What You Don’t Know About Your Competitors May Sink You

November |2009

What You Don’t Know About Your Competitors May Sink You

What?

According to a study by the Society of Competitive Intelligence Professionals, about 90% of the Fortune 500 companies in the US are conducting competitive intelligence activities. A majority of large enterprises, according to another study (about 70%), believe that having competitive intelligence in the past would have increased the effectiveness of their campaigns. Yet, many companies, including some market leaders in the rest of the world, do not have well-defined competitive intelligence plans. They evaluate their strategies and tactics in isolation, without taking into account what the competitors are up to or how they could react to them.

Competitive intelligence is one of the key success factors in today’s highly competitive and dynamic marketplace. Companies need to continuously monitor their competitors, especially before making key strategic decisions and investments around new product and campaign design, price and promotions plans, and branding and repositioning decisions.

But, Why?

If not proactively managed, one of your competitors may launch a similar product to the one your R&D Department was working on just before you. Another competitor may apply deep discounts the same week you were planning to increase your prices. Any such actions by your competitors can and will go a long way towards negatively affecting your market share and brand image.

To address such risks, companies need to take into account not only their own strategic priorities and voice of their customers, but also what their competitors plan, develop and offer to the market, in order to have the complete picture for their strategic and tactical investments. This is why, according to the respondents of a recent Outward Insights survey:

83% consider competitor intelligence important in business development & sales 79% consider competitor intelligence important new product launches 71% consider competitor intelligence important R&D planning and execution

Unfortunately, most companies that do competitor research perform such activities only on an ad-hoc basis and do not follow a structured process or plan. What’s worse, such research often gets lost on the desktop of a few specialists and never sees daylight again. Effective competitive intelligence with high ROI requires the right focus and utilization, which comes with good planning and dedication.

So, How?

The obvious, but not so commonly covered, first step in competitive intelligence is the identification of competitors. Unfortunately, most companies assume only their usual rivals create competitive risks and fail to recognize a potential up-and-comer, or a complete newcomer until it is too late. For example, Xerox failed to recognize Canon as a potential threat before it entered into its market and US car makers considered Honda as only a motorcycle manufacturer and did not consider it as a future competitor at the time. Identification of the competitors requires ability to foresee who might enter into the market, as well as who has substitute offerings stealing market share from them, such as a speedboat company stealing customers from Ford, or 3G mobile operators stealing share from the traditional ISP market.

Once the current and potential competitor list is defined, companies should set-up operations to regularly follow news and continuously gather intelligence about their:

Items Information to Gather

Promotions &

Campaigns

Expected new promotions launches

Type and propositions in campaigns

Target segments and regions

Media and channels used

Tone and messages used

Awareness, recall and impact in the market

Prices &

Discounts

Comparison against own price levels

Awareness and perceived level of prices by customers

Price discrimination practices

Communication strategies for price changes

Products &

Propositions

Expected new product launches

Comparison against own product portfolio

Mapping against market segments

Perceived quality and attractiveness of products

Bundling strategies

Channels

Expected new channel launches

Comparison against own channel mix

Employee capabilities across channels

Geographical distribution of channels

Effectiveness of different channels

Incentive mechanisms across channels

Customer

Experience

Customer journey and wow factors

Information collected about customers

Differentiation by customer segments

Consistency and differences across touch points

Customer satisfaction from the experience

Service Levels

Duration to fulfill products, provide services and resolve

complaints

Differentiation by customer segments

Consistency and differences across touch points

Customer satisfaction from the service levels

Operational

Model

Process flows and key performance indicators

Systems architecture and technologies used

Human Organizational structure, roles and responsibilities

Resources Compensation model and levels

Level of staff quality

Employee satisfaction and loyalty

Strategies &

Positioning

Mission, vision and strategic priorities

Perceived positioning in the market

Strategic goals and initiatives

Although information about all these items should be collected continuously to facilitate quick responses and opportunistic actions, regular reports should also be compiled quarterly or semi-annually to create an archive on the competitor profiles, to use as an input in the strategic planning and key initiatives such as new product launches.

Sources which can be used to gather such information are numerous, with different levels of cost (difficulty), content, and depth:

Source Content

Desktop Research

(News, company

web sites, blogs)

Company mission, vision and strategic initiatives

(if public)

Current, past & new to market products, prices and

promotions

Recently launched initiatives and systems invested

in

Observation

(Mystery shopping,

visits, calls)

Customer experience across customer lifecycle

Service levels and employee capabilities across

channels

Up-to-date product, price and promotions

information

Case Studies

(Conferences,

interviews)

Former and current strategic initiatives

Impact and lessons learned from key initiatives

Competitor HR

(Profiles, open

positions)

Profile, hence expected mindset of top

management

Changes in top management positions

New organizational positions and investments

Third Parties

(Consultants,

suppliers, partners)

Ongoing projects and key initiatives

Products and systems purchased and in use

Organizational and operational details

Media investments and preferences

Simulation

(War-gaming, game

theory)

Possible responses to own decisions and actions

Possible short to long term strategies of the

competitor

Possible market reactions with current and future

strategies

Modeling

(Forecasting, system

dynamics)

Future sales and market share

Probabilities of different strategies and responses

All the information collected about competitors should be action oriented, creating immediate responses upon learning or critical inputs for decisions in the future. Hence, companies should also pay attention to measuring and evaluating the value-add of each source and category of information collected to maximize return on their competitive intelligence investments.

What Next?

In order to start structuring and regularizing competitive intelligence, companies should establish an external or outsourced team of specialists or allocate part-time responsibilities to their existing resources to initiate and plan intelligence gathering activities. In this plan, the sources, content and frequency for intelligence gathering should be well-defined and supported by a knowledge management platform to keep the information manageable and accessible by the right parties over time.

About Forte Consultancy Group

Forte Consultancy Group delivers fact-based solutions, balancing short and long term impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety of service offerings for numerous sectors, approached in three general phases - intelligence, design, and implementation.

For more information, please contact info@forteconsultancy.com

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