Before understanding why you should pay attention to indirect competitors, you have to understand who they are. Indirect competitors exist within your industry, sell to your target audience, but don’t sell the same product or service that you do. So, why do they matter?
They help you understand your audience.
Because they sell a different product than you do, but to the same audience, looking at who your indirect competitors are will help you get a better understand of who your customers are. For example, if you sell curling or straightening irons, you may want to look at indirect competitors who sell hair care products. Talk to your beauty supply distributor about these indirect competitors to determine what hair concerns your customer has. Are they looking for moisturizing shampoos and conditioners? Products that will tame frizz? Whatever it is, this insight is valuable and will help your brand stay in touch with what customers want.
They can give you new marketing ideas.
How are your indirect competitors marketing to your audience? Perhaps they’re using social media influencers or another channel that your brand has not ventured into yet. Take a cue from these indirect competitors and try to reach your audience through these channels, too. If the indirect competitor is a larger brand, they most likely have research that points them in the direction of whatever channel they’re choosing, so it should be a somewhat safe bet.
They may partner with you.
Sometimes, indirect competitors make the best partners. Take a look at the beauty example that was previously mentioned. If a hair care brand partners with a curling iron or straightening iron brand to offer joint discounts or promotions, they may be able to attract consumers that would otherwise not be interested. Beauty supply distributors can merchandise these items together and create unique displays to attract customers and show the new partnership. Other marketing channels should also highlight the new venture. Customers who only buy the hair care may be tempted to try out the straightening or curling iron and vice versa.
They can help you discover new markets.
Although indirect competitors are selling to the same audience that you are, they may also be selling to other groups that don’t overlap with your customer base. Maybe your straightening or curling iron business has focused solely on younger women, however you realize by looking at your indirect competitor that older women are a large, untapped market that you could target with a little repositioning. It might be helpful to look at multiple indirect competitors and figure out what groups are buying from all of your competitors. These consumers will be more likely to invest in trying your product as well. For example, a customer who is only buying shampoo and conditioner may be less likely to buy a curling iron than one who is purchasing shampoo, conditioner, hair spray, and mousse. Obviously, the latter customer is more invested in his or her hair care and willing to try new items.
How do you stay on top of your indirect competitors? Tell us in the comments below!Business & Finance Articles on Business 2 Community