The 4 Types of Competitors You Need to Start Tracking Today

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TL;DR

  1. You have competitors (probably in a good number), and they can be:
    • Direct competitors
    • Indirect competitors
    • Replacement competitors
    • Potential competitors
  2. Sometimes, it makes sense to partner with indirect, replacement, or potential competitors
  3. There are several ways to find your competitors
    • Understand your target audience
    • Run a SWOT analysis
    • Monitor your competitors (start with a Google search, and if you’re down to it, try a competitive intelligence tool)

When you came up with your latest business idea, chances are you thought you were building the next unicorn and that your product would disrupt the industry.

13/10 for the attitude, but.

While your idea was probably great, the reality is no product is built in a vacuum, and it’s very likely that other founders had a similar idea (or will, sooner rather than later.)

Depending on the industry you want to disrupt, you’ll face some competition, and you’d better be prepared because it can become very fierce very fast.

Knowing who your competitors are is the first step to building your competitive intelligence program.

In this article, we’ll look at the types of competitors you can encounter and how to start monitoring them quickly.

Let’s get the ball rolling.

Who Are Your Competitors, and Why Should You Track Them?

As a SaaS business, your competitors are mainly other businesses that sell the same or similar products. However, this is just a partial definition, as you can have different competitor types depending on your target audience, market share, and other factors.

But first, let’s stop for a minute to see some of the benefits of gaining insights from other successful businesses that share a direct or indirect connection with your products or services. By keeping an eye on your competitors, you can gain a competitive edge, improve business operations, and achieve strategic goals. To give a few examples:

  1. Be the best-informed business: i.e., by gathering and analyzing CI, you could proactively anticipate industry shifts and adapt your strategy, maintaining your leadership position.
  2. Identify market threats and opportunities: i.e., by observing a competitor’s struggle with a new regulation and quickly adapting your services to comply, you could gain a first-mover advantage.
  3. Understand strengths and weaknesses: i.e., by identifying gaps in a competitor’s product line and introducing complementary products, you could capture untapped market segments.
  4. Improve product offerings: i.e., by studying the features and performance of competing products and integrating features into your product, you could increase your industry appeal.
  5. Inform your pricing: i.e., by observing how competitors price similar services, you could adjust its pricing strategy to offer better value, attracting more clients.
  6. Understand customer expectations. i.e., by analyzing feedback on your competitors’ products, you could improve your software’s user interface and increase customer satisfaction.
  7. Counteract on competitor strategies: i.e., by monitoring a competitor’s marketing tactics, you could refine your messaging and targeting, capturing a larger market share.

What Are The 4 Types of Competitors in Marketing?

Understanding your business competitors helps you strategize better and has the potential to improve your business overall. Let’s now look at the four types of competitors you’ll generally find if you are in B2B and give some examples.

Table showing the 4 types of competitors to track

A quick note: As we focus on the B2B segment, you won’t find Coke and Pepsi, streaming services comparisons, or coffee shops in the same neighborhood, even if they are classic examples of competitors.

1. Direct competitors 

Direct competitors are businesses offering the same products or services as you do in the same niche or the same target market. An example of direct competition for B2B is in the crowded SEO tools space; while your first thought may go to Ahrefs or Moz, tons of new SEO alternatives are entering the space weekly. They’re in the same market, targeting similar customers with the same pain points with comparable products.

How a direct competitor impacts your business  
Direct competitors drive innovation, push for product/service enhancements, and provide insights on the same customer needs. Monitoring them helps differentiate your offering, attract customers, retain market share, and stay ahead. Find direct competitors through market research and closely monitor their strengths, weaknesses, and pricing strategies to effectively position your product or service.

2. Indirect competitors

Indirect competitors solve the same problem as you with a different product or service (aka, they’re probably in a different industry) but still compete for the same customers as you do. To continue the example above, a tool like SurferSEO can be considered an indirect competitor to Ahref as it also provides keyword analysis but focuses on content marketing.

How an indirect competitor impacts your business performance  
Indirect competitors broaden your understanding of your market. They can influence customer preferences and expectations, nudging you to expand your offerings further or improve your product or service. For instance, in the B2B space, as artificial intelligence started to gain traction, every business followed suit or came up with innovations to stay competitive.

3. Replacement and substitute competitors

Replacement or substitute competitors offer an alternative product that customers might use instead of yours. Let’s resume our example of SEO tools: with the rise of generative AI tools, something like Jasper could replace Ahrefs completely, changing how writers produce content.

How replacement competitors influence product positioning 
Replacement competitors can drastically shift market dynamics and consumer habits. Staying aware of substitutes can help you innovate or diversify to maintain your market position.

4. Potential competitors

Potential competitors are those not currently in your market but have the capability to enter it. For example, Grammarly doesn’t offer keyword research. Still, it is a digital writing tool that includes grammar checks and writing suggestions, so it can potentially enter the SEO market as a replacement competitor.

Potential competitors and the importance of staying ahead 
Knowing about potential competitors is crucial for long-term planning. It encourages continuous improvement and innovation, ensuring you're always offering something valuable and unique that keeps you ahead of anyone who might enter the fray.

[BONUS] Partner with your competitors

Unless you are Samsung and Sony (and it’s 2004), I would advise against partnering with your direct competitors.

Indirect competition and other types of competitors are an entirely different story. A potential competitor, or even a replacement competitor, could become partners and cater the same need to the same customer base in the same industry with joint solutions.

In the same digital space, SurferSEO partnered with Jasper to provide keyword research and help you rank your content written with the help of generative AI. Together, they provide a more comprehensive and innovative solution for businesses targeting their customers.

By partnering with others in your industry, you gain access to more resources, ideas, and expertise for new developments and improved services, enhancing customer satisfaction.

3 Ways to Find Your Competitors

Understanding your business competitors’ strategies and strengths can give you an edge in the market. Here are three quick competitive analysis strategies that every business should consider implementing.

1. Understanding consumer preferences and behavior

One of the most important aspects of competitive analysis is understanding your target audience’s preferences and behavior. You can tailor your offerings and marketing strategies to meet their needs by gathering insights into what drives their purchasing decisions.

Perform market research, gather customer feedback, and analyze data from social media to gain a deeper understanding of your target audience. This will help you identify any gaps in the market that you can exploit and ensure that your strategies align with consumer preferences.

2. Leveraging SWOT analysis for competitive advantage

Conducting a SWOT analysis can help you identify your company’s position in a given industry compared to your competition.

By evaluating internal factors, such as the resources and capabilities of your sales team, and external factors, like market trends and customer behavior, you can gain valuable insights and identify opportunities in areas where improvement is needed.

Graph showing a SWOT analysis graph in the context of identifying the 4 types of competitors you need to track
Image Source

3. Monitoring competitor activities

You can gain insights into your competitors’ marketing strategies, product offerings, and customer interactions by monitoring their activities with competitor research.

a. Google search results

A simple Google search can reveal a lot about your competition. By entering your competitors’ names in the search bar, you can see what keywords they are targeting, their website content and design, and even their social media presence. This information can give you an idea of their marketing strategies and success in reaching their target audience.

b. Website tracking

By tracking your competitors’ websites, you can understand their online presence, including their design, content, and user experience. Pay attention to how they showcase their products or services and what unique features they offer.

c. Social media

Social media platforms offer insights into competitors’ activities, promotions, and customer interactions. Monitor their pages to understand strategies and make informed business decisions.

d. Email marketing

Signing up for email alerts from your competitors can provide valuable insights into their promotions, sales, and product launches. You can analyze the frequency and timing of these emails to understand their marketing tactics and how they keep their customers engaged.

e. Search engine rankings

Keeping an eye on your competitors’ search engine rankings is a crucial part of competitive analysis, as they likely target the same keywords. By monitoring their backlinks and keywords online, you can gain insights into their SEO strategy and determine areas where you can improve your website’s ranking.

f. Customer reviews

Reading customer reviews on your competitors’ websites or third-party review sites can give you a sense of their overall customer satisfaction and identify common issues. This information can help you better shape your products and services to meet your industry’s customers’ needs.

g. Use a competitive intelligence tool

Utilizing a competitive intelligence tool can save you time and effort in gathering information on your competitors.

CI tools help you centralize and harmonize your data across your organization’s departments, saving you time, improving the quality of your intel, and giving you the competitive advantage you need to focus on what really matters.

A tool like Unkover allows you to track your competitors’ website pages and email marketing to easily compare and analyze your performance against that of your competitors.

Wrapping Up

Use the tips and tools we describe in this article to gain valuable insights into your competitors’ strategies and attract more customers.

Manually monitoring and analyzing your competition can be time-consuming and give subpar results. Consider using a tool like Unkover as your source of competitive intelligence, and start monitoring your competitors today. Get started today!

Competitor analysis FAQs

Any additional questions about competitor analysis and the difference between a direct competitor and indirect competition? Check out our FAQ section below for answers to some common questions.

What are the different types of competition?

Direct competitors offer similar products or services as you do, targeting the same audience. Direct competition operates in the same market and competes for the same customers.

Indirect competitors are businesses that offer substitute products or services to yours. These companies may not necessarily target the same audience but can still impact your business.

Replacement competitors are businesses that offer products or services that can be used in place of yours.

Potential competitors are businesses that could compete directly with you in the future or expand their offerings to compete with you.

How do competitors affect a business?

All types of competitors influence a business’s strategy and success by fostering innovation, meeting customer needs, and necessitating strategic planning and differentiation.

Direct competitors boost innovation, enhance products, and adapt to trends. Indirect competitors enhance market insights, shaping adaptations based on evolving consumer preferences.

Replacement competitors drive innovation or diversification to maintain relevance amidst industry shifts and changing consumer behaviors.

Potential competitors foster improvement and innovation, ensuring competitiveness and distinctiveness against new players.

Why are competitors important in business?

Competitors play a crucial role in shaping the success of a business. They provide valuable insights into market trends, consumer preferences, and industry dynamics that can help businesses stay relevant and competitive.

By closely monitoring your competitors and performing market research, you can identify strategic opportunities for growth and pivot your strategies to meet customer expectations.

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