Typically, competitors are defined by the market in which they are competing. For example, when competing for a client's business, competing companies might be considered competitors even if they are in the same industry. Alternatively, when an individual is competing for the same job, different individuals might be considered competitors even if they are not employed in the same industry.
Types of Competitors
Several types of competitors, but the primary distinction between them is whether they directly or indirectly compete with a business. Below is a detailed look at the key types of competitors.
Direct competitors are the most obvious competitors and are in the same market as your company. They sell similar products or services to the same target audience. An example of direct competitors would be two fast-food restaurants located near each other or two companies that sell the same type of software.
Indirect competitors are those that don't offer identical products or services but serve the same overall need for customers. For example, a movie theater and a bowling alley are indirect competitors. They both offer entertainment options, but they do so through different means.
Replacement competitors are those offering different solutions to the same problems customers face. For instance, a car rental company and an Uber would be considered replacement competitors.
Potential competitors are the newcomers to your industry who don't currently compete with your company but may in the future. These could be companies selling complementary products or services or new entrants to your specific industry.
Emerging competitors are not part of your industry yet but could potentially impact it in the future. For instance, a company launching a self-driving car could emerge as a competitor for ride-sharing services like Uber.
By understanding your competitors and their strategies, you can develop a more competitive marketing plan and increase your market share.