Businesses of all kinds have competitors vying for their customers. Competitors are companies that function in the same industry as your company; they even sell similar products or services. Competition can be regarding many factors like, quality of product or service, low price, type of product or service and type of promotions. In this article, we will discuss about the effectiveness of the strategy tools of your competitors. This is thus, a study about competitive intelligence and gaining competitive advantage by the knowledge of competitors’ market strategy and customer satisfaction level.
The method of gathering and analyzing data about the strengths, weaknesses, threats and opportunities of competitors in an ethical style in order that the decision making aspect of your business improves is called competitive intelligence.
Activities related to competitive intelligence are divided into three main categories; they are tactical, strategic and counter intelligence.
It focuses on short-term issues, like enhancing revenue and getting hold of market share.
This emphasizes on long-term aspects, such as main opportunities and risks that your organization can encounter.
This involves protecting the secrets of your company. Just like you are interested to know about other companies, they too are interested to learn about your strategies.
Value of Competitive Intelligence
When starting to utilize competitive intelligence, investors ask themselves the following questions.
- How to define the mission, strategic intentions, strategic options and strategic goals of the company?
- What should be done to choose and improve strategies which are both sustainable and successful?
- What new products and services should be built and what kind of market should be entered? How to enter the market?
- How to utilize the competitive strategy?
Whatever may the strategic structure be for a company’s business management; nothing is more important for its competitive strategy than competitive intelligence. Competitive intelligence is more concerned about doing the correct thing than doing the thing correctly.
# Competitor analysis
Analyzing competitors involve the objective to develop a profile of the type of strategy alterations adopted by competitors, probable response of competitors to the strategic moves made by other companies and the reaction of rival companies to changes in environment and industrial policies.
# Objective of competitive intelligence
The objective of competitive intelligence should be single-minded. This helps in creating tactics and techniques essential for transferring market share in a consistent way from a competitor to your company.
An organization which does not monitor its main rivals is not equipped with useful competitive strategy and this leaves the organization and its market susceptible to attack. The basis for competitive intelligence surrounds decisions made by mangers about the way a business should be positioned to increase the value of the capacities that differentiate it from its rivals. If the company cannot gather, analyze and work on the information it gets on its competitor, it will lead to the company’s failure in the market.
Difference with Corporate Espionage
Competitive intelligence should however, not be confused with industrial espionage because the latter uses unethical methods to have competitive advantage.
- Industrial or corporate espionage is often heard of. Companies send spies to rival companies for getting information about the activities in their research and development wing. In case of competitive intelligence, such unethical actions are not required.
- By implementing competitive intelligence, you can assess the activities of rivals. This assists in getting valuable data and developing plans to decrease the chances of being overwhelmed by news like alterations in pricing strategy of competitor, etc.
Competitive intelligence is a part of market intelligence plan. The plan is devised to improve decisions of your business by keeping the company abreast of the atmosphere in the external market.
Uses of Competitive Intelligence
Competitive intelligence is used to monitor the actions of competitors. This helps in understanding what they are doing and might do in future. This also helps in gaining insight into the competitive position of your own enterprise.
For instance, if you learn that a rival is trying to acquire other companies, you must not compete on size of the rival company; instead you should improve the quality of your products or services.
- Intelligence is a product on one hand and a process on the other. In this analytical method, information gathered about rivals is changed into knowledge about the capacities, performance, desire and final product or service of that method.
- The emphasis of research about market is generally on the issues connected with the profitable marketing of services and products. On the other hand, competitive intelligence has a broader aspect and it is a value-added concept that puts a layer over research of market, strategic planning and development of business.
- The objectives of research in competitive intelligence generally consists of matters, like, analysis of joint ventures in which rivals have entered, competitor’s capability to manufacture, future plans of the competitor regarding certain product lines and markets, the cause of change in corporate strategy, etc.
In the global arena competitive analysis occurs at two levels. They are business unit and corporate. There are a couple of things that come up when corporate strategy is dealt with:
- the kind of business the corporation should be in
- the way corporate strategy should be run
The Competitive Intelligence Cycle
The cycle of competitive intelligence constitutes five steps. They are as follows.
- Making plans and thinking about direction
- Gathering information and conducting research
- Processing and storing
- Analyzing and producing
- Circulating and Delivering
Before making decisions regarding investments in competitive intelligence you should think about the following questions.
- What is it that you want to know?
- What part of information is already available with you?
- What is the reason to know?
- By what time do you need to have the information?
- What will you do with the information you gather?
- What are the costs involved in gathering the information?
- What will happen if you do not get the information?
To Wrap Up
From this article, it can be deduced that competitive intelligence helps in understanding the strategies of rival companies, so that your enterprise can have enhanced market share and ability to face changes in the industrial atmosphere.