A couple weeks ago I sent my business partner in one of my projects a list of indirect competitors. He, a television producer without a business background, replied that they are not competitors. That made me realize that the many terms used in business are very confusing and their subtleties are unclear. So I put together a little glossary of some terms that are often misused/mistaken.
Direct competition vs. Indirect competition: Direct competition is pretty clear but what about indirect competition? For example Netflix’s direct competitor is Hulu. They’re both streaming video platforms. An indirect competitor can be the simple antenna TV or something that can be a technology that is still in R&D. Over the air TV broadcast isn’t necessarily a streaming on-demand platform but it is a substitute video entertainment/content delivery system. So a competitor can be something that is obvious or something that is not so conspicuous.
Industry vs. Market: Industry is what your company is in. It is your competitors, your supply chain, and related companies. They are essentially the parties that sell to the market. The market is your customers. They are the buyers of your product or service. When industry publications write “market size” they are talking about the amount of money that can be made from the customers.
Sector vs. Segment: Sector is a subsection of an industry. The “telecommunications industry” for example is made up of thousands of sectors; the router sector, the ground wire/cable sector, the GPS tech sector, etc. Industry term is only as broad as the scale of your analysis. If you are analyzing just the GPS sector, then you can say “GPS industry” and then breakdown the relevant sectors within that industry. Segment is a subsection of a market. A segment of the “millennial market” is tween girls, etc. (when a segment is referencing a group of people, then it can also be called demographic). A segment of the “restaurant market” is Mediterranean restaurants.
Revenue vs. Profit (income): Revenue is the money that is coming in before costs, expenses, taxes, depreciation, etc. are taken out. Once those pesky things are taken out you have profit. There is gross profit which is revenue – expenses, and and net profit which is revenue – expenses – taxes. Then there is retained earnings, which is another step!
There are many many more (branding, PR, etc.) so if you are unsure, please feel free to ask!