Facing the competition

In almost any market, a business venture is faced with three principal types of competitor: primary, secondary, and tertiary. Each of these is distinguished by the nature and immediacy of the competitive threat they represent.

Primary competitors

This group includes companies who are solving the same problem as you are, using the same basic approach or technology. Primary competitors are generally the most obvious threat in a marketplace. Nike is an obvious primary competitor for Adidas. Often, primary competitors are referred to as “direct competition.”

Secondary competitors

This group includes anyone who is solving the same problem as you, but is using an alternative solution. Secondary competitors are typically a little harder to spot than the direct competition. For example, Via Rail is a secondary competitor to Air Canada.

“A solution is the replacement of the current problem by the next level of problem.”
Kim James, management consultant &complexity theorist

Consider that sometimes your toughest “secondary competitor” might actually be your customer in the sense that their prior investment in the status quo acts as “indirect competition” for your offering.

Tertiary competitors

This group is made up of anyone who is not currently solving the same problem as you, but who is in a business position to do so with relative ease if sufficiently motivated. Often, they are much larger companies who tend to dominate entire industries and whose principal interests lie in ensuring a healthy overall economy and market ‘ecosystem’.

Tertiary competitors are seldom obvious at first but frequently become visible later in a venture’s business planning and implementation stages. Microsoft, Google, and Yahoo are examples of tertiary competitors for anyone who wants to operate in the online advertising marketplace.

“Life may be short, but it can also be very wide.”
originalthinking

Sometimes referred to as “distant competition,” these tertiary competitors are typically large and acquisitive, and ironically may at some future time simply buy you out rather than fight against you. For instance, Microsoft was once a tertiary competitor for fledging upstart Hotmail, which it decided to acquire - for a substantial sum of cash - rather than try to replicate.

However, it’s worth keeping in mind that a tertiary competitor could also just as easily freeze you out and shut you down. But then if you aren’t paying attention, so could any other competitor.