Analysis of competitors reveals crucial information for businesses. Any company operating in the market faces various competitive rivals that directly impact their business activities. Therefore, competitor analysis is a vital activity that every business must pay attention to.
By analyzing competitors, businesses can identify their strengths and weaknesses, opportunities, and challenges they are facing. This information helps in formulating the most appropriate business strategies and establishing a unique presence in the market.
So, what types of competitors do businesses face in the market? Let's explore this in the following section.
### 4 Types of Competitors in Marketing
#### 1. Direct Competitors
Direct competitors are businesses that offer similar products or services to yours. They may compete in all products or services your business provides on the market. However, there might be differences in marketing strategies, distribution channels, and more. Examples of direct competitors are Pepsi and Coca Cola, Phuc Long and The Coffee House, etc.
#### 2. Indirect Competitors
These are competitors that are difficult to detect and identify. Social listening is an effective method for marketers to determine what concerns their customers have and to identify indirect competitors. For instance, if your business sells fresh apples, indirect competitors could be vitamin C supplements or apple-flavored candies.
#### 3. Competitor as a Partner
Sometimes, your partners can become your competitors. Good profits and extensive potential can attract your partners to enter the market. Therefore, suppliers are also considered a type of competitive threat that businesses need to pay attention to.
#### 4. Induced Competitors
Induced competitors refer to businesses that offer products or services different from yours but address the same needs of the customers. For example, if your business sells bread, an induced competitor could sell instant noodles. In this case, you cannot turn bread into instant noodles, but you can change the customer's perception that eating bread can provide many beneficial nutrients.
### Steps for Competitor Analysis
#### 1. List Competitors
Firstly, list out competitors (around 7-10) based on factors such as having the same customer base, similar business models, similar product offerings, and operating in the same industry.
#### 2. Classify Competitors
Classify competitors into categories based on either the level or force of competition.
- **Classification by Level of Competition:**
- Utilitarian Competition: Different products but solving the same customer problem.
- Niche Competition: Businesses with similar offerings but targeting a specific market segment.
- Industry Competition: Businesses operating in the same industry.
- Brand Competition: Similar products, targeting the same customer base with similar marketing strategies.
- **Classification by Force of Competition:**
- Direct Competition: Businesses directly competing with similar products or services.
- Hidden Competition: Difficult-to-detect competitors.
- Indirect Competition: Businesses offering different products but addressing the same customer needs.
#### 3. Gather Information About Competitors
Collect comprehensive information about competitors, with a focus on areas relevant to your business, such as:
- General information about the competitor.
- Customer feedback on the competitor's products/brand.
- Product development strategy.
- Pricing strategy.
- Distribution strategy.
- Communication strategy.
#### 4. Identify Competitor Strategies
Understand the strategies employed by competitors. Common strategies include:
- Market penetration strategy: Efforts to reach as many target customers as possible by building trust and loyalty.
- Product development strategy: Introducing new or improved products to meet customer needs.
- Market development strategy: Expanding into new markets to reach a broader customer base.
- Diversification strategy: Developing and offering new products or services to diversify the business.
#### 5. SWOT Analysis of Competitors
Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for each competitor. This helps identify and compare the competitive advantages of your business against those of your competitors.
#### 6. Report Compilation
Based on the data collected and analyzed, create a comprehensive report on each competitor. This report should cover:
- An overview of the competitor's business.
- The market the competitor operates in.
- A comparison of your business's products/services with the competitor's.
- A SWOT analysis of the competitor.
- Highlighting your business's competitive advantages.
In conclusion, competitor analysis is a crucial process that provides businesses with insights to make informed decisions and stay competitive in the market. By understanding the strengths and weaknesses of competitors, businesses can strategically position themselves for success.
By analyzing competitors, businesses can identify their strengths and weaknesses, opportunities, and challenges they are facing. This information helps in formulating the most appropriate business strategies and establishing a unique presence in the market.
So, what types of competitors do businesses face in the market? Let's explore this in the following section.
### 4 Types of Competitors in Marketing
#### 1. Direct Competitors
Direct competitors are businesses that offer similar products or services to yours. They may compete in all products or services your business provides on the market. However, there might be differences in marketing strategies, distribution channels, and more. Examples of direct competitors are Pepsi and Coca Cola, Phuc Long and The Coffee House, etc.
#### 2. Indirect Competitors
These are competitors that are difficult to detect and identify. Social listening is an effective method for marketers to determine what concerns their customers have and to identify indirect competitors. For instance, if your business sells fresh apples, indirect competitors could be vitamin C supplements or apple-flavored candies.
#### 3. Competitor as a Partner
Sometimes, your partners can become your competitors. Good profits and extensive potential can attract your partners to enter the market. Therefore, suppliers are also considered a type of competitive threat that businesses need to pay attention to.
#### 4. Induced Competitors
Induced competitors refer to businesses that offer products or services different from yours but address the same needs of the customers. For example, if your business sells bread, an induced competitor could sell instant noodles. In this case, you cannot turn bread into instant noodles, but you can change the customer's perception that eating bread can provide many beneficial nutrients.
### Steps for Competitor Analysis
#### 1. List Competitors
Firstly, list out competitors (around 7-10) based on factors such as having the same customer base, similar business models, similar product offerings, and operating in the same industry.
#### 2. Classify Competitors
Classify competitors into categories based on either the level or force of competition.
- **Classification by Level of Competition:**
- Utilitarian Competition: Different products but solving the same customer problem.
- Niche Competition: Businesses with similar offerings but targeting a specific market segment.
- Industry Competition: Businesses operating in the same industry.
- Brand Competition: Similar products, targeting the same customer base with similar marketing strategies.
- **Classification by Force of Competition:**
- Direct Competition: Businesses directly competing with similar products or services.
- Hidden Competition: Difficult-to-detect competitors.
- Indirect Competition: Businesses offering different products but addressing the same customer needs.
#### 3. Gather Information About Competitors
Collect comprehensive information about competitors, with a focus on areas relevant to your business, such as:
- General information about the competitor.
- Customer feedback on the competitor's products/brand.
- Product development strategy.
- Pricing strategy.
- Distribution strategy.
- Communication strategy.
#### 4. Identify Competitor Strategies
Understand the strategies employed by competitors. Common strategies include:
- Market penetration strategy: Efforts to reach as many target customers as possible by building trust and loyalty.
- Product development strategy: Introducing new or improved products to meet customer needs.
- Market development strategy: Expanding into new markets to reach a broader customer base.
- Diversification strategy: Developing and offering new products or services to diversify the business.
#### 5. SWOT Analysis of Competitors
Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for each competitor. This helps identify and compare the competitive advantages of your business against those of your competitors.
#### 6. Report Compilation
Based on the data collected and analyzed, create a comprehensive report on each competitor. This report should cover:
- An overview of the competitor's business.
- The market the competitor operates in.
- A comparison of your business's products/services with the competitor's.
- A SWOT analysis of the competitor.
- Highlighting your business's competitive advantages.
In conclusion, competitor analysis is a crucial process that provides businesses with insights to make informed decisions and stay competitive in the market. By understanding the strengths and weaknesses of competitors, businesses can strategically position themselves for success.