Competition – Direct and Indirect

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Direct and indirect competition is when one product faces immediate threat of not selling because of another product. For example, iPhone and the Samsung Galaxy S2. A popular video on Youtube was displayed where the iPhone and Samsung were dropped from different heights, and the durability of the Samsung was a lot better. The two products were rated similar with regards to capacity, display, etc. Hence, durability was a significant factor that it was better than the iPhone. This is an example of direct  competition because they are both smartphones, who serve the same function (entertainment + communication), therefore pose a threat towards each other.

On the other hand, indirect competition is when another thing which serves quite the same function. A computer would be the indirect competition of the iPhone because it can also allow the user to communicate with someone else through applications such as Skype and iChat.

In class, we made a broadcast to show our knowledge about indirect and direct competition. This has allowed us to learn more about the word “markets” in the guiding question because we then comprehend how the market can be affected by products which are directly and indirectly related to each other. We also learn that specifications that the different products hold can affect the choice of the buyer.

This is also related to Needs and Wants because it allows us to know more about “Wants”. Buyers obviously want the best product available, therefore will look at the product with the best benefits.

Direct competitors

1. Offer the same products and/or services as you offer your customers
2. Have the same targeted demographic of customers

A good example of a direct competitor for a food truck is another food truck or fast casual restaurant that sells the same style of cuisine.

Indirect competitors

are a little more difficult to categorize in the mobile food industry. Although a restaurant may sell the same type of cuisine that you do, if they’re classified as a fine-dining establishment, you likely won’t be competing for the same customers.