A business that offers different products or services but targets the same customer base.

An indirect competitor refers to a business that offers a different product or service but satisfies the same underlying customer need or desire as your business [1, 2]. While they might not be direct competitors in the traditional sense, they still compete for a share of your target audience’s attention and resources.

Here’s a breakdown of the key characteristics of indirect competitors:

  • Different Products/Services: Indirect competitors don’t offer the exact same product or service as your business.
  • Shared Customer Needs: However, they target the same customer needs or desires, albeit through different solutions.
  • Competition for Attention: Both your business and indirect competitors vie for the same customer segment’s attention and budget allocation when they make purchasing decisions.

Examples of Indirect Competition:

  • Coffee Shop vs. Smoothie Bar: Both cater to the need for a pick-me-up or refreshment in the morning, but one offers coffee while the other offers smoothies.
  • Streaming Service vs. Movie Theater: Both provide entertainment options, but a streaming service offers on-demand content at home, while a movie theater offers a big-screen experience and social outing.
  • Taxi Service vs. Ridesharing App: Both provide transportation solutions, but a taxi service might be more traditional and hail-based, while a ridesharing app offers on-demand booking and potentially lower fares.

Why Indirect Competitors Matter:

  • Understanding the Landscape: Identifying indirect competitors allows you to have a more comprehensive understanding of the competitive landscape you operate in.
  • Alternative Solutions: Customers considering your product or service might also be considering solutions offered by indirect competitors.
  • Broader Market Trends: Indirect competitors can reflect broader market trends and consumer preferences that you might want to consider in your strategies.

How to Deal with Indirect Competition:

  • Focus on Your Value Proposition: Clearly articulate what makes your business unique and the specific value you offer to customers compared to both direct and indirect competitors.
  • Highlight Your Strengths: Emphasize the strengths of your product or service that differentiate you from indirect competitors, even if they offer a seemingly substitute solution.
  • Stay Informed: Monitor the offerings and marketing strategies of indirect competitors to understand how they are approaching the market.