In marketing, we think about the following types of competitors (I’ve taught this in undergraduate and MBA courses):
Direct competitors sell the same types of products with comparable features, pricing, and outcomes, to the same target audience. Examples include Harvard vs. Yale, Honda vs. Toyota, Sears vs. JCPenney, Hershey’s chocolate vs. Nestle chocolate.
Indirect competitors sell similar products or services that could serve a similar purpose for your direct or peripheral customer groups. For example, community colleges vs. in-state four-year colleges, Mercedes Benz vs. Toyota, home ownership vs. renting, specialty restaurants vs. fast food hamburgers, pie or baklava vs. chocolate bars.
Replacement Product Competitors
Replacement products are substantially different products customers could use instead of your product or service to meet their same need. When markets are turned completely on their heads, for example, some vehicle purchasers might skip buying a second Mercedes and buy a motorcycle or bicycle instead (or join a car share club). One example that’s getting recent attention during the current financial downturn and “study from home” environment is Google’s pursuit of attracting students away from traditional university education to pursue Google’s new “Career Certificates.”
What About Your New Forms of Potential Competition?
Have you assessed how your customer’s buying decisions could change in the short term and the long term due to COVID-19? Have you identified what kinds of replacement products this may lead them them to consider purchasing instead of continuing to use your products or services? Working through this idea effectively is necessary to think through how to retain as much business as possible and/or to attract other customers who could use your product as a replacement product for an alternate product that is now not working for them (budgetary or movement constraints, etc.).
If you haven’t considered this – or you are feeling challenged by this – Burkhardt & Co. is here to help. Our consulting services are one option for you. Purchasing our Competitive Intelligence Workbook is another option for you.