Competitors Analysis To Increase Your Profitability

Competitors are definitely one of the most important factors to consider when running a business. In addition, we all think about employees, suppliers or shareholders when making decisions. However, many businesses (more often small businesses) forget to consider the competition, which can be a fatal mistake. But how is competition taken into account, and what is the point?

First, it’s important to remember that not all competitor types affect us in the same way. According to how they affect us, we can distinguish three different types.

Competitor Types

Direct Competitors

They offer the same or very similar product. For example, if we were the owner of a movie theater, our direct competitor would be another movie theater in the area. For customers, they are interchangeable, so they choose one or the other based on quality, price, accessibility, etc.

Substitute Competitors

They offer a similar product or service but run a different business. For example, a person who likes to go to the movies would probably not be satisfied watching the same movie on a streaming platform. However, if that person is only interested in the movie, they probably don’t care if they watch it in a movie theater or in their living room.

Available Spend Competitors

Finally, available-spend competitors has completely different products or services, but customers come to them for the same reasons. Friends who don’t know what to do can go to the movies, but they can also go bowling or the theater. A couple planning a weekend getaway might go to the movies, but they could also go to the aquarium or go hiking.

How To Deal With Competition?

You need to ask yourself the following question: Why do customers come to your business? Why do they choose your company over the offers available? And more importantly, why wouldn’t they?

At first, it may seem easy to deal with direct competition. They are easy to identify, and it is enough to offer a quality service at a competitive price, right? However, the truth is that it is not that simple. It is more important to differentiate yourself from others, and for that, you have to know them. What kind of customers goes to your competitor? What is their market share? Moreover, what are their prices?

It is vital to have all this information when considering a strategy. Otherwise, we may waste resources on poorly targeted advertising campaigns or try to compete by lowering prices when that was not the problem in the first place.

It is essential to include our indirect competition in this analysis as well. It is often easy to overlook them and not realize their effect on us until the adverse effects are evident. We are usually focused on our immediate environment and cannot see the bigger picture. For this reason, it may be advisable to seek professional help with the tools and perspective that we lack. 


Analyzing the competitors can give you information about the market, help you notice new opportunities, and perceive weaknesses that would otherwise go unnoticed. Therefore, it is always advisable to carry out this type of analysis regularly to ensure the good health of our business. Contact us to learn more about the possibilities.

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