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Competitive Intelligence is the use of public sources to locate and develop an information database that can be mined for information to be analyzed and used to develop actionable strategies for your business.
The CI you develop will have a positive impact on your business strategy, tactics and operations. In today's business and economic environment and going forward, it will be even more crucial for business professionals to practice competing and marketing intelligently—and that requires developing an ongoing Competitive Intelligence (CI) gathering function for your company.
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 action to improve profits, having timely, relevant information is critical to effective decision making and the strategic planning process.
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.
The steps to take to develop a Competitive Intelligence program for your company follow:
1. Assess What You Know and Don't Know
The purpose of a CI project is to gather accurate and reliable information. The groundwork for the project is laid out through an internal CI audit. This is primarily a review of your organization's operations to determine what is actually known about your competitors and their operations.
As a starting point, most organizations have some knowledge of their competitors and their own CI needs. If these needs are not clearly defined, however, the organization may not be 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 property—but also information about your business's external environment. This includes industry trends, legal and regulatory trends, technology developments, political developments and economic conditions.
To start, list your competitors and do a SWOT* Analysis for each. This will indicate what you know about them and what you still need to find out.
A good place to start finding information is by dissecting your competitor's websites. You will be amazed by what you can find. The obvious would be descriptions of products and services, management team, customer service policies, etc.
By delving further you can find out even more. Read through press releases to find out about their marketing and product strategies and financial results. Read their Employment Section to learn about the benefits they offer. This could give you a heads up on whether your benefits are competitive in order to recruit the best candidates. Seeing what positions they are filling could give you clues to new contracts they have or new technology they are working on.
2. Establish a budget and intelligence gathering methodology.
The amount of data needed and the methodology for gathering it will help you determine the budget required to accomplish the project objectives. At the very outset, commit to the resources necessary to get the project done—in manpower and time required as well as budget dollars.
Research data can be defined in two forms: Secondary and Primary
Secondary data is information gathered from published sources such as trade publications, books, government agencies, websites, market research reports, business information companies, newsletters, industry or subject newsgroups, blogs, trade shows and trade associations. All secondary research data is in the public domain.
It is also information gathered from within the organization. Internal company information can come from MIS systems and customer databases. Utilizing this type of information is called data mining. A database or warehouse for a small company can be a customer list or sales-by-customer history. It can be as simple as an Excel spreadsheet or as sophisticated as an Oracle software system.
A major use of data mining is to 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 provide better profits. Data mining finds patterns of product usage to help analyze consumer behavior. It can glean causes of customer attrition and improve customer retention.
In the retail sector data mining can help identify profit patterns, complementary product sales, shelf space and market basket analysis. It can help identify products that are traffic builders. Manufacturing Quality and Warranty Programs use data mining to help identify process variations within manufacturing and assembly operations. Data mining can help improve product quality by identifying the factors that cause problems, thus increasing customer satisfaction by reducing complaints and training.
A main source of secondary data is the Internet.
The Internet can be the greatest tool devised for the CI sleuth since the opening of the first public library.
However, and it's a big HOWEVER, although information is overly abundant on the Internet, and continuously being created and revised, it ranges from good to very bad to just plain wrong. Therefore, you should always question the reliability of the information. While information on the Web exists in a wide variety of formats (facts, opinions, stories, interpretations, statistics), it is written for varying agendas—to inform, to persuade, to sell, to present a viewpoint—therefore, it is up to the researcher to interpret the information and separate the wheat from the chaff.
Any research project should start by using the thousands of valuable free sites and search engines. As in a traditional research project using offline resources, your search will be infinitely easier if you spend some time planning and understanding how search engines work.
• Start with general and meta search engines, then progress to subject or specialized search engines.
• 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 to appear, i.e. “apples AND
oranges”. OR if you want documents in which either of your search term appears, i.e. “apples OR
oranges”.
• Evaluate the quality of the information you retrieve. Does it quote a reliable source? Does the
information come from a reputable, well-known source? A URL ending in .gov, .edu or .mil is usually an
indicator of quality information.
Primary data is information gathered for the research project and involves scientifically selecting and interviewing people individually or in groups.
Most research projects begin by reviewing secondary research to determine if problems and solutions can be identified or research hypotheses can be developed without having to collect primary data, which is extremely time-consuming and costly.
However, if primary data is needed, several methodologies may be used:
• Observational Research involves studying relevant consumers in the setting in which they purchase
products. This is the type of research being done when a person with a clipboard stops you at the
shopping mall.
• Focus Groups may be utilized to interview consumers in a small-group setting on their purchase
decisions and product/service perceptions and preferences.
• Surveys may be used to gauge consumers' knowledge, beliefs, preferences or attitudes. Surveys can
be useful and powerful tools even when sampling a small fraction of a population.
• Experimental research uses groups of interviewees who are subjected to different research treatments.
• Beta tests, common in the computer industry, re a means of testing a product before it is launched to
the market. Beta tests can uncover potential design and manufacturing problems as well as consumer
preferences and potential product acceptance.
3. Put it together - the CI Process
The most critical part of the research process now begins—analyzing the data and converting it into meaningful information that can be easily accessed and understood by all business units. It will then be used to make business decisions or develop strategies.
There are several ways to do this:
Manual data collection may simply involve compiling a report from answers to interview questions, focus group responses and results of secondary research.
Electronic tools include spreadsheet programs to mine, tabulate and analyze data. Focus groups can be recorded on video for later viewing. Software programs for mining and analyzing data are readily available.
Another way is to group the information gathered into functional areas of the corporation - sales info, competitive data, pricing, marketing, demographics, etc. This allows each company department to “own” responsibility for the information and keep it current.
4. Develop Actionable Strategies
After the research has been concluded and analysis completed, the competitive intelligence phase begins. Note that the CI process is continuous while the initial market research phase has a definite end point.
A SWOT Analysis session is a useful tool for analyzing the data generated in the research phase. A cross-functional team is put together to analyze the company's strengths and weaknesses compared to its competitors. The external environment is analyzed for opportunities and threats. From this analysis, patterns and benchmarks can be seen and strategies and tactics developed.
It is often useful to use a consultant to facilitate a SWOT session in order to add objectivity to the analysis and planning process and to move the process along past internal agendas.
CI's real value is to provide managers with the organizational tools to learn what the competition will do, not what the competition has already done. From this information each business unit can develop plans for effective management.
The Competitive Intelligence Process is a continuous process. Once in place, every member of the organization from engineering to sales should be channeling information to the person responsible for the data warehouse. The goal is for the organization to always be proactive in its strategic planning and develop actionable tactics and contingency plans for any events they may encounter.
Companies with CI programs have better knowledge of their markets, better cross-functional relationship between their business units and a greater ability to develop proactive competitive strategies. Whether a company needs to develop a corporate strategy or a marketing strategy, the first step is to conduct CI—and incorporate it as an integral part of the business. By continuously monitoring the competitive landscape in which you do business, your company will be able to compete intelligently and prosper.
*SWOT - strengths/weaknesses/opportunities/threats