Competitors

Who are the competitors in business? 

A competitor in business or a competitor in marketing is someone who competes against you in the market to take a portion of your market share. They are also called rivals as they also sell their products at similar prices through similar channels of distribution. Competitors in business are a vital part of the free-market economy as their presence helps the businesses thrive through innovation. 

Types of Competitors

Primarily, there are three types of competitors in marketing – direct, indirect, and potential or future competitors. The competition happens in a profitable market where the market players sell the same products through the same channel with little differentiation. 

Direct Competitor

A direct competitor will sell the exact product to the same set of customers through the same channel. This type of competitor also competes for the same potential market and fights for a bigger share with you. An example of competitors in the fast-food industry would be Burger King and McDonald’s who sell the same burger to a similar audience. 

There are many similarities between these two direct competitors in business as they operate in the same food and drinks industry, offer burgers and fries to their audience, use similar channels like retail chains, takeaway, and home delivery to reach their customers, and target the young mass through their products. 

Indirect Competitor

An indirect competitor competes in a similar market but offers a completely different product to satisfy a similar need of consumers. Here, the example of competitors can be Domino’s and Burger King. 

These fast-food chains are starkly different but their products can be used as a replacement for the other. They are considered to be indirect competitors even though they sell different products because they are operating in the fast-food industry and have the same target audience. 

Potential Competitor

A potential competitor in business is someone who can completely replace your market share by offering a similar product with a better solution. An example of competitors in the fast-food industry for Burger King would be someone who is offering a healthier burger at a similar price point. Even though they will have different sets of audiences, a healthier alternative to Burger King can change its market share. 

Importance of Business Competitor

• Healthy competition often warrants innovation as a business will take its time to understand the needs and demands of the consumer to stay ahead of the race. 
• Competitors in marketing can help a business realise its true strengths and weaknesses. 
• Along with the product, a business will focus on marketing, branding, and customer service along with various incentives to keep the customer from going. 
• Competitors in business can educate an enterprise on how the market works, how to produce efficiently along with learning the art of selling. 
• Competitors in business also help the customers as they get a lot of options to choose from. 

Disadvantages of Competitors in Business

Even though there are many advantages of competitors in business, there are plenty of disadvantages too. 

• Good competitors in business can reduce the market share of the existing company by a significant margin. Therefore, a lot of businesses detest new competitors in Marketing. 
• A competitor also puts the existing business under a lot of pressure as they won’t be able to compete with big market players. 
• The employees are also under a lot of pressure when there are competitors in business. They need to work harder to build strategies, promotions and find out ways to keep their customers. 
• Businesses tend to overspend and overcompensate when there is a competitor involved. They have to spend extra money on promotional strategies along with attracting new employees and investors. 
• Competitors in business are also disadvantageous for customers as well. Customers often get confused when there is a large variety of the same product in the market and the confusion can puzzle them. 

Example of Competitors in Business 

Coca-Cola and Pepsi

These two companies have a direct competition as they both sell the same product to the same customer base. Marketing and promotional strategies along with market share are the only differentiators. 

Apple and Xiaomi

Both the companies tend to compete the most in the smartphone segment. However, they are also in direct competition in other gadgets like television, smart watches, and even laptops. 

Nike and Adidas 

Both the companies are the leaders in athletic shoes and command a large market in athletic wearables. They are in direct competition and have a large share of athletes under them. 

Conclusion

With an effective plan, you can easily beat your competitors in business by commanding more market share. Strategise to stay ahead of the game and improve customer service to attract more business.