Competitor monitoring, part I
Where should competitor monitoring start?
Competitor monitoring should start with the question of what customer need your product or service meets, because the answer determines whether you define your competitive environment correctly.
Competitor monitoring should not start with entering the names of a few companies into a spreadsheet or tracking their websites. The first step is a question that is much simpler and, at the same time, harder: what customer need does our product or service meet? The answer determines whether a company defines its competitive environment correctly. Many companies focus solely on businesses offering the same product. Yet a real threat may also come from companies in a different category that compete for the customer's budget, attention or time. As Rafał Wiśniewski, Managing Partner at MarketHub, stresses, data only has real value when a company can define the market correctly and turn information into business decisions.
What types of competition should competitor monitoring cover?
Competitor monitoring should cover not only direct competition but also indirect competition, which meets the same need with a different solution, and substitute competition, which performs a similar function with different technology.
The most common mistake is narrowing the analysis solely to direct competitors, i.e. companies offering similar products or services to the same target group. This approach can lead to overlooking players who meet the same need in a different way. From the customer's point of view, what matters is not only the product itself but also the result they want to achieve. A company may therefore compete not only with businesses in its own category but also with entirely different solutions. A company in the entertainment industry may compete with a restaurant, a cinema, a sports event or a streaming platform, because all these options vie for the customer's free time and budget. Effective competitor monitoring should take this wider context into account.
Direct competition: the most obvious area of analysis
Direct competition consists of companies offering the same or a very similar product aimed at a similar group of customers. A car manufacturer competes with other manufacturers of vehicles in the same class, a law firm with firms providing similar services, and a food brand with products on the same shop shelf. This is the easiest group to identify, and it is usually the focus of competitor monitoring. Companies analyse the prices, offer, marketing campaigns, sales channels and communication activities of their closest rivals. The problem arises when the analysis stops at this group alone.
Indirect competition: same need, different solution
Indirect competition covers businesses that offer a different product or service but respond to the same customer need. A good example is how people spend their free time. A cinema, a restaurant, go-karting and a concert differ from one another, but they compete for the same evening and the consumer's limited budget. Similar relationships exist in many industries. An in-person course may compete with an e-learning platform, a taxi with public transport, and a traditional shop with a subscription service. For a company, this means it has to observe not only companies operating in the same industry but also alternative ways of meeting customer needs.
Substitute competition: similar use, different technology
Substitute competition is yet another category. It concerns products that differ in composition, technology or production method but perform a similar function. The classic example is the rivalry between butter and margarine. Both products are used in a similar way, although they are made differently and have a different composition. In many sectors the importance of substitutes grows as technology develops. A solution that today seems to complement the market may quickly become a real alternative to the existing product. That is why competitor monitoring should also include observing new technologies, business models and ways of meeting the same need.
What do companies really compete for?
Companies compete above all for the customer's limited budget and for their time, so a rival may even be a business from an entirely different sector.
Market rivalry can be analysed from two main perspectives. The first is the battle for the customer's money. The consumer has a limited budget, so choosing one product often means giving up another. The second perspective is time. This applies especially to the entertainment, education, media and service industries. A company may compete with a business from an entirely different sector if it vies for the same part of the customer's day. This view widens the scope of the analysis and helps you spot threats earlier, including those that a traditional division of the market does not show.
Why should competitor monitoring include future rivals?
Businesses that pose no threat today may become one after expanding their offer, entering a new market or changing their business model, and spotting such signals early gives a company time to respond.
Future competition is also an important element of the analysis. These are businesses that do not currently pose a direct threat but may become one after expanding their offer, entering a new market or changing their business model. Such changes may come from start-ups, technology companies, large digital platforms, foreign brands or companies with the resources to enter a new segment quickly. Spotting such signals early gives a company time to prepare a response, adjust its offer or change its strategy. This is exactly why competitor monitoring should cover not only current rivals but also the directions in which other players may expand.
How do you build a list of companies for competitor monitoring?
First answer three questions: what need your product or service meets, what other products meet the same need, and which companies do it in a different way.
Before a company starts regular competitor monitoring, it should answer three basic questions:
What need does our product or service meet? What other products meet the same need? Which companies do it in a different way?
Only then can you build the right list of businesses to watch. Some of them will require constant monitoring, while for others periodic analysis will be enough. Others still may serve as a point of reference or a potential partner. This approach makes better use of the time and resources devoted to market analysis.
How does competitor monitoring support better decisions?
A wider approach reveals substitutes, future competitors and potential partners, which helps companies react to change more quickly, assess risk better and plan strategically.
Effective competitor monitoring is not about mechanically tracking the activity of other companies. Its aim is a better understanding of the market, customer needs and the directions of change that may affect the company's business. A company that limits its analysis to its closest rivals sees only part of reality. A wider approach reveals substitutes, alternative models of meeting needs, future competitors and potential partners. Properly conducted competitor monitoring therefore becomes not only a tool for observing the market but also part of strategic planning. It helps companies react to change more quickly, assess risk better and make decisions based on a fuller picture of the business environment.
Audio generated with artificial intelligence from the webinar "Competitor monitoring in 3 simple steps" held on 28 July 2026, hosted by Rafał Wiśniewski, Managing Partner at MarketHub Sp. z o.o., edited by Katarzyna Kucia
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