Posted in Marketing and Strategy Terms, Total Reads: 1529
Any person or entity that is in the same industry or a similar industry, or which offers a product similar to that of another person or entity, is called its competitor. The presence of competitors make the market competitive, driving down the prices and margins on goods and services, as the competitors attempt to gain a larger market share by competing on prices i.e. lowering its prices more than its rival.
Example: Pepsi and Coca-Cola have been long standing competitors in the Foods and Soft Drinks Industry. In the aeroplane industry, Boeing and Airbus would again be long-time competitors. The same goes for Hindustan Unilever, Procter and Gamble, and ITC competing in the Indian FMCG industry.
There are three types of competitors namely:-
1) Direct Competitors – Similar products and revenue goals
2) Indirect Competitors – Similar products but different revenue goals
3) Replacement Competitors – Substitute products, same customer time/money
Competitor is an important aspect to look at before entering a market and is, hence, a part of both Porter’s 5 Forces and the 5C Analysis. These two tests help analysis a market with respect to its attractiveness to competitors.