Business and competitive intelligence consists of gathering information about your existing and future market and competitors to make better product and company decisions. Business intelligence includes information about the market uncontrollables that you must adapt to:
- Your customers. Acquisitions of suppliers (your competitors) that may make you obsolete, creditworthiness, changes in management that may require “re-winning” the account.
- Laws, regulations, and policies. Especially those that may affect your product, kill competitors, provide financing (i.e., homeland security)), environmental requirements that change your materials, new mandated packaging sizes, etc.
- Potential acquisitions. Shows financial condition and the potential new direction of customers and competitors.
- New technologies. Especially “paradigm shift” technologies such as the Internet, digital cell phones, and faster processors.
- Market direction. Market increase or decrease, new buying trends, depressed marketing circumstances.
Sources for business intelligence include:
- Industry trade and general publication articles
- Industry consultants and analyst
- Resellers – yours and competitors
- Your own sales force & customer service
- Press clippings
- Industry reports and survey findings
- Trade shows and events
- Web sites and Internet content (chat rooms, sites)
- Service bureaus (i.e. Dunn & Bradstreet, etc.)
Competitive intelligence includes information and analysis of your current and potential competitors.
Competitive product matrix. The primary deliverable for competitive intelligence is a competitive matrix. This involves a complete workup on your competitors. Following are some of the variables to consider:
- Products. You would compare features, usability, integration, GUI, expandability, modularity, codebase, reusability, benchmarking (# keystrokes, speed to execute / render / load / compile, installation time, etc.), bundled applications, # of templates, etc. Consider existing published matrices (from publications, competitor’s literature/Web site) to capture all the variables that might be important.
- Service. Compare customer service, returns policy and actual practice, tech support policy and practice, service mechanism and terms, warranty, etc. WordPerfect shook up the entire industry by offering free support–set the standard, and it was a major selling point.
- Pricing. Consider retail versus street price, wholesale for margins, bundle deals, firm vs. negotiated, RFQ information, financing terms, upgrade policy, rebate process, and installation time savings. It is important to note how competitors list their prices (MSRP, street price, etc.) since some reviews give a higher value for better pricing–even if your street price is the same.
- Quality. Review stability of the product, finish, and component cost of goods and type (especially for hardware), # people in test, testing process. Some companies, such as Ulead, Adobe, and others produce notoriously buggy software–which can be leveraged against them.
- Sourcing. It is valuable to understand where competitors get their materials and their manufacturing facilities–since you can often determine their exact cost and ferret their pricing strategy (critical for RFP best bidding situations). It will also help understand whether they build or OEM and help you to disrupt their supply chain.
- Distribution. It is critical to know how your competitors distribute their products, direct, one-tier, and two-tier, along with understanding their reseller strategy. You can recruit their resellers, use a more efficient channel, use their distribution method against them (they “don’t” have resellers to help with field support, or they sell direct and tick off their resellers (making their resellers easier to recruit). You can also market via wholesale distributors to the identical channel that purchases your competitor’s products.
- Terms. Some bids and sales are won entirely on the terms of purchase. Some customers may want to finance, some want discounts, some can’t pay sooner than 45 days, some want to pay at the end–how your competition sets the terms of the sale is critical to capture.
- Reputation. This often refers to brand equity such as that held by Microsoft, GE, IBM, etc. It plays a major part in the buying decision and should be taken into account within the competitive analysis.
- Benchmarks. Some products live and die by benchmarks such as compiling development tools, and products with complex installations (with massively varying installation times). The necessary benchmarks should often be specified within the Market Requirement Document and can be leveraged within the selling and positioning process.
Once you have compiled this information you will create a grid comparing your major competitors against your own company offering. Notice that a competitive matrix is not just a competitive product matrix.
Taking apart your competitor helps you understand your own value proposition and, until you can discover it, you can’t position your product, train your salespeople, run well-positioned promotions, and don’t know how to direct future development.
As a side note, the product management and development teams would have the complete competitive matrix (showing your own good and bad results) so you could improve your ongoing position. Sales, resellers, and customers would only have the version showing your benefits (with a few negatives thrown in to retain some semblance of credibility). I have seen this process done well at some companies, while at others I was shocked to see that the extent of competitive analysis was a reference to a competitor’s Web site
I call these single-sided competitive matrices the “Tom Cruise” charts. You are better than Tom Cruise because you have dark hair, you wear size 14 shoes, you are better at math, etc. All of this looks good on paper and puts you forward in the best light–even though it is totally irrelevant to Tom Cruise’s fans.
Important note: Some countries (such as Germany) and agencies do not allow competitive matrices. However, most do (it is encouraged within the US) and all of us value a chance to understand the differences that we may not have considered.
Competitive Matrix Samples
- View samples of competitive matrices, plus detailed instructions (simple enough that an intern can follow them)