Identifying your competitors as soon as possible is key when developing the strategy and the value proposition for a new business. There are four types of competitors:
- direct: these competitors try to solve the same problem for the same customer group, hence their products or services are quite similar and in the same price group
- indirect: these competitors try to solve the same problem for a different customer group (that can be smaller, bigger or from another industry/business vertical) in a different way
- potential: this type of competitors offer a different product or service for the same customer group
- substitute: also called phantom competitors, are the businesses that sell a different type of product or service, but one which your customers could choose to spend their money instead (e.g. McDonald’s and frozen potatoes from Kaufland)
