What is Competition in Marketing and Why It Matters

Competition is an inevitable part of doing business No matter what product or service you sell, other companies likely offer something similar Understanding your competitive landscape is essential for succeeding in today’s crowded marketplace. This article will explain what competition in marketing is, types of competitors, how to conduct competitor analysis, and why monitoring the competition is critical for any business.

What is Competition in Marketing?

Competition in marketing refers to rival companies that sell comparable products or services to your target audience. These businesses actively compete with yours for market share

Your competitors are trying to reach the same customers and persuade them to buy their offering instead of yours. Competition creates consumer choice and incentivizes companies to improve their products prices, and overall value proposition.

Brands must continually analyze their competitors to craft marketing strategies that differentiate them in the eyes of prospective customers. A savvy competitive strategy is the key to gaining an edge over rivals in your industry.

Direct and Indirect Competitors

There are two primary types of competitors in marketing:

  • Direct competitors – Businesses offering nearly identical products or services that appeal to the same target audience. For example, Pepsi and Coke directly compete as leading cola brands.

  • Indirect competitors – Companies that sell different but comparable offerings that could potentially divert sales away from your business. For example, while juice brands don’t directly compete with soda, they are an indirect competitor.

Direct competitors pose the biggest threat and require the closest monitoring. However, you can’t ignore indirect rivals as they may win over your customers. All competitors, whether direct or indirect, impact your marketing strategy and success.

How to Conduct a Competitor Analysis

Doing a competitor analysis entails thoroughly researching key rivals to inform your marketing efforts. Follow these steps:

1. Identify Your Direct Competitors

Search online to find brands selling identical or very similar offerings. Analyze keywords and social media hashtags related to your product. Ask customers what other companies they considered. Compile a list of your closest competitors.

2. Research Their Marketing Strategies

Closely evaluate competitor sites, social media, ads, content, PR, etc. Compare product features, pricing, promotions, messaging, market segments, distribution channels, and overall branding.

3. Benchmark Performance

Gather key marketing metrics for competitors like website traffic, social media followers and engagement, SEO rankings, sales leads and conversions. Compare these benchmarks to your own performance.

4. SWOT Analysis

Analyze competitors’ strengths, weaknesses, opportunities, and threats. Strengths and opportunities represent areas where rivals excel and gaps you can fill. Weaknesses and threats highlight vulnerabilities and warning signs.

5. Identify Key Takeaways

Summarize your findings and determine action steps. What changes will make your marketing more competitive and appealing to customers? Set goals based on insights gathered.

6. Monitor Regularly

Revisit your analysis quarterly to check for competitor changes. Ongoing monitoring ensures you respond quickly to both offensive and defensive moves.

Utilize tools like Sprout Social to easily track competitor social media profiles, keywords, mentions, and more. Automated monitoring saves time and keeps your findings up-to-date.

Why Competitor Analysis is Vital for Marketing Success

Doing a thorough competitor analysis, both initially and on an ongoing basis, provides many benefits that translate into real marketing and sales impact.

Identify Gaps and Opportunities

Learn how you stack up against rivals and uncover gaps where you can improve. If competitors aren’t effectively reaching a market segment, address it. Capitalize on their weaknesses.

Enhance Messaging and Positioning

See what resonates with your audience based on competitors’ messaging and branding. Tailor your own branding and messaging to differentiate from rivals.

Set Benchmarks

Use competitors’ performance as benchmarks to evaluate your own efforts. Establish realistic goals for driving better results in areas like web traffic, social media reach, and lead conversion rates.

Gain Early Warning

Get advance notice of new offerings competitors have in the pipeline. Make necessary adjustments to minimize the impact on your sales and marketing.

Build Competitive Advantage

Mastering competitor analysis lets you track changing market conditions and adapt faster than rivals. Competitive intelligence powers strategies to attract customers, fend off competitors, and dominate your niche.

Types of Competitive Marketing Strategies

Use insights from your competitor analysis to employ offensive and defensive competitive strategies:

Offensive Strategies

  • Identify and exploit competitors’ weaknesses.
  • Release improved products or features before competitors.
  • Use disruptive pricing like price skimming or penetration pricing.
  • Increase marketing investment in channels competitors are ignoring.

Defensive Strategies

  • Match competitor discounts and promotions to neutralize their impact.
  • Highlight key strengths and differences vs. competitors through messaging.
  • Add features to counter new competitive threats.
  • Increase barriers to entry like patents, economies of scale, or brand loyalty.

The most successful brands combine both offensive and defensive strategies based on monitoring competitive intelligence.

Maintaining a Competitive Edge

Vigilant tracking of the competition allows you to continually enhance your value proposition to stay ahead. With regular competitor analysis, you can:

  • React faster to market changes
  • Uncover new opportunities before rivals
  • Make strategic improvements
  • Protect and grow market share

Incorporating ongoing competitive analysis and strategy into your marketing and sales process is essential. Mastering the ever-evolving competitive landscape will set your brand apart and drive revenue growth over the long term.

what is competition in marketing


Michael Fairbanks, author of “In The River They Swim” said the following: “I can predict the future of a developing nation better than any IMF [International Monetary Fund] team of economists by asking one question: ‘Do you believe in competition?’” It is self-evident that when competing with others, individuals are pushed to levels of performance they would not otherwise achieve. The same is true of firms within a market. Without competition, the impetus to continuously innovate and improve is lacking; a higher level of performance is never achieved.

Countries who embrace and encourage competition will reap the rewards. Those countries who fear competition and focus only on its negative effects, often falter and become stagnate.

There are numerous benefits to competitive markets. When firms have to continuously compete with one another for sales and market share, they are incentivized to do so through the provision of goods and services that are superior to that of their rivals. In this environment, firms must constantly strive to outdo one another in providing new, better, and less expensive goods and services. The firm that does this the best “wins.” The consumer, however, is ultimately the winner in this scenario as their subjective needs and wants are being met at a fair, market price.

Because competitive markets drive down prices, this frees up resources for a consumer to spend on other goods and services. Instead of having to spend the preponderance of their money on good X, for example, they now have money to spend on service Y as well. This bolsters business and employment in more industries across the economy.

Competitive markets also encourage the most efficient and valued use of scarce resources. When companies are not driven to focus on costs due to competition, there is less incentive to maximize efficiency and minimize waste. When a market is competitive, firms only succeed when they use those precious resources in the most effective, valuable way possible and waste is diminished.

Market competition does result in some parties “losing.” This loss could come in the form of a company bankruptcy. Whole industries may be destroyed. Jobs are lost. People suffer the financial and emotional toll of those job losses. These are examples of the negative effects of competitive markets that should not be ignored or flippantly belittled.

As challenging as these negative effects are, the net, long-term benefits of competitive markets are much greater. New products and services are created and vastly improve living standards. Items can be purchased at a lower price, freeing up money to be spent elsewhere, and consequently boosting revenues in other industries. New industries are born out of competition and create millions of new jobs.

With competitive markets there is great risk but there is also great reward.

Countries can have uncompetitive markets for a number of reasons, many of which involve a country’s national government tipping the scales in favor of one company over another. A national government can do this a number of ways. One way is through providing a favored company with subsidies or tax breaks, while failing to do so for other companies. Sometimes a politically well-connected firm might secure monopoly power within a particular market at the expensive of all would-be competitors.

The most popular methods of stifling competition employed by governments include tariffs, quotas, and other trade barriers. Employed by governments of both developed and developing countries alike, trade barriers are meant to protect domestic producers from cheaper, foreign imports. Western governments, for example, have protected their agricultural sectors from foreign competition for decades. They have done so through very high tariffs. In the end, this not only hurts the majority of their consumers but also young, nascent firms in the developing world.

Likewise, developing nations erect trade barriers in order to protect their “infant” industries from more mature, foreign competition. The idea is that when those native industries have reached a level that rivals their foreign competitors, the government will cease their protective measures and will allow those same native firms to compete with foreign ones. Unfortunately, this latter step usually does not occur as native firms will continually plead for protectionist policies that are politically popular.

While some parties certainly benefit from uncompetitive markets (i.e. politically favored companies or protected industries) there is an economy-wide net loss. Not-so-favored companies never gain much market share and fail. Companies have to pay higher prices for foreign inputs, cutting into their margins. Lastly, consumers will have to pay higher prices for lower quality goods and services. Combined, these effects damage the economy and can hinder a nation from reaching its full potential.

The Importance of Competition | Intellections

What is market competition?

Overall, market competition is a simple concept that has significant implications in the way firms interact in markets. Indeed, depending on the characteristics of a market, incumbents will choose to compete on the price, quantity or the quality of their product or service.

Why is competition important in marketing?

Competition is an essential aspect of marketing. It refers to the rivalry between businesses that offer similar products or services to the same target market. In today’s highly competitive business environment, it is crucial for companies to understand their competitors and their strengths and weaknesses.

What is competitive marketing?

Competitive marketing is the process of creating and executing a marketing strategy with the goal of outmaneuvering rival businesses to gain market share. In order to be successful, businesses must have a clear understanding of their competitors, their own strengths and weaknesses, and the needs of their target market.

What is marketing competitor analysis?

Marketing competitor analysis is the process of researching and analyzing your competitors’ marketing strategies and tactics to identify their strengths and weaknesses. Look at the four Ps of marketing —product, price, place and promotion—these are four essential factors in marketing a product or service.

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