Or: Direct, Indirect, And Replacement Competition
Who is your competition?
In some areas of life, there is an easy answer. If you play on a football team, clearly the other teams are your competition. If you are a football league commissioner, then it’s a little more complicated. You could see other team sports as your competition, from rugby to soccer to baseball. Beyond even that, if you’re a coach of a community team for 15-year olds, you’re trying to compete for the attention and focus of your players. You’re competing with school, music teachers, video games, and raging teenage hormones.
Competition is not as clear cut as we might like it to be. The same applies to marketing.
For example, if you run a pizza shop your direct competition is clearly other pizza shops within the area where you can deliver a pizza. Simply based on the kind of product you provide, there will be many other competitors willing to fight for people’s pizza money. These are your direct competitors.
In addition to direct competitors, you will have some indirect competition. These are businesses that are offering to provide some of the same underlying benefits that you are. In the pizza shop example, any restaurant or grocery store is an indirect competitor. This is because they aren’t necessarily offering the same product, but instead they offer the same benefit of a full belly.
Indirect competition doesn’t stop there though. Businesses can compete indirectly by providing similar emotions through associating with the brand. For most social enterprises, helping the customer feel like they’re making a difference socially and environmentally is part of what is sold. They can often get similar feelings by donating to a charity, engaging in advocacy, or volunteering.
Businesses also compete indirectly by providing different levels of access to their product. Going back to the pizza shop example, there is a clear accessibility advantage for the pizza shop over a business like a grocery store. Getting food delivered to your door without the effort of cooking is a clear competitive advantage if the customer is looking for the easiest way of getting food.
The values your business presents can be another way to compete. If customers care primarily about how workers are treated throughout the supply chain, they will be much more likely to go to a coffee shop that serves fair trade coffee than one that does not. If customers care about the local economy, they’re going to try to buy locally as much as possible. They’ll go to the pizza shop that has partnerships with local farmers over the pizza shop that gets their ingredients at the supermarket.
Some businesses compete nearly exclusively on aesthetics. Some customers will be drawn to a specific look or style. In the food industry, this could be based on the décor of the restaurant, or the music that plays during their meal. This area of competition is about the experience that the customer has while at the business.
I’ve been explaining indirect competitors as different and distinct from direct competitors. This is not quite accurate. Your direct competitors will also be using elements of indirect competition to position themselves as unique options and to carve out loyal customer segments within each of the elements I’ve laid out here.
With all elements of indirect competition, there is an element of branding and positioning that determines where your social enterprise will fit. It is better to define your values and positions to focus on appealing to the customers who want to associate with those values than to try to appeal to everyone.
Beyond even indirect competition, there is a more difficult form of competition that will affect your marketing. Replacement competition is competition on the limited resources of your customers. Replacement competitors are the other parts of society that are competing for the time and attention of your customers.
Part of your marketing is asking your customers to pay attention to your social enterprise. You are asking them to focus their attention enough to understand your offer and decide if they want it. In this area, you are competing with all forms of entertainment, family life, work, news, politics, etc.
Sometimes you will accidentally run into replacement competitions and there was little you could do to stop it. It doesn’t matter how good your offer is if you’re a luxury store in an area that was just hit with a natural disaster. It’s entirely possible that your marketing efforts could be entirely undermined by big news that breaks on the same day. While it is possible to plan for this kind of replacement competition, most of this will occur without warning, and you will have to work around it as much as possible.
In any other situation, you need to be able to explain why your social enterprise is worth focusing on, more than anything else that the customer could be doing at the time. This is easier to do if you have defined a brand with specific values and have crafted an interesting offer within those values.
As you define your brand and craft your offer: keep it simple.