mdi-chevron-left Go Back


A business rival in the same market.

Business Glossary provided by


Competitors are businesses or entities that operate in the same or similar industry and offer comparable products or services to the same customer base. Competition occurs on various bases, including price, quality, brand recognition, and market share. Understanding competition is crucial for businesses to strategize and position their offerings effectively. Competitiveness can foster innovation and lead to better choices for consumers but can also lead to aggressive market tactics and rivalry.

Context of Use:

The concept of a competitor is used in market research, business strategy, and planning discussions. It is central to analyses that aim to understand the competitive landscape, including the assessment of both direct and indirect competitors.


The purpose of identifying and understanding competitors is to enhance a company’s strategic positioning and operational effectiveness. By analyzing the strengths and weaknesses of competitors, a company can refine its offerings, improve customer service, and develop targeted marketing strategies to better meet the needs of the target audience.


In the beverage industry, Coca-Cola and Pepsi are classic examples of direct competitors because they operate in the same industry, offering very similar products to the same target audience. They continually engage in competitive marketing strategies and business development efforts to outperform each other. On the other hand, companies producing drink alternatives like tea or mineral water represent indirect competitors, offering different but replacement goods that serve similar customer needs.

Related Terms:

  • Market Research: The process of gathering, analyzing, and interpreting information about a market, including the nature of the goods and services, target audience, and competitors.

  • Indirect Competition: Occurs when companies compete against each other for the same customer dollars but offer different, yet substitutable, products or services.

  • Marketing Strategies: Plans created to promote products or services to enhance visibility, meet the needs of the target audience, and maximize profitability.

  • Business Development: Involves tasks and processes to develop and implement growth opportunities within and between organizations.


  1. How can a company effectively understand its competitors? Effective competitor analysis involves conducting thorough market research, monitoring social media, reviewing public company filings, and analyzing marketing strategies and customer feedback. This helps a company understand both direct and indirect competitors' strengths and weaknesses.

  2. What are replacement competitors? Replacement competitors offer products or services that are not identical but could serve as substitutes to meet the same customer needs. For example, if a company sells coffee, a company offering tea could be considered a replacement competitor.

  3. Why is it important to identify indirect competitors? Identifying indirect competitors helps a company to recognize broader market threats and opportunities, allowing for more comprehensive strategy development and risk management.

  4. How do competitive advantages relate to competitors? Competitive advantages are conditions that allow a company to produce goods or services better or more cheaply than its competitors. These can include superior product quality, brand reputation, or unique technology.

  5. What role does social media play in competitive analysis? Social media platforms are valuable tools for observing competitors’ marketing activities and customer engagements. Analyzing these can provide insights into competitors’ strategies, customer preferences, and potential areas for improvement in one’s own business.

View Glossary Writing a Business Plan?

Starting or Running a Business?

Generate a business plan in minutes.

Get Started
Business Owner