Overview

Competition in business can be described as a contest or rivalry among the companies or organizations that are engaged in selling products that are similar in nature or targeting the same audience. These organizations also target the same customers for increasing their sales and revenue thereby gaining more market shares. These business organizations compete in different forms such as direct competition where the competitors are engaged in offering the same service or product. While in the case of indirect competition in business, the marketing and goals of the business differ from that of the competitor even though the services or products offered are the same. The competition in the business often leads to infringement of trademarks or Intellectual property by the competitor business. A civil suit can be filed for such infringement against the competitor’s business and prevent such businesses from selling their product or service in the market. There are several advantages as well as disadvantages of competition in business which have been discussed below.

Types Of Business Competition

Business Competition can be categorized into three types of competitions. Following are the three types of business competitions.

• Direct Competition

As the name suggests, in direct competition, the competitors of the business are in the same line of business where the same product or service is offered. When we talk about business competition, direct competition is one of the most common forms of business competition. The competitor business targets the price, service, sale points, etc. in direct competition.

• Indirect Competition

In the case of indirect competition, the competitors offer the same product or service, however, their marketing and business goals differ. A different business strategy for targeting the market is adopted by the competitor business. This implies that a different kind of content marketing strategy is used for selling the product or service by the competitor business in indirect competition.

• Replacement Competition

This kind of competition in business is tough to be identified as the same resources of the business’s product or service is used by the competitor but for selling some other products or services. It must be kept in mind by the businessman that customers define the competition of business. It is based on their demands and needs for which they depend on the products or services of the business. For instance, a book which is written and a video game are two different types of product. However, the target of both markets is 12 years old children. Therefore, the same intellectual creative resources are used but the product sold is different.

Thus the needs or demands of the customer must be understood before initiating any business. This will help the business to understand their target concerning the customers as well as the competitor’s target.  In a similar process, the business can target those who need first and what could be replaced with something new as well as attractive for capturing the market share. The organizations can target after evaluating the market as well as the customers.

Demerits Of Business Competition

There are several disadvantages or demerits of business competition.

Reduce in the market share

Due to the competition, the customers are divided based on choosing the best products or services for themselves. With huge competition in the market, the market share of the business owner reduces. The competition in business divides the market of the customers into smaller sections which makes it difficult for the business owner to have a good amount of market share due to smaller divisions in the customer’s market.

• Business comes under pressure

The efficiency of the employees in the business gets affected due to constant pressure on businesses for competing and creating new ideas for their products or services. It becomes difficult for the business to survive in an environment with a constant pressure of competing. 

• Constant pressure on employees 

As mentioned earlier, with demand in competition in the business, there will be internal conflicts or disputes within the business organization. Thus the efficiency of the employees is affected due to constant pressure and unresolved conflicts within the organization leads to other legal issues. 

• Unnecessary business expenditure

Competition does not remain a competition anymore and thereby turns to survival in the market for earning profits. For this, the businesses require a lot of resources for expanding their business and reaching the targeted audience and making the business stand at a global level. Thus, it leads to expenditure by the organizations. In recent years, business expenses have increased a lot. 

• Confusion among Customers

The business competition also leads to confusion among the customers and most of organizations are engaged in direct competition in a business that leads to the selling of the same product or services. While some customers know how to pick the best ones, other customers find it difficult in choosing the best product or service from a wide range of similar products or services.

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