Explain the three factors companies use to identify principal competitors

What will be an ideal response?

• Time horizon: Narrow down the list of competitors to those posing a threat in the time horizon of the marketing
plan, typically one year. The list will generally contain direct competitors, with the occasional indirect competitor
added to the list to reflect current trends.
• Product/service life cycle: Reduce the number of competitors to those relevant for the product or service's stage
in its product life cycle. In the early stages of the product life cycle, indirect competition is more of a threat. Direct
competition is more relevant once the product matures.
• Rate of technological change: Markets with rapid rates of technological change should consider indirect
competitors as well as direct ones. The consumer electronics industry, with its high rate of change, should consider
competition more broadly than say, the food industry, with slower rates of change.