Clancy
02-01-2008, 01:10 AM
No business is an island. For success, the business will need to deal with customers, suppliers, employees, and others. In almost all cases there will also be other organisations offering similar products to similar customers. These other organisations are competitors. And their objective is the same as yours - to grow, make money and succeed. Effectively, the businesses are at war - fighting to gain the same resource and territory : the customer. And like in war, it is necessary to understand the enemy:
how he thinks;
what his strengths are;
what his weaknesses are;
where he can be attacked;
where the risk of attack is too great....
and so on. And like in war, the competitor will have secrets that can be the difference between profit and loss, expansion or bankruptcy for the business. Identifying these secrets is thus crucial for business survival. But all this is not new...
Around the year 500 BC, the great Chinese military strategist, Sun Tzu wrote a treatise on the Art of War. This work is still relevant today with advice to both military commanders and businesses on winning against competitors:
If you are ignorant of both your enemy and yourself,
then you are a fool and certain to be defeated in every battle.
If you know yourself, but not your enemy,
for every battle won, you will suffer a loss.
If you know your enemy and yourself, you will win every battle.
Who is a competitor in business?
Business competitors are:
Other organisations offering the same product or service now.
Other organisations offering similar products or services now.
Organisations that could offer the same or similar products or services in the future.
Organisations that could remove the need for a product or service.
Why monitor competitors?
By knowing our Competitors we may be able to predict their next moves,
exploit their weaknesses and undermine
their strengths.
Customer's usually know the differences between companies - their good points and bad points. They know that company A is cheaper than company B and that company C has a better after-sales service. For a business to operate in a market and not know the same, and more, is tantamount to giving up the battle without even starting. As Frederick the Great said:
"It is pardonable to be defeated, but never to be surprised."
So what is involved?
There are four stages in monitoring competitors - the four "C"s:
Collecting the information
Converting information into intelligence (CIA)
Collate and catalogue it, Interpret it and Analyse it
Communicating the intelligence.
Countering any adverse competitor actions.
Information will come from a variety of sources, both within the organisation and external to it. Sales representatives deal on a daily basis with customers - and will hear what the competitors have been doing. They are the business foot soldiers - with the ear to the ground who can forewarn management about impending enemy campaigns. Research & Development may come across new patents, purchasing may find out that a supplier is now also supplying a competitor, market research can give feedback on the customer's perspective... but these are just examples of where information can come from. Information can also be found on the Web itself - many companies are now advertising their services and some specialise in offering information that can be used for competitor research. Among the best are Dun & Bradstreet with a database of over 30 million companies world wide. If you need to know about a company this is probably the best source. No other company offers the same global scope - although some local companies will give D&B a run for its money for single country information. Patent information can be obtained from companies such as Derwent Information or from local patent offices. And global press information is available from databases made available by companies such as The Dialog Corporation with its DataStar and Dialog services.
From information to intelligence
Having scanned the press, spoken to the sales force, customers, suppliers, Uncle Tom Cobbley and all, you should now have a large pile of data on your competitors. However much of this will be repetitious, out of date, wrong or inaccurate, misleading, or incomplete. However like a jigsaw, each piece can help build up the compete picture. And even if some pieces are missing, you can often get a good idea of what the real picture actually is - even if other pieces are damaged and not all remaining pieces fit perfectly. The company report can give an idea of a company's health - which will be enhanced by information from trade suppliers, trade press articles, and credit information agencies such as Dun & Bradstreet. Patents give an idea of R&D activity, while the trade press gives an idea of marketing activity. And of course there are specialist organisations that have the techniques to dig deeper and get information that can lead to an idea of competitor strategy and future trends. All this information needs to be collated - with any links and commonalities highlighted. The information will need to be indexed and catalogued - so that when new information comes along, it can be quickly linked to similar information that had previously been found. Finally, the relevance and importance of each piece of information needs to be interpreted and analysed - on its own and in conjunction with other information, the other pieces in the jigsaw. This is where information starts to become intelligence.
Communicating the intelligence
Too many companies are overly secretive, protecting information that all their customers and competitors already know. Secrecy is important. It can be extremely dangerous to let a competitor know about the new product being developed. However, letting the sales force attempt to sell products without a full awareness of the products strengths and weaknesses relative to the competition is like sending them out with one arm tied behind their back. They will be unable to answer objections and comparisons convincingly, and thus are less likely to make the sale. And if the competitor product is that much better then shouldn't marketing, or product development be looking at ways of improving one's own product - rather than hiding the damaging news ostrich like. Competitor intelligence needs to be evaluated and selectively communicated to all who need to make decisions based on what customers, suppliers, or other companies in the market are doing or are likely to do. And in today's world, that usually means everybody. The worker in the factory needs to know why production processes have changed from what was always done if he is to believe in management. The Mushroom theory of management has always had its adherents but has not usually succeeded in the long term.
Countering Competitor actions
Having identified what competitors are doing, battle can be entered. Sometimes the battle will be vicious - especially when two competitors have been slogging it out for years. (Pepsi vs. Coca Cola; Procter & Gamble vs. Unilever). Various military strategies have been used to describe different approaches to beating competitors - flanking strategies, encirclement and siege strategies, frontal attacks and even guerrilla marketing tactics. However it should always be conducted within the law. Although it is tempting to use underhand ways of gaining an advantage, certain activities may result in a prison sentence as well as extremely damaging publicity, loss of goodwill and loss of revenue.
Collecting Information on competitors can be likened to prospecting for gold. Nuggets are a rarity. The prospector will need to sift through a lot of soil, to find the few grains of gold which make the task worthwhile. Occasionally, the prospector will even be tricked by iron pyrites - or "Fool's gold"! Similarly, some of what is collected on competitors will turn out to be useless. Sometimes the information may be completely wrong and lead the unaware on the wrong path. However with experience, this is less likely, as with the skilled gold prospector and "Fool's gold".
how he thinks;
what his strengths are;
what his weaknesses are;
where he can be attacked;
where the risk of attack is too great....
and so on. And like in war, the competitor will have secrets that can be the difference between profit and loss, expansion or bankruptcy for the business. Identifying these secrets is thus crucial for business survival. But all this is not new...
Around the year 500 BC, the great Chinese military strategist, Sun Tzu wrote a treatise on the Art of War. This work is still relevant today with advice to both military commanders and businesses on winning against competitors:
If you are ignorant of both your enemy and yourself,
then you are a fool and certain to be defeated in every battle.
If you know yourself, but not your enemy,
for every battle won, you will suffer a loss.
If you know your enemy and yourself, you will win every battle.
Who is a competitor in business?
Business competitors are:
Other organisations offering the same product or service now.
Other organisations offering similar products or services now.
Organisations that could offer the same or similar products or services in the future.
Organisations that could remove the need for a product or service.
Why monitor competitors?
By knowing our Competitors we may be able to predict their next moves,
exploit their weaknesses and undermine
their strengths.
Customer's usually know the differences between companies - their good points and bad points. They know that company A is cheaper than company B and that company C has a better after-sales service. For a business to operate in a market and not know the same, and more, is tantamount to giving up the battle without even starting. As Frederick the Great said:
"It is pardonable to be defeated, but never to be surprised."
So what is involved?
There are four stages in monitoring competitors - the four "C"s:
Collecting the information
Converting information into intelligence (CIA)
Collate and catalogue it, Interpret it and Analyse it
Communicating the intelligence.
Countering any adverse competitor actions.
Information will come from a variety of sources, both within the organisation and external to it. Sales representatives deal on a daily basis with customers - and will hear what the competitors have been doing. They are the business foot soldiers - with the ear to the ground who can forewarn management about impending enemy campaigns. Research & Development may come across new patents, purchasing may find out that a supplier is now also supplying a competitor, market research can give feedback on the customer's perspective... but these are just examples of where information can come from. Information can also be found on the Web itself - many companies are now advertising their services and some specialise in offering information that can be used for competitor research. Among the best are Dun & Bradstreet with a database of over 30 million companies world wide. If you need to know about a company this is probably the best source. No other company offers the same global scope - although some local companies will give D&B a run for its money for single country information. Patent information can be obtained from companies such as Derwent Information or from local patent offices. And global press information is available from databases made available by companies such as The Dialog Corporation with its DataStar and Dialog services.
From information to intelligence
Having scanned the press, spoken to the sales force, customers, suppliers, Uncle Tom Cobbley and all, you should now have a large pile of data on your competitors. However much of this will be repetitious, out of date, wrong or inaccurate, misleading, or incomplete. However like a jigsaw, each piece can help build up the compete picture. And even if some pieces are missing, you can often get a good idea of what the real picture actually is - even if other pieces are damaged and not all remaining pieces fit perfectly. The company report can give an idea of a company's health - which will be enhanced by information from trade suppliers, trade press articles, and credit information agencies such as Dun & Bradstreet. Patents give an idea of R&D activity, while the trade press gives an idea of marketing activity. And of course there are specialist organisations that have the techniques to dig deeper and get information that can lead to an idea of competitor strategy and future trends. All this information needs to be collated - with any links and commonalities highlighted. The information will need to be indexed and catalogued - so that when new information comes along, it can be quickly linked to similar information that had previously been found. Finally, the relevance and importance of each piece of information needs to be interpreted and analysed - on its own and in conjunction with other information, the other pieces in the jigsaw. This is where information starts to become intelligence.
Communicating the intelligence
Too many companies are overly secretive, protecting information that all their customers and competitors already know. Secrecy is important. It can be extremely dangerous to let a competitor know about the new product being developed. However, letting the sales force attempt to sell products without a full awareness of the products strengths and weaknesses relative to the competition is like sending them out with one arm tied behind their back. They will be unable to answer objections and comparisons convincingly, and thus are less likely to make the sale. And if the competitor product is that much better then shouldn't marketing, or product development be looking at ways of improving one's own product - rather than hiding the damaging news ostrich like. Competitor intelligence needs to be evaluated and selectively communicated to all who need to make decisions based on what customers, suppliers, or other companies in the market are doing or are likely to do. And in today's world, that usually means everybody. The worker in the factory needs to know why production processes have changed from what was always done if he is to believe in management. The Mushroom theory of management has always had its adherents but has not usually succeeded in the long term.
Countering Competitor actions
Having identified what competitors are doing, battle can be entered. Sometimes the battle will be vicious - especially when two competitors have been slogging it out for years. (Pepsi vs. Coca Cola; Procter & Gamble vs. Unilever). Various military strategies have been used to describe different approaches to beating competitors - flanking strategies, encirclement and siege strategies, frontal attacks and even guerrilla marketing tactics. However it should always be conducted within the law. Although it is tempting to use underhand ways of gaining an advantage, certain activities may result in a prison sentence as well as extremely damaging publicity, loss of goodwill and loss of revenue.
Collecting Information on competitors can be likened to prospecting for gold. Nuggets are a rarity. The prospector will need to sift through a lot of soil, to find the few grains of gold which make the task worthwhile. Occasionally, the prospector will even be tricked by iron pyrites - or "Fool's gold"! Similarly, some of what is collected on competitors will turn out to be useless. Sometimes the information may be completely wrong and lead the unaware on the wrong path. However with experience, this is less likely, as with the skilled gold prospector and "Fool's gold".