A white paper discussing competitive intelligence and how to use it to gain competitive advantage.
The companies that practice CI will win the marketplace battle. They will be more flexible to changing market conditions, able to leverage the knowledge they gain into successful strategies and operating tactics. Ultimately, they will be the companies that gain competitive advantage.
compete Intelligently strategies for competitive advantage The companies that practice CI will win the marketplace battle. They will be more flexible to changing market conditions, able to leverage the knowledge they gain into successful strategies and operating tactics. Ultimately, they will be the companies that gain competitive advantage. Competitive Intelligence: Harvesting Information to compete and market intelligently. By: Susan Brod No matter what your industry, your business environment What is CI and why is it important? changes daily. New competitors, new products, new technologies and the global economy affect your decisions and the direction in which you lead your business. CI is the use of public sources to locate and develop an In today‘s business and economic environment and going information database that can be mined for information to be forward, it will be even more crucial for business analyzed and used to develop actionable strategies for your professionals to practice competing and marketing business. The CI you develop will have a positive impact on intelligently—and that requires developing an ongoing your business strategy, tactics and operations. Competitive Intelligence (CI) gathering function for your company. What is the purpose of CI? Whether you are developing viable corporate strategies, creating new products and services, entering new markets, considering a merger or acquisition, or charting a course of Intelligence is both a process and a product: an analytical process that transforms gathered competitor and market action to improve profits, having timely, relevant information information into actionable knowledge about competitors‘ is critical to effective decision making and the strategic capabilities, intentions, performance and position as well as planning process. the final product of that process.1 The companies that practice CI will win the marketplace Here is an example of how CI worked for one company: battle. They will be more flexible to changing market conditions, able to leverage the knowledge they gain into successful strategies and operating tactics. Ultimately, they ABC Inc. had been selling electronic will be the companies that gain competitive advantage. components to OEMs (Original Equipment Manufacturers) who manufactured gas furnaces. The company was experiencing Through the development and implementation of a CI increasing competition and price erosion. program, your company can obtain early warning on Additionally, its largest customer had just competitive threats and emerging opportunities. That means purchased a company that manufactured the you will be able to develop proactive strategies that capitalize same product as ABC‘s, thus integrating this on your competitors‘ weaknesses and your company‘s product into their operations with no need to strengths. purchase parts from ABC. ABC was faced with losing 40% of its business. CI takes time and financial resources. It should involve senior management, department managers, sales and ABC then initiated a CI program. The company marketing, customer service, financial, human resources and conducted market research and analyzed it in a manufacturing personnel. Large companies have internal CI SWOT* Analysis Session with a cross-functional departments and large budgets. However, even the smallest team. It looked at both its core competencies company can establish an effective CI program by utilizing and the external environment, then analyzed the Internet and its vast free resources or retaining the the competitive information it had gathered. services of competitive intelligence professionals. Companies may elect to outsource all or part of their CI *Strengths/Weaknesses/Opportunities/Threats programs. Outsourcing can be as simple as ordering prepared market research reports from industry association The organization determined that several social, sites and market research companies for as little as $50 or as environmental and legal trends could positively impact its costly as subscribing to ongoing research services like ability to enter two new markets. First, there was the Forrester Research for annual six-figure fees. Market ―cocooning‖ of America, whereby people were staying home research companies use the most advanced tools to automate more and wanted luxuries like gas fireplaces. Second, there sourcing of required information and to transmit gathered were environmental laws that necessitated using gas information to their clients. Trained market researchers and fireplaces where burning wood was banned. Additionally, the industry experts can assist and facilitate your search efforts. proliferation of fast food restaurants using gas stoves You might also consider using a consultant‘s services to either presented another new market opportunity. help in the development or implementation of an internal CI program or to conduct a program for you (the Internet is a The product of the CI project was the development of a good place to seek outsourced assistance). A major proactive marketing and sales strategy designed to enter and advantage of using an independent consultant is to gain penetrate these new markets. This resulted in less objectivity and to avoid tunnel vision or personal agendas. dependence on one customer and an !8% growth in the company‘s sales in the first 12 months of the new sales By having an ongoing CI program in place, you will be able to effort. be more flexible in responding to market changes and, by developing strategies that result in competitive advantage, ultimately become more profitable. Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 Figure 1: Competitive Intelligence is Value-Added Competitive Intelligence What are the components of a CI research project? Strategic Planning To compete intelligently, it is necessary to start out with good old-fashioned market research—the process of collecting, analyzing and reporting information. Analysis Figure 2: The Research Process Market Research CI is a value-added concept that layers over the top of strategic planning, and market research. The research objectives of a CI project will often involve issues such as: 1. Define the 2. Develop the 3. Harvest the Research Project Research Plan - 4. Analyze the • The manufacturing capabilities of the competitor. & Audit In-house Methodology Information - Information Implementation • Analysis of alliances and/or joint ventures entered into Data by competitors. • The competition‘s future plans and strategies for specific markets or product lines. • The state of the economy. • Market trends and sizes • Reasons behind changes in the corporate or business unit strategy, et cetera.2 Reva Basch, a market research professional, called by Wired 1. Define the Project and Audit In-house Data Magazine ―the ultimate intelligence agent‖, describes CI in ―Research Online for Dummies.‖ 3 Think carefully about the information you need to gather. Answering the following questions will help you target your ―A Competitive Intelligence project is broader and research: deeper than just investigating competitors and products (and just performing market research). • How much information do you already have (about competitors, technology, your market, your customers, It is broader because you have to look at your etc.)? company in the context of your marketplace—other • What more do you need to know? companies, consumers and outside events and conditions such as lawsuits or regulatory changes • When do you need to know it? that could affect profitability and strategic • Why do you need to know it? direction. • What will you do with the intelligence once you have it? • What will it cost to get it? It is deeper because you go beyond the general • What will it cost (in lost opportunity) to not get it? background data and hunt for news—new plant construction, partnerships, management changes, The purpose of a CI project is to gather accurate and reliable patent and trademark applications, and so on—that information. The groundwork for the project is laid out may signal what your competition is up to. through an internal CI audit. This is primarily a review of your organization‘s operations to determine what is actually Competitive Intelligence projects are analytical. known about your competitors and their operations.4 They can be likened to detective work because you have to piece together the facts, opinions and As a starting point, most organizations have some knowledge analyses that you find, trying to discern meaningful of their competitors and their own CI needs. If these needs patterns and drawing conclusions based on the are not clearly defined, however, the organization may not be evidence you find.‖ able to deploy its resources effectively. The CI audit helps to pinpoint them. CI requires not only information about your competitors— their sales channels, marketing strategies and messages, products and pricing, strategic alliances, intellectual Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 property—but also information about your business‘s external transactions, manufacturing warranties and environment. This includes industry trends, legal and telecommunications records. The data from these regulatory trends, technology developments, political transactions provide profiles of key trends that impact developments and economic conditions. multiple areas of a business, such as complementary products, sources of profits, consumer demographics and The amount of data needed and the methodology for purchasing behavior. This data, gathered over time, is stored gathering it will help you determine the budget required to in databases that are referred to as data warehouses. accomplish the project objectives. At the very outset, commit to the resources necessary to get the project done—in A database or warehouse for a small company can be a manpower and time required as well as budget dollars. customer list or sales-by-customer history. It can be as simple as an Excel spreadsheet or as sophisticated as an Research data can be defined in two forms: Secondary and Oracle software system. Primary While operational data deals with daily activities (i.e., orders entered tied to manufacturing and shipping functions), the Figure 3: Types of Research Data warehouse data is historical in nature and is used to obtain perspective on business trends (i.e., sales by geography, by product, buying patterns, etc.) The insights gathered from PRIMARY the analysis of this historical data are then used in the SECONDARY RESEARCH decision-making process. RESEARCH Written Sources Research is Personal customized. (books, trade Interviews Industry surveys indicate that more than 80% of Fortune 500 publications, companies view data mining as a critical factor for business directories, etc.) success. Most of these companies collect and refine massive quantities of data in data warehouses.6 The data can be manipulated and used in a variety of ways: Databases Surveys • Customer Prospecting and Segmentation Data mining can help companies analyze their customer base and segment their markets. This helps identify those customers that are more likely to respond to marketing efforts and The Internet Focus Groups will provide better profits. • Customer Relationship Management Data mining finds patterns of product usage and helps companies analyze consumer behavior. It helps to identify what causes customer attrition Secondary Research and improves customer retention. Data mining improves an organization‘s effectiveness, Secondary data is information gathered from published efficiency and value by enhancing the knowledge it sources such as trade publications, books, government already possesses. It has a variety of applications agencies, websites, market research reports, business in many industries: information companies, newsletters, industry or subject newsgroups, blogs, trade shows and trade associations. • Retail - In the retail sector data mining can help identify profit patterns, complementary product All secondary research data is in the public domain. sales, shelf space and market basket analysis. It can help identify products that are traffic It is also information gathered from within the organization. builders. Internal company information can come from MIS systems and customer databases. Utilizing this type of information is • Consumer Packaged Goods companies use data called data mining. mining in much the same way as retail companies. A manufacturer‘s products can be According to a Gartner Group report, ―Data mining (extracting analyzed across many store chains so that information from databases) and artificial intelligence (the market share and demographics can be creation of computer systems that can mimic the decision- analyzed and the factors influencing the making power of human beings) are at the top of the five key effectiveness of advertising can be identified technology areas that have clearly made an impact across a and measured. wide range of industries‖ 5 over the past several years. • Manufacturing Quality and Warranty Programs Since the mid-70‘s, computers have been used to capture use data mining to help identify process large amounts of data from business transactions such as variations within manufacturing and assembly banking, website ―browsing‖, credit card records, sale operations. Data mining can help improve Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 The Internet can be the greatest product quality by identifying the factors that tool devised for the CI sleuth cause problems, thus increasing customer since the opening of the first satisfaction by reducing complaints and public library. training.7 However, and it’s a big HOWEVER, • In the Business-to-Business Sector data mining although information is overly helps determine customer order cycles, sales abundant on the Internet, and results, employee turnover and product acceptance. Mining and analyzing data enables continuously being created and companies to identify best practices, analyze revised, it ranges from good to bad marketing campaign results and develop to just plain wrong. strategies that capitalize on the business‘s core competencies and market opportunities. About The Internet they do so within Wikipedia‘s editing policies and to an The Internet can be the greatest tool devised for the CI appropriate standard. Substandard or disputed information is subject to removal. Users need not worry about accidentally sleuth since the opening of the first public library. damaging Wikipedia when adding or improving information, as other editors are always around to advise or correct However, and it‘s a big HOWEVER, although information is overly abundant on the Internet, and continuously being obvious errors, and Wikipedia‘s software is carefully designed created and revised, it ranges from good to very bad to just to allow easy reversal of editorial mistakes.‖ 9 plain wrong. Therefore, you should always question the reliability of the information. While information on the Web Wikipedia‘s information page admits that ―because Wikipedia exists in a wide variety of formats (facts, opinions, stories, is an ongoing work to which, in principle, anybody can interpretations, statistics), it is written for varying agendas— contribute, it differs from a paper-based reference source in to inform, to persuade, to sell, to present a viewpoint— important ways. In particular, older articles tend to be more therefore, it is up to the researcher to interpret the comprehensive and balanced, while newer articles more information and separate the wheat from the chaff. frequently contain significant misinformation, ‗unencyclopedic‘ content, or vandalism. Users need to be aware of this to A good example of Internet information is Wikipedia—―the obtain valid information and avoid misinformation that has free encyclopedia that anyone can edit.‖8. been recently added and not yet removed. However, unlike a paper reference source, Wikipedia is continually updated, with Started in 2001 Wikipedia (pronounced wi : kipi : dia) is a the creation or updating of articles on topical events within multilingual, Web-based, free content encyclopedia project. seconds, minutes, or hours, rather than months or years for printed encyclopedias.‖10 The name ―Wikipedia‖ is a blend of the words wiki (a type of collaborative Web site) and encyclopedia. How then can a researcher be certain that they are gathering accurate facts and not fiction or opinion? If you‘re not sure Wikipedia‘s articles provide links to guide the user to related the information you‘ve found is reliable, you might want to pages with additional information. Wikipedia currently has look at: 3,004,305 articles in English (plus more than 13,000,000 articles in 260 other languages. • Accountability—who is responsible for the site? ―Wikipedia is written collaboratively by If the author of the site is not clearly indicated, volunteers from all around the world. Anyone e-mail the Webmaster with some questions. with internet access can make changes to Try to select sources that offer as much of the Wikipedia articles. Since its creation, Wikipedia following information as possible: Author's has grown rapidly into one of the largest Name, Author's Title or Position, Author's provide links to guide the user to related pages organizational Affiliation, Date of Page Creation with additional information. Wikipedia currently or Version, Author's Contact Information11 has 3,004,305 articles in English (plus more than 13,000,000 articles in 260 other • Bias—remember that even reputable languages.)‖ publications may be biased in their viewpoint. An example: We all know that info found on Content contributors do not need specialized qualifications to Fox News leans towards a conservative philosophy while MSNBC leans liberal. contribute. Wikipedia's intent is to have articles that cover existing knowledge, not create new knowledge (original research). This means that people of all ages and cultural and • Timeliness—check the date of the information. Be aware that some sites never remove or social backgrounds can write Wikipedia articles. Most of the update information and some are dynamic, articles can be edited by anyone with access to the Internet, replacing information every day or even hourly. simply by clicking the edit this page link. Anyone is welcome You will have to determine how timely and, to add information, cross references or citations, as long as Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 therefore, how relevant the information is for your purposes. • Information Overload—with the vast size of the Internet you could stay online Information Overload—with the forever—or until your money and patience vast size of the Internet you wears out. A good indication of knowing could stay online forever…….A you‘re done is when you start seeing the good indicaton of knowing when same results from several sources. It‘s you’re done is when you start important to know when you‘re done so seeing the same results from you can move on to the next step in the several sources. process. • The CARS Checklist--The CARS Checklist (Credibility, Accuracy, Reasonableness, Support) is designed for ease of learning and use. Few sources will meet every criterion in the list, and even those that do may not possess the highest level of quality possible. But if you learn to use the criteria in this list, you will be much more likely to separate the information.12 Figure 4: Summary of The CARS Checklist for Research Source Evaluation13 Credibility Trustworthy source, author‘s credentials, Goal: an authoritative source, a source that supplies some known or respected authority good evidence that allows you to trust it. Evidence of quality control, organizational support. Accuracy Up to date, factual, detailed, exact, Goal: a source that is correct today (not yesterday), a comprehensive source that gives the whole truth. Audience and purpose reflect intentions of completeness and accuracy. Reasonableness Fair, balanced, objective, reasoned Goal: a source that engages the subject thoughtfully and No conflict of interest, absence of fallacies reasonably, concerned with the truth. or slanted tone. Support Listed sources, contact information Goal: a source that provides convincing evidence for the Available corroboration, claims supported, claims made; a source you can triangulate (find at least two documentation supplied. other sources that support it). Understanding what is available and how to find Internet content is the first step in finding the information your research project requires. Figure 5: Map of the Internet Free Sites Gated Sites General Search Engines Intranets Meta Search Engines Specialized Search Engines Pay for Service Company Web Sites Associations / Publications Data Aggragators Government & University Sites Research Libraries Blogs Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 Examples of meta search engines are www.dogpile.com and Some Tips for Finding Information on www.momma.com. The Internet: A good source to understand the different types of search Free Sites engines and how they work is the University of California at Berkley‘s Tutorial ―Finding Information on the Internet‖ at 1. Search Engines http://www.lib.berkeley.edu/TeachingLib/Guides/Internet/Met aSearch.html15 Custom (CSEs) or specialized search engines deal with Any research project should start by using the thousands of information on one topic or research service. You can find a valuable free sites and search engines. As in a traditional sample of custom search engines at research project using offline resources, your search will be www.customsearchguide.com. At this site you can find infinitely easier if you spend some time planning and search engines specific to such topics as prediction markets, understanding how search engines work. marketing magazines search, UK agricultural machinery, cattle information, etc. • Start with general and meta search engines, then progress to subject or specialized search engines. 2. Company Websites • Learn Boolean search instructions. Use ALL to tell the search engine explicitly that you want documents in which all your terms appear. AND if you want two terms • Be aware that competitor‘s websites are an to appear, i.e. ―apples AND oranges‖. OR if you want amazingly simple way to find out about competitive documents in which either of your search term appears, strategies, marketing and product plans and sales i.e. ―apples OR oranges‖. channels. Most Websites are still first or second generation marketing sites rather than Web 2.0 interactive customer-centric sites and in the ―old‖ • Also evaluate the quality of the information you retrieve. days of the Internet—back in 1997 thru about Does it quote a reliable source? Does the information 2003—companies put all kinds of helpful competitive come from a reputable, well-known source? A URL information on their sites. ending in .gov, .edu or .mil is usually an indicator of quality information. More on this later. • To gather financial data and information on competitor‘s plans, read mission and vision ―No matter which search engine you use, you can statements—they offer clues to a competitor‘s plans drown in the web‘s ocean of materials trying to find and strategies. Publicly-held companies usually have the right answer because only about 17% of the their annual reports and K-1 documents on their search results will apply to your question. Search sites. These contain a fountain of information on engines are not regularly updated, so you may not financials, marketing plans, sales strategies, be getting current data. Quality control doesn‘t exist. personnel, etc. Annual reports and SEC documents Abandoned sites, urban legends spouted as truth, can also be found on www.edgar.com. While and advertising, advertising, advertising abound.‖14 privately-held companies are more difficult to research, you can still obtain estimated revenues Although most people immediately go to Google when they and other information on sites such as want to search for something, researchers utilize a variety of www.hoovers.com and www.onesource.com. search engines. General search engines like Google are a good place to start but contain many irrelevant ―hits‖ as • When seeking information about a company, try people put many irrelevant keywords on their sites in order to doing a Google search for ―news‖ rather than gain search optimization. General search engines are where searching the entire web. Results of news searches you really have to separate the wheat from the chaff. are timely and will give you articles from newspapers, publications and press releases. Bing is an interesting new search engine developed by Microsoft as a direct Google-competitor. It not only brings you ―hits‖ on your search terms but when you run your cursor 3. Association and Publication Sites over ―hit‖, it gives you a synopsis of the site—a welcome feature and time saver. Bing also gives you a list of ―related • Most industries have associations that link to the searches‖ that may bring you more relevant information. best sites for finding information on that industry. One example is the Food Marketing Institute at In a meta-search engine, you submit keywords in its search www.fmi.org. From here you can link to hundreds of box, and it transmits your search simultaneously to websites about the food industry—wholesalers, several individual search engines and their databases of web supermarkets, grocery manufacturers, etc. Another pages. Within a few seconds, you get back results from all the example is by searching for ―electronics industry‖ on search engines queried. www.momma.com, we find the Electronic Industries Alliance (EIA) Upon clicking on this site, we are linked Meta-search engines do not own a database of Web pages; to a full page of electronics industry associations. they send your search terms to the databases maintained by Another good starting point for industry information search engine companies. Meta search engines give you a is www.business.com. At this site you can find broader spectrum of ―hits‖ than a general search engine. Industry Analysis as well as information by product. Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 Primary Data can be As of December 2007, blog search engine Technorati was gathered through: tracking more than 112 million blogs.17 • Observation Blogs can be useful when searching for information about • Focus Groups companies and people. A company can find out what their • Surveys employees and customers are thinking by searching blogs • Experiments and/or blogging themselves. • Interviews • Beta Tests Technorati – http://technorati.com/ is a site that compiles and reports on blogs. On this site you can search the ―blogosphere‖ to find information about any company or subject. A search for Coca-Cola came up with 14,887 blogs mentioning Coke. Internet publications are another good source of research If you still haven‘t found what you need, move on to gated information. They can be industry-specific publications and/or proprietary sites. such as ―Integrated Solutions for Retailers‖ and ―Semiconductor Today‖ or general business publications Gated Sites such as Inc.com and Business Week. A good site to find industry publications is www.freetrademagazines.com. ―What you don‘t know really does hurt you. About 70% of the Web is "hidden" – accessible with passwords only (for the 4. Government and University Sites select few).‖18 • Government sites (federal, state and local) and country Gated sites can be proprietary to a company or organization, sites have a wealth of information and statistics on accessible only by password by employees, students and/or market size, market trends, companies, technology, etc. customers, or a site that charges for the information it www.usa.gov will lead to hundreds of sites to gather contains. These are commonly aggregators of data such as statistics on business, consumers, import and export Dialog, D&B, Hoovers, Lexis-Nexis and Dow Jones. trade, foreign countries….on and on. Gated sites can be proprietary to a company or organization, • Country websites such as accessible only by password by employees, students and/or http://www.direct.gov.uk/en/index.htm will lead you to customers, or a site that charges for the information it whatever information you are seeking about the United contains. These are commonly aggregators of data such as Kingdom, its people, demographics, business links, laws Dialog, D&B, Hoovers, Lexis-Nexis and Dow Jones. and regulations, etc. It‘s a safe bet that most countries now have a website. Some gated sites, such as Hoovers, do have some free content, but the majority of content is only accessible on a subscription service. • University sites should also be viewed to find reports and research. A good example is Harvard University which Dependent upon the amount of research you need to do, it has a separate site—www.harvardbusiness.org—where may be beneficial to subscribe to some gated sites. you can find their business case studies by industry, Sometimes they are available at public or school libraries that geography, management function, etc. Similarly, have purchased subscriptions. Wharton University has a site-- http://knowledge.wharton.upenn.edu—that contains articles and reports on everything from strategic management to insurance and pensions. Primary Data 5. Blogs Primary data is information gathered for the research project and involves scientifically selecting and interviewing Internet research in the Web 2.0 age cannot ignore the latest people individually or in groups. type of website—blogs. Blogs are defined as a type of website, usually maintained by an individual with regular Most research projects begin by reviewing secondary research entries of commentary, descriptions of events, or other to determine if problems and solutions can be identified or material such as graphics or video. Entries are commonly research hypotheses can be developed without having to displayed in reverse-chronological order. "Blog" can also be collect primary data, which is extremely time-consuming and used as a verb, meaning to maintain or add content to a blog. costly. Many blogs provide commentary or news on a particular subject; others function as more personal online diaries. The However, if primary data is needed, several methodologies ability for readers to leave comments in an interactive format may be used: is an important part of many blogs.16 Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 • Observational Research involves studying relevant consumers in the setting in which they purchase 3. Harvesting the Information You Need products. This is the type of research being done when a person with a clipboard stops you at the shopping mall. Now that you have accumulated all this data, it‘s time to put it together. There are several ways to do this: • Focus Groups may be utilized to interview consumers in a small-group setting on their Manual data collection may simply involve compiling a report purchase decisions and product/service from answers to interview questions, focus group responses perceptions and preferences. Although focus and results of secondary research. groups are primarily used for consumer products and services, many companies involved in Electronic tools include spreadsheet programs to mine, business-to-business products and services use tabulate and analyze data. Focus groups can be recorded on this type of primary research, gathering small video for later viewing. Software programs for mining and groups of customers into User Groups where analyzing data are readily available. topics such as product performance, customer service and delivery are discussed. Collecting information is usually the most costly phase of the research process and the one most liable to error. In primary Focus groups and user groups are not to be used research, interviewees may be unreachable or uncooperative statistically. These groups are usually kept to a and give false or biased answers. Data input is time small number of participants and, therefore, do consuming and labor intensive in both primary and secondary not provide the sampling sizes that would research. product relevant statistics. Here again, adequate planning is necessary to establish your • Surveys may be used to gauge consumers‘ budget. When outsourcing a CI project it is important to have knowledge, beliefs, preferences or attitudes. a clear timeline for research completion outlined in the Surveys can be useful and powerful tools even proposal. A fixed project fee rather than time and material is when sampling a small fraction of a population. preferable. Unless the survey is very simple, expert assistance should be sought in both developing It must be reiterated that CI is an ongoing corporate function. the survey and in analyzing the results. A company‘s budget must reflect the costs of keeping CI information current and provide the resources to analyze the Consultants are available who specialize in both information and incorporate it into the company‘s strategic the development and analysis of surveys. and operating plans. This ongoing effort can be as simple as Sources of help can be found at The American directing all business unit managers to keep their CI Statistical Association for Public Opinion Research information stream current, enlisting the assistance of your (www.aapor.org) and the American Marketing sales force in gathering competitive information from their Association (www.ama.org). customers, subscribing to a research service, or establishing a CI department with thin the organization. • Experimental research uses groups of interviewees who are subjected to different research treatments. Researchers control extraneous variables and attempt to identify 4. Analyzing the Information – how the different groups respond. This type of research is very common for pharmaceutical and The CI Process cosmetics companies. • Beta tests, common in the computer industry, are a means of testing a product before it is The most critical part of the research process now begins— analyzing the data and converting it into meaningful launched to the market. Beta tests can uncover information that can be easily accessed and understood by all potential design and manufacturing problems as business units. It will then be used to make business well as consumer preferences and potential decisions or develop strategies. product acceptance. A frequently used method to analyze data is to tabulate the After you have determined the research methodology to collected data, then utilize statistical techniques and decision be used, the research instruments must be chosen: models to perform ―what if‖ scenarios regarding particular situations or problems. Simple manual analysis is possible for • Questionnaires are commonly used in one-on- certain scenarios. For example, if you are considering one and telephone interview or given to the manufacturing a new product, here is one way to approach interviewee to fill out. your data: • Mechanical instruments include galvanometers Your objective is to determine what competition is that measure a person‘s physical reactions in present, what customers think of the competition‘s response to exposure to a picture or ad, and products, how the product is marketed and what tachistoscopes, which flash an image to a person market share can be achieved. at various intervals after which the person describes his or her level of recall. Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 Sales at an electronics components manufacturer A SWOT Analysis is a useful tool for were declining in an industry with strong offshore analyzing data and turning it into competition. Management believed it could turn actionable strategies…..It is often sales around by hiring more sales reps and turned to useful to use a consultant to a consultant for help. facilitate a SWOT session in order to add objectivity to the analysis and The consultant began by conducting an informal CI planning process and to move the audit with senior management to determine the process along past internal state of the industry the company sold to, who their agendas. competitors were and what their positioning in the industry was. Although the company was able to list its competitors, they ranged in size from $1 million businesses to $1 billion businesses. The company sold its products to about six industry segments but The information needed was gathered by could not tell which was their primary market. conducting both primary and secondary research. Additionally, it did not know the total market for its Secondary research uncovered information about products and, therefore, could not determine its competitors, their strengths and weaknesses, the market share. size of the potential market, present and future market trends. Primary research was Solution: Realizing that the information base was accomplished through a combination of limited and competitive and industry information interviewing customers and focus groups. critical to solving the company‘s declining sales problem deficient, the consultant first initiated a CI Research results might show one competitor with project. 100% market share and high customer satisfaction, or it might show 20 competitors with The objective was to learn about the company‘s equal market share and high customer internal operation and sales history, as well as the dissatisfaction. Once the results are in hand, external environment in which the company management can overlay its own company‘s competed. Only then could the consultant develop internal strengths and weaknesses against the an action plan to increase sales. competition‘s positioning. It can perform ―what if‖ scenarios as to whether their market entry could The first step in the CI project was to mine data achieve their desired market share and sales from the company‘s customer list, specifically its volume and determine the best strategy to sales reports. Through a manual analysis the introduce and market the company‘s product. company was able to: Decision-support systems software is available for data analysis. Quantitative and/or qualitative data obtained from • Determine by SIC code the industry segments the research project is entered, and the system outputs the customers represented information describing the implications of specific decisions. • Rank customers by sales from year to year Some companies offering analysis software: Tibco • Analyze customer retention (http://www.insightful.com/data-mining.asp), MicroStrategy, • Determine which geographic areas produced Inc. (www.microstrategy.com) and SAP, the best results. http://www.sap.com/solutions/sapbusinessobjects/index.epx) • Analyze sales efforts in best result areas. A SWOT Analysis session is a useful tool for analyzing the • Determine which product lines produced the data generated in the research phase. A cross-functional best results. team is put together to analyze the company‘s strengths and • Analyze product sales by market segment weaknesses compared to its competitors. The external environment is analyzed for opportunities and threats. From The objective was to learn about the company‘s this analysis, patterns and benchmarks can be seen and internal operation and sales history, as well as the strategies and tactics developed. external environment in which the company competed. Only then could the consultant develop It is often useful to use a consultant to facilitate a SWOT an action plan to increase sales. session in order to add objectivity to the analysis and planning process and to move the process along past internal The first step in the CI project was to mine data agendas. from the company‘s customer list, specifically its sales reports. Through a manual analysis the company was able to: Putting CI to Work • Determine by SIC code the industry segments After this has been completed, the competitive intelligence • the customers represented Rank customers by sales from year to year phase begins. Note that the CI process is continuous while the initial market research phase has a definite end point. • Analyze customer retention • Determine which geographic areas produced The following case study illustrates the process: the best results. Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 • Analyze sales efforts in best result areas. It was clear from analyzing this data that the company had a very small share of the market, • Determine which product lines produced the albeit a market that was expected to grow at a 15- best results. 20% rate over the next five years. Due to its low • Analyze product sales by market segment market share and sales volume, the company clearly did not offer an independent sales rep adequate By data mining its customer database and analyzing income from the product line. Therefore, alternative this information, the company was able to clearly see sales channels were looked at and analyzed. This what its primary target market was. It could then analysis determined that the best alternative better focus its sales and marketing efforts and channels were to: determine if, in fact, those geographic territories presently covered by a sales rep produced the best results. • Focus company sales efforts on distributors • Develop a strong, internal telemarketing effort. The external CI project focused on learning about • Utilize the Internet as a sales channel, either by the industry, specifically identifying it size and selling its products online or by allowing technology trends, and the company‘s competitors. customers to solicit pricing online through a The methodology for this was Internet-based closed site. secondary research. From a CI project that took less than one month, the First, competitors‘ websites were analyzed. This company was better positioned to move forward and resulted in determining: develop actionable strategies to increase sales. It also learned that it had to seriously consider how to • Competitors‘ missions and goals, which upgrade its technologies and manufacturing processes were clearly stated on some sites. to compete successfully within its industry. And, most • What customers their competitors were importantly, it established an ongoing CI function. The company now has the ability to track and update its selling to. Competitive Matrix, analyze its sales and customer • Which competitors‘ sales channels were database and monitor industry trends. independent reps, direct sales or distributors. It is ready to move forward with the flexibility to be • Interactive features of websites—could proactive to any internal company or external customers get specifications, pricing, etc.? industry, economic, or competitive challenge it may Could they order parts? encounter in the future. • What geographic areas were covered by competitors‘ sales reps? • Pricing The bottom line ---- • Delivery • Competitors‘ marketing objectives such as trade shows planned. Figure 6: CI is an Ongoing Process • Technologies used. • Markets covered. • Manufacturing capabilities • ISO certification Define Needs From the analysis of competitors, the company was able to develop a Competitive Matrix which clearly show its strengths and weaknesses as well as market voids or under-covered niches. Analyze & The company was able to see where its own Develop Competitive Conduct strengths could be utilized to provide a competitive Intelligence Research Strategies advantage in market niches not covered by the competition. It was also able to determine that its product line was not state-of-the-art. As a result, the company evaluated its manufacturing and technology capabilities. Collect The second step was to research the industry and Data market segments where the company sold its products. The goal was to determine where to focus its marketing and sales efforts. This second step yielded the following: • The size of the industry by market segment In practice, the intelligence product is unlikely to be created from perfect input. We cannot truly and accurately predict • Forecasts by product the future, but we can evaluate the past and extrapolate • Technology trends trends to forecast and prepare for the future. Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 CI‘s real value is to provide managers with the organization tools to learn what the competition will do, not what the competition has already done. From this information each The Competitive Intelligence Process business unit can develop plans for effective management. is a continuous process. The Competitive Intelligence Process is a continuous process. Companies with CI programs have Once in place, every member of the organization from better knowledge of their markets, engineering to sales should be channeling information to the better cross-functional relationship person responsible for the data warehouse. The goal is for between their business units and a the organization to always be proactive in its strategic greater ability to develop proactive planning and develop actionable tactics and contingency plans competitive strategies. for any events they may encounter. Whether a company needs to develop Companies with CI programs have better knowledge of their a corporate strategy or a marketing markets, better cross-functional relationship between their strategy, the first step is to conduct business units and a greater ability to develop proactive CI—and incorporate it as an integral competitive strategies. Whether a company needs to develop part of the business. a corporate strategy or a marketing strategy, the first step is to conduct CI—and incorporate it as an integral part of the business. Bibliography Clemente, Mark N., ―The Marketing Glossary‖. AMACOM, 1992 Salant, Priscilla and Dillman, Don A., ―How to Conduct Your Own Survey— Leading Professionals Give You Proven Techniques for Getting Reliable Results.‖, John Wiley & Sons, 1994. Reynolds, Don, Jr., ―How to Sharpen Your Competitive Edge‖, Small Business Sourcebook 1999 ―Sales & Marketing—First Book for Business‖, McGraw-Hill 1996 Basch, Reva – ―Researching Online for Dummies‖. IDG Books 1998; Revised 2000 Herring, Mark, ―10 Reasons Why the Internet Is No Substitute for a Library‖, American Libraries, April 2001 End Notes 1 ―The Intelligentsia‖ by Michelle Cook, Business 2.0 2 ―What is Competitive Intelligence‖ by Arik R. Johnson at www.auorawde.com 3 Basch, Reva – ―Researching Online for Dummies‖. IDG Books 1998; Revised 2000 4 Ibid 5 ―The Intelligentsia‖ by Michelle Cook, Business 2.0 6 Information Discovery, Inc. ―Perspective on Data Mining – Reaping Benefits from your Data‖ at www.datamining.com 7 Ibid. 8 www.wikipedia.com 9 Ibid. 10 Ibid. 11 ―Evaluating Internet Research Sources‖ by Robert Harris, Version Date: June 15, 2007, www.virtualsalt.com 12 Ibid. 13 Ibid. 14 ―10 Reasons Why the Internet Is No Substitute for a Library‖ by Mark Herring, American Libraries, April 2001, p. 76–78. 15 ―Finding Information on the Internet‖, University of California at Berkeley, http//www.lib.berkeley.edu/TeachingLib/Guides/Internet/MetaSearch.html 16 Wikipedia, August 20, 2009 17 ―Welcome to Technorati", Author Unknown, http://technorati.com/about/. Retrieved 2008-06-05. 18 10 Reasons Why the Internet Is No Substitute for a Library‖ by Mark Herring, American Libraries, April 2001, p. 76–78. ____________________________ Competitive Intelligence: Harvesting information to compete and market intelligently ©compete Intelligently 2009 80 Coffee Pointe Drive compete Intelligently Savannah, GA 31419 912.257.5756 strategies for competitive advantage www.competeintelligently.com firstname.lastname@example.org Founded in 1996 compete Intelligently is a full-service competitive intelligence company. compete Intelligently’s mission is to provide its clients with information about the landscape in which they do business so they may make informed choices, develop actionable strategies, increase sales and gain market share. Susan Brod is the founder and President of compete Intelligently.
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