Understanding your Indirect Competitors

Think BMW's top rivals are Mercedes or Audi? Think again. Discover why something as unexpected as a swimming pool might be a more significant competitor than you realize.

Frederik van Lierde - Oct 12, 2023

Articles

Leadership

They Riddle

Pause for a moment and answer the question. Who is the #1 competitor of BMW?

What's the first name that pops into your mind? Mercedes? Audi? If you're like most, these are the brands you'd naturally associate as competitors to the luxury car giant, Mercedes, Audi?. But what if I told you that the real answer might be... a swimming pool?

Before you dismiss this as a riddle or a play on words, let me explain.

For startup founders and entrepreneurs, understanding competition is crucial. It's not just about identifying direct competitors in your industry, but also about recognizing the broader landscape of where your potential customers might allocate their resources. In the case of BMW, while Mercedes and Audi are direct competitors in the luxury car market, a swimming pool represents a different kind of competition: the competition for discretionary spending.

Imagine a family considering purchasing a new luxury car. They have a certain amount set aside for discretionary spending. This budget could go towards a new BMW, or it could be used for a lavish vacation, a home renovation, or yes, installing a swimming pool in their backyard. In this scenario, the swimming pool competes directly with the BMW for the family's discretionary funds.

For startups, this broader perspective on competition is essential. It's easy to become hyper-focused on direct competitors, those who offer similar products or services. However, in many cases, the real competition might come from entirely different sectors or unexpected areas. For instance, a new fitness app might see other fitness apps as competitors, but they're also competing against gym memberships, personal trainers, and even home workout equipment.

Understanding this broader competitive landscape helps in several ways:

Marketing and Positioning: By recognizing the broader range of choices your potential customers have, you can tailor your marketing messages to address not just why your product is better than direct competitors, but why it's a better use of discretionary funds than other options.
Product Development: Knowing the broader competitive landscape can inspire innovation. If you're aware that your potential customers might spend their money on a completely different product or service, it might inspire features or offerings that make your product more appealing.
Strategic Planning: Recognizing all potential threats, not just the obvious ones, can help in long-term planning and risk mitigation.

For BMW, while they certainly need to keep an eye on Mercedes, Audi, and other luxury car brands, they also need to understand the broader landscape of luxury spending. They need to ask questions like, "Why would someone choose a swimming pool over a new car?" or "How can we make our cars more appealing than other luxury expenditures?"

Conclusion

As you build and grow your startup, challenge yourself to think outside the box when it comes to competition. Direct competitors are just the tip of the iceberg. Dive deeper, and you might find that your biggest competition is something as unexpected as a swimming pool. And in that realization lies the opportunity to truly differentiate and succeed.