The term "competitive environment" refers to the number and types of companies against which a given business competes in its industry. Direct competitors are those that sell very similar goods and services. Indirect competitors are those that sell unrelated goods and services, but to similar target markets.
The more serious competitors a company faces as it operates a business, the more beneficial it is for the business to differentiate itself to customers, according to an article for the Houston Chronicle. Promoting distinct benefits or attributes helps customers recognize how a brand is positioned within the competitive environment. In highly competitive environments, companies also face greater pressure to offer low or affordable prices.