5 Market Intelligence System

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A Market Intelligence System (MkIS) is one that systematically gathers andprocesses critical business information, transforming it into actionablemanagement intelligence for marketing decisions.

Market Intelligence is about providing a company with a view of a marketusing existing sources of information to understand what is happening in a

market place, what the issues are and what the likely market potential is.

Market Intelligence can be divided into two spheres Market Intelligence based on external data Market Intelligence based on internal data

Often Market Intelligence relies purely on external data such as analystsreports, but there is often a great deal of untapped information internallythat would give you an insight into your market, from sources such asdatabases and prospect lists, and an holistic view can prove very insightful.




Market and customer orientation - implementing an MkIS will encourage peoplethroughout the organisation to focus externally.

Identification of new opportunities - One company in a component industryidentified a new trend before the 'expert' industry analysts.

Early warning of competitor moves - through good intelligence, One chemicalcompany thwarted the siting of a competitor's manufacturing plant in one of theirmost profitable sales territories.

Minimizing investment risk ² on-going intelligence and analysis is more likely totemper unbridled enthusiasm to follow the bandwagon into those "mustn't miss thewindow of opportunity" markets

Better customer interaction - An insurance company downloads into theirsalespeople's portables up to date profiles, order history and relevant 'news bites', for

the clients they are about to visit. Better market selection & positioning - good understanding of customer needs andcompetitor positioning will help a company better carve out its own unique niche

Quicker, more efficient and cost-effective information - establishment of a system willmake information more quickly and easily accessible. One company avoided the needfor an expensive piece of market research by tapping into its existing MkIS.




Marketing Intelligence

Market Understanding Competitive Understanding

Competitor Intelligence Product Intelligence Investments * Pricing Organization Changes * Product Info

Strategy * Promotion

Market Understanding Consumer Understanding Market Share * Product Definition Opportunity forecast * Customer perception Market volume analysis * Loyalty satisfaction




Define the Customer

Understand the Needs

Map Needs against Decisions and Sources

Implement a Sourcing Strategy Define Information Policies and Standards

Select a Pilot Project

Select and Adopt appropriate Technology

Nurture the Intelligence Process

Focus Dissemination (Distribution)

Market the Capability




Strategic Analysis & Scenario Planning Environment Forecasting Acquisition targets Location of new plants Supplier evaluation

Marketing Planning Industry analysis Competitor analysis New product introductions Product portfolio Pricing

Sales & Marketing Sales cycle management (targetting etc) Database marketing Sales forecasting Promotion campaign assessment







Competitor analysis in marketing and strategic management is an assessmentof the strengths and weaknesses of current and potential competitors. This

analysis provides both an offensive and defensive strategic context to identifyopportunities and threats.

Competition - Any person or entity which is a rival against another. Inbusiness, a company in the same industry or a similar industry which offers asimilar product or service. The presence of one or more competitors canreduce the prices of goods and services as the companies attempt to gain alarger market share. Competition also requires companies to become more

efficient in order to reduce costs. Fast-food restaurants McDonald's andBurger King are competitors, as are Coca-Cola and Pepsi




Competitor intelligence is the art of defining, gathering, analyzing, anddistributing intelligence about products, customers, competitors, individuals,concepts, information, ideas or data needed to support executives andmanagers in making strategic decisions for an organization. Includes a broadarray from government intelligence to market intelligence to business

intelligence.

One common and useful technique is constructing a competitor array. The stepsinclude:

Define your industry - scope and nature of the industry

Determine who your competitors are Determine who your customers are and what benefits they expect Determine what are the key success factors in your industry Rank the key success factors by giving each one a weighting Rate each competitor on each of the key success factors




Direct Competition (also called category competition or brand competition),where products which perform the same function compete against eachother. For example, one brand of pick-up trucks competes with several otherbrands of pick-up trucks. Sometimes, two companies are rivals and one addsnew products to their line, which leads to the other company distributing the

same new things, and in this manner they compete.

Substitute or Indirect Competition, where products which are closesubstitutes for one another compete. For example, butter competes withmargarine, mayonnaise and other various sauces and spreads.

Budget Competition Included in this category is anything on which theconsumer might want to spend their available money. For example, a familywhich has 70K available may choose to spend it on many different items,which can all be seen as competing with each other for the family'sexpenditure. This form of competition is also sometimes described as acompetition of "share of wallet".




A. The threat of the entry of new competitors - Profitable markets that yieldhigh returns will attract new firms. This results in many new entrants,which eventually will decrease profitability for all firms in the industry.

Economies of product differences Brand equity

Switching costs Capital requirements Access to distribution Customer loyalty to established brands

B. The threat of substitute products or services - The existence of products

outside of the realm of the common product boundaries increases thepropensity of customers to switch to alternatives Buyer propensity to substitute Relative price performance of substitute Buyer switching costs Perceived level of product differentiation Number of substitute products available in the market




C. The bargaining power of customers (buyers) - is also described as themarket of outputs: the ability of customers to put the firm under pressure,which also affects the customer's sensitivity to price changes. Buyer concentration to firm concentration ratio Degree of dependency upon existing channels of distribution Bargaining leverage, particularly in industries with high fixed costs

Buyer volume Buyer switching costs relative to firm switching costs Buyer information availability

D. The bargaining power of suppliers - is also described as the market ofinputs. Suppliers of raw materials, components, labour, and services (such as

expertise) to the firm can be a source of power over the firm, when there arefew substitutes Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Impact of inputs on cost or differentiation Presence of substitute inputs

Strength of distribution channel

ContdContd««




E. The intensity of competitive rivalry - For most industries, the intensity ofcompetitive rivalry is the major determinant of the competitiveness of theindustry. Sustainable competitive advantage through innovation Competition between online and offline companies Level of advertising expense

Powerful competitive strategy










Benchmarking is the process whereby an organization evaluates theirpractices against the practices of similar - or sometimes larger and smaller -organizations in the industry. When doing so, an organization engages inresearching the best practices in other organizations that are successful.Benchmarking is seen by many as a continuous event that must be performed

to maintain a competitive edge in the market. So that you or yourorganization don·t spend countless hours researching the industry.The following procedure used for benchmarking«

1. Identify the problem2. Identify organizations that are leaders in your industry

3. Study their best practices4. Implement the steps necessary to close the performance gap




1. Strategic Benchmarking - Where businesses need to improve overallperformance by examining the long-term strategies and general approaches thathave enabled high-performers to succeed.

2. Performance or Competitive Benchmarking - Businesses consider their positionin relation to performance characteristics of key products and services.

3. Process Benchmarking ²Focuses on improving specific critical processes andoperations.

4. Functional Benchmarking - Businesses look to benchmark with partners drawnfrom different business sectors or areas of activity to find ways of improvingsimilar functions or work processes.

5. Internal Benchmarking - Involves benchmarking businesses or operations from

within the same organisation (e.g. business units in different countries).6. External Benchmarking - Involves analysing outside organisations that are

known to be best in class. External benchmarking provides opportunities oflearning from those who are at the "leading edge".

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5 Market Intelligence System