What is competition in marketing?

The rivalry among businesses pursuing the same customers — direct competitors, indirect alternatives, substitutes, and even the status quo ('doing nothing') — that a company must understand to position and differentiate itself.

Who are a business's real competitors?

Whatever the customer would choose instead — which is often broader than look-alike rivals. It includes indirect competitors, substitutes, and inertia. A new product's biggest competitor is frequently the customer's status quo.

How does competition shape strategy?

Positioning and differentiation are defined relative to the alternatives, so they depend on identifying competition correctly. The discipline is to compete where you can be genuinely distinct — making the rivalry less relevant by being different, not fighting head-on where a stronger rival wins.

Growth Marketing Glossary

Competition

com·pe·ti·tionnoun

Everyone else after the same customer — direct rivals, substitutes, even 'doing nothing.' Understanding the real competition, not just the obvious rivals, is the basis of strategy.

Schematic — rivals competing for the same demand

Term: Competition
Is: Rivalry among businesses for the same customers
Types: Direct, indirect, substitute, the status quo
Shapes: Positioning, differentiation, strategy

Parts of speech & senses

competition · noun

The rivalry among businesses pursuing the same customers and demand — including direct competitors, indirect alternatives, and substitutes — that a company must understand to position and differentiate itself. "Their real competition was the spreadsheet, not the other software."

What competition really is

Competition is everyone vying for the same customer's money, attention, or demand. The obvious form is direct competition — businesses offering a similar product to the same market. But the more useful, broader view includes indirect competition (different products solving the same problem), substitutes (other ways the customer could meet the need), and the most overlooked competitor of all: the status quo, or 'doing nothing.' A new product's biggest rival is often not another product but the customer's inertia.

Defining the competition too narrowly — only the companies that look like you — is a classic strategic blind spot. The real competitive set is whatever the customer would choose instead, which is frequently broader and stranger than the obvious rival list. Knowing who you actually compete with is the foundation of positioning: you can only differentiate against the alternatives you've correctly identified.

How understanding competition shapes strategy

Competition shapes nearly every strategic choice. Positioning is inherently relative — it defines what you are and why you're different against the alternatives, so it depends entirely on correctly identifying them. Competitive analysis (studying rivals' offerings, pricing, strengths, weaknesses, and positioning) reveals gaps to occupy and threats to defend against. Differentiation — being meaningfully different rather than marginally better — is how a business escapes pure competition on price. And competitive dynamics (how rivals respond, how intense the rivalry is) shape pricing, investment, and where to play. The discipline is to compete where you can be distinct, not to fight head-on where a stronger rival already wins.

Competing well vs. competing badly

Healthy competitive strategy is about finding and owning a position where you're genuinely strong and differentiated — serving a segment exceptionally, solving a problem in a distinctly better way, or building advantages competitors can't easily copy. Competing badly means imitating rivals (racing to the same crowded position), competing only on price (a margin-destroying spiral), or obsessing over competitors to the point of losing sight of the customer.

The deepest insight is that the goal isn't to beat competitors at their game but to make the competition less relevant by being meaningfully different — the 'blue ocean' idea of creating uncontested space rather than fighting for share in a bloody red one. The discipline is to understand competition thoroughly, then choose where and how to compete so your strengths matter most and the rivalry matters least.

Worked example. A software startup defines its competition narrowly — the other apps in its category — and builds its whole strategy around beating them on features. Growth is slow, and customer interviews reveal why: most prospects aren't choosing between apps at all; they're using a spreadsheet or doing nothing, because the apps all feel like overkill. The real competition was the status quo, not the rival software. Repositioning against that actual alternative — emphasizing simplicity and the cost of inertia rather than feature parity with competitors — the startup starts winning the customers who were never going to pick any app. The lesson: competition is whatever the customer would choose instead, which is often broader than the obvious rivals — and identifying it correctly is the foundation of positioning. (Illustrative; RGM analysis.)

Failure modes to watch. Defining competition too narrowly (only look-alike rivals, missing substitutes and the status quo); imitating competitors into a crowded position; competing only on price into a margin spiral; obsessing over rivals until you lose sight of the customer; and positioning against the wrong competitive set because the real alternative was never identified.

Synonyms & antonyms

Synonyms

competitorsrivalrycompetitive set

Antonyms

monopolyblue oceanuncontested market

Origin & history

"Competition" comes from the Latin competere, "to strive together" (com- 'together' + petere 'to seek'). In business it names the striving of rivals for the same customers and demand — the central force that microeconomics and strategy both study.

Etymology: source.

Usage trends

Search interest for this term over the last five years:

View interest-over-time on Google Trends →

Common questions

What is competition in marketing?: The rivalry among businesses pursuing the same customers — direct competitors, indirect alternatives, substitutes, and even the status quo ('doing nothing') — that a company must understand to position and differentiate itself.
Who are a business's real competitors?: Whatever the customer would choose instead — which is often broader than look-alike rivals. It includes indirect competitors, substitutes, and inertia. A new product's biggest competitor is frequently the customer's status quo.
How does competition shape strategy?: Positioning and differentiation are defined relative to the alternatives, so they depend on identifying competition correctly. The discipline is to compete where you can be genuinely distinct — making the rivalry less relevant by being different, not fighting head-on where a stronger rival wins.

Resources & people to follow

referenceRGM analysis — definitions, senses, and usage verified per term

Curated, non-competitor resources verified per term.

Related training

moduleGrowth marketing foundations

Disciplines

Areas of marketing where competition is a core concern:

Growth strategyPerformance marketing

Sources

trendsGoogle Trends — "competition business"