Indirect competition is the situation when two businesses target the same market and audience and aim to satisfy the same needs, but offer different products. Usually, indirect competitors take away a huge number of companies’ potential clients, because they provide different solutions to the same buyers’ pains.
In the article, we compare direct and indirect competition and provide examples for you to understand the peculiarities of each one.
Direct Competition vs Indirect Competition
Some junior marketers may focus only on the direct competitors and develop brands’ strategies without paying attention to the indirect ones. However, it is vital to consider various products and services to get a holistic image of the market situation. We compare direct and indirect competition and describe their differences below.
Direct competition means that two companies offer the same products to satisfy the needs of the same audience. The companies’ branding, promotion, values, and strategies may vary, but their goods are similar. Also, direct competitors work in the same market, e.g., coffee-to-go points in one city or premium car brands that sell their developments mainly in Europe.
Indirect competition means that businesses produce different goods but target the same market and customer segments. For example, chocolate and cookies are both sweets and can substitute each other, so they are indirect competitors. This concept is larger, because of the huge number of such substitutions, e.g., watching various films and cartoons, going to the cafe or theater, shopping in the department store, and even traveling are all ways to spend free time, which means that they can compete with each other.
It may be challenging to take into account all substitutions, but you can discover the most obvious ones by conducting keyword research and studying related topics. Also, we describe some indirect competition examples in different markets to help you understand this concept better.
Examples of Indirect Competition
Identifying and analyzing the indirect competitors of your company can help you develop a well-defined strategy and find strong competitive advantages. To make your analysis easier, study some examples of indirect competition below.
- McDonald’s vs Domino’s Pizza. These companies sell fast food and target consumers who want to eat quickly. They work worldwide and have almost similar pricing policies. Their branding and marketing are also alike. However, McDonald’s sells burgers and fries, while Domino’s serves pizza, so we can say that they are indirect competitors.
- Marvel comics vs Netflix movies. These two companies compete in the field of teenager and adult entertainment. Both of them work all over the world and have many fans. Marvel comics can substitute Netflix movies and vice versa, though they aren’t direct competitors because these brands create different products.
- Targeting vs collaborating with influencers. We can say that these two advertising mechanisms also compete with each other. You can reach the same markets and audiences either by using targeted ads or influencer promotions. The goal is also the same: to sell products of the advertised brand. However, these methods aren’t similar and have their peculiarities. We suggest combining them to reach better results for your promotional campaigns.
Congrats, now you know what indirect competition is and its difference from direct competition. Also, you have studied its examples and can find indirect competitors of your company.
Last Updated: 28.10.2022