Competition is a fact of doing business. Businesses see competition in the form of price, quality, design, sales, location, and almost every business process. Show
Many people complain about it, many learn from it, and many run away from it. But most don’t know the true meaning of business competition, its nature, types, and even importance. Here’s a complete guide explaining everything you should know about business competition. Contents show 1 What Is Business Competition? 2 Types Of Competition 2.1 Direct Competition 2.2 Indirect Competition 2.3 Potential or Replacement Competition 3 Importance Of Business Competition 4 Benefits Of Business Competition 5 Disadvantages Of Business Competition 6 Business Competition Examples 6.1 Coca-Cola and Pepsi 6.2 DHL and FedEx 6.3 OnePlus and Apple 6.4 Burger King and Taco Bell What Is Business Competition?Competition in business is the contest or rivalry among the companies selling similar products and/or targeting the same target audience to get more sales, increase revenue, and gain more market share as compared to others. Types Of CompetitionAlso called market competition, business competition is usually a fact in a profitable market – many players produce similar products, sell through similar channels, and even target the same audience. This competition, however, can be classified into three types – Direct CompetitionDirect competitors are vendors that sell the same products to the same audience and compete for the same potential market. An excellent example of direct competitors is Burger King and McDonald’s business rivalry. Both of these companies –
Indirect CompetitionIndirect competitors are vendors that sell products or services that are not necessarily the same but satisfy the same consumer need. An example of indirect competitors would be McDonald’s and Pizza Hut. Even though these two vendors sell products that are different, they are considered to be competitors as they –
Potential or Replacement CompetitionReplacement competitors (also called potential competitors) are vendors who have the ability to replace the business’ offering altogether by providing a new solution. The smartphone was a replacement competitor of digital cameras. Even though these two products had different uses, smartphones had the ability to provide a totally new solution to the existing photography need of the customers. Importance Of Business CompetitionIn contrast to what it seems, healthy competition is almost as important as healthy demand for a business. It-
Benefits Of Business CompetitionCompetition benefits all the three parties connected with the offering – business, consumers, and even the market. Here’s how
Disadvantages Of Business CompetitionBusiness competition isn’t always beneficial too. High competition has the following disadvantages –
Business Competition ExamplesCoca-Cola and PepsiCoke vs Pepsi is a great example of direct competition. Both companies offer almost the same product but try to build their market share using marketing and positioning strategies. DHL and FedExDHL and FedEx are direct competitors which offer courier delivery services all over the world. They differ in specialized services and add-ons like providing overnight delivery, long-distance delivery, etc. They also try to build their market share using price wars. OnePlus and AppleOnePlus isn’t a direct competitor of Apple when it comes to the pricing of the products. While Apple targets more urban, educated, high-earning individuals with its iPhone, OnePlus targets more tech fanatics and Android lovers who prefer to buy mid-price-ranged phones. However, with extensive brand-building efforts, their target audiences have started to merge, making these two direct competitors. Burger King and Taco BellEven though Burger King and Taco Bell serve different products, they serve the same target audience and satisfy the same need, making them indirect competitors. Go On, Tell Us What You Think!Did we miss something? Come on! Tell us what you think about our article on business competition in the comments section. Aashish Pahwa A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing. What is it called when companies compete for customers?Business competition is the contest between organizations that provide similar products or services or that target the same audience of consumers.
What are the 4 types of competition?Economists have identified four types of competition—perfect competition, monopolistic competition, oligopoly, and monopoly.
What are the 3 types of competitors?When you identify competitors, you have three types to consider: direct, indirect, and replacement. Direct competitors are the businesses that sell a similar product or service in the same category as you. (These are the competitors you most often think about.)
What makes a company a competitor?Competitors are other businesses who can offer the same or similar goods and services to your customers.
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