Competitor – definition and meaning

A competitor is a person, business, team, or organization that competes against you or your company. If somebody is trying to beat you in a race, that person is your competitor.

We do not just use the term ‘competitor’ in business. Competitors also exist in sports, politics, acting, music, literature, etc.

In business, we call a close a competitor a rival. In other words, rivals are the same size and make similar products.

If two companies are leaders in their field, we refer to them as arch rivals. Beverage giants Coca-Cola and PepsiCo make virtually identical products and have a very similar market share. Coca-Cola and Pepsico are arch rivals.

According to Competitors App, which helps marketing professionals monitor their rivals’ marketing moves, a competitor is:

“A company which rivals another. Two companies that operate in the same industry, make similar products, and target the same consumers, are competitors.”

In December 2005, for the first time in 112 years, PepsiCo surpassed its arch rival Coca-Cola in market value.

Competitor – targeting customers

Competitors not only make similar products but also sell them at similar prices. For example, in the car market, Ford is a competitor of Toyota.

In fact, Toyota and Rolls Royce are not competitors. Even though they both make and sell cars, they are not targeting the same customers. They sell their cars at vastly different prices.

Competitors form a vital part of a free-market economy. Their presence in an industry helps drive down the prices of goods and services.

Coca-Cola Company and PepsiCo are beverage competitors. Their products are virtually identical, each one with a different name and labeling. As they both dominate the soft drinks market globally, they are arch rivals.

Competition is good for consumers

If a competitor has to compete to gain market share, the winner is the consumer. The consumer wins because competition ensures top quality.

If two companies offer similar products at similar prices, quality will determine what the customer buys.

If a company has no competitor, it has a market monopoly. Monopolies are common in a command economy (communism). They also exist in a free market where the sole company either destroyed its competitors or acquired them.

To prevent monopolies, most free-market democracies have government regulators. These regulators either approve or turn down major mergers and acquisitions from going ahead.

In the United States, the Federal Trade Commission’s Bureau of Competition enforces the country’s antitrust laws. Certain large mergers and acquisitions need to notify the government and wait for a review.

The equivalent department in the UK is the Competition and Markets Authority (CMA).

Bill Gates vs. Steve Jobs

Most business people have a competitor. From the early 1980s until 2011, Bill Gates and Steve Jobs were arch rivals. Mr. Jobs ceased being Gates’ competitor when he died.

In this image, you can see two high tech leaders – Steve Jobs and Bill Gates. They were arch rivals in the eyes of the media for three decades. While some said the winner was Jobs, others backed Gates, pointing to his phenomenal business success and unrivaled wealth.

Gates and Jobs became opposing poles in a frantically-expanding computing revolution.

During the first two decades of their rivalry, Gates dominated. He oversaw Window’s dominance as the world’s default operating system.

However, during the last decade of his life, Jobs turned the tables on Gates. This happened when Jobs broke into the smartphone, tablet, and music player markets.

Both men were reluctant to praise each other. However, they were swift to criticize.

According to Jobs, Microsoft’s main problem was ‘a lack of taste.’ Gates, when summing up the iPad – arguably Jobs’ greatest commercial achievement – said ‘It’s okay.’

Writing in Fortune, Adam Lashinsky said the winner was Steve Jobs.

Direct and indirect competitors

Direct competition

Domino’s Pizza and Pizza Hut are in direct competition. Both companies make pizzas, i.e., the same goods, and target the same customer group. They also aim to satisfy the same needs. They are direct competitors.

Indirect competition

Domino’s Pizza and McDonald’s do not make the same goods. One makes pizzas while the other makes hamburgers. However, they both target customers who are hungry and want a cheap and filling meal. Their customers do not want to wait a long time after placing their order.

Domino’s and McDonald’s are in indirect competition. Indirect competition exists when two sellers make different products but target the same customers group. They also aim to satisfy the same needs.

Domino’s and McDonald’s, therefore, are indirect competitors.

Five C’s of Marketing

‘Competitors’ is one of the Five C’s of Marketing. The other four are Customers, Collaborators, Company, and Climate.

The Five C’s are the five key areas of marketing.

Video – Competitor stores set up next to each other

Why do competitor gas (UK: petrol) stations position themselves next to each other? Why can you travel for miles without seeing one coffee shop, and then suddenly find three all next to each other?

This video explains why. It uses two ice-cream sellers on a beach as an example.