Direct competition is a market situation in which two or more businesses provide customers with the same product or service and have the same target audience. In direct competition, these two or more rivals often have similar price points.
In this article, we’ll compare direct and indirect competition and review several examples.
Direct Competition vs Indirect Competition
Since people often misinterpret the two terms, we need to discover the difference. In this section, we’ll have a closer look at the direct and indirect competition and their distinctive features.
Direct competition is a market situation in which two or more brands offer the same product and have the same target audience. They compete with each other to win customers’ attention and persuade consumers to purchase. For example, if you want to buy a smartphone that meets all modern requirements, you can consider Apple or Samsung, which offer phones with the same characteristics. When you want to eat a burger, you choose between the following fast-food companies: McDonald's, KFC, and Wendy’s. They are direct competitors because they offer similar products: burgers, french fries, chicken nuggets, ice cream, etc.
Indirect competition is a market situation in which two or more companies offer different products or services yet can provide customers with a solution and meet their needs. An indirect competitor helps consumers reach the same goal. Indirect rival has a different approach to the target audience and provides customers with alternative products. For instance, if you want to have a coffee drink, you can go to Starbucks and buy one, or you can install UberEats and order an iced latte at a local coffee shop and have it delivered.
Now that you know the main difference, let's look at several examples of direct competition from well-known brands.
Examples of Direct Competition
Every company has its direct competitors. You’ll probably recognize the well-established brands in our examples. Let’s explore their competitors in more detail.
McDonald’s and Burger King
McDonald’s is the most popular fast-food company not only in the US but also outside the country. The brand conquered customers with its quick, tasty meals and affordable prices. However, consumers’ tastes change, and new players enter the market. Although McDonald’s does its best to meet the changes in demand yet, people still strive to try something new. Burger King became McDonald’s direct competitor since it produced similar products and targeted the same audience. Their burger battle “Whopper against the Big Mac” is still severe.
Coca-Cola and Pepsi
The competition between Coca-Cola and Pepsi is an excellent example of a duopoly. These two big rivals dominate the market and don’t let anyone else in. They share the same product — soda-flavored cola and audience. Moreover, both brands have similar price points, so it’s up to customers to decide which one they prefer to choose. They create new tastes, develop new marketing strategies, and provide customers with zero sugar drinks to hook the attention of the audience and encourage them to buy.
Boeing and Airbus
Since the 1990s, these two manufacturers of jetliners have shaped a duopoly with their big market shares. Boeing and Airbus offer a wide range of products — aircraft with different capacities. However, their products are similar, so the companies fight for precedence.
Now you’ll be able to identify the direct competitors of your business. Hope that our examples showed the features of direct competition.
Last Updated: 08.11.2023