Gathering Information for Competitive Intelligence
Market research and competitive intelligence are two linked, but slightly different, concepts. Both provide information to help you understand more about your market, and make the right decisions for your company.
Understanding the market, including both your customers and your competitors, is vital to success in business, and feeds into a wide range of strategic analysis tools, including Porter's Five Forces and PESTLE analysis.
This page provides definitions of competitive intelligence and market research, and then offers some techniques that you may find useful in gathering information to support your strategic and tactical decisions about your products, markets, and ongoing operations.
Competitive Intelligence vs. Market Research
There is no single, agreed definition of either competitive intelligence or market research.
Some sources suggest that market research is a subset of competitive intelligence, and others that the reverse is true, or even that the two are the same.
Broadly speaking, the term ‘market research' seems to have been around longer. More recently, it has evolved or developed into ‘competitive intelligence' or ‘market intelligence', probably to reflect the broader range of activities used to gather information, and because information sought includes more about competitors as well as customers. It is generally agreed that market/competitive intelligence:
- Includes both qualitative and quantitative information;
- Provides information about a company's competition, customers and markets;
- Looks at past, present and future situations and scenarios;
- May need to be gathered both directly and indirectly, from a wide range of sources;
- Is used to make both strategic and tactical decisions about marketing, product development and stakeholder management.
A thought on information quality and quantity
Consider Porter's Five Forces. Using it for analysis requires information about your suppliers and customers, your competitors, and possible changes in the future, including new substitutes for your product or service, and new entrants to the market: effectively, competitive intelligence.
Your analysis will be better with more information (within limits).
BUT… the information must be accurate.
The Information Funnel
The process of gathering information can be considered as a funnel.
- At the top of the funnel, you feed in as much information as possible, without worrying too much about its quality.
- As the information passes through the funnel, you assess its accuracy, relevance, quality, and therefore usefulness, going back for more if necessary about any particular area.
- Finally, at the bottom of the funnel, you end up with a set of useful and accurate information to draw on to make decisions.
Based on our popular management and analysis content the Skills You Need Guide to Business Strategy and Analysis is a straightforward and practical guide to business analysis.
This eBook is designed to give you the skills to help you understand your business, your market and your competitors.
It will help you understand why business analysis is important for strategy—and then enable you to use analytical tools effectively to position your business.
Possible Sources of Information
There is a wide range of information sources that you can use to find out about your competitors, market, and industry. These include:
- Analysts' reportsThese are often either published freely, or are available for quite low fees or in exchange for contact information. You can also commission reports in your chosen area. These reports will provide detailed information about an industry or current conditions. They are likely to be both accurate and reliable, especially from established research houses, because the reputation of the analysts rests on that.
- Social mediaThis provides valuable intelligence about what people are saying about your industry, your company or your competitors. It is particularly useful because it gives you direct access to both your competitors and your customers. However, there is an awful lot of ‘noise' on social media, and you may find it difficult to filter it accurately to obtain the information you want. It also not be very accurate, because it only reflects what is being said, not necessarily the truth.Getting competitive intelligence from social media is probably best thought of as a long-term and ongoing project, rather than a one-off exercise, because you will need to monitor the situation over time, and get used to filtering out the noise.
- The wider internet and search enginesLike social media, the wider internet can also provide useful information. Search engines often provide information about particular organisations, or links to the sites that most people have found most useful. Of course, it will be hard to find information that is not already public, and you will need to be careful about the accuracy of the reports.
- Press coverageLike social media, this tells you about what people think, albeit filtered to support the point of view of the news provider. You can look at press coverage over time by using a database of press cuttings. Like the internet, you need to be careful about your sources, although using a database rather than simply searching news sites means that some of the filtering has been done already. You also need to be wary of statements like ‘sources state…', as this may mean ‘I made this up but I want it to sound authoritative'.
- Your network and contactsDo not underestimate the value of your own network and contacts as a source of information. If you have been working in an industry for some time, you have probably built up a network of contacts who have a wide knowledge of the current situation, and some very good ideas about how it might change in future. Of course, not all of them will be prepared to share their insights with you, but some at least might be prepared to pool resources.
- Your own research among customers or othersYou may need to carry out some original research to supplement gaps in the publicly-available information, or to bring it up-to-date.
Ethical practice and competitive intelligence
Competitive intelligence is NOT industrial espionage. It is an ethical and reasonable business practice.
However, this does mean that you need to avoid any unethical practices when gathering your information. For example, do not be tempted to phone your competitors and pretend to be a potential customer to gain more information about their prices.
Equally, you need to avoid any possible accusations of collusion because you have shared your prices with competitors, in exchange for information about theirs.
The next step
Gathering information in an important step but, on its own, it is not enough. You then have to assess its quality, and decide how you are going to use it in decision-making. Finally, you have to take action as a result.