Why Every Small Business Needs Competitive Intelligence
Competitive Intelligence should be viewed as a crucial element when building a 2020 business strategy. Understanding competitor motivations and behaviors help shape product development, pricing, brand positioning, and more. The key is to identify challenges, advantages, and white spaces to build a strategy that creates competitive differentiation. But it is impossible to differentiate yourself from competitors’ visibility into their activities.
Building a strategy without Competitive Intelligence is like planning a road trip without a map. You might eventually reach the destination, but it will be much more difficult.
Competitive Intelligence programs uncover and analyze market and competitor activity to provide actionable intelligence. Ultimately, the goal is to provide leadership with useful insights to support more informed business decisions.
A competitive intelligence report is likely to include current and emerging competitors, customer profiles, market intel, pricing, and more. With competitive landscapes becoming more dynamic, it is imperative for companies to seize a knowledge advantage. This advantage can be leveraged to increase revenue, market share, and brand equity.
There are numerous tactics for excavating competitor data.
One obvious tactic is using internet searches. With web searches, companies can find out what competitors are doing publicly and what they have done in the past. Web searches can uncover potential product announcements as well as customer feedback. Internet searches are a beginning but not the end. Be aware that surface-level web searches often yield “company approved” information that only projects strengths. A deeper search should include views into leadership tendencies, past contracts, technology, M&A’s, facilities, personnel changes, and more.
Other forms of market research and analysis can be similar to internet searches regarding time commitment. These might include analysis of niche market and customer segments. However, a deeper dive will require more exhaustive efforts for data collection and analysis. These can include both quantitative and qualitative research to obtain higher-quality insights.
Another way to assess competitor activity is through proprietary database mining.
This entails purchasing data from an outside source and mining it for patterns and trends. Data mining typically involves larger sets of data that are likely to reveal a considerable amount of information.
Human Intelligence is an even more complex option. This involves direct contact and communication with individuals who can provide relevant information. These people may include former customers, former suppliers, and other subject matter experts. It is of the utmost importance that this process is conducted ethically and gathers information legally. It is strongly recommended to use a third party company.
Once collected, data is analyzed for applicability and validity. This crucial step helps differentiate between consistent patterns and outliers. The process allows companies to narrow down massive amounts of data into valuable insights. The analysis will ultimately reveal competitor strengths, weaknesses, white spaces, and tendencies.
There are some very important pitfalls to be aware of in the process.
First, be sure to have three separate sources to avoid circular intelligence. It is human nature to assume something is true when the same information is listed from different sources. However, they might all be parroting the same information from one source. And that one original source may not be valid or might be the very company being researched. So, it is important to gather from different sources and verify the authenticity of the data’s origins.
Having multiple sources also eliminates guessing and assumptions based on experience with a specific competitor.
Tribal knowledge only goes so far and is prone to error. It seems logical to defer to personal experience when dealing with competitors Companies that frequently compete head-to-head often make decisions based on experience. This can be a perilous tactic. Frequently, organizations become echo chambers for inaccurate or incomplete data.
For instance, it might be a given that one solution costs more than the competitor’s similar solution. Based on this, internal conversations can begin to focus solely on pricing strategies. However, competitive intelligence might reveal the competitor’s solution has more perceived value due to price plus simplicity of implementation. This more accurate knowledge completely changes those conversations.
Competitive analysis should be used to create a competitive differentiation strategy and distinguish a company’s offering from others in the market.
Competitive differentiation can focus on technology, sales, marketing, pricing, and other key areas. The goal is to identify and then exploit advantages while addressing areas that need improvement
An important area of competitive differentiation is price-to-win analysis, also known as competitive pricing. This process works to find the sweet spot between a profitable price, competitive behavior, and the buyer’s perceived value of a solution. This aligns a seller’s strategy with the buyer’s needs while differentiating their solution in a competitive situation.
A successful price-to-win- strategy isn’t about pricing your services below competitor’s; rather, it’s about positioning your solution as the choice that provides the greatest overall value.
Competitive intelligence is integral for ensuring a company’s success.
It should not be thought of as a nice-to-have or complementary aspect of business strategy. Instead, it should form the basis of the strategy. Equipped with accurate insights, businesses can differentiate themselves and better align with buyer needs and expectations. Put simply, this differentiation process gives companies a far better chance to win. When building a business strategy, it is easy to go down the wrong road.
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