The study of competitive products is important because competitive products are alternative choices potential customers can pick over any new product. Therefore, product developers must ensure that the new product they are developing provides potential customers with a compelling reason to purchase the new product over the competitive products.
Competitive product can be classified into the following three distinct categories:Direct Competition, Substitute Products and Similar Products.
Products that are direct competitors provide the same benefits to the customer and are aimed at similar target markets. A great example of directly competitive products are Coke and Pepsi.
Figure 1. Coke and Pepsi are directly competitive products.
Another example of direct competitors is Honda Civic and Toyota Corolla.
Substitute products allow the customers to achieve the same benefit using different technology. For instance, a substitute product for a regular pencil is a mechanical pencil. They both allow the user to make marks on paper but they use very different technologies.
Figure 2. A substitute product for a regular pencil is a mechanical pencil.
Another example of substitute product is the cell phone and the land line.