How many categories of competition are there?
Roughly, two! Yes, textbooks talk about brand competition, total budget competition, substitutes, etc., but I prefer to think that there are two basic categories of competition: Direct and Indirect.
Direct competition is anyone who gets up every day with the specific, deliberate goal of taking that business you would otherwise have from the customers your efforts are targeting. Indirect competition is anything your target market could do other than do business with you!
If we are the local cable company, for example, even our monopoly on the market won’t guarantee our success. We have direct competition in the form of network television, satellite television, public television, and so forth. One could consider radio, the Internet, Netflix, and other media forms of competition as well.
There are also less-obvious, more indirect forms of competition that have to be considered when developing strategy. There are other opportunities that compete for the time and resources of the customer such as reading, social events, the climate/weather, tough economic times, superior technology, changes in societal norms/values, or anything else in which the customer could invest his or her resources. Doing nothing or just plain apathy is also a form of competition.
This problem is not unique to for-profit entities. Many very worthy causes don’t get the support they deserve simply because there are other opportunities competing for the resources of their target markets.
This begs the question, “How can we overcome these various forms of competition?” The answer is, once again, the customer! To protect ourselves from direct competitors, we have to make sure our value proposition is superior to theirs. We can accomplish this simply by targeting the best customers to match our core competencies and staying closer to our customers than anyone. Indirect competition may be a little tougher, just because it is rather hard to predict and impossible to control. Indirect competition is often caused by a lack of interest, so the question we have to answer for our potential customers is, “Why should I care?” If we have a value proposition that truly benefits them and is worthy of their investment of time, money, or whatever, we can then go about telling a story that compels them to shift those resources our way.
This may seem like a simplified view of the competitive landscape, but by keeping the categories narrow we can avoid overlooking anything!
Your competition is anyone who raises customer expectations, because if someone else satisfies customers better than you, no matter what type of business, you suffer by comparison.” – Inside The Magic Kingdom: Seven Keys to Disney’s Success