Direct vs Indirect Competition – What’s the difference?

Imagine this.

You have just finished your long working day, and you want to eat something delicious.

A burger!

The first thing that gets on your mind. 

Mmm, you can already feel the smell of it. The taste of it.

And you can’t wait to have it in your hands. 

The next thing that comes to your mind is – where should I go to get the burger?

McDonald’s or Burger King? 

Trust me; I know this can be a very tough decision.

McDonald’s and Burger King are perfect examples of direct competition. 

Aside from direct competition, there is also indirect competition.

And in today’s article we will talk about both of them, the differences between them, how to get to know them, and how to beat your competition, so without wasting any more time, let’s dive in: 

What is Direct Competition?

Direct competition means that two or more businesses offer the same product or service and compete for the same market, to satisfy the same customer need. As I said, McDonald’s and Burger King are the perfect examples of this. There are lots of other great examples for direct competition, like Google vs Yahoo, Samsung vs Apple, Instagram vs Snapchat, and one of my favorites Drift vs Intercom. 

what is direct competition

The direct competition also extends down to the lower retail market, for example, two people selling different iPhone cases. 

How to know who your direct competition is?

There are 2 simple ways:

Customer feedback: As you know, before a customer picked as their choice, they probably had a couple of other considerations in their mind. You can ask your existing customers which companies they were evaluated before choosing you. And you can ask your potential customers which companies they are considering to better understand what they are looking for. 

Online: You can check online forums like Quora and Reddit, and trust me, you will be amazed to see how many interesting things you can find there that can help you improve your business. 

Okay, we talked about Direct Competition, now let’s see what indirect competition is: 

What is Indirect Competition?

Indirect competition means that two or more businesses compete for the same market to satisfy the same customer need, but offer different products or services. Let’s say, for example, you open a grill bar, and on the other side of the road is a pizzeria. When people want to eat something, they can either come to you and eat tasty steak, or they can go to a pizzeria and eat some pizza. 

what is indirect competition

So pizzeria is not your direct competitor, right? You sell different products. But you compete for the same market (hungry customers) and you compete to satisfy the same need (hunger), which is indirect competition

Here are some examples of indirect competition:

  • Cold beverage and hot beverage
  • Coffee and tea
  • Aspirin and ibuprofen
  • Margarine and butter 

How to identify indirect competition online?

You can identify them by doing keyword research. 

Most of your customers search for specific keywords to find the right solution. You can identify your indirect competition using these specific keywords.

Tip: You can use SEMRush to find how often these words are being used.

Keep one thing in mind, this is just one little aspect of everything, variety is endless and can be a lot different. 

The difference between Direct and Indirect Competition

The difference between direct competition and indirect competition is obvious: They don’t sell the same product, but they compete for the same market to satisfy the same need. 

How to get to know your competition

One thing that can help you make your products, services, and marketing stand out is: getting to know your competition.

How can you do this? Well, here’s how:

1- Know who your competitors are

If you have a retail store, your competitors are other stores that sell similar merchandise. (direct competition)

But at the same time, you are competing with businesses that are meeting the needs of your customers with different products than you. (indirect competition)

Knowing both of them can give you a huge advantage. 

2- Find out everything you can about your competition.

Pay attention to the things your competition does, read their articles, study their website, and if possible shop them secretly to see what they are doing firsthand. 

Here are some things that you need to know about your competition:

  • the products and services they provide and how they market them
  • their prices
  • their values
  • business methods
  • things they do to enhance customer loyalty
  • their online activities 

You should also find as much as possible about your competition customers, things like: 

  • who are they
  • what products or services they buy from them
  • what customer is looking for 

3- Develop relationships

You probably heard a quote from Sun Tzu: Keep your friends close and your enemies closer”

I love to say it like this: “Keep your friends close and your competitors closer” and if you happen to turn “the enemy” into a friend, all the better.

Feel free to reach out to your competitors. Join industry and business networking associations so you can get to know people. You never know where those relationships might lead.

4- Let your competitors make you better

When a competition is doing better than you, try to figure out why.

When you do that, figure out what you can do to make your services and products better. 

Okay, let me guess, you are wondering how to beat your competition? 

I knew it, and that’s why the next thing we are gonna talk about is exactly that, how to beat your competition.

How to beat your competition

You, as a business owner, have to become an expert at monitoring all the types of competition that might be influencing your outcomes. You can use this to understand what’s going on in the customer’s mind, and then you can tailor messaging accordingly. 

1. Keep an eye on all competitors: economics, business, and trends

Understanding your customers is one of the most important things you can do to help improve your business. You need to know what trends, new products, and even economics might be affecting their decision-making for purchasing your products. 

It’s not enough just to offer great customer service; you also have to understand how they think about buying your products so that you can take all factors into account when creating a marketing strategy or package deal.

What makes customers buy from your competitors? 

What do they currently value in their life?
Why do they think twice?

Every business, from eCommerce and agencies to pet shops, needs to better understand these things and use them to build better relationships with their customers

2. Provide helpful content

Whether you’re a big company or a freelancer, your content is how you interact with other people. Keep in mind – it’s not about talking about how amazing your products and services are. It’s about showing your potential customers how your products and services can help them. 

For example, a marketing agency can publish content that helps potential clients use Social Media more efficiently or even how to choose an agency that fits their needs.  

Providing helpful content should support the customer’s journey rather than promoting your brand.

A well-integrated marketing strategy, including content, can help your company stand out no matter what the competition. It might lead to more significant and positive brand awareness, higher retention of existing customers, and greater connection to potential customers.

3. Communicate on social channels your customers are using 

To make your customers stick with you and your business no matter what, you need a real relationship. 

Building that kind of relationship with your customers involves not disrupting them with intrusive banner ads and spam. 

Hell no!

Instead, use different channels like Email, Messenger, and SMS platforms to talk with potential customers, share information, fix problems, and nurture the relationship. 

This will make sure people are happy enough to come to you when they need to buy something related to your company. 

4. Become a guide for customers

You should take your customers and guide them towards success. Communicate with them. Make sure they are getting an incredible amount of value from what you sell. 

By doing all these things, you will create a close relationship with your customer, and you‘ll keep them with you.

Conclusion

We talked about direct competition, indirect competition, the difference between them, how to get to know your competition, and how to beat your competition, and here’s a takeaway from all this:

No matter what product or services you offer, competition is something that is always gonna be there. And it’s up to you how you will use it. 

Will you use it as motivation to work harder?

Will you use it to improve your productivity? 

Will you use it to improve your product and your business? 

That’s something you have to answer yourself. 

One thing to keep in mind: Fair competition is great; It forces everyone to give their best. But not everyone is playing fair. There are always people who think that the best way to build their business up is by tearing others down. Don’t be one of those people. There are a lot better ways to “beat” your competition 😉


Frequently Asked Question


What are the 3 types of competition?

Three types of competition are direct competition, indirect competition, and secondary competition.


What’s the difference between direct and indirect?

The difference between direct competition and indirect competition is obvious: They don’t sell the same product, but they compete for the same market to satisfy the same need. 


What are examples of indirect competition?

Some examples of indirect competition are: cold beverage and hot beverage, coffee and tea, aspirin and ibuprofen, margarine and butter.

direct vs indirect competition

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Mert Aktas

Mert is the Marketing Manager of UserGuiding, a code-free product walkthrough software that 2000+ companies trust in their user onboarding.

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