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As a business person, the chances of monopoly in your industry are slim (or almost nonexistent). Therefore, you’re sure of having some competition — and the nature of competition is largely dependent on the kind of products your competitors offer. And that’s where direct and indirect competition comes into play.
Direct competitors are companies that offer the same product (or service) offering as you. However, indirect competition is somewhat different. They are businesses whose product (or service) offerings are different from yours, but could satisfy your customer’s needs, and possibly achieve the same goals.
Regardless of your kind of industry, greater success breeds more competition as you’d need to attract more customers. And how you monitor your competition plays a major role when it comes to sustaining your growth. If you desire more success in business, you need to pay close attention to direct and indirect competition.
Their influence is unseen, but it’s ever-present and it plays a huge role in business growth. They are the competition and are in a constant battle to draw more customers away from your business.
In this guide, you’ll discover how to navigate the terrain of direct and indirect competition — and also come up with reliable ways of shaping and building a more robust business.
To get started, you’ve got to have an in-depth knowledge of what direct competition is.
Also, you’ll learn the following:
Direct competition is companies that offer products and services that are very similar to yours. In direct competition, the competition between rivalries is fierce as the companies try to win a significant percentage of the market share.
Direct competitors typically know a lot about themselves — they have a good grasp of their strengths and weaknesses. And that is because they are competing for the same target customers. When it comes to keeping an eye on themselves, they pay close attention to their pricing and marketing.
Building a robust business starts with having a good grasp of your direct competitors. This way, you get to figure out what sets you apart from the crowd, and also come up with ways of attracting your potential customers.
A good example of direct competition can be found both in the online e-commerce space and in online streaming services. In the online e-commerce space, companies like Amazon, eBay, Alibaba, Flipkart, Walmart, and Rakuten are direct competitors.
When it comes to online streaming services, companies like Amazon, Netflix, Apple TV, Disney+, and Hulu are in direct competition to dominate the space.
Indirect competitors offer the same product or service offering to their target audience, but each company has a unique way of addressing the customer’s needs. Here, your competitors offer different products or services that directly compete with your product or service offering.
In direct competition, both your business and that of your competitors offer conflicting solutions to the same customer need. This will, in turn, make customers either choose your product or that of the indirect competitor to fulfill their needs.
In the online space, Pinterest, Etsy, and Facebook marketplace are seen as indirect competitors to Amazon. In the next section, you’ll figure out how to identify direct competitors.
Having a good understanding of your direct competitors is one of the best ways of staying ahead of the pack. To understand your direct competitors, here are some things you need to consider.
Asking your customers about your competitors is one of the sure ways of understanding your direct competition. What alternatives are available in the marketplace, and how do these alternatives compare to your product or service offering? Answers to these will help you gain more insight into your direct competitors.
When you understand how you fit into the market, you will gain more clarity on how to reposition your brand out there.
Researching your competition is another way of identifying your direct competition. Go to various social media platforms and online communities to figure out what other people are saying about the businesses in your industry.
Thorough research will help you get a feel for who your target customers look up to when it comes to finding solutions to their needs. And the information obtained from your research will help you come up with ways to improve your company.
Market research reports help you figure out who your direct competitors are. Information gleaned from these reports helps you gain a broader understanding of your industry. And one of the sure ways of maintaining a substantial market share is by figuring out who your competitors are and coming up with strategies to help you stay ahead in the marketplace.
It is somewhat challenging to identify indirect competitors. But if you can identify who they are, then you must have covered some grounds. Indirect competitors are pretty much businesses that provide similar products or service offerings as yours, but they are not in direct competition with you in the marketplace.
Since they are not in direct competition with you, they pose a lethal threat to your business. To identify indirect competition, here are some things to consider.
Keyword research is a good way of identifying the indirect competition. Several tools like Google Ads Keyword Planner and Google Trends can help during the keyword research process. With keyword research, you get to identify the companies that target the exact keywords you’re targeting. By identifying these companies, you’d get a decent idea of who your indirect competitors are. While doing keyword research for Google Ads or for SEO, you should not ignore one of the best tools PPCexpo Keyword Planner.
You can track indirect competition by paying close attention to the kind of content they produce. By publishing SEO-friendly content, they may aim to rank for the exact keywords you’re targeting. In your search for indirect competitors, this strategy will go a long way to help you identify who they are.
Perform adequate research to identify businesses that offer similar products or services to yours. To start the research process, you should consider using the internet, conferences, and trade publications to determine who your indirect competitors are.
PPC (Pay-per-click) is the one of the forms to market and advertise your product or services in the digital world. If you are not using PPC platforms like Google Ads then you can make sure your competitors will be using that. You can simply type your brand or any query related to your products or services and see which ads are coming and appearing on SERP (Search Engine Result Page).
If you find relevant ads and you are not there then of course you are missing a big market audience. You can follow the guide on PPC campaigns if you are new to start. But if you are already managing campaigns in Google Ads then you should give a close eye to your monitoring, reporting and analysis.
To get good results, you must keep a close eye on your campaigns, especially if you’re running multiple campaigns from a single account. Speaking of keeping a close eye on your campaign, you need to consider tools like the PPC Signal tool. The PPC Signal tool uses a data-driven approach to offer insights about any anomaly found in your campaign at any time.
Here is what the PPC Signal dashboard looks like.
PPC Signal is AI enabled tool which gives you signal based on data driven analysis. In this era of competition, if you can keep track your marketing efforts effectively then there will be no hindrance in your way to progress and to become market leader.
Here are some differences between direct and indirect competitors:
The primary difference between direct and indirect competition lies in their product or service offering. Indirect competitors offer products using a different approach. This way, customers get to choose either your product or that of your competitor.
Regarding direct competition, they offer similar products. Due to the product similarity, your company gets to explain what differentiates your product from that of your competitor. For instance, you could tell your customers that your products or services are more affordable or of premium quality.
The approach of the indirect competition is contrasting, but the direct competitor shares a similar mission with you. The ultimate goal is to address the needs of the customer. For instance, if you offer customers a way of learning new languages, direct competitors have the same service offering — tutoring. The difference lies in the kind of tutoring solution the customer opts for.
When it comes to indirect competition, they offer contradictory products or service offerings. Using the same example, an in-person tutor uses a different approach to address the needs of the customer. And that could be a mobile app or any other approach.
Indirect competitors could likely be offering products or services at varying costs. The difference in the pricing is due to the differences in the product or services offered by the competing companies. Since you and the indirect competitor do not offer the same products, you’d pretty much notice differences in the pricing.
Usually, lower prices tend to be more appealing to the customers. This knowledge will help you come up with a way of tweaking your business to draw more customers.
The prices between your company and the direct customer are less varied. Why? Because the same products or services are offered to the customer. And the price range for such a product or service offering tends to be much less.
Business owners need to keep a close eye on the types of competition that are going on in their industry. A thorough research process will help the business owner figure out what’s going on in their customer’s mind, and pretty much come up with better ways of beating both sides of the competition.
Speaking of beating both sides of the competition, here are easy ways of doing just that.
Diving into the minds of your customers is one of the sure ways of beating the competition. You need to have a good grasp of how new products, trends, and economics affect the buying decisions of your customers.
Why do potential customers buy from your competitors, and why are they skeptical of your product offering? What’s their priority when it comes to their business?
Whether you’re managing an online business, or a brick-and-mortar shop, an understanding of how these factors influence businesses will help position your business for better results.
Content is how businesses interact with their target audience — and that goes for both freelancers and fortune 500 brands. Talking about your product or service offering is good, but it won’t help you drive many results. You need to be genuinely interested in solving the needs of your customers.
For instance, business persons who manage a restaurant business could offer cooking advice and a recipe for customers who desire to cook at home. And marketing agencies can produce content that helps their audience identify ways of growing their social media presence.
To produce useful content, you need to understand that your primary objective is to support your customer’s journey, not necessarily to promote your brand. An integrated marketing strategy should include great content — and it helps the company stands out from the competition.
This will, in turn, help you boost positive brand awareness, retain existing customers, and build a better connection with potential customers.
To build a loyal customer base, you need to establish a strong relationship with your customers. And that can be accomplished by reaching out to them on a platform void of spam and banner ads.
To reach out to your customers, you need to consider channels like emails, SMS, and Messenger. These channels would help you talk with your potential customers, share information, fix problems, and pretty much nurture relationships with them. This way, customers will be free to come to you whenever they need any of your products.
Nowadays, businesses are focusing on ways to make a quicker and more human connection with their customers. And there is bound to be more evolution in the industry.
Speaking of human connection, one way of establishing it is by having a solid system for managing queries — and you can add guidance to the mix. Businesses often set up a system for managing queries, but don’t build on it.
For instance, if you sell digital products, your focus should be on helping the customer win. You can do that by guiding and frequently communicating with them. The primary objective is to help them gain value, and also build a stronger relationship with them within your ecosystem.
Businesses almost always strive in a capitalist ecosystem. When it comes to capitalism, competition is fierce, and to survive, you need to evolve. It’s easy to quickly adapt to the marketing trends, but to conquer more grounds, you need a good grasp of other factors that are not captured in the Google market trends.
As a business person, you need to position your company in such a way as to withstand these unseen market forces and know the direct and indirect competition deeply. For instance, if you manage an e-commerce store, the competitive force could be customers who can make your products cheaper at home. Or customers who are keen on seeing the product in-store first.
Businesses that offer services can also withstand indirect competition. One way of doing that is by properly educating your customers and providing various ways of solving their problems. Regardless of the kind of business you manage, you can stay ahead of the competition by updating your audience on relevant industry trends.
Proper education of your target audience helps build a strong connection. And when it’s time to make a buying decision, your brand name comes to mind.
Regardless of the kind of competition you’re facing, the intensity of such competition will have an impact on your business. And it could also affect the potential for the success of your business in the long run.
As a business person, you need to consider all types of competition during your planning stage. This way, you’d know how to position your business in such a way that you stay ahead of your competition.
A good understanding of your direct (and indirect) competitors and the products they offer will help you get the full picture of who is competing for your customers. The more knowledge you acquire, the more you’re likely to navigate through the business terrain.
A computer brand, and a company that sells notebooks. These companies supply items for note taking — but the two products are different. Notebooks are much different than computers, but the companies contend for the same customers. Therefore, they are indirect competitors.
So, got the idea about direct and indirect competition? The direct competition offers the same product (or services) as yours. However, the product or service offering of indirect competition is somewhat different from your brand products (or services), but it could potentially solve the customer’s need.
To stay ahead in your industry, you need to know who your direct and indirect competitors are, and their product or service offering. When it comes to running high converting PPC campaigns, you’d need a tool that would help you track your campaigns from a single account — that’s where the PPC Signal tool comes in.
Do you know who your direct and indirect competitors are, and how will you position your business so you can stand out from the crowd?
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