Who are the competitors of Starbucks? Or of Toyota? Or of Coca Cola.

Most business owners, and a surprising number of marketers are likely to mention coffee chains, car brands and Pepsi. While there’s nothing wrong with that thought process, today’s complex and increasingly commoditized marketplace demands that we think beyond these direct competitors, when determining our marketing plans.

This is so simply because the consumer who is going to be spending money in a Starbucks, or on a Toyota, is fulfilling a need by doing so. It logically follows that the money will be spent on a product/service that fulfils said need. Which leads us inevitably down a path where we need to understand that need better.

So, let’s take the Starbucks example. Why does a customer go to a Starbucks? To have coffee? To have a sandwich? To access free Wi-Fi? To meet friends? You see where I’m going…

Depending on the need of the consumer that is being fulfilled by visiting a Starbucks, a number of other products and services that can also fulfil those needs.

For example, if I go to Starbucks only for the coffee, then, the company competes with other cafés, for sure, but also with home espresso machines.

On the other hand, if I’m at Starbucks to meet with friends, then any number of places to socialize in become competition, which, obviously takes the game far beyond cafés.

Let’s take another example – Sandisk memory devices. One would think that Kingston, Seagate, etc., the other big brands manufacturing memory devices would be Sandisk’s only competition. However, it is valuable to note that Sandisk faces competition even from Google Drive, Dropbox, and any number of storage solutions, including newer phones that come with 256GB of internal memory!

Technically, marketers try and segregate competition into three buckets – ‘direct’, ‘indirect’, and ‘substitute products’. This framework allows us to look beyond the products/services that directly compete with our products, and focus on the consumer need that our product/service fulfils instead.

We should try our best to look at our entire competitive set, and, of course the business environment, or be prepared to become a case study in the “what not to do” section!

After all, who would’ve thought that laptops would come under threat from phones? Or that the same phones would one day compete with watches? Or that the watches would become phones!