When you are running a business, it is very important to know about your competitors. Knowing your competitors will help you to determine your place in the market and also about your customers. Your customers are the one who plays the most important roles in making your business a successful one. When you will know about your competitors totally, you will be able to determine what your customers are wanting. 

Just by analyzing your competitors, you can develop an effective business plan. And on the other hand, any kind of business plan is incomplete without a proper competitor analysis. But in order to analyze your competitors, first, you need to know the type of competitors that you are having in any business you are operating. 

What Are The Types Of Competitors?

When you are running a business, it is important to know what are the types of competitors. There are a total of 5 types of competitors for any business. They are,

  1. Direct Competitors.
  2. Potential Competitors.
  3. Indirect Competitors.
  4. Future Competitors.
  5. Replacement Competitors. 

What Is A Direct Competitor?

Direct competitors are your fiercest competitors, and you are required to find out the most about them. You may have around 3 or 4 companies that fall under this category of your direct competitors. When your customers are making any purchasing decisions, they will always shortlist these companies. You always need to compete with this group for the same customer dollars. 

What Is An Indirect Competitor?

When it comes to indirect competitors, you do not need to worry that much. They are generally the ones who offer alternative services or products that you offer. But make sure you are keeping track of what they are up to as an indirect competitor can be a direct competitor at any time. 

Direct vs Indirect Competitors

For your better understanding, here is a chart to understand the direct and indirect competitors. 

Direct Competitors Indirect Competitors
1. Product and Services. 1. Alternative Products and services.
2. Audiences. 2. Audience with the same goals.
3. Price Points. 3. Comparable price points.

Identifying Direct Competitors

Here are the ways to identify direct competitors. As I have mentioned earlier, it is really crucial to locate your direct competition, so here they are. 

1. Market Research

For identifying your direct competitors, you can take a look at the market. Who are the other companies that are making similar products like yours? Reach your sales team and have some words with them about the competitors who often come up in their sales process. This way, you will be able to get a closer look at those businesses or companies along with their products and marketing efforts. This will help you to create effective tactics to outperform them. 

2. Customer Feedback

When you are trying to identify your direct competitors, you can get the answer from your customers. Once your customers have decided on your products or business, you can ask them about the other brands they like. And you will be surprised with the answers, as they will come up with some names that are not even on your radar. 

There is another thing that you can do, and that is, tell your sales team to ask your potential customers about the other businesses they are considering. This can be done easily during the sales process. 

3. Check Social Media Or Community Forums

In this age of digital era, a considerable portion of customers searches for their queries on social media platforms and on other online platforms like Reddit or Quora. By checking those conversations that your customers are having on those websites, you can identify your competitors. Research, conducted by Deloitte shows that almost half, 50% of the millennials report that a simple recommendation from any family member, relative, or friend has a high influence on the buying decisions of your customers. 

Here is a chart of highly influenced consumer buying decisions: 

Brand Recommendation from a family member or friend Television Ads Recommendation from social media circle
Gen Z 48% 18% 27%
Millennials 60% 25% 27%

Identifying Indirect Competitors

Here are the ways to identify your indirect competitors. From the above discussion, it is now clear how important it is to identify your competitors with the indirect competition. 

1. Keyword Research

When it comes to identifying indirect customers, keyword research is the key. All you need to do is conduct a competitive search engine optimization analysis. This way, you will be able to determine which publishers or businesses are competing on Google for space. You also can go through those websites that are ranking in search engines or Google. 

2. Analyze Result Page Of Google Search Engine

There are some of your competitors who are writing content that is very close to your specific value proposition. You need to examine the value proposition of all your products and services. This way, you can identify those keywords that are central to your services or products. Search with the keywords on Google or any other search engines, and check who is competing on search engines with your content. 

3. Go Through The Paid Data

Make a list of those keywords that are crucial for your business. Now head into the Adwords and scan those same keywords. Is there too much competition for any one of those keywords? Now, your job is to check which websites or businesses are purchasing ads for those keywords. These are your indirect competitors, without any doubt. 

Frequently Asked Questions(FAQ)

Consider two businesses offering different products or products of different categories altogether. But the customers see them as an alternative purchasing choice. For example, mineral water and coffee.

Final Words

In order to drive your business in the right direction, it is really crucial to understand the direct and indirect competition. And for that, you need to do a lot of research and tasks. Make sure you can not be successful or attract more customers without analyzing your competitors in the market. 

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Shane Brown is a passionate blogger and chief blogging officer at BloggerOutreach and Viacon He is also associated with RedhatMedia, a well-known Media Agency Company. Shane specializes in inbound marketing and creative sales copy.