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COMPETITIVE INTELLIGENCE

A business model for assessing the strengths and weaknesses of competitors

Competitive intelligence took off in the US in the 1970s. In 1980, Michael Porter published his book, Competitive Strategy: Techniques For Analysing Industries And Competitors.  Understanding the strengths and weaknesses of competitors is critical in determining a business strategy. A profile of competitors is required for product planning, pricing, strategy and acquisition policy.

Competitive intelligence (CI) is, as the term suggests, market intelligence that is focused on finding out as much as is possible about business competitors. All companies face some level of competition. Understanding the strengths and weaknesses of competitors is critical in determining a business strategy. A profile of competitors is required for product planning, pricing, strategy and acquisition policy.

Given time, a considerable amount of intelligence can be obtained on competitors.  Researchers seldom have unlimited time and so must set out to collect as much information as possible within confines.  In some companies competitor intelligence (CI) is a continuous process. Topics that are usually featured in a competitor intelligence gathering exercise are:

Topics that are usually featured in a competitor intelligence gathering exercise are:

 

Financial data

  • Company revenue, number of employees, number of plants.

  • Exports (including geographical breakdown).

  • Net profit and gross profit.

  • Current assets and fixed assets.

  • Return on assets.

  • Trend of financial data over time.

  • Ratio analysis (of revenue to employees, debtor days etc).

Customers

  • Target customers.

  • Key customers.

  • Share of wallet of competitor at customers.

  • Loyalty of customers to the competitor

Products and turnover

  • The range of products sold by the competitor, their performance, specifications and prices. 

  • The revenue and market share for major product lines.

  • The importance of spares within the competitor’s product portfolio.

  • The importance of service within the competitor’s revenue.

Prices

  • The pricing policy of competitor including known discounts.

  • The timing of price increases and whether they are instigated independently or follow a lead.

Distribution

  • Route to market used by the competitor.

  • Key distributors.

Deliveries

  • The speed with which the competitor can fulfil an order.

  • The reliability of deliveries on time and in full.

Promotions

  • The size of the competitor’s promotional budget.

  • Approximate breakdown of the promotional mix.

  • The attendance of the competitor at exhibitions.

Selling methods

  • The size and organisation of the competitor’s salesforce.

  • The geographical coverage of the sales territory.

  • Quality of the competitor’s sales force.

Production facilities/capacity

  • The production capacity of the competitor.

  • Current production levels.

  • The capacity level at which the competitor breaks even.

Company organisation and philosophy

  • The management structure of the competitor and its relationships with parent bodies or subsidiaries.

  • Associations with distributors and other partners.

  • Any patents held by the competitor and when they expire.

 

Sources of competitor intelligence
 
•    Financial data: Publicly quoted companies have to produce detailed accounts which are made available within months of the end of their financial year. 
•    Websites: We live in an age of self-promotion where companies post a considerable amount of data about themselves on their websites. 
•    Google maps: Google Maps and Google Street View allow us to have a good look at the fabric and the premises of companies without leaving our desk.
•    Market research reports: Market research reports are available at modest costs that cover almost every industry including specialised niches. 
•    Customers: Customers can report competitors’ product performance, deliveries, sales service, prices etc. 
•    Suppliers: Companies that supply materials and information may well supply competitors and be prepared to share views on them.
•    Distributors: These companies deal with a wide range of different suppliers and customers, some of which may be competitors. 
•    Industry experts, journalists and observers: There are always people in an industry who acquire knowledge on companies from attending seminars, conferences and exhibitions.
•    Past employees: If they are not bound by confidentiality agreements, past employees may be prepared to share intelligence on where they previously worked.
 

Consider setting up a continuous programme of gathering competitor intelligence. Use your sales force and Google alerts to keep up-to-date with changes. Create an easily accessible place where customer intelligence can be filed and shared (perhaps on the company’s intranet).

 

Keep encouraging the people who are your eyes and ears for intelligence. They need to know that what they are collecting and sharing is valued.

An ad hoc competitor intelligence survey should begin with the questions “What do we want to find out about this competitor and what will we use the intelligence for?”. Remember to “join the dots” between pieces of market intelligence. For example, adverts for a new product development manager could indicate that the competitor is bound on an innovation strategy.

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