In the broadest sense, everything someone can spend their money on is competition. Money spent on your product or service is money that ISN’T being spent on something else. So it has to be appealing enough, needed enough or made to appear so, to win that horse race.
More narrowly, you’re competing for attention against all other marketing, at least in that medium (that magazine, or on that store shelf, or in that trade show).
Finally, of course, you have your direct competitors. Other toy stores. Other accountants in your area. Other digital thermostats. Other charities.
In developing, testing and fine-tuning strategy, campaigns and marketing items, the wise marketer familiarizes himself with each of these echelons of competition. He knows that to succeed, he needs to be different, different in a positive way, but not so different as to be off-putting.
This applies to all marketing of anything, anywhere.