Very few business decisions are formed without having looked at what sort of conclusion will affect competitors or equally as important, how competitors will to reply to the decision.
Obviously, knowing the characteristics of the competition you encounter is really important.
The key is to gather and analyze information about the market and about your competitors for sources that are open to the public. This process is called competitive intelligence.
It is a mistake to think of this process as something that is merely gathering information. It is much more than that. Not only do you need to know where to go to find the data, you need to interpret it. Since the market can change rapidly, you need to have a way to gather the data on a constant basis.
Why is this an important process?
Well, without the proper knowledge to back any business decisions, you are at risk for losing money. Also, if you fail to take advantage of a current trend, your competitors could reap the benefits and you’ll be left out. Competitors need to be screened in depth to determine who they really are, the way they operate, as well as their relative strengths and weaknesses. Furthermore, a thorough study of your key competitors can generate valuable insights into the proper way to serve your clients.
By methodically examining your competitors’ processes it is possible to:
- Pinpoint ways that the market industry is segmented by trying to find any variations between customer groups served by different competitors.
- Pinpoint variations in basic needs and wants of clients and just how effective various strategies might be in filling these needs.
- Pinpoint customer groups which may be under-served or perhaps not served at all.
- Pinpoint this market positions of competitors as well as the major competitive dimensions that play a role in this situation. Through determining how competition is positioned along with what marketing factors are essential for creating and maintaining their position, it is possible to decide how you would like your products or services to be placed to “differentiate” it from competitors.
- Understand how useful different pricing, promotion, product/service, and distribution techniques are by considering how good they've helped different competitors.
- Pinpoint probable enhancements to aspects of the marketing mix to more efficiently serve your individual customers
There are several things that you need to examine.
This includes information about your competitors, any relevant changes to the legal aspects of your industry or regulations, and technology that is typically used in your industry. You also need to understand what is happening politically and economically as well as any trends that exist in your market. Also gather data about your suppliers and any materials that you need to use.
There are several places you can go to gather data. The internet is a wonderful resource. Just be careful that the sites you use to gather your information has a reputation for accuracy.
Remember that merely gathering information doesn’t mean that you are performing competitive intelligence. The process includes a series of steps including data collection, organization, analysis, application, etc. Once you take the data, analyze it, and learn how to use it to increase your knowledge about your company and the market, then you are engaging in competitive intelligence.