When customers purchase products from a competitor instead of your business, this is known as?

When customers purchase products from a competitor instead of your business, this scenario is best described as indirect competition. Indirect competition occurs when not only similar products or services are being considered, but also alternative products that satisfy the same customer needs or wants.

For example, if a customer is looking for a beverage, they may choose between a soda from your company and tea from a competitor. Even though one is a soda and the other is tea, they fulfill the same need for a refreshing drink. This illustrates how indirect competition operates, as customers weigh different options in fulfilling their desires.

In contrast, direct competition refers to businesses that offer similar products or services targeting the same customer base, which isn't the case when customers are choosing different categories of products. Market segmentation involves dividing a broad target market into subsets of consumers with common needs or characteristics but doesn't specifically address competition among different businesses. Competitive advantage refers to the attributes that allow a company to outperform its rivals, but again, it doesn't encompass the dynamic of customers choosing a competitor instead of your business.