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Tuesday, November 20 , 2018, 6:30 pm | Fair 59º


Paul Burri: Three Kinds of Competition — Direct, Indirect and ‘Everything Else’

You not only have to compete with the guy around the corner, but with a lot of other unseen rivals, too

There’s more competition out there than you think, and it’s not just the guy across the street or down the block. Let me explain.

Let’s suppose that you own Joe’s Hamburgers on Main Street. Obviously, Tom’s Best Burgers around the corner on West Street is your competitor — but you knew that, of course. How about Burgers, Burgers, Burgers over on the other side of town? Well, yes, but not so much.

So those two are the only competition that you have to be concerned about? Well, not exactly. They are your direct competition. If you were in the dry-cleaning business, it would be other nearby dry cleaners; if you were in the airline business, it would be other airlines.

Actually,there are three types of competition. There is the direct competition, and you know who that is already. Then there is the indirect competition. The indirect competition includes all the other places that your customers might choose to stop for lunch instead of your place. There’s Tillie’s Tamales, Chung’s Chop Suey and Tony’s Pizza. These are all indirect competitors of yours who can — and do — take business away from you.

In addition to this competition there is also the slightly more indirect competition that takes business away from you — the people who bring their lunch to work, the people who skip lunch, the people who are dieting and eat only certain special food. If you were in the airline business, your indirect competitors would be trains, buses, cars and maybe even boats. If you were in the dry-cleaning business, your indirect competition would be wash-and-wear clothes.

And then there is the third kind of competition that is harder to see and much harder to compete with. It is sometimes referred to as “the everything else” competition. No matter what kind of business you are in, you are trying to sell something to someone. But so is everyone else. That’s the “everything else” competition.

I might forgo lunch and a hamburger at Joe’s to spend my money on something else that happens to attract me momentarily. I might forgo my California vacation to go to the Grand Canyon. Or I might buy a fancy computer instead. Or I might stay home and save the money for something else. Or I might buy a car instead of going on a fancy vacation.

So you not only have to compete with the guy around the corner but also with a lot of other unseen competitors. That may not be so important if you own Joe’s Hamburgers, but you better keep that in mind if you have a more complex target market or a more costly product or service.

— Paul Burri is an entrepreneur, inventor, columnist, engineer and iconoclast. He has been a counselor with the Santa Barbara chapter of SCORE (Service Corps of Retired Executives) for the past eight years. SCORE offers free business counseling to local businesses. He is also the membership director of the Channel City Camera Club. The opinions and comments in this column are his alone and do not reflect the opinions or policies of any outside organization. He can be reached at .(JavaScript must be enabled to view this email address). Click here for previous Paul Burri columns. Follow Paul Burri on Twitter: @BronxPaul.

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