Competitive Intelligence: Q & A
My company’s focus in using Competitive Intelligence has been concentrated on competitors (for example, their product and service bundles, pricing, size of salesforce, new hires, etc.). How can Competitive Intelligence be used to anticipate changes in the industry or competitive environment so that my company will be in a position to profit from such changes?
That’s a very good question. You have pointed out a key objective of Competitive Intelligence, one that is all too often ignored in the business community: the Identification and Understanding of Signals Indicating Changes in Consumer Demand.
The ability to identify such signals requires a CI professional to take a wide view of the industry he/she is operating within. Understanding the marketing strategies, products and corporate cultures of competitors is very important but it does not permit the CI professional to identify changes in the market.
Below are a few examples.
Changes in Government Legislation or Tax Laws
Very often external forces bring about significant changes in an industry. Government legislation, including tax incentives, may impact an industry by lowering the barriers to entry of new competitors. For example, the players in a specific industry may feel safe because the cost of entering the market (the cost of new manufacturing facilities, hiring skilled staff, etc.) is prohibitive.
Changes in tax laws and other incentives may very well entice new competitors into the industry, and disrupting the way business is conducted.
Also, advocacy or lobby groups for industry and consumer issues can provide some clues about upcoming changes in your industry. If there is an advocacy group that looking for legislation that could impact your industry, try to understand their motives and demands. It can help your company devise changes in processes and technology that can obtain a significant advantage in the market place.
Low Price Competitors
In any particular market, whether it is consumer or B2B, there may be a significant part of the market that feels that it is paying too much money for products and services it doesn’t necessarily need. They may be looking for a provider who, while not necessarily providing the best products or services, can provide something that is of acceptable value at a low price, a provider who is deemed “good enough”.
Quite often, low-cost competitors have found a way to be more efficient somewhere along the value chain (for example, they may have removed the “middle man” somewhere along the process between manufacturing and distribution processes). Their example can provide you with ideas to cut costs, improve profitability and enter new markets.
There may be an upstart company or two on the periphery of your industry that has a new technology that has not reached its potential. It is possible that the technology is not very good (at this point in its development) and the services may be substandard. It would be a good idea to understand the product this company is providing and to understand the concept behind the product: What is the idea behind the product and why would it be important to a potential client?
Very often, technology lags behind the concept or idea behind the product. It is only when the technology is fully developed, along with the added services that ride on this technology, that the product becomes a disruptive force in the market – either displacing established players or creating markets where none existed heretofore.
A good example is the wireless handheld device like Blackberry. When wireless handhelds first came the technology was not fully developed and the service was not very good. Established players in the telecommunications industry did not think much of this upstart product. By the time the technology was fully developed, it was too late. Many companies are trying to emulate the original handheld manufacturers, but now they are so far ahead in that market that new entrants (who try to copy the leaders) find it almost impossible to compete.
Food for Thought
- Competitive Intelligence requires a comprehensive understanding of the entire competitive environment, not just established competitors
- Be aware of potentially disruptive forces that could impact your industry. This will help your company to anticipate major changes in your industry and profit from changes in market demands and new technologies.
- Pay attention to potential changes in legislation and also advocacy groups promoting such changes. Understand the motivations behind the demand for such changes, even opening up a dialogue with lobbyists and advocacy groups. Again, this can lead to changes in the way your company does business and so keep it ahead of the competition.
- Try to learn from the competition. This involves not just performance benchmarking against key competitors. It also involves studying competitors on the periphery of your industry, who may have products or technologies that are still in the development stage. What is the concept behind the technology? What market is being targeted? What capability is being offered and why would it be important to the target market?
- Focusing exclusively on established competitors can create a major competitive blind spot from which your company can be blindsided by unforeseen developments.