Are Your Competitors?
Your competitors are not always who you think they are.
For example, if you are a manufacturer of popcorn products,
your direct competitors are probably other brands of popcorn in
the market. But what about tortilla chips, peanuts, snack mixes,
or potato chips? And what about rice cakes, candy bars, cake/pie
items, rolled candy, gum, or frozen confections? The target
consumer may be making a choice among all these items for a
"snack" purchase, including popcorn! Or the target
buyer may be considering a drink purchase among alternatives for
A company must narrow its choices and decide which industry,
product or service categories, brands, geographic areas,
channels of distribution, etc., to compete in. Without this
knowledge and analysis, your marketing programs will not be
effective and efficient, particularly if you have a very limited
Competitor levels. It may help to think of your
competitors as a series of levels, ranging from your most direct
competitors to those who are more remote.
- First level: the specific brands which are direct
competitors to your product or service, in your geographic
locality. In many cases, these competitors offer a product
or service which is interchangeable with yours in the eyes
of the consumer (although of course you hope you hold the
advantage with better quality, more convenient distribution,
and other special features). For example, if you operate a
local garden center, you may compete against the other
garden centers within a 10-mile radius.
- Second level: competitors who offer similar products in a
different business category or who are more geographically
remote. Using the example of the garden center, a discount
chain that sells garden supplies and plants in season is
also your competitor, as is a landscaping contractor who
will provide and install the plants, and a mail-order house
who sells garden tools and plants in seed or bulb form. None
of these competitors provides exactly the same mix of
products and services as you, but they may be picking off
the most lucrative parts of your business.
- Third level: competitors who compete for the
"same-occasion" dollars. Inasmuch as gardening is
a hobby, third-level competitors might be companies that
provide other types of entertainment or hobby equipment;
inasmuch as gardening is a type of home-improvement,
competitors might be providers of other home-improvement
supplies and services.
As another example, one tortilla chip brand competes directly
with other tortilla chip brands in the tortilla chip segment of
the salty snacks category. It also competes with all other salty
snacks such as potato chips, fried curls, nuts, and other forms
of salty snacks. It may also compete with non-salty snack items
like candy bars, cookies, and ice cream. Other competitors may
include an even broader definition of "snack
occasions," to include beverages and sandwiches.
The point of this analysis is to consider carefully, from the
buyer's point of view, all the alternatives that there are to
purchasing from you. Knowing that, you can attempt to make sure
that your business provides advantages over your competitors,
beginning with those who are in the most directly similar to
you. In fact, you can even borrow ideas from second- or
third-level competitors in order to compete more effectively
against your first-tier competitors.