Direct competitors sell the same kind of product to the same customers for the same need, such as McDonald’s and Burger King. Indirect competitors sell something different that meets the same need, such as a supermarket ready meal or a meal kit for a hungry customer. Strategy researchers frame the difference as market commonality versus functional similarity: rivals do not need to look alike to take the same customer (Peteraf and Bergen, 2003).
List the job the customer is trying to get done, not your product category. Everything that does that job is a competitor.
02
Sort by similarity
Offers in the same category, at similar prices, to the same buyers are direct competitors. Offers that solve the same need another way are indirect.
03
Watch the substitutes
Indirect competitors cap what you can charge: if your price rises, customers switch to the other way of meeting the need.
04
Re-draw the map often
Technology moves companies across the line. A search engine, a chatbot or a game can become a rival to a business that never saw it coming.
Where you see it today
Google lists its indirect rivals
Alphabet’s annual report for 2025 names competitors well beyond search engines: vertical sites users go to directly for travel, jobs or health, billboards, radio and TV for ad budgets, and AI model developers and providers of AI products (Alphabet, 2026). It is a direct-and-indirect competitor map in a regulatory filing.
Chegg and AI Overviews
In February 2025 Chegg announced a strategic review and a complaint against Google, saying that Google’s AI Overviews retained traffic that had historically come to Chegg (Chegg, 2025). A search feature, not another homework site, became the rival that mattered.
Netflix competes for free time
Netflix’s annual report says it competes with a broad set of activities for leisure time, including video gaming providers and social media (Netflix, 2026). Its indirect competitors are anything a member could do instead of watching.
Functional similarity
Research on competitor identification argues that firms should scan for rivals whose products or resources do the same job, even when they look different (Peteraf and Bergen, 2003). That is the logic behind treating AI assistants as competitors to websites, apps and services.
What they share with youThe customer's limited hours
ExampleNetflix vs video games and social media
AI intermediary
What they share with youThe moment of decision
ExampleAn AI answer that removes the need to visit a site
How to use it
Write down the customer's job in one sentence, then list every way it can be done today, not only products like yours.
Track direct rivals on price and features, and indirect rivals on how many customers they divert from your category.
Ask what an AI assistant would answer if a customer asked for your product: that answer is now a competitor.
Check where the customer's decision now starts (search, chat, app store, marketplace) and who controls it.
Review the competitor map at least once a year; indirect rivals tend to become direct ones.
The Business Engineer lens
In the AI economy the most dangerous competitor is often the one that does the customer’s job before they reach you. The Business Engineer view is to map competition by the job and by who owns the point of decision, not by product category.
What is the difference between direct and indirect competitors?
Direct competitors sell the same type of product to the same customers; indirect competitors sell something different that meets the same customer need.
What is an example of indirect competition?
A fast-food chain competes indirectly with meal kits and home cooking; a streaming service competes indirectly with video games and social media for free time.
How do you find indirect competitors?
Start from the customer's need, ask what else people use to meet it, and look at where customers go instead of buying from you.
Yes. When an AI assistant or AI search answer meets the need directly, it can divert customers from websites and services, as Chegg said of Google's AI Overviews.
The complete explainer, cleaned up and reformatted for mobile.
Direct competitors are companies that offer the same product or service and that might have the same business and financial profile. Indirect competitors, on the other hand, are companies whose products or services while different could potentially satisfy the same customer needs. Competition in the digital era has become way more fluid, thus it’s important to take into account various overlapping factors to assess the competitive landscape — as explored in the strategic map of AI market players — .
FourWeekMBABusiness EngineerAt a glance
Direct competition also occurs between Apple and Samsung smartphones in the consumer electronics industry.
Many assume McDonald’s only competes with other fast-food restaurants, but the company also indirectly competes with home cooking, diet plans, and subscription meal boxes.
Keyword research – companies can use a dedicated keyword research tool to identify competitors who are targeting the same keywords.
Identifying Direct Competitors: Businesses can identify direct competitors through methods like customer feedback, market research (analyzing websites, social media, pricing, values, etc.), and monitoring consumer discussions on platforms like social media.
Layout refreshed 6 October 2026. The article text below is unchanged.
Why it mattersFrom the article
Fluid Competition in the Digital Era: Competition in the digital age has become more fluid and complex due to overlapping factors.
Key Takeaways Summary: Differentiating between direct and indirect competitors is essential.
Direct competitors
Direct competitors are two or more companies that offer the same product or service in the same market to satisfy the same consumer need.
McDonald’s and Burger King are one example with their respective Big Mac and Whopper hamburgers. Direct competition also occurs between Apple and Samsung smartphones in the consumer electronics industry.
Identifying direct competitors
Companies can identify their direct competitors in the following ways:
Customer feedback – the first and most obvious way is to survey consumers. Who were the various brands they considered before making a purchase?
Market research – a more intensive process requiring the business to gather information from the websites and social media accounts of related businesses. Are their prices, values, business methods, online activities, or customer loyalty programs similar?
Social media – consumers often share their buying experiences on platforms such as Reddit, Quora, and Tumblr. Others will ask for brand-specific recommendations.
Indirect competitors
Indirect competitors describe businesses that offer different approaches to consumers to reach the same goal or satisfy the same need.
Many assume McDonald’s only competes with other fast-food restaurants, but the company also indirectly competes with home cooking, diet plans, and subscription meal boxes. Each of the businesses involved in offering these services is an indirect competitor because they are satisfying the same consumer need to avoid hunger.
When discussing indirect competition, it is also important to note that the comparison may be between two companies or two products. Indeed, the Monash University Marketing Dictionary says this about indirect competition: “A product that is in a different category altogether but which is seen as an alternative purchase choice; for example, coffee and mineral water are indirect competitors.”
Identifying indirect competitors
Indirect competition can be identified using these methods:
Keyword research – companies can use a dedicated keyword research tool to identify competitors who are targeting the same keywords. Alternatively, it may also be useful to perform a simple Google search for a broad keyword and take note of the competitors occupying the first few positions.
Content research – many indirect competitors also write SEO-friendly blog posts and landing pages that are closely related to a product or service. In this context, indirect competitors may include businesses, individual bloggers, and publications.
Key takeaways:
Direct competitors are companies that offer the same product or service. Conversely, indirect competitors are companies whose products or services while different could potentially satisfy the same customer needs.
McDonald’s and Burger King are one example of direct competitors with their respective Big Mac and Whopper hamburgers. Businesses endeavoring to determine their direct competitors can do so via market research, customer feedback, and social media.
McDonald’s also has indirect competitors, including home-cooked meals, diet plans, and subscription meal boxes. Each of these is a McDonald’s competitor because they address the same need.
Key Highlights
Key Highlights:
Direct Competitors vs. Indirect Competitors: Direct competitors are companies that offer the same product or service, aiming to satisfy the same consumer need in the same market. Indirect competitors, on the other hand, provide different products or services that could still fulfill the same customer needs.
Fluid Competition in the Digital Era: Competition in the digital age has become more fluid and complex due to overlapping factors. It’s crucial to consider various elements to accurately assess the competitive landscape.
Examples of Direct Competitors: McDonald’s and Burger King are direct competitors with their respective hamburgers (Big Mac and Whopper) in the fast-food industry. Apple and Samsung compete directly with their smartphones in the consumer electronics market.
Identifying Direct Competitors: Businesses can identify direct competitors through methods like customer feedback, market research (analyzing websites, social media, pricing, values, etc.), and monitoring consumer discussions on platforms like social media.
Examples of Indirect Competitors: McDonald’s not only competes with other fast-food chains but also indirectly competes with options like home cooking, diet plans, and subscription meal services. Indirect competitors address the same consumer need but offer different solutions.
Indirect Competition Comparison: Indirect competition can involve comparing companies, products, or services from different categories. For instance, coffee and mineral water could be seen as indirect competitors, as they’re alternative choices to address a similar need.
Identifying Indirect Competitors: Methods for identifying indirect competitors include keyword research (finding companies targeting similar keywords) and content research (identifying businesses, bloggers, or publications producing related content).
Key Takeaways Summary: Differentiating between direct and indirect competitors is essential. Identifying them involves methods like customer feedback, market and content research, and keyword analysis. Indirect competition can involve unrelated categories that still fulfill the same customer need.
Competitor Analysis Examples
Connected · Direct
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Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
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