Market Competition: Definitions, Types, Importance, 4 Levels, Techniques

Marketing management is the process of planning, executing, and controlling marketing initiatives to reach specific goals and objectives. So a good marketing needs a good knowledge of there audience, market, and there competition.

By constantly observing and analyzing these factors, businesses can make right decisions and develop effective marketing strategies.

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Joseph Stiglitz, market competition is the process by which businesses compete for customers and market share. It is the rivalry between companies that sell similar products or services to the same customers.


Philip Kotler defines market competition as the degree to which companies compete for customers and market share in a particular industry. He notes that competition in a market is influenced by factors such as the number of players, the level of differentiation of products, and the bargaining power of customers.


Michael Porter sees market competition as the intensity of rivalry among companies in an industry, including the threat of new entrants, the bargaining power of suppliers and buyers, and the threat of substitute products.


Greg Mankiw defines market competition as the situation in which firms compete to attract consumers by offering better products at lower prices.


Jagdish Sheth views market competition as the dynamic process by which firms attempt to gain or maintain an advantage over rivals by using strategies such as differentiation, price, and promotion.


Market Competition Definitions, Types, Importance, 4 Levels, Techniques definepedia

The Importance of Understanding Competitors in Marketing Management

In marketing management, understanding the competition is important. This includes analyzing the competition’s strengths and weaknesses, as well as their marketing strategies and tactics.

By this, businesses can identify areas of opportunity and develop accordingly themselves and gain a competitive edge. Competitor analysis can also help in pricing decisions, product development, marketing efforts and in many more activities.

The purpose of this article is to provide an overview of the importance of understanding competitors in marketing management. By studying the process of competitor analysis and its role in effective marketing management. Whether you are a small business owner or a marketing professional, This will help you in all perspectives.

Understanding the Business Landscape

there are few key steps of competition analysis and how you can use them to improve your business.

Identifying Competitors

The first is to identify your competitors. This includes both direct and indirect competitors. Direct competitors offer similar products or services to the same target market. Indirect competitors offer products or services that can be a substitute for yours.

To identify your competitors, there the following tips:

  • Market research to understand the players in your industry
  • Customer feedback to learn about their perceptions and purchasing habits
  • Industry reports and analysis to stay updated on the latest trends and developments

Assessing Competitor Strengths and Weaknesses

It is important to understand their strengths and weaknesses. This information can inform your business strategies and help you stay ahead.

To find your competitors’ strengths and weaknesses, do these things:

  • Analyzing their products and services
  • Examining their pricing strategies
  • Evaluating their marketing and promotional efforts
  • Monitoring their customer reviews and online reputation

Understanding Competitor Strategies

This involves analyzing their marketing mix, which includes the 4Ps: product, price, place, and promotion.

So by understanding your competitors’ strategies, you can gain insights into their target market, their strengths and weaknesses, and how they differentiate themselves from others in the industry.

This information can help you make informed decisions and stay ahead of the competition.

Four Levels of Competition

Competition is a constant presence in the business world, and it’s essential to understand the different forms it can take.

Brand Competition

When other businesses offer similar products and services at similar prices to the same customers, this is known to as brand competition. So in this style of competition, the brand is the main characteristic that distinguishes one company from another.

Brand competition would be considered between two separate clothing brands. That sell identical styles of apparel to the same target market.

Industry Competition

When all companies in the same industry produce the same product or class of products, this is known to as industry competition. The key factor determining the level of competitiveness in this form of competition is the industry itself.

For example, all cosmetics companies would be considered in industry competition with each other.

Form Competition

Form competition occurs when a company sees its competitors as manufacturing products that supply the same service.

For example, an automobile manufacturer would compete against other automobile manufacturers. And other manufacturer of other vehicles like buses, trucks, cycles, and motorcycles will compete in there own industry or area.

This type of competition occurs when companies are offering similar services to the same target market.

Generic Competition

When a company considers all other companies to be competitors for the same consumer income, this is known to as generic competition.

This kind of competition occurs when organisations are not only offering similar products and services, but they are also fighting for the same customer spending.

For example, a grocery store that sells food, household items, and personal care products would consider all other grocery stores, as well as department stores, to be its competitors.

Competitor Analysis Techniques

SWOT Analysis:

Strength, Weaknesses, Opportunities, and Threats

SWOT analysis is a popular competitor analysis tool. It helps you in analysing your competitors’ Strengths and Weaknesses, Opportunities and there Threats also. So the purpose of a SWOT analysis is to help you to understand how your competitors behave and what are the reasons for their success. As a result, you can analyse their strengths while also correcting their weaknesses.

PESTLE Analysis:

Political, Economic, Social, Technological, Legal, and Environmental Factors

PESTLE analysis is a complete concept that basically focus on the study of the external factors that create a big impact on a business. It helps you to understand the Political, Economic, Social, Technological, Legal, and Environmental problems.  Understanding the wider context which allows you to develop ideas.

Porter’s Five Forces Analysis

Threat of New Entrants, Threat of Substitutes, Bargaining Power of Customers, Bargaining Power of Suppliers, and Rivalry Among Competitors

Porter’s Five Forces analysis is a model for analysing competition that gives an organised approach. So it focuses on the 5 fundamental aspects that define the amount of competition in a market: the threat of new entrants, the threat of substitutes, customer bargaining power, supplier bargaining power, and rivalry among rivals. So having b etter understanding of these five factors will provide you with a full view of the competitive.

Market Concept of Competition it’s Perspective

When it comes to understanding competition in the market, it is important to focus not only on the industry but also on the customer’s perspective. Competition in the market refers to the process in which businesses compete for customers and market share. So it is the rivalry between companies that sell similar products or services to the same customers. The level of competition in a market depends on several factors, including the number of players, the differentiation of products, and the bargaining power of customers.

Types of Market Competition

There are various types of market competition, including:

Perfect competition: Perfect competition refers to a large number of small businesses competing for customers with similar products.

Monopolistic competition: Monopolistic competition is characterized by a moderate level of differentiation of products and competition.

Oligopoly competition: Oligopoly refers to a few large businesses dominating the market.

Monopoly competition: Monopoly refers to a single business having complete control over a market.

Exploring the Market Concept of Competition

From a customer perspective, competition is about satisfying their needs through various offerings. This approach helps companies visualize their potential competition and plan their operations accordingly. By analyzing both industry and market trends, companies can identify their present and potential competitors.

For example, A toothpaste brand can use a product-market battlefield map to understand the competition in the toothpaste market. The map shows the market segments occupied by various brands based on the customer age group and product type. This analysis helps the brand estimate the market size, competitors’ market shares, entry barriers, and strategies. Based on these estimates, the brand can decide to enter new segments if they appear attractive.


Understanding market competition from the customer perspective is crucial for a company to stay competitive in an ever-changing environment. By mapping out the product-market battlefield, companies can identify their competition and make informed decisions about expanding into new segments.

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