Competitive intelligence is the systematic collection of information by a company on its industry, business environment, competitors, products, and consumers. Insights are then used to help the company develop its strategy or improve its competitive position. Competitive intelligence can be assessed according to seven elements: sector intelligence, market intelligence, competitive intelligence, innovation intelligence, sales intelligence, procurement & supply chain intelligence, and Environmental, social, & governance (ESG) intelligence.
|Definition||Competitive Intelligence (CI) is a multifaceted business practice that involves the systematic gathering, analysis, interpretation, and dissemination of information about competitors, market trends, and industry dynamics. It enables organizations to make informed, strategic decisions by providing valuable insights into their competitive landscape. CI serves as a proactive tool for understanding the external business environment, identifying opportunities, and mitigating risks.|
|Key Elements||– Information Gathering: CI relies on the collection of data from diverse sources, both internal and external, such as market research, industry reports, competitor analysis, customer feedback, and online sources. – Analysis and Interpretation: The gathered information undergoes rigorous analysis and interpretation to extract actionable insights. This involves identifying patterns, trends, strengths, weaknesses, opportunities, and threats (SWOT analysis), and assessing the potential impact on the organization. – Decision Support: CI serves as a foundation for informed decision-making by providing decision-makers with data-driven insights and a clearer understanding of market dynamics. – Continuous Monitoring: CI is an ongoing process that necessitates constant monitoring of the competitive landscape and market trends. This proactive approach allows organizations to adapt swiftly to changes.|
|Characteristics||– Data-driven: CI relies on data and factual information, reducing the reliance on intuition or guesswork. – Proactive: It involves ongoing monitoring and analysis, helping organizations anticipate market shifts and competitor moves rather than reacting retroactively. – Strategic: CI informs strategic decision-making, enabling organizations to align their goals and actions with market realities. – Cross-functional: Successful CI often requires collaboration across various departments, including marketing, sales, research and development, and finance. – Actionable: The insights generated through CI are designed to be actionable, enabling organizations to implement strategies based on the information acquired.|
|Implications||– Informed Decision-Making: CI provides decision-makers with valuable information to make informed choices regarding market entry, product development, pricing strategies, and competitive positioning. – Competitive Advantage: By understanding competitor strengths and weaknesses, organizations can gain a competitive advantage by exploiting opportunities and mitigating threats effectively. – Market Adaptation: CI helps organizations adapt to changing market conditions by identifying emerging trends and consumer preferences, allowing for the timely adjustment of strategies and tactics. – Risk Mitigation: It helps in identifying and mitigating potential risks by providing early warnings about competitive threats and market disruptions. – Innovation: CI encourages innovation by providing insights into unmet customer needs, market gaps, and technological advancements.|
|Advantages||– Enhanced Clarity: CI enhances the clarity of decision-making by providing a comprehensive view of the competitive landscape. – Time Efficiency: It saves time by delivering relevant information directly to decision-makers, reducing the need for extensive research and analysis. – Improved Decision-Making: Informed decisions based on CI insights tend to be more effective, reducing the likelihood of costly mistakes. – Professionalism: Utilizing CI demonstrates professionalism and a commitment to data-driven decision-making, which can enhance an organization’s reputation. – Resource Optimization: CI helps in allocating resources more efficiently by focusing efforts on areas with the greatest potential for return on investment (ROI).|
|Drawbacks||– Information Overload: The abundance of data can sometimes lead to information overload, making it challenging to discern critical insights from noise. – Costly and Time-Consuming: Effective CI can be resource-intensive, requiring investments in technology, personnel, and ongoing data acquisition. – Ethical Concerns: Gathering information about competitors may raise ethical concerns, particularly if it involves questionable or unethical practices. – Resistance to Change: Implementing CI practices may face resistance within organizations, especially if they require a cultural shift towards data-driven decision-making. – Limited Predictive Power: CI, while valuable, may not always accurately predict future market developments and competitor actions.|
|Applications||– Strategic Planning: CI forms the foundation for strategic planning by providing insights into market conditions, competitor strategies, and emerging trends. – Product Development: It guides product development efforts by identifying unmet customer needs and potential product improvements. – Pricing Strategy: CI helps in setting competitive pricing strategies by analyzing competitor pricing structures and consumer preferences. – Marketing Campaigns: It informs marketing campaigns by identifying target audiences, messaging, and channels based on competitor analysis and market trends. – Risk Management: CI assists in risk management by identifying potential threats and vulnerabilities in the competitive landscape.|
|Use Cases||– Business Reports: Companies use CI to prepare comprehensive business reports that analyze competitor performance, market dynamics, and growth opportunities. – Sales Strategy: Sales teams utilize CI to tailor their strategies, identify leads, and position their offerings effectively against competitors. – Market Entry: CI informs decisions about entering new markets by assessing market saturation, competitive intensity, and regulatory challenges. – Mergers and Acquisitions: Organizations rely on CI to evaluate potential merger or acquisition targets, considering their competitive positions and growth prospects. – Product Launches: CI guides product launch strategies, ensuring they align with market demands and competitive forces.|
Understanding competitive intelligence
Today, the rate of competition and market disruption is cause for concern for many businesses. According to research by Accenture, 63% of companies are currently experiencing disruption with 44% of those companies highly susceptible to the phenomena.
Competitive intelligence helps a business secure and maintain a competitive advantage by developing a core strategy based on data-backed predictions. In other words, the business uses competitive intelligence to capture, analyze, and then act on information related to their particular competitive landscape. This information can be gleaned from the market, competitors, products, supply chain, industry, and target audience.
Perhaps unsurprisingly, there are many benefits to developing strategies based on competitive intelligence. These strategies enable businesses to:
- Identify industry trends or competitive threats ahead of time.
- Better analyze their strengths and weaknesses.
- Allocate resources more efficiently.
- Maximize their return on investment (ROI), and
- Improve product development and product launching.
The seven elements of competitive intelligence
The seven elements of competitive intelligence help remind businesses that there is more to the approach than simply analyzing its competitors.
To develop a broad, holistic strategy, each business should consider the following seven elements of intelligence:
Sectors are large groups of companies with similar primary business activities such as finance, healthcare, and communications. Sector intelligence evaluates large-scale economic trends and fluctuations.
As the name suggests, market intelligence pertains to information about the market the business operates in. Market intelligence can strengthen market positioning and clarify competitors, customers, growth opportunities, and current or future problems. Since most markets are dynamic, the business needs to prioritize the regular collection of market intelligence to remain competitive.
Which is focused on the movements and decisions of competitors in a given industry. How is the competitor negotiating sales deals or developing products? What are the key takeaways from their marketing campaigns?
This is a form of data-backed intelligence where sales teams create customer profiles, generate leads, and close accounts. Sales intelligence encourages businesses to monitor the market for certain triggers which indicate that a customer is ready to buy.
Procurement and supply chain intelligence
This type of collective intelligence gives the business insight into supply and demand figures, production costs, storage costs, regulatory and taxation costs, material supply intelligence, and competitive sales prices. Essentially, procurement and supply chain intelligence details the required rate of production based on demand.
Environmental, social, and governance (ESG) intelligence
ESG intelligence tracks the environmental footprint of a business and details the sustainability measures introduced by competitors. ESG also encompasses social welfare and humanitarian initiatives and the relationships between organizations and national and foreign governments. As consumer awareness around ESG principles increases, organizations must incorporate them into their strategies to remain competitive.
- Competitive intelligence is the collection of information by a company on its industry, business environment, competitors, products, and consumers. Insights are used to help the company develop its strategy or improve its competitive position.
- Strategies based on competitive intelligence help a business improve product development, identify industry trends or competitive threats ahead of time, and maximize return on investment.
- The seven elements of competitive intelligence remind businesses that there is more to the approach than simply analyzing competitors. Intelligence must also be considered from a sector, market, innovation, sales, procurement, and ESG perspective.
- Definition and Purpose: Competitive Intelligence is the systematic gathering of information about an industry, business environment, competitors, products, and consumers. It helps businesses develop strategies and enhance their competitive position by making informed decisions based on data.
- Addressing Market Disruption: In the face of competition and market disruption, competitive intelligence becomes crucial for securing and maintaining a competitive advantage.
- Data-Backed Strategy: Competitive intelligence is used to capture, analyze, and act on information related to the competitive landscape, including market trends, competitors’ actions, products, and audience preferences.
- Benefits of Strategy Development: Strategies derived from competitive intelligence help businesses anticipate industry trends, assess strengths and weaknesses, allocate resources efficiently, maximize ROI, and improve product development.
- Seven Elements of Competitive Intelligence:
- Sector Intelligence: Evaluates large-scale economic trends and external economies of scale affecting an industry.
- Market Intelligence: Focuses on understanding the business environment, competitors, customers, growth opportunities, and challenges in the market.
- Competitive Intelligence: Analyzes competitors’ movements, decisions, sales negotiations, and marketing campaigns.
- Innovation Intelligence: Involves identifying and implementing viable innovative ideas that align with market demand.
- Sales Intelligence: Informs sales teams by creating customer profiles, generating leads, and identifying triggers indicating readiness to buy.
- Procurement & Supply Chain Intelligence: Provides insights into supply and demand, production costs, storage, regulations, and competitive sales prices.
- ESG Intelligence: Tracks environmental, social, and governance (ESG) criteria to evaluate a company’s social responsibility and sustainability efforts.
- Strategic Impact: Competitive intelligence enables businesses to develop comprehensive strategies that cover various aspects of their operations, beyond just analyzing competitors.
- Innovation and Adaptation: To stay competitive, businesses need to innovate strategically and adopt measures that align with changing consumer preferences and market dynamics.
- ESG Principles: Incorporating Environmental, Social, and Governance (ESG) principles into strategies is becoming crucial as consumer awareness around sustainability and responsibility increases.
- Holistic Approach: Effective competitive intelligence requires considering multiple intelligence elements, as each contributes to a well-rounded strategy.
- Consumer-Centric Focus: Competitive intelligence helps businesses better understand and cater to their consumers’ needs and preferences.
- Continuous Monitoring: To maintain competitiveness, businesses should prioritize the continuous collection and analysis of intelligence data from various sources.
- Data-Driven Decision-Making: Competitive intelligence enhances decision-making by providing data-driven insights and reducing reliance on assumptions.
- Maximizing ROI: Strategies developed from competitive intelligence help businesses allocate resources more effectively, leading to increased return on investment.
- Anticipating Challenges: Competitive intelligence allows businesses to identify potential challenges and threats before they become major issues.
- Adaptive Strategy: By leveraging competitive intelligence, businesses can create adaptive strategies that respond to market shifts and capitalize on emerging opportunities.
Main Free Guides:
- Business Models
- Business Strategy
- Business Development
- Digital Business Models
- Distribution Channels
- Marketing Strategy
- Platform Business Models
- Revenue Models
- Tech Business Models
- Blockchain Business Models Framework
Connected Strategy Frameworks
Related Strategy Concepts: Go-To-Market Strategy, Marketing Strategy, Business Models, Tech Business Models, Jobs-To-Be Done, Design Thinking, Lean Startup Canvas, Value Chain, Value Proposition Canvas, Balanced Scorecard, Business Model Canvas, SWOT Analysis, Growth Hacking, Bundling, Unbundling, Bootstrapping, Venture Capital, Porter’s Five Forces, Porter’s Generic Strategies, Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF Framework, BCG Matrix, GE McKinsey Matrix, Kotter’s 8-Step Change Model.