What are indirect competitors, and why do you need to know about them?
When you’re plotting your competitive landscape, it seems like there are a lot of market players to keep track of. And that’s because there are. From direct competitors to suppliers and vendors, you need to account for everyone who could impact your business and its ability to thrive. But your direct competitors are the companies trying to sell the same products and compete directly with you on price and features. Indirect competitors may not be one of your biggest rivals right now, but they almost certainly will be someday. These businesses occupy a similar niche in the broader market but don’t directly compete with you. That might sound strange initially, but these types of rivals can significantly impact your business if left out of the competitive landscape analysis. They might not give you sleepless nights now, but they almost certainly will in the future. Read on to learn more about indirect competitors and why they matter so much in this industry.
What Are Indirect Competitors?
Indirect competitors are companies that occupy a similar niche—businesses that serve the same customer but don’t directly compete with you. That may seem confusing and a bit silly but bear with us. Indirect competitors aren’t selling the same products or services as you, but they share the same customers and pool of potential clients and are trying to solve the same problems. Indirect competitors may not be a considerable pain to your business right now—or they may seem like a non-issue. But they’re also not likely doing much to inspire customer loyalty and engagement. In the future, these indirect competitors may be looking for new customers, and those customers may be coming from your business.
Why Are Indirect Competitors so Important?
First, indirect competitors are likely the next big thing in your industry. They are obviously running a successful business, so they’re probably gearing up for growth. That could mean a sudden increase in marketing spending, product development, or expansion that could directly impact your business. Indirect competitors can also be an indication of potential growth in the market. If more companies enter the same space as you, more customers who need solutions to their problems are out there. If you can identify which companies are the indirect competitors and if they’re growing, you can make a more accurate forecast of future demand. Indirect competitors can also show you what features and benefits are in demand. More importantly, they can show you how to differentiate yourself from those competitors and become the obvious choice for customers.
4 Types of Indirect Competitors
When identifying which businesses are your indirect competitors, the first step is to figure out what those businesses are actually doing. The more you know about their business model, the easier it will be to identify which ones could impact your business.
Indirect competitors can have vastly different business models; they don’t have to be direct competitors to impact your business. Here are four types of indirect competitors you can expect to find in any industry: –
- Substitutes: These are the products that are similar to your product but not exactly the same. Substitutes don’t compete with you directly, but they could steal your customers if they gain enough traction.
- Complements: Complements are the products used in conjunction with your product. They’re not a direct competitor because they don’t sell to the same customers. However, if they gain enough traction, they could steal your customers.
- New Entrants: New companies that compete with you directly enter the market. This could be another company with a similar or completely different product.
- Substituting Customers: Customers using your product would be better served by a different solution.
3 Ways Indirect Competitors Can Benefit Your Company
- More Customers: Indirect’s can drive additional customers to your site by solving a problem you can’t. If they’re successfully solving a problem you can’t, they could steal customers from you. If you let them. But if you can identify those companies and understand their offerings, you can pivot your marketing and product development to address those concerns.
- More Competitions: Indirect rivals can also spur you to action. If you know that another company is solving a problem and gaining customers, you’ll have an even greater incentive to develop a better solution.
- Better Solutions: Finally, indirect can inspire you to create a better solution. If you’re watching another company develop a solution to a problem, you can learn from that company’s mistakes and do it better. You might not be the first mover in the market, but you can be the best mover.
2 Ways Indirect Competitors Can Hurt Your Business
Conversely, they can also hurt your business in a few ways. Indirect rvials can undercut your price and profitably steal customers you could otherwise serve.
They can also inspire your customers to engage with their product instead of yours. That could mean a sudden drop in customer engagement and engagement with your brand. It could also mean that your customers are solving the problem they came to you to solve, but they’re solving it with a different solution.
What are indirect competitors, and why do you need to know about them?
In conclusion, the competitive landscape is constantly changing, and your competitors always evolve. That means staying on top of the latest trends and developments in your industry is important. It’s also important to identify and keep track of your indirect competitors. Indirect competitors may not be a huge pain to your business right now—or they may seem like a non-issue. But they’re also not likely doing much to inspire customer loyalty and engagement. This means that in the future, these indirect competitors could be looking for new customers, and those customers could be coming from your business.
