Competitive intelligence is the process of discovering, analyzing and using information to become more competitive in the marketplace.
This involves gathering information about competitors in order to determine their possible future actions and strategies and gain a competitive advantage.
Competitive intelligence is an ongoing process that involves gathering data about:
- competitors and their strategic intentions;
- technology, especially emerging trends and possible future developments;
- legal and regulatory changes;
- suppliers and changes to supply and distribution systems;
- industry and market trends; and
- political and economic changes that affect the competitive environment.
People sometimes confuse competitive intelligence with stealing information from or spying on competitors. Although finding out about competitors is an essential component of competitive intelligence, it does not involve covert gathering of information.
Developing competitive intelligence includes all factors in the competitive environment, not just competitors.
In competitive intelligence, all information is gathered from publicly available and non-proprietary sources. The information is analyzed constantly to answer the questions raised by a company’s strategic planning and objectives.
Competitive intelligence keeps a company informed about critical issues that might influence its profitability and ability to compete in the marketplace. It also enables decision makers to make more effective planning decisions.
The need for competitive intelligence
Companies need to develop competitive intelligence as well as market intelligence because it enables a company to be more profitable and avoid losses.
For example, market intelligence might indicate that customers in a new market desire a certain new product. A company might invest considerable time and financial resources into developing that product and preparing a marketing plan, only to see a competitor also develop the same product and release it first.
Competitive intelligence enables a company to make better decisions regarding long-term and short-term planning, research and development programs, and marketing focus.
It also enables a company to react quickly to legislative and regulatory changes in the competitive environment.
The intelligence that is developed can be used to aid in decisions about whether entering certain product markets is worthwhile. It can also be used to help decide on the method of market entry and to assess potential profitability.
An important part of your global business success
With international trade, competitive intelligence becomes even more important.
Developing an understanding of the competitive situation prevailing in foreign markets is invaluable for making a decision about whether to enter a market.
For example, market research might show that the target market is dominated by a few large and powerful corporations, which might make securing an initial market foothold prohibitively expensive.
In this situation, a company might decide that it would be a strategic move to develop a partnership with one of the large corporations already in the market.
Competitive intelligence can contribute to a company’s international activities in other ways. A company might be able to find out why competitors have succeeded or failed in a new market and learn from their mistakes.
New product ideas and design considerations might be uncovered, or a company might gain advance warning of new product introductions.
Other monitoring activities might reveal competitors’ prices, which can help in making decisions about cost structure.
The competitive intelligence model
Competitive intelligence works best when a clear, concise question is formulated after a company conducts a needs assessment.
This method will identify knowledge gaps and enable questions to be developed. For an international marketer, the needs assessment might lead to the development of questions such as:
- What is the financial strength of a competing firm in our target market?
- What are the critical success factors in the market leader’s promotional campaigns?
- What are the company’s strategic intentions?
- Who are the company’s partners?
- What markets is the competitor targeting?
There are ten phases in the competitive intelligence model:
- Conduct a needs assessment
- Formulate questions
- Organize the process
- Gather the data
- Organize the data into information
- Assess the accuracy of the information and fill information gaps
- Analyze information to create competitive intelligence
- Disseminate intelligence to decision makers
- Formulate a strategy and implement it
- Evaluate action effectiveness and adjust the needs assessment as required
The model is cyclical and continually builds on and refines the competitive intelligence that has been obtained from earlier projects.
What types of competitive intelligence do you need to gather to increase your international profitability?