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What Is Competitive Intelligence?
Competitive intelligence, or corporate intelligence, gathers data about competitors, customers, and markets to develop a better plan than others for their business. It aims to make business decisions and create a strategy that helps the company stay one step ahead of the competition.
Corporate intelligence helps build a successful corporate strategy to grab new business opportunities and surpass market obstacles set by rivals. Companies get to explore and identify competitive advantages. This process helps to easily identify any weaknesses or loopholes in the company by analyzing information about the rivals. However, incomplete data can over or underestimate the rivals.
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- Competitive Intelligence is analyzing and keeping an eye on competitors' strategies by gathering information. It aims at being one step ahead of its competitors.
- The Fugger family first mentioned the word in Germany's newsletter, stating market threats to their international business in Asia, Africa, the United States, and Europe.
- Companies use different tools to gather complex information about rivals and markets. After gathering, they analyze and prepare reports regarding the competitors.
- Different sources of competitive intelligence include surveys, reports, statistical data, articles, industry conferences, etc.
Competitive Intelligence In Business Explained
Competitive intelligence refers to a process of ethically and efficiently gathering, analyzing, and using information related to the competitor's strategy. As a result, companies get an overall view of all entities within the industry. It helps them to earn an extra advantage over others. In addition, firms use this process to research marketplaces to anticipate and respond to business obstacles. Apart from observing the competitors, firms study the customers and the marketplaces for ease of operations.
Unforeseen events and situations may disrupt rival business operations. It may thus impact the distributors and stakeholders related to the business. So, after carefully gathering information about such events and analyzing their impact, firms may employ collective intelligence to respond efficiently using the latest technology and innovation. As the real-world problem may vary depending on the numerous factors, firms often utilize lateral thinking rather than conventional things to respond to them. An example includes firms impacted by the central budget or policies. Therefore, they might require data regarding the schemes and policies of the government.
The competitive analysis process starts with gathering and analyzing the rival's, industry's, and customer's data from published and unpublished. Rather than just studying easily available data, small and large businesses use various competitive intelligence tools in their daily operations to gather disparate data. Firms could use different tools and sources of competitive intelligence for this process. Different sources include social media channels, websites, statistical reports, surveys, news articles, product analysis reports, and industry conferences.
After gathering all the data, the next step is to analyze it. This step involves studying the competitors' strategies and detecting the loopholes. Once data gets analyzed, companies can prepare a competitive intelligence report. This report helps in developing corporate strategies.
Competitive Intelligence History
The history of this process dates back to the 16th century. One of the wealthiest business owners, the Fugger family, published a newsletter in Germany about competitive intelligence during that era. It stated that its international business had severe market threats. Later on, many companies started recognizing it as an important business practice. In the 1970s, every firm in the United States started analyzing and gathering information about its competitors.
Following it, in 1983, mobile phone producer Motorola's CEO Bob Galvin developed a separate competitive intelligence team. This team assisted the executives with seniority decisions. Sooner the concept spread wide, companies like Johnson and Johnson, Procter and Gamble, and others also adopted it. As a result, till the late 1990s, almost 80% of firms started using competitive intelligence tools in decision-making.
Types
The two types of competitive intelligence include the following:
#1 - Tactical
It is a short-term process that provides solutions to the issues. Its prime purpose includes solving the business's daily tactics (problems). Otherwise, firms use it to increase their revenues or profits. In addition, companies use tactical Intelligence to make product comparisons and analyze competitors' marketing tactics. For example, airlines frequently use tactical Intelligence to set flight fares by comparing the daily fluctuations with their rivals.
#2 - Strategic
In contrast, strategic Intelligence refers to a long-term process focusing on future opportunities and threats to the business. Its main goal is to help companies draft future policies. In addition, it gives a future outlook to the company. Companies can use this method to create strategies to shape the organization's future.
Examples
Let us look at the examples of corporate Intelligence to comprehend the concept better:
Example #1
Suppose cold drink manufacturer Coca-Cola uses various marketing tactics to attract new customers. Also, it collects a huge revenue year on year basis. In contrast, PepsiCo struggles with the competition. During the company strategy discussion, the board raised a question regarding Coca-Cola's growth. Finally, they appointed a corporate intelligence team to help them stay ahead of the competition. The intelligence team gathered data on their base industry, main competitors, and customers. Through surveys and competitive intelligence platforms, they gained insight into the industry. Also, there was a constant eye on the competitor's moves.
After analyzing all the competitors' components, the team handed the competitive intelligence report to the executives. The report contained the major issues and loopholes of the company. Also, they provided solutions to them. For example, the company attracted many new customers and clients on adoption. However, if PepsiCo had refused to adopt the report proposed by the intelligence team, the competitors would have surpassed them, thus, laying back in the industry.
Example #2
According to a report by Crayon, corporate intelligence teams spent more than 15% of their time solving the issues in 2019 compared to 2018. Besides that, 88% of the intelligence teams use competitive intelligence platforms and indicators to perform their analysis. Another report states that 90% of fortune 500 companies use corporate Intelligence to gain an edge over their competitors. Likewise, the Forbes report states that 73% of enterprises allot 20% of their budget to this analysis, helping companies compete in the real world.
Importance
Competitive intelligence proves to be of great importance to businesses. It allows companies to learn and adapt to their competitors' mistakes constantly. Additionally, it helps predict the possible moves of the competitor. For example, if a rival's product fails in any country, others will be extra cautious considering similar factors. Furthermore, it warns about various system flaws that arise along the way. Finally, the company also learns about its customers' interests, dislikes, and preferences.
Corporate intelligence allows companies to monitor the prevailing market trends easily. Also, it helps in identifying any future threats or opportunities. Likewise, companies can prepare plans and policies to maximize profits by minimizing operational costs. Finally, as a result of their efforts, they can attract more customers and increase revenue growth.
Competitive Intelligence vs Market Intelligence
Although competitive and market intelligence help companies improve their strategic planning, they differ slightly. The former focuses more on competitors' strategies, whereas the latter focuses on the market. Market intelligence considers a bigger market picture, while competitive analysis analyzes the rival's action plan. However, the latter is a superset, i.e., a larger group of the former.
| Competitive Intelligence | Market Intelligence | |
| Meaning | Firms define it as a process of gathering data and analyzing the competitor’s actions. | It refers to a process of gathering data to understand the overall market. |
| Purpose | To stay ahead of the market | Aims to understand the customer’s behavior |
| Perspective | Limited only to the competitors | Covers the entire market |
| Focus | It looks at the competitor’s plans and actions. | Here, it focuses more on customer demographics. |
Frequently Asked Questions (FAQs)
Following are the steps for gathering corporate intelligence data:
● Identify the main competitors
● Gather data using various sources (online and offline)
● Analyze the obtained data
● Give insights to the stakeholders.
Companies can use the following competitive steps to develop new products:
● Gather data on the competitor if they have similar products or resemblances.
● Note down the points or flaws in their products.
● Prepare a strategy for creating a unique product that differs from the rivals.
● Finally, enact the plan and prepare a new product.
Yes, corporate Intelligence is no doubt an ethical practice. However, there is no space for unethical tradition until companies use legal or defined ways to gather data.
Corporate Intelligence is of great importance in the pharma sector. Pharma companies use it to research newly launched generic medicines in the market. In addition, they use it to detect the gaps in research and development and to analyze the competitor's actions.
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