How to Outsmart Your Competition: The 3 types of competitors to keep an eye on

December 18, 2018
December 18, 2018 Carol Forden

I was reading The Wall Street Journal recently about brands using influencers to market products to consumers, which as we all know has pluses and minuses to this approach.

I was struck with the fact that content marketing has a significant effect on how some companies, especially brands and companies, regard their competition.

We thought we’d teach a marketing 101 lesson on the three types of competitors you must evaluate and take into consideration when marketing your product or service.

Direct Competitors

A direct competitor is anyone that offers the same products, with the same end game. They make money from the same product or services that you do.

Direct competitors are what most commonly comes to mind when you think of the word “competition.”

When I was running my own CPG business, I used to work with the buyers of national retail and hospital groups.

They were focused on direct competitors – creating a win/loss where my sales team went head-to-head against other companies offering similar products and services.

Indirect Competitors

Indirect competitors offer the same product and services but have a different goal.  They don’t drive revenue in the same way.

These competitors don’t always offer the same products or services as you do, but they do compete for the same customer base.

This is where content marketing can have an impact. Primarily, a company’s marketing can compete with your paid product, as we’ll see in the example …

Mammoth Toyota is an indirect competitor of Johnson Chevrolet while it derives revenue from selling Toyota’s and not Chevrolet’s.

Mammoth produces a free online content catalog of how to maintain your vehicle to retain the highest trade-in value “The Mammoth Library.”  As part of its content marketing that vehicle owners, regardless of the brand can choose to read instead of spending hours searching the web for expert answers to simple and complex questions.

In indirect competition, there are two different jobs a customer wants to do, but the jobs themselves are competing with each other. Software products experience these types of conflicts all the time:

  • “I want to allow payments in my product, but I want to minimize the number of third-party API’s we have to utilize.”
  • “I want to add an analytics tool, but I also want to minimize the response times.”
  • “I want to see how and where my team spends their time, but also to show we’re a trusting work environment.”

As you can see, there are two conflicting forces here.

The appeal of the outcome of your product vs. the other product or service.

Your marketing needs to make the alternative outcome less attractive, or you need to reposition your product and product messaging, so the result is no longer in conflict.

Replacement Competitors

A replacement competitor is something someone could do instead of choosing your product.

In essence, they offer a slightly different product and service but target the same group of customers with the goal of satisfying the same need.

But they’re using the same resources the consumer could have committed to your product.

These are the hardest competitors to identify. That stated, we must recall that our customers define our competition.

A competitor is merely the other choices they may choose to make.

So you should interview customers, listen to their social media conversations, and understand macro trends to gain an understanding of what choices they are making and why.

Audience research is the key to identifying these, to see where crossover interests lie. Social listening tools like Hootsuite and Social Studio are useful, as are customer surveys.

Google Consumer Surveys and Google Analytics affinity groups are good places to start to aid in identifying replacement competitors.

Another Mammoth Toyota example: The Hudson Toyota series of service reminders and a downloadable schedule is a replacement competitor for the Mammoth service content series.

Or, if your child has a free hour in their day, they can either decide to play a video game or to read a book?

It’s a little idealistic to assume that the average 8-year-old would consider reading book verses playing a video game.

You need to be a bit of a psychologist and study your customers to determine the product or service they consider as a suitable replacement for your products and services.

Does a 12-year-old consider a book as competition for a mobile game?

Probably not.

However, does an influencer on that purchase decision (mom or dad) find a book to be a replacement competitor?

For most parents it is.

 

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