A market is very often full of competitors. If you have a unique and truly top-quality product, but still aren’t generating the sales you’d like, it may very well be the competition causing the trouble, not your offering. The competition may be muddying the field with a lot of noise, so that potential customers aren’t even aware that you’re there and that your product or service is different and better. You must make your presence in the marketplace known or your competitors will cause headaches and drive business away from you.
Another competitor type offers something that’s a substitute for your offering. Such companies are not actually in direct conflict with you. Nevertheless, some of your potential customers – people who would be best served by your offering – choose one of these other companies instead. As far as the customers are aware, the competitors’ products or services are essentially the same as yours – a suitable substitute, which meets their needs just as well as yours would. In such a case, you somehow need to make it clear that there IS no substitute for what you’re offering – that it’s NOT the same, and is the best, most rational choice.
Substitutes are a threat to you, don’t forget that!
As an example from the supermarket: If you’re thirsty (or expect to be) you can choose orange juice or apple juice to quench your thirst. Each of these products is a substitute for the others. We can go back to Billy’s Billing as another example. Unaware of the unique features Billy’s offers, potential customers think that hiring an accounting assistant or book- keeper is a suitable substitute for investing in an accounting program.