Staying Ahead: The Art of Competitive Insight

Competitive intelligence (CI) is the defining, analysing, gathering and distribution of information regarding products, customers, and competitors while putting into consideration the environmental aspect required to offer support to the individuals responsible for all the strategic decisions implemented in an organisation. CI is generally viewed as another form of competitor analysis, but it goes further than just analysing competitors but encompasses the entire environment and stakeholders. Competitive intelligence is the act of collecting information regarding a competitor including the marketplace to come up with a business strategy.

Types of competitive intelligence

There are two types of competitive intelligence activities,; that is tactical and strategic. The former is short-term and strives to offer input on how to capture the market share or increase revenue. The later is a long-term measure that deals with issues involving risks and opportunities that may face an organisation. CI must differentiate from industrial or corporate espionage that uses illegal and unethical means to have an unfair competitive advantage.

Perks of a market

Competitors offer unseen support which is not evident at first through helping to carve out an organisation’s category while educating the users by eliminating the concept and supporting that there is a market for it. Intense competition has proven over time to be the best accelerator since it strengthens rather than weaken a market.

In virtually all competitive markets, proper generation of information helps an organization to be stable, get ahead, and ensure it’s not left behind. A well executive intelligence undertaking serves as an early warning system that indicates the changes in the competitive landscape that may disrupt. This may take the form of the rival bringing into the market a new product, introduce pricing strategy or at times have a new entrant into the market.

The second-mover advantage

It is common knowledge that all businesses are testing waters for other organizations and it is upon those that are following to take advantage. It is prudent for a trailing company to benefit in a huge way from the successes and failures of others. The original firm will have spent a lot in creating the product and the later may use the experience to benefit from lower costs and make fewer mistakes while at it.

The important factor in product pricing

In any business model, the most important factor to consider in the setting of the product price is determining a price that is low enough that the customers will have the feeling that they are getting value for money as compared to what the competitors are offering and the price they are charging. The price should be high enough to generate a profit.

Both Cournot Ltd and Bertrand Ltd have an impact on each others’ pricing. The customer in the market will be hesitant to buy a product that is very similar for a higher price, though this can be achieved by convincing the customer that the product has a more effective solution to his problems. There are customers who are value-oriented and will tend to go for the lower priced product. It has been proven that profits could remain the same even with an increase in sales caused by a reduction in price. To illustrate this; if a company X sold 2,000 pens for $1 each, the revenue will be $2,000. If the same company lowered the price to $0.75, then they would require making sales of 1,142 pens to achieve the $2,000 in total sales. There is a possibility in this scenario that the lower price will in actual facts stimulate more than 1,142 unit sales hence the profits will increase.

Conclusion

Competitive intelligence within a particular market should be contributed to by all since it will be of benefit to each player by pooling resources and capitalising on the goals achieved. A competitor can become a collaborator through cooperative competition by turning a battleground into a network as illustrated in the open-source software. Using today’s artificial intelligence, competitive intelligence can end up to be a competitive advantage.

References

Haag, Stephen. Management Information Systems for the Information Age. (2006).

McGonagle, John J. and Carolyn M. Vella. The Manager’s Guide to Competitive Intelligence. (2003)   

Blenko, D. and C.S. Fleisher. Competitive Intelligence and Global Business. (2005)