direct-competitors-vs-indirect-competitors

Direct Competitors Vs Indirect Competitors

Direct competition is a linear way to look at the business world and compare a company with other similar companies in the same industry. An example is comparing Netflix with other streaming services. On the opposite hand, the indirect competition looks at the core asset and potential long-term overlaps. For instance, Netflix’s main asset is attention, and if you look at attention, you might compare Netlfix with other services, beyond streaming, like perhaps TikTok.

AspectDirect CompetitorsIndirect Competitors
DefinitionDirect Competitors are businesses or organizations that offer similar products or services within the same industry or market segment. They often target the same customer needs and compete directly for market share.Indirect Competitors are businesses or organizations that, while not offering identical products or services, operate in the same general market or cater to similar customer needs. They indirectly compete for a share of the customer’s wallet.
Product/Service OverlapDirect Competitors typically offer products or services that are closely related or substitutes for each other. Customers often compare them when making purchasing decisions.Indirect Competitors offer products or services that may not be identical but serve similar purposes or satisfy similar customer needs. They might not be compared directly in purchase decisions.
Customer ComparisonDirect Competitors are often compared by customers in terms of price, quality, features, and other factors. Customers might choose between them based on these direct comparisons.Indirect Competitors may not always be compared directly by customers because they offer different solutions or fulfill distinct aspects of a customer’s overall need.
Market CompetitionDirect Competitors engage in direct market competition and often have similar target customer segments. They compete for the same market share and customer base.Indirect Competitors may not compete head-to-head in the same market segment but can still influence each other’s market share by providing alternative solutions.
Pricing StrategyDirect Competitors are more likely to engage in price wars and intense competition on price, as customers can easily compare their offerings. Price becomes a significant competitive factor.Indirect Competitors may compete on value or differentiation rather than price, as their offerings are not directly interchangeable.
Example– For example, in the smartphone industry, Apple and Samsung are direct competitors. They offer similar smartphones with overlapping features and compete for the same customer base.– In the smartphone industry, Apple (smartphones) and Bose (high-quality headphones) could be considered indirect competitors. While they don’t offer the same products, they both target consumers interested in premium audio experiences.
Customer Decision-Making– Customers’ decision-making regarding direct competitors often involves a side-by-side comparison of features, prices, and brand preferences.– Customers’ decision-making with indirect competitors may involve evaluating the broader context of their needs and considering different aspects, such as lifestyle or use cases.
Marketing FocusDirect Competitors often focus their marketing efforts on highlighting their advantages over competing brands, emphasizing product features, and promoting competitive pricing.Indirect Competitors may focus on educating customers about the unique benefits of their products or services and how they fulfill particular needs or solve specific problems.
Market DynamicsDirect Competitors can have a more immediate impact on each other’s market share, leading to more intense and direct competition.Indirect Competitors can coexist more peacefully in the market, as they cater to different aspects of a customer’s overall needs. Competition may be less direct.
Market Share StrategyDirect Competitors often employ strategies aimed at gaining a larger share of the same market segment. Gaining market share from competitors is a common objective.Indirect Competitors may focus on expanding their market share by attracting new customers or by offering complementary products or services that appeal to a broader customer base.
Collaboration Potential– Collaboration between Direct Competitors is less common, as they are more likely to view each other as rivals in the same market.Indirect Competitors may find opportunities for collaboration or partnerships, as their offerings may complement each other, providing additional value to customers.
Market Entry BarriersDirect Competitors often face lower market entry barriers because they operate within established market segments. Competition may lead to more frequent market entrants.Indirect Competitors may face higher entry barriers, as they might need to educate customers about their unique solutions and create demand in a less-defined market segment.
Market DifferentiationDirect Competitors may differentiate themselves through product innovation, brand loyalty, or pricing strategies.Indirect Competitors may differentiate themselves by offering unique solutions or targeting specific niches within a broader market.
Customer LoyaltyDirect Competitors often have customers who switch between brands based on factors like price, features, or perceived value.Indirect Competitors may enjoy higher customer loyalty if they fulfill specific needs or offer solutions that are not easily substituted.
Market Saturation Risk– In markets with many Direct Competitors, there is a higher risk of market saturation, where customers have many choices, and competition is intense.– In markets with multiple Indirect Competitors, there may be opportunities for market expansion, as each competitor addresses a specific aspect of customer needs.

Perform a Competitor Analysis

Direct competition case study

In a direct competition scenario, you take the current customer base, define a market and industry, and, based on that, look at overlaps with other, similar products.

For instance, if you’re Netflix, you compare yourself with other streaming services:

netflix-competitors
Netflix is the largest streaming video subscription service in the world. Created by Reed Hastings and Marc Randolph in 1997, the company has revolutionized the video content subscription model with over 139 million subscribers in 190 countries. The success of Netflix is due to two factors. The first is a recommendation system that gives suggestions on what customers should watch based on their viewing history. The second is the vast catalog of content on offer – produced by third parties and by Netflix itself. These factors have resulted in Netflix competing against influential TV networks and film producers for viewership.

Indirect competition case study

Another way to look at the competition.

For instance, if you’re Netflix, instead of looking only at the current customers’ overlap, you might want to check where attention is moving.

Based on that you reassess the long-term competition landscape:

It doesn’t mean that you now need to compare yourself to TikTok, rather try to understand what content model and framework TikTok uses to create a loyal users base.

And according to that, revise the business strategy to come up with new ways to conceive content, just like Netflix had done itself, a decade before.

Key Highlights

  • Direct vs. Indirect Competition:
    • Direct Competition: It involves comparing a company with similar competitors in the same industry. For example, Netflix would be compared to other streaming services.
    • Indirect Competition: This approach focuses on a company’s core assets and potential long-term overlaps. For Netflix, its core asset might be attention, leading to comparisons with services like TikTok that also capture attention.
  • Direct Competition Case Study (Netflix):
    • Netflix is a global streaming video subscription service with massive success and influence.
    • Key factors in its success include a recommendation system based on viewing history and a vast content catalog.
    • Netflix competes with traditional TV networks and film producers for viewership.
  • Indirect Competition Case Study (Netflix):
    • Instead of focusing solely on customer overlap, this approach looks at where attention is shifting.
    • In this case, the competition landscape is reassessed to understand emerging trends.
    • The example of TikTok is used to illustrate the concept.
    • The goal is to analyze other platforms’ content models and frameworks to adapt business strategies.
  • Strategic Implications:
    • By examining attention shifts, companies like Netflix can anticipate changing audience preferences.
    • This approach prompts companies to rethink content creation strategies and adapt to evolving trends.
    • Netflix’s past success in transforming content creation strategies is cited as an example of how to respond to shifts in competition.

Read: Netflix Business Model

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Competitor Analysis Examples

Competitors Case Studies

Zoominfo Competitors

zoominfo-competitors
Zoominfo is an American software-as-a-service (SaaS) company founded by Henry Schuck and Kirk Brown in 2007. The company sells access to the most comprehensive B2B database in the world to help sales and marketing teams better communicate with prospects. Zoominfo held an IPO in June 2020 raising $935 million. Like similar software companies that are valuable to remote teams, demand for the Zoominfo platform increased because of the coronavirus pandemic. It is now used by over 20,000 businesses, with clients including T-Mobile, Zoom, Amazon, and Google.

Spotify Competitors

spotify-competitors
Spotify is the world’s largest music streaming platform with over 381 million users across 184 markets around the world. The company was founded by Martin Lorentzon and Daniel Ek in 2008 in response to the shutdown of peer-to-peer music service Napster. Spotify became a success because it was the first company to determine how to distribute music legally and compensate the music industry at the same time. The platform now offers various curated music discovery services, music stations, audio customization, and private listening. In recent times, it has also ventured into the streaming of audiobooks, podcasts, comedy, poetry, and short stories.

Poshmark Competitors

poshmark-competitors
Poshmark is a social commerce marketplace where users can buy and sell new or used clothing. The company was founded in 2011 by Manish Chandra, Tracy Sun, Gautam Golwala, and Chetan Pungaliya. Poshmark is one of many companies looking to profit from the explosive growth in the second-hand clothing and resale industry, which is expected to be worth around $51 billion by 2023. Scores of women, in particular, are opting to sell their unwanted fashion items online instead of donating them to charity or thrift stores.

Afterpay Competitors

afterpay-competitors
Afterpay is an Australian fintech company operating in Australia, Canada, the United Kingdom, New Zealand, and the United States.  Founded in 2014 by Nick Molnar and Anthony Eisen, the company enjoyed a first-mover advantage in the buy-now-pay-later (BNPL) space. Less than seven years later, the company reached 13.1 million active customers with gross sales amounting to $10.1 billion. Despite its success, some suggest the company has lost its edge in the buy-now-pay-later space with the emergence of several high-profile competitors exerting their influence and giving merchants more choice.

Carvana Competitors

carvana-competitors
Carvana is an online used car retailer with vending machines located around the United States. The company was founded in 2012 by Ryan Keeton, Ben Huston, and Ernest Garcia III. The company is the fastest growing online used car retailer in North America and was recently one of the youngest companies to be added to the Fortune 500 list. While Carvana is currently the only American company selling cars in vending machines, its growth and success have not gone unnoticed by other players. In this article, we’ll take a look at some of the company’s major competitors.

Carvana Competitors

carvana-competitors
Carvana is an online used car retailer with vending machines located around the United States. The company was founded in 2012 by Ryan Keeton, Ben Huston, and Ernest Garcia III. The company is the fastest growing online used car retailer in North America and was recently one of the youngest companies to be added to the Fortune 500 list. While Carvana is currently the only American company selling cars in vending machines, its growth and success have not gone unnoticed by other players. In this article, we’ll take a look at some of the company’s major competitors.

GoodRx Competitors

goodrx-competitors
GoodRx is an American healthcare company known for its telemedicine platform and a website and mobile app that track prescription drug prices. As part of this service, the company makes drug coupons available for free to consumers. GoodRx was created by Trevor Bezdek, Doug Hirsch, and Scott Marlette. Hirsch, an early employee at both Yahoo and Facebook, got the idea for the company after picking up a prescription with private health insurance and still having to pay $450. Given the high variability in prices between different pharmacies, Hirsh went on a mission to make prescription drug prices more transparent and affordable for ordinary Americans. Revenue in the second quarter of 2021 amounted to $177 million with over 7.5 million app customers using the GoodRx app. While the company was the first to provide a comprehensive list of pharmacy drug prices, new players have entered the market. The rest of this article will be devoted to looking at the main GoodRx competitors.

DoorDash Competitors

DoorDash Competitors
DoorDash is an online food ordering and delivery platform founded by Tony Xu, Stanley Tang, Andy Fang, and Evan Moore in 2013. Together with its subsidiaries, DoorDash has a 56% market share in food delivery and a further 60% in the convenience delivery sector.

Pepsi Competitors

pepsi-competitors
In 1965, PepsiCo acquired Frito-Lay in what the chairmen of both companies called a “marriage made in heaven”. The resultant company transformed PepsiCo from a soft drink organization and set it on a path to becoming one of the world’s leading food and beverage companies.  Today, PepsiCo claims to operate in more than 200 countries and territories around the world with seven distinct divisions and many successful brands.

Coca-Cola Competitors

coca-cola-competitors
The Coca-Cola Company has 21 different billion-dollar brands or brands that generate more than $1 billion or more in revenue each year.  The company also sells its products in nearly every country in the world, with Cuba and North Korea the only two countries where it is not sold officially. What’s more, the Coca-Cola brand is worth $87.6 billion, making it one of the most valuable among all companies. Though these figures allow Coca-Cola to enjoy market dominance in many countries, the company is nevertheless subject to intense competition.

Disney Competitors

disney-competitors
Headquartered in Burbank, California, Disney has global reach and influence with its universally popular resorts, movies, streaming services, video games, and merchandise.  But as one of the largest media conglomerates in the world with a diverse range of products in multiple marketplaces, Disney is no stranger to competition. 

IBM Competitors

ibm-competitors
International Business Machines Corporation (IBM) is an American multinational technology company. It was founded in New York as the Computing-Tabulating-Recording Company in 1911 by Charles Ranlett Flint. IBM is a diverse company with a similarly diverse portfolio of products and services. It produces and sells hardware, middleware, and software. It also offers hosting and consultancy services in nanotechnology and mainframe computers. What’s more, IBM has a strong culture in research and development, filing the most U.S. patents of any business for the past 28 years.

Uber Competitors

uber-competitors

Starbucks Competitors

starbucks-competitors
Starbucks is a multinational coffee chain headquartered in Seattle, Washington. It was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971. From a single and very humble bean roasting store in Pike Place Market, the company is now a global giant operating almost 33,000 stores around the world. This large global footprint obviously increases the competition for Starbucks in many different markets. The coffee industry itself is also highly competitive, with established players including McDonald’s and Dunkin’ Donuts.

Boeing Competitors

boeing-competitors
Boeing is best known for designing and manufacturing commercial aircraft, but the company also produces helicopters, rockets, satellites, spacecraft, missiles, and telecommunications infrastructure. Founded in 1916 by William Boeing in Seattle, Washington, the company is one of the largest aerospace manufacturers and defense contractors in the world.

Google Competitors

google-competitors
While Google (now Alphabet) has been born as a search engine, it is now a diversified company, even though its core business remains search, as most of its revenues still come from Google, the search engine, and YouTube, the “video engine.” However, as a tech giant, which business is primarily based on advertising, the company does compete with Facebook, Twitter, Microsoft (with Bing), and Amazon (with e-commerce search and its advertising machine).

Peloton Competitors

peloton-competitors
Peloton is a media and exercise equipment company primarily making money making money via its fitness products. The idea for the company came from John Foley, who argued that technology could help time-poor individuals get a full workout at home. The company competes with other players like Bowflex, NordicTrack, Life Fitness, MYX Fitness.

IKEA Competitors

ikea-competitors
IKEA was founded in 1943 by Swedish businessman Ingvar Kamprad as a mail-order catalog business. The company is best known for selling affordable flat-pack furniture, but it also sells home accessories and kitchen appliances. Today, IKEA offers approximately 9,500 products across 445 stores in 52 countries. With such broad reach, IKEA is not immune to competition.

Airbnb Competitors

airbnb-competitors
The Airbnb story began in 2008 when two friends shared their accommodation with three travelers looking for a place to stay. Just over a decade later, it is estimated that the company now accounts for over 20% of the vacation rental industry. As a travel platform, Airbnb competes with other brands like Booking.com, VRBO, FlipKey, and given its massive amount of traffic from Google. Also, platforms like Google Travel can be considered potential competitors able to cannibalize part of Airbnb’s market.

Salesforce Competitors

salesforce-competitors
Salesforce is a cloud-based customer relationship management (CRM) provider, allowing businesses to build meaningful and sustained relationships with their customers. With robust, customizable software that integrates with social media, Gmail, and Microsoft Outlook, the Salesforce CRM platform is rated highly among businesses of all shapes and sizes. Recent data has shown that the company has captured 19.5% of the global CRM market.

Shopify Competitors

shopify-competitors
In just fifteen short years, Shopify has grown from humble beginnings to become one of the fastest-growing eCommerce platforms online. The Shopify eCommerce solution is perhaps best suited to users who desire an easy, flexible and affordable starter solution for their online store. The provider now has upwards of 820,000 stores accounting for 20% of the total market share. However, the continued success of any company in the dynamic digital market is never guaranteed.

Netflix Competitors

netflix-competitors
Netflix is the largest streaming video subscription service in the world. Created by Reed Hastings and Marc Randolph in 1997, the company has revolutionized the video content subscription model with over 139 million subscribers in 190 countries. The success of Netflix is due to two factors. The first is a recommendation system that gives suggestions on what customers should watch based on their viewing history. The second is the vast catalog of content on offer – produced by third parties and by Netflix itself. These factors have resulted in Netflix competing against influential TV networks and film producers for viewership.

Nike Competitors

nike-competitors

YouTube Competitors

youtube-competitors
YouTube is the most popular online video platform, a hybrid between a video search engine and a social media platform with a continuous feed prompted by social interactions and engagement. In fact, the platform is so popular that YouTube.com is the second most visited website on the internet. After being acquired by Google in 2006 for $1.65 billion, the platform now boasts over 2 billion registered users. Collectively, these users upload 500 hours of video every minute. The platform competes with other video engines like Vimeo, Dailymotion, and social platforms like IGTV, TikTok, and Twitch.

Zoom Competitors

zoom-competitors
Zoom is a video platform, which enabled remote working. As such it competes with other large tech players like Google and Microsoft for the productivity space, and other startups like Slack and Go-To-Meetings.

Tesla Competitors

tesla-competitors
As an electric automaker and builder of sports cars and now trucks, Tesla’s competitors comprise companies like Ford, Mercedes-Benz, Porsche, Lamborghini, Audi, Rivian Lucid Motors, Toyota, and more. At the same time, Tesla is an electric energy production and storage company (SolarCity); it competes with Sunrun, SunPower, and Vivint Solar. And as an autonomous driving company, it competes with companies like Zoox, Waymo, and Baidu with the self-driving software.

Amazon Competitors

amazon-competitors
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years, Amazon acquired several companies. As it operates across several industries, Amazon has a wide range of competitors across each of those industries. For instance, Amazon E-commerce competes with Shopify, Wix, Google, Etsy, eBay, BigCommerce.

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