to each of them.


Direct Competition

Companies operating in this segment are quite similar to yours in terms of the product or the service that they offer. The competition doesn’t have to be on all the aspects & they might position their product different but it is still apples to apples comparison.

For e.g.: Direct competitors can be Coke & Pepsi as both of them are selling aerated drinks, same in color & trying to solve the same problem. Another example of it can be Nike & Adidas.


Indirect Competition

This is the most common type of competition faced by the businesses. The competing products are trying to solve the same problem. These companies sell products which offer slightly different products & services. This kind of competition takes all the probable ways a customer can opt for to satisfy his need.

For e.g.: Indirect competitors to Coke can be Fruit Juice as they both are trying to quench the thirst of the customer. Similar is the case of Pizza Hut & McDonalds, both of them are fulfil the hunger but they offer different products.




Replacement Competition

These can be pretty tricky to identify as one needs to don upon a customer’s hat to understand it from their perspective. We must put in an effort to figure them out as they pose threat on your overall segment.

For e.g.: A hard bound book or an audio book. These books can be on the same topic or can be the same books but a user is now replacing a hard bound book by an audio book & that’s why it’s essential to identify if your product can be replaced by another product which can be in a different segment.

Similarly, a packaged beverage may not give any essential vitamins as compared to a fruit but maybe your customer perceives it as a good enough source for the same vitamins & hence, they replace a fruit with a packaged beverage.



Phantom competitor

This type of competition is created by a customer & is more of a phenomenon. It is observed when a person considering to take your service or buy your products opts for completely unrelated service or product. It can challenging to tackle such competition as the entity doesn’t even exist in your business scope.

For e.g.: If a customer buys an Apple iWatch instead of a Amazon Kindle to giveaway as a gift or someone just chooses to go for a run instead of going to a movie. These decisions are completely person driven & are based on their personal choices & there’s very little your company can do to fight such competition.




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