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What is competition? How to classify and track 3 types of competitors: Direct, Indirect and Substitute?

What is competition? How to classify and track 3 types of competitors: Direct, Indirect and Substitute?

Competitors are firms, operating in the same market, offering same products, and targeting same customers and solving same problems

What is competition rivalry? Set of competitive actions that occur as firms maneuver for an advantageous market position

Three main types of competitors are direct, indirect, and substitute. All 3 competitors solves the same problem.

Let's analyzer human hunger problem.

Direct competitors sell similar products in a similar market, A customer that buys a competitor's product won't buy yours.

Think McDonalds and Burger King in US, both going after fast food markets, cheap fast food, aimed at solving hunger problem.

Indirect competitors sell different product but solves same problem and target same customers.

Think subway, not selling burgers, but satisfying human hunger.

Substitute competitors do not target same customer but solves the same problem.

Think grocery purchase from Subway as a substitute of eating at McDonalds.