Xerox had almost thrown up its hands and getting ready to exit the small copier business when Japanese copier manufacturer, Canon, entered the US market in the 1980s. Canon was flooding the US market with a copier, which was way too less in cost when compared to Xerox.
This was when Xerox decided to conduct competitor analysis!!
Competitive Intelligence – 7 Reasons to Use Competitive Intelligence
Xerox sent a sample of Canon products to its Japanese distributor, asking them to come back with the prices of all the parts. To their surprise, Xerox learned that Canon had come up with innovative ways to build and assemble the parts in a copier, for example, using two screws in place of the four or six that Xerox was using. Xerox consolidated all such information, and the end result was astonishing. It showed that Canon could in fact make a profit at that price!!
Xerox realized that its beliefs about its competitor, Canon, in the desktop copier business were completely wrong. This is a classic case and an interesting lesson to ensure that a company really understands what their competitors are doing, as opposed to just simply thinking that they understand.
Arie de Geus, head of Shell Oil Company’s Strategic Planning Group, rightly says that the only way to stay ahead of competitors is to learn faster than competitors.
So how do companies “learn faster”? The magical answer is in conducting competitor analysis using competitive intelligence!!
What is Competitive Intelligence?
Competitive intelligence is the systematic process of observing, collecting, and analyzing relevant information about the external business environment and distributing the resulting insights within an organization in order to make informed decisions. It can focus on competitors, customers, and other stakeholders, but also on products and markets as well as on economic, technological, or legal factors.
Regardless of the scope, its main purpose is to understand the external environment so that appropriate actions can be taken by businesses to stay competitive.
Many times we’re forced to take a step back and see the world in perspective as we analyze and re-analyze the reasons to track competition. Sometimes that self-reflection comes in the form of competitive intelligence. Other times, it could be just the whiskey!!
Nevertheless, we present 7 reasons to conduct competitive intelligence that can put you ahead in the race in 2020.
Top 7 Reasons to Conduct Competitive Intelligence
1. To Anticipate Competitor Moves
Even when competitors change their strategies spontaneously, companies have a good chance of figuring out what they’ll do and when, with the help of competitor intelligence.
Cisco former CEO and Chairman, John Chambers, claimed that based on competitor intelligence, he could anticipate competitors’ moves one or even two steps in advance. This may sound exaggerating, but it turned out to be true when several CEOs were interviewed later.
Take, for example, McDonald’s and Burger King. They both responded differently to the negative publicity about obesity and fast foods. McDonald’s was quick to respond to the market and overtake the competition by introducing a variety of healthier options.
Burger King, who had already anticipated the move, on the other hand, grabbed the opportunity to cherry-pick customers who are lesser health-conscious. In turn, they offered high-fat and high-calorie sandwiches by counter-advertising healthy choices.
Burger King had anticipated that McDonald's would not respond to this attack!!
2. Find New Opportunities
How often do we pay attention to competitors? We always discount them thinking they are harmless. But they can drastically change the marketplace with their new ways of using the technologies and new strategies.
“World trade means competition from anywhere; advancing technology encourages cross-industry competition. Consequently, strategic planning must consider who our future competitors will be, not only who is here today.” — Eric Allison, Uber
An example?
SKY airline, identified a new opportunity to compete against its rivals in the Chilean market. It introduced a low-cost model, which was the first of its kind in Chile. SKY took new measures such as eliminating complimentary food and beverages for all passengers during flights and thereby lowered its ticket prices. This helped the company increase its share of carried passengers from 10% to 20%, according to Euromonitor International.
3. Stay Ahead of Rivals
The time your game is most vulnerable is when you’re ahead. Never let up.” — Rod Laver, Australian former tennis player.
When companies are striving hard to find out as much information as possible about the marketplace, competitive intelligence has become increasingly relevant to stay ahead of the competition in the marketplace.
Regardless of how good your product is, you need to travel at the speed of light and thus react quickly to the evolving markets in order to stay first in the competition.
Think of Tesla. How Tesla changed the auto industry
They were the first ones to give people what they’ve been asking for years: a reliable electric car. None of the other big automotive manufacturers were manufacturing electric cars until Tesla made it happen in 2008.
Tesla led the pack with a bombastic announcement of the first luxury electric car: The Tesla Roadster.
4. Stand Out
Companies should present themselves to consumers with a unique brand identity that sets them apart from their key competitors. Investigating your competition is one of the most important aspects of developing your brand positioning as you need to know where you fit into the overall market.
The iconic Be Beautiful campaign was unique that knocked out the competition of Dove. In this campaign, the Real Beauty Sketches explored the gap between how women look at themselves versus how other perceive them. The two portraits were drawn by FBI-trained forensic artist Gil Zamora. The results are surprising!
This not only positioned Dove as a brand capable of understanding women but also set apart Dove as a unique company compared to its competitors.
“The most meaningful way to differentiate your company from your competitors, the best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.” – Bill Gates, principal founder of Microsoft Corporation.
5. Learn Market Dynamics
Competitive Intelligence sparks new ideas and fresh thinking to flow into the company. With competitive intelligence, companies can evaluate how their competition is selling and positioning their products and take advantage of the market gaps to enhance profit margins. By learning these market dynamics, companies can make more effective operational decisions.
Take the airline industry, for instance. Fuel is its largest expense that accounts for nearly 20-40% of its operating budget. Hence, they are constantly looking for ways to cut fuels costs and look for alternative fuels.
See how United Airlines partnered with Des Plaines, an Illinois-based developer of technology for the petroleum refining and gas processing industries, to use its Green Jet Fuel to power its flights from Los Angeles to San Francisco. It converts non-edible animal fats and oils into jet fuel, which will allow United Airlines to replace up to 30% of its petroleum-based fuel for the L.A. flights.
6. Propel Innovation
This stands as one of the most crucial reasons why Competitive Intelligence is used in companies. Innovation is much needed to sustain a competitive advantage that allows companies to leapfrog in front of their customers, and not just mimic and follow them. And certainly, this means profit!
“The only way you survive is you continuously transform into something else. It’s this idea of continuous transformation that makes you an innovation company” – Ginni Rometty, chair, president, and CEO of IBM, and the first woman to head the company.
Dyson Appliances Limited (DAL) is a classic example of innovation using competitive intelligence. DAL’s founder James Dyson himself was the source of many innovations. He is popular as the inventor of the first bag-less vacuum that took the vacuum cleaner market by storm. Following the pursuit of innovation, Dyson churned out many other innovative models of vacuum cleaners that had helped Dyson gain a market leadership position. DAL’s deep-set culture of innovation gave it an edge over its competitors.
7. Make Better Decisions
The truth is, decision-makers need insights, not data.
With fact-based and real-time competitive intelligence, such as industry trends, competitor campaigns, new launches, product innovations, etc. companies are empowered to make better decisions to achieve their goals.
Netflix is a great example of making the right decisions based on competitor intelligence. Netflix, which was into movie rentals, decided to introduce streaming video, which allowed viewers the option to watch films on home computers.
This was a breakthrough decision that led to the death of Blockbuster which was once a leader in DVD rentals.
Role of Artificial Intelligence (AI) in Competitive Intelligence
The global artificial intelligence software market is expected to report 118.6 billion in revenues by 2025, from around 9.5 billion U.S. dollars in 2018, according to the market research firm Tractica.
Artificial intelligence is gaining prominence in the competitive intelligence industry, as machine algorithms can identify trends and insights in data in just a fraction of a second. By analyzing and providing accurate data, companies can make faster decisions so as to stay ahead of their competitors.
Sofia Spencer, Proposition Manager, M&A, and Capital Raising at Refinitiv, says that AI can come as a solution in hyper-competitive industries such as Investment banking.
AI-enabled tools can track a competitor’s entire digital footprint and provide the most critical insights that are not even announced in media but might be hidden in website pages or customer reviews.
Several companies offer competitive intelligence. Here are a few competitive intelligence companies/competitive intelligence tools that will uncover your competitors’ strategies and help you to beat them at their own game.
1. AIM
AIM is a provider of competitive and market intelligence. It provides strategic intelligence that is used by companies to anticipate threats, find new opportunities, and make informed decisions. The company is known for its bespoke approaches, helping clients from various industries, including banking, finance, insurance, agriculture, healthcare, consumer goods, etc.
2. Cascade Insights
Cascade Insights is competitive intelligence that specializes in providing research design, sample development, report creation, and data analysis. Focusing mostly on the technology sector, Cascade Insights offers intelligence to companies, so they can capitalize on the opportunities in the B2B technology sector.
3. Clootrack
Clootrack is an AI-enabled platform that helps organizations discover trends and insights with the help of its comprehensive competitive intelligence reports. With a team of data scientists, programmers, and industry experts, the company has extracted more than a million data insights and serves 100+ enterprises across various sectors, including retail, automotive, healthcare, and finance.
4. Aqute Intelligence
Aqute Intelligence offers actionable information on your peers, partners, and industry players. The analysis is a blend of online research and telephone interviews to gather the intelligence that companies need.
5. MindShifts
Mindshift provides a platform to help its clients stay ahead of the trends. It works closely with its clients to understand their business and provides a range of services, including competitive insights and coaching. With Mindshift, organizations can gain knowledge and build their competitive intelligence practices.
Conclusion
“Move fast. Speed is one of your main advantages over large competitors.” — Sam Altman, Chairman of Y Combinator and Co-Chairman of OpenAI
The world is already moving fast with forces such as digitization, globalization, and deregulation, making it highly difficult for companies to compete against fast-moving competitors.
“Entrepreneurs are now having to learn to play by a different set of rules,” says Allison McSparron-Edwards, Managing Director of Consultrix Ltd.
Competitive intelligence is emerging as a solution as it offers competitive insights that are backed by accurate, latest, and, complete information that is key to organizations outperforming their competition.
So, if your company is not yet involved in competitive intelligence, it’s time to start!! After all, competitive intelligence has the potential of providing you with a significant strategic advantage.