Imagine you're a fitness creator. You spend your days battling other fitness accounts for views and followers.
But the people who didn't sign up for your program this month?
They actually downloaded a meditation app, started running outside for free, or got hooked on the Yoga With Adriene YouTube channel. And while none of those things look like your typical competition, they just ate your lunch (or rather, your business).
Direct competition refers to companies that offer the same products or services you do. Indirect competition refers to businesses whose offerings differ from yours but could satisfy the same customer need.
Let's break down the difference, look at real examples, and figure out how to spot and beat the rivals hiding in plain sight.
TL;DR
- Direct competitors sell the same thing to the same people; indirect competitors solve the same customer need in a completely different way.
- Indirect competition is often the bigger threat because you don't see it coming.
- Identifying both types of competitors helps you differentiate your brand, sharpen your messaging, and stop losing customers to alternatives you never considered.
Indirect Competition: The Competitors You're Not Watching
Indirect competition occurs when a business offers a different product or service than yours that satisfies the same customer need. Their business models typically don't look anything like yours, so they're easy to ignore.
Example: A fitness creator isn't just competing with other fitness creators — they're competing with meditation apps, outdoor running (no subscription fee), and free YouTube workout channels. All of them are fighting for the same customer who woke up thinking, "I want to do something good for my body and mind today."
The products are very different, but the goal is identical.
This matters because the alternatives your customers actually choose often aren't the businesses you'd expect. If you only watch the obvious rivals, you'll keep losing people to options that aren’t even on your radar.
Direct competition vs. indirect competition
Direct competition refers to a company that offers the same product or service as you, at a similar price, to the same target audience.
These are the rivals you already know about because they look like you, price like you, and chase the same customers. Because they're so easy to spot, most businesses pour all their energy into out-competing them. That's fine, but it's only half the picture. Building a strong marketing strategy means accounting for the competitors you can't see, too.
Direct competition | Indirect competition | |
|---|---|---|
Product offered | Same product or service | Different product, same need |
Audience overlap | High: same target customers | Partial: overlapping needs |
Pricing similarity | Similar price points | Often very different |
Threat visibility | Obvious, easy to spot | Hidden, easy to miss |
Example | Chili’s vs. Applebee's | Chili’s vs. home cooking |
Competitive response | Out-feature or out-price | Reframe the customer need |
You can beat a direct competitor by being faster, cheaper, or better at the same thing. But to beat an indirect competitor, you need to understand the deeper need your customer is trying to meet and own that need better than any alternative can.
Here are some examples of what that looks like in practice.
4 Examples of Indirect Competition
Let’s explore what indirect competitors could look like in different industries.
1. McDonald's vs. meal kits and home cooking
Most people assume McDonald's only competes with other fast-food joints and cafes. In reality, they also compete with meal-subscription boxes like Blue Apron and HelloFresh, home cooking, and health-focused diets. All of them answer the same question: "How am I feeding myself tonight?" But the products couldn't be more different: a drive-thru burger, a box of pre-portioned ingredients, or whatever's in your fridge.
2. Spotify vs. podcasts vs. audiobooks
Spotify, podcast apps, and audiobook platforms are all different forms of entertainment, but they're fighting for the same thing: your attention and commute time. The need is for on-the-go entertainment, and whether someone presses play on a playlist, a true-crime podcast, or the latest bestseller, that's time they're not spending on your audio product. Every one of those formats is eating into the same slice of someone's day.
3. Canva vs. hiring a freelance designer
Say a creator needs professional-looking graphics for their next launch. They could open Canva and DIY it, or they could hire a freelance designer on Fiverr. Two totally different solutions for the same need.
Canva isn't competing with other design software here; it's competing with a person (the freelance designer). Most software brands completely forget to account for this kind of indirect competitor.
4. A fitness creator vs. a meditation app
Back to our opening scenario. A fitness creator and a meditation app aren't remotely the same product, but they're both chasing a customer who wants to feel better about their body and mind. The audience overlaps, the need overlaps, and the budget those customers have overlaps too. The approach is totally different, but the money comes from the same wallet.
How to Find Your Indirect Competition
It’s not news that your company has competitors. As buyer behavior and preferences change, most companies continually adapt. But what most miss is the underlying forces that aren’t in the latest marketing trend articles.
Michael E. Porter, a Harvard Academic, is known for his theories in business strategy and economics. He believes that industry competition is rooted in its underlying economics and other competitive forces that go well beyond the established players in a particular industry. According to Porter, a strategist’s goal is to establish a position in their industry that enables the company to defend itself against these forces or leverage them in its favor.
For example, if you market an e-commerce store, a competitive force could be customers' need to see a product in-store first. Or they can make a version of your product cheaper at home. To combat these competing forces, you decide to offer a free in-home trial of your product and an easy return policy.
Porter’s theory has been published in the Harvard Business Review since 1979 and continues to influence today’s strategists when developing an industry position.
On that note, when you're identifying indirect competitors, ask yourself:
- What problem is my product actually solving for the customer?
- What else could someone use to solve that same problem?
- Where does my audience spend money when they don't spend it with me?
- What free or DIY alternatives exist for what I sell?
Start with your customer's problem, not your product
Ask yourself, “What problem is my product actually solving?” Then brainstorm every other way a customer could get that solved. Once you reframe competition around the need rather than the product, a whole new list of rivals emerges.
Find out where your audience actually spends money
Collecting customer feedback through surveys, social listening, and purchase behavior tells you what people are choosing instead of your products. If you sell online courses, your indirect competitor might be a free YouTube tutorial or a $15 book on Amazon. Ask your audience what they tried before they found you; the answers are usually humbling and useful.
Visualize your competitive landscape
Put your product in the center of a page or whiteboard and draw the alternatives radiating outward. Direct competitors sit close to the center; indirect competitors sit further out but still pull from your audience. Seeing it on one page makes the hidden threats obvious, and it's a lot cheaper than learning about them after they've stolen your customers.
How to Beat the Competition You Didn't See Coming
Once you know who you're up against, the goal is to make people choose you anyway. Become an expert at monitoring every type of competition that might be influencing your outcomes, then use that insight to tailor your messaging. Here's how to actually do it.
Differentiate on experience, not just product
Your indirect competitor might have a completely different product, but you can still win on experience. Make your buying process faster, more personal, and more human than the alternative. You can use a tool like Manychat to start automating link delivery and lead qualification today (for free).
Show up where they can't
If your indirect competitor is a DIY solution (home cooking, a free YouTube tutorial, etc.), your advantage lies in the relationship they can't replicate with these offerings. For example, a YouTube video can't answer a follow-up question at 11 p.m. You can, and you actually don’t even need to be the one doing it if you use a tool like Manychat.
Put Together a Quick Competitive Analysis Plan
A solid competitive analysis doesn't have to be a 40-page deck. Here's a five-step process that covers both direct and indirect competitors.
- List your competitors. Write down every direct rival, then add the indirect ones you uncovered by mapping your customer's needs.
- Define the need each one serves. For every competitor, note the underlying customer problem they solve. This is where indirect rivals reveal themselves.
- Compare strengths and gaps. Look at pricing, experience, messaging, and channels. Where are they strong? Where do they leave customers wanting?
- Find your UVP. Pick the gap you can own: your unique value proposition is usually a better experience, a more personal relationship, or a need you serve more completely.
- Revisit regularly. This is an ongoing process, not a one-and-done exercise. Changes in customer habits and technology happen fast — 87% of marketers use generative AI in at least one workflow in 2026, up from 51% in 2024.
There's really only one rule for managing both direct and indirect competition: Stay aware of trends, new products, and economic shifts, and use them to create better opportunities for people to engage with your company. The rest is up to you.
Frequently asked questions
Indirect competition happens when different products solve the same customer need. Example: a fast-food chain competing with meal kit delivery services and home cooking. The products look nothing alike, but they achieve the same goal (in this case, serving dinner).
Direct competitors sell the same product or service to the same audience, while indirect competitors offer a different product that satisfies the same underlying customer need. Direct rivals are obvious; indirect ones are easy to miss.
Indirect competition matters because it reveals the alternatives your customers are actually choosing instead of you. Oftentimes, those alternatives aren't the businesses you'd expect. Ignoring them means losing customers without knowing why.
Yes, a company can be a direct competitor in one product category and an indirect competitor in another, depending on which customer need you're comparing. It all comes down to the specific need you're measuring against.
You should revisit your indirect competitive landscape at least quarterly, since new alternatives, technologies, and customer behaviors can shift the playing field faster than you'd expect.
