Just like the name suggests, direct competitors are those types of businesses that offer some form of direct competition to another business. This is opposed to indirect competition, which is less direct and often times not as easy to spot as the direct types. Direct competitors may be divided into the companies that target the same consumer demographic as an organization, that engage in the same type of marketing tactics as a company to lure consumers into patronizing them, and that offer the same or similar type of product or service as another company.
Those companies that target the same type of customers as another company may be viewed by that company as direct competitors. Most companies usually carry out a study of their customer base so as to know the type of people most likely to purchase their products. The result of the study will show the section of the community toward whom they should concentrate their marketing efforts. For instance, a company that produces fashion accessories may find that young women within a certain age group constitute its largest customer base. When a second company that also produces fashion accessories starts to concentrate its effort on the same demographic based on the same study, then that second company may be viewed as one of the first company’s direct competitors.
Other examples of direct competitors are those companies that utilize the same marketing tactics as another company in order to promote its products and to win new customers. For instance, a mobile phone company may decide to offer a free eReader to customers who purchase one of its more expensive phones as a bait to encourage more people to buy the phones despite the high price tag. Another mobile phone company might decide to engage in similar tactics, such as offering its customers a free camera phone for buying a similar expensive phone. This type of company is then one of the first company’s direct competitors.
Perhaps the most obvious form of direct competition is when other companies offer the same type of product as another company. For example, a company that produces vacuum cleaners will consider other companies that manufacture vacuum cleaners as direct competitors. In the same sense, an auto mechanic repair shop will consider other auto mechanics in the area as direct competition since they offer the same kind of services and serve the same demographic of consumers.