Final answer:
Indirect competition occurs when businesses offer similar products or services, but are not direct competitors. The effects of indirect competition can be mitigated by differentiating products or services, targeting specific market segments, and implementing effective marketing strategies.
Step-by-step explanation:
Indirect competition occurs when businesses are not direct competitors but offer similar products or services that can meet the same consumer needs. The effects of indirect competition can include a decrease in market share, lower profits, and reduced customer loyalty. For example, if there are two coffee shops in a town, they may indirectly compete with each other by attracting the same customers even though they offer different coffee blends and atmospheres.
To overcome the effects of indirect competition, businesses can focus on differentiating their products or services through unique features, quality, pricing, or customer experience. They can also target specific market segments and create effective marketing campaigns to build brand awareness and loyalty. For example, a coffee shop can differentiate itself by offering organic, fair-trade coffee or by providing a cozy and welcoming ambiance.
In conclusion, indirect competition can have a significant impact on businesses by potentially reducing their market share and profitability. However, businesses can overcome these effects by differentiating themselves from their competitors and effectively targeting their desired customer base.