Direct vs. Indirect Competition, Explained

Competition is essential for growth, but only if a company assesses its competitors correctly and improves itself to keep up. In marketing too, analyzing the competition is healthy and can inspire you to learn and adjust the business to better meet consumer needs.

To do this, you need to understand direct and indirect competition and how each can affect your work. Once you know the differences, you can determine how best to identify and rate your competitors, both directly and indirectly.

What is direct competition?

When you think of a marketing competitor, you are probably thinking of your direct competitors. Direct competitors are other companies that offer the same services for the same customer needs in the same market as you.

Let’s say your marketing firm works primarily with restaurants in the western United States. There are certainly other companies specifically focused on restaurant marketing in the western United States and these companies would be your direct competition.

Even in the smallest markets there will be direct competition, which is important to prevent monopolies.

Examples of direct competitions

There are many examples of direct competition. McDonald’s, Wendy’s, and Burger King are all direct competitors. Also think of the infamous fast food chicken sandwich wars when major restaurant chains like Popeyes, KFC, Wendy’s, Zaxby’s and others launched chicken sandwiches to appeal to the same consumer base in the US.

The competition does not only apply to large, national or international brands. Direct competitors are also two women’s fashion boutiques in a small rural town.

Digital companies also see direct competition. Instagram and Snapchat, for example, offer their target audiences very similar features such as story disappearance and direct messages.

Examples of indirect competition

Let’s say we have a customer base in a small town. Customers are hungry and often visit the main street for dinner. There are four large restaurants here, all of which offer different dishes. Although the products on offer are different, the restaurants all serve the same purpose: to feed the city’s hungry customers.

Also, think of a customer who needs to buy gifts for a birthday party. A shop sells clothes. A shop across the street sells jewelry. Despite the different products, the two stores are competing for the same customer.

Direct and indirect competition in marketing

When it comes to marketing, knowing your direct and indirect competition can help you improve your campaigns and even reach new audiences.

The chicken sandwich wars mentioned above are a great example here. Popeyes launched its critically acclaimed fried chicken sandwich with a strong marketing campaign. Direct competitors – other fast food restaurants that sell chicken sandwiches – could use marketing to showcase their own submissions to the so-called competition.

The result? The Chicken Sandwich Wars have received a lot of media coverage in recent years. Customers have lined up in droves at various fast food restaurants to try the latest, and supposedly the best, chicken sandwiches.

On the flip side, analyzing your indirect competition can help marketers reach a wider audience. Knowing that customers who buy gifts can choose between your store and similar stores that sell different products, you can create campaigns to attract those customers. Digitally, indirect competitors can target the same keywords and understanding that can help boost SEO and get your business to the top of the search engine results page (SERP).

1. Customer feedback

A quick way to identify your competitors is to ask your current customers or potential customers. For example, if a potential customer has questions about your product or service, ask them about other companies they are considering for this purchase. Submit feedback surveys asking customers what other brands they are considering and why they chose yours.

2. Market research

This will require some digging on your end. If you have a brick and mortar store, you need to check out similar stores, their websites, and their social media to get a better idea of ​​their stores. Customer surveys can also fall into the category of market research.

3. Social media

Many people share their shopping experiences on social media and forum websites like Reddit. Check out the recommendations people share for the product or service you also sell to help identify the best competitors in your market.

4. Keyword research

For indirect competitors, turn to keyword research. You can use the keywords you are targeting to identify other companies targeting the same keywords and ultimately the same top spot in the SERPs and target audience.

5. Check the SERP

Speaking of SERP, it can also be a handy tool for identifying your competitors. Search your keywords to find out which companies rank high for those keywords to see your indirect competitors.

Track and analyze competitors

Now that you know the differences between direct and indirect competitors, you have narrowed down a list of both that apply to your business. What next?

It is time to conduct a competitive analysis that will help you improve your own business strategies compared to your competitors.

There are several points to consider in a competitive analysis: direct and indirect competitors, products / services sold, competitors’ sales tactics, pricing and sales, marketing and content strategies, and social media and websites.

This comprehensive data gives you a better idea of ​​how your competitors are doing at every level, from the products they sell to customer service, all online and offline.

Researching competitors, products, services, keywords, and marketing tactics results in a huge amount of data that needs to be sorted and organized so that HubSpot’s competitive analytics templates can easily do these tasks.

For example, you can use this content marketing competitor analysis template to track competitors’ strategies in the areas of social media, blogs, email, and SEO.

This multi-feature scorecard enables you to compare your company to its competitors based on a number of customizable attributes.

There are many different templates to consider when creating a visual competitive analysis. So find the one that best suits your needs. It can also be useful to use several for different comparisons.

Use the direct and indirect competitor analysis to your advantage

A bit of healthy competition hasn’t hurt anyone, but you have to know how to play the game. By identifying and analyzing your competitors, you can differentiate yourself from the competition by improving your marketing strategies, focusing on your target audience, and reaching potential new customers.