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"Competitive Intelligence: A 'Must Have' Marketing Tool"
By Richard Wood, Managing Partner, Sand Hill Partners

The CEOs of the world’s most pre-eminent enterprises will tell you that their companies are successful because they take their competitors seriously. They will tell you that they are keenly aware that every forward step taken by a competitor represents a step backward for them.

Understanding the competition is critical to any business enterprise. Companies always need to know what their competitors are thinking, what they're planning, and how they're positioning themselves. Assumptions about competitors that were made six months ago may no longer be true. Markets are dynamic and constantly changing. Some competitors are moving much faster than others. Pertinent, insightful, up-to-date information about them is essential for strategic planning, product messaging and market maneuvering. In fact, experts are now saying that the half-life of competitive assumptions is a mere three months.

Today, most of the firms in the Fortune 500 engage in competitive intelligence activities, but only 9 percent have formal competitive intelligence programs and processes. The competitive intelligence leaders, not surprisingly, are Microsoft, Motorola, IBM, Procter & Gamble, General Electric and Coca Cola.

We are not talking about passive market research, online searches through historical artifacts, Web site scanning or spreadsheet benchmarking. We are talking about proactive intelligence programs that continually and aggressively study and analyze a competitor’s strategies, products, plans, opportunities, strengths and weaknesses.

The more information a company has about its market and competitors, the better it can differentiate, position and brand itself while minimizing competitive threats and market risks. Companies such as General Electric will tell you that intimate knowledge of the marketplace and the competition are critical to any marketing initiative – whether it be a new-product launch, sales force training or marketing communications program development.

So why don’t more companies have formalized programs and processes? Here are the reasons most often given:

We’re not worried about the competition; we’re doing just fine
The competition can’t touch us, so we really don’t need to spend a lot of time worrying about it
Our products practically sell themselves
Intuition and gut feeling have gotten us this far
We’ve been in business for 20 years now, so we know pretty much everything that’s going on
We rely on our salespeople for all of our competitive information
Our focus is on technical innovation, not competitive strategy
We really don’t have anyone to handle it
We don’t exactly know how to go about doing it
We’re really too busy

Yet, competitive intelligence is a powerful, proven force in building a dominant business and driving incremental revenues. What your competitors are planning, scheming, and saying about you in the marketplace can have profound implications on the future of your organization.

Based on our experiences, your return on investment from a well-orchestrated competitive intelligence program can be significant. Competitive initiatives can produce incremental revenues in the millions of dollars simply by providing the up-to-date competitive information needed to re-adjust and re-focus sales strategies and market positioning.

Here is the kind of "actionable information" you can expect to gain from a good strategic intelligence program:

Details about your competitors’ marketing plans, strategies and growth drivers

Comprehensive information on your competitors’ product lines – specifications, engineering strategies, quality, reliability, degrees of innovation, and levels of customer satisfaction

Identification of gaps in your own product line

Information on your competitors’ product plans and pending product launches

Competitor pricing levels, packages, bundles, specials, customer financing terms and options

Information on your competitor’s sales processes, sales organization, customer base, key accounts, sales prospects and distribution channels

Feedback and comments from your competitors’ customers, business partners and financial analysts

Your competitors’ customer service, customer retention and aftermarket sales strategies

Your competitors’ value propositions, positioning statements, sales/marketing messages to prospective customers and their key differentiators

Insight into what your competitors are saying about you, and who they view as their competitors

General market trends and SOM splits

Geographical strength and reach of your competitors

Basic financial information – revenues, profits, revenue mix, balance sheet items, etc.

Targeted financial information – revenues from a specific product line, etc.

Corporate information – core competencies, organization, ownership, facilities, locations, sales offices, number of employees, recent organizational changes, employee recruitment patterns and recent recruitment emphasis

Strategic information – partners, vendors, alliances, relationships, networks, and acquisition plans

The critical information you need to re-position and re-tool your own sales messaging

Better overall understanding of your competitors’ strengths and weaknesses

Clear awareness of your own strengths and weakness and how to take greater advantage of both

Successful companies go to great lengths to learn about their customers’ needs, wants and demands. Outstanding companies go several steps further. They assess and track competitor actions to provide early warning of emerging business opportunities and market threats.

In today’s fiercely competitive business climate, you no longer can afford to rely on old news and intuition. Before you make your next significant market move, you owe it to yourself to re-examine your market space, accurately assess your competitive position within it, eliminate surprise and take advantage of the opportunities that lie before you. The knowledge and insights gained will allow you to develop more effective strategies to drive revenues while taking several important steps forward in your marketplace.

(Richard Wood is Managing Partner of Sand Hill Partners, a strategic services firm specializing in competitive intelligence, competitive product analysis, and pre-transaction services. Clients range from Fortune 500 firms to early-stage and emerging-growth enterprises. Further information is available at the firm Web site, www.sandhillroad.com or by contacting Mr. Wood at 650-631-0123 or by email at partners@sandhillroad.com.