Direct
Competition - this is the most obvious and
typically the only competition that companies examine
when they consider who might be taking their customers
away. Direct competitors are typically those
competing for the same dollars (e.g. sales of the same
product), from the same customers (e.g. demographics),
in the same market (e.g. geographic).
In-Direct
Competition - this concept can be much harder
to consider as it is less obvious. In-direct
competitors typically take dollars that could otherwise
be earmarked for your product/service and direct it to
another purpose. For example, video games are an
indirect competitor for a movie theater. Both seek
to capture the finite discretionary dollars that a given
consumer has to spend on "entertainment". One very
important aspect of identifying competition on any level
is realizing what someone is truly buying, e.g. in terms
of a product or service's value according to Maslow's
Hierarchy of Needs (http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs)...
Competitive
Impactors - many times competition
strengthens itself in ways that are very difficult to
identify "on the surface", yet have a real impact in
improving a company's position in the market. For
example, a company might find lower cost sources for
direct product materials, operating supplies, etc. that
improve their margins. They may not make price
cuts, which are an obvious way to cut into your customer
base....they may instead invest that extra margin in new
products, increased advertising, etc. And those
tactics can definitely give a company an advantage.
With
very, very few exceptions companies today must compete in a
global economy. Even the small, local specialty
company is impacted by more competitive forces than are
typically considered. We often try to position
competition as "competitive forces", more so than just
competition. These forces can be broken into several
key categories...