Sault Ste. Marie Innovation Centre
Competitive Market Intelligence Workshop
June 18, 2008
1
Speaker
David Lithwick is a partner at Market Alert Limited (www.marketalert.ca ),
a Toronto based competitive intelligence consultancy.
He has 25 years experience in CI, including completing over 800 studies.
David has written, in conjunction with the Marketing Research
Intelligence Association, a manual on competitive and sales intelligence
techniques.
He also co-authors a monthly CI column in VUE Magazine.
Prior to joining Market Alert, David worked as a CI analyst for a major
bank and as an account manager in advertising, servicing SC Johnson,
Wendy’s and Pfizer.
2
Let’s Begin
3
Definition
Active CI - gather intelligence on your competitor to learn
about their capabilities, strategies and intentions.
Defensive CI - prevent competitors from learning about your
marketing initiatives and your employees from leaking
sensitive information.
4
What CI Is
Early warning of threats and opportunities.
Approximations and best views of the market and
competition. It is not a peek at the rival's financial books.
Means many things. A research scientist sees it as a headsup on a competitor's new R&D initiatives. A salesperson
considers it insight on how their company should bid against
another firm in order to win a contract.
Short and long-term. Can use intelligence in immediate
decisions, such as how to price a product or use the same data
to decide on long-term market positioning.
(Source http://www.fuld.com)
5
What CI Is Not
Crystal ball. There is no such thing as a true forecasting tool.
Intelligence will give you good approximations of reality.
Database search. Databases do not replace human beings
who need to make decisions by examining the data and
applying their experience, analytical tools and intuition.
20th century invention. (Nathan Rothschild, cornered the
market on British securities by receiving early warning of
Napoleon's defeat at Waterloo.)
News story. Too broad and not timely enough for managers
concerned with specific competitors and competitive issues.
6
Example 1
A pulp and paper company needed to know if a new competitor
was going to start competing aggressively on costs.
Their CI supplier tracked down from the internet a profile of the
rival firm's CEO, which said that to save $, the CEO takes buses
versus a limo to visit their firm's plants. This was a tip that the
competitor will compete aggressively on costs.
7
Example 2
A bank hired a CI firm to see whether any competitor will preempt
them in being the first to offer internet banking.
The CI supplier subsequently discovered that ING Direct was
planning to enter the market shortly .
The supplier tipped off a major newspaper who interviewed ING
Direct, got confirmation and then published an article on the front
page.
As a result, the bank fast tracked their launch before ING was
able to enter the market.
8
Example 3
Getting information on a privately held start up venture proved to
be very challenging for a hi tech company, until they discovered
Deja News (www.Dejanews.com ) which allowed them to tap into
some online discussion groups.
One participant disclosed that the start up had posted 8 job
openings on one Usenet group. That posting was a road map to
the start up’s development strategy.
9
Best Practices
1. Competitors are regularly monitored versus conducting CI in
reaction to a threat
2. Formal set of ethical guidelines in place for collecting CI
3. CI is tracked to see:
a. how many people are using it
b. how they are using the findings
c.
what their level of satisfaction is with the CI
d. what impact CI has on the company’s overall business
performance
10
Worst Practices
1.
Rushing to set up your CI program versus actively collecting
CI based on a real threat
2.
CI is managed by someone who is too busy, too junior or not
interested
3.
CI is assigned too many tasks that end up confusing what the
deliverables should be and not meeting key needs
2.
Overly simplistic view of how easy it is to collect and analyse
CI
3.
Concentrating only on traditional competitors
11
Non Traditional Threat Research in Motion
When RIM first introduced the BlackBerry, the major telecoms
did not consider RIM to be a threat.
The original Black Berry had limited capabilities and RIM itself
seemed to be on the edge of financial ruin.
RIM’s technology and financial situation both improved
dramatically.
Now the telecoms are playing catch up and missed an
opportunity to truly compete.
12
Your Turn
If you were the chief information officer at Algoma and concerned
of having too much sensitive information on your website, where
would you look to cut back:
–
–
–
–
–
–
–
–
–
Corporate Mission?
Corporate Governance?
Facilities (e.g. steel making, cold mill, etc.)?
Career Opportunities?
News media (e.g. press releases, executive bios)?
Investors (e.g. financial reports, quarterly conference calls)?
Customer News?
Business Partners?
Supplier News?
13
Ethics
14
CI vs. Espionage
CI sources information within the public domain.
Espionage implies illegal activities and is an infrequent activity.
Think about it; corporations do not want to find themselves in
court, nor do they want to upset shareholders.
For the most part, you will find spies in espionage novels, not in
the executive suite.
15
Trade Off
The greater the sensitivity of information you seek,
the higher the risk of being unethical
Open source - readily available info (e.g. websites)

Open proprietary - obtained through concerted efforts
(employee interviews, databases, etc.)

Closed proprietary - info obtained through “back
channels” (e.g. friend of a friend works for your
competitor)

Strictly Classified - information obtained covertly
16
Ethical
Attending a conference where the competitor is speaking
Becoming a shareholder of your competitor
Paying industry experts an honorarium for their opinions
about your competitor
17
Unethical
Misrepresenting yourself
Accepting competitor information or documents from someone
with a possible hostile intent (e.g. disgruntled ex-employee)
Interviewing competitor employees for a position that doesn’t
exist at your company
Hacking into your competitor’s website
(Please see handout - “Is CI Ethical?”)
18
Your Turn
On a business flight, you are sitting beside a sales
manager of your main competitor.
Is it unethical to let him talk about his company's
marketing initiatives without telling him who you work
for?
19
Planning Your First Study
20
CI Brief
You work for Research in Motion and heard that Business
Depot is launching a private label BlackBerry.
What must this investigation achieve?
Provide details of Business Depot’s launch. This will help us
develop a strategy to defend our market position .
What must know questions are to be answered?
1.
2.
3.
4.
5.
When is the launch date?
What will the price be?
What channels will the product be sold through?
What % of Business Depot’s stores will have onsite demos?
What key benefits will be promoted?
21
CI Brief (Cont’d)
What do you already know?
US now test marketing advertising (print and radio)
Which sources are priority to contact?
Business Depot
Buyers from our key retail accounts
When is the latest that you require the information?
January 10, 2008
(Please see hand out - “How to Plan Your CI
Investigation”)
22
Work in Progress
Must Know Questions
When is the launch date?
What will the price be?
Sources
# Mentions
Secondary
In-house
External
Q2
Mar
Feb
Feb/Mar
$75.00
$70.00
$80.00
$70-$80
x
x
x
3
x
x
2
x
x
2
What channels?
• Face to face selling
• 1-800 number
% stores w/ onsite demos?
• 80%-90%
• 100%
x
1
Advantages promoted?
• Lower price
x
• 3-year extended warranty
x
• Ease of usage
x
x
x
3
x
2
1
23
Sources
24
Sources
Competitor
Call centres, investor relations, sales, suppliers to your
competitor, competitors of your competitor
Third Parties
Customers, journalists, stock analysts, government,
associations
Alliances
Suppliers, companies who co-market your product
Secondary
Annual reports, brochures, market research, press
releases, newsletters, industry reports
(Please see hand out – “ Helpful Internet Sources”)
25
Sources Cont’d
Internal
Accounting – interpret competitor financial data
Customer Service - daily contact with customers who hear
information about competitors
HR - helpful at reconstructing competitor org charts
Legal - interpret competitor patent data and possible trademark
infringements
Sales - in contact with competitor reps
26
Tips
1.
Don’t ask too many people to help you; you may get
overwhelmed with conflicting information.
2.
Never restrict your search. Not only can one source provide
several important types of data, but multiple sources should
be cross-checked to generate data on the same point.
3.
Corroborate findings by speaking to 3 different sources.
4.
Be wary of relying too much on sales reps, as they
frequently will provide CI to fit their agenda and/or fail to
separate their opinions and conjecture from fact.
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Example - Sourcing Internal CI
You work in sales support for Bombardier Aerospace.
A key
competitor, Embraer, recently hired a lobby firm to help procure
Chinese government contracts.
Which 3 departments at Bombardier would you contact to learn
more about the demand by the Chinese for small jet planes?
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Findings
Purchasing
More companies are using lobbyists to help break into the Chinese
market, where the China Aviation Industry Corporation is the key
central buying unit.
Sales
Embraer just completed a tour of their new small jet plane,
Embraer 170, to 5 Chinese cities last week.
Product Specialists
China will need another 950 jet planes of 30 to 120 seats in next 5
years. (Right now they have about 600 small jet planes. This
represents a market worth of $16 billion US.)
29
Trade Show CI
Conference Speakers
As someone who has paid to attend the conference, you are
entitled to ask questions, even if they are your competitors.
Competitor Booths
Instruct colleagues before visiting your competitor ‘s booth on
what questions to ask.
People Visiting Your Booth
Put together a survey and hire a researcher or consultant to
intercept buyers, brokers, etc. for their insights.
30
Analysis
31
Stages
1.
Incorporation - read all materials, two or more times.
2.
Incubation - assemble the facts in various ways so that a logical
picture emerges.
3.
Enlightenment - after studying the data and reflecting on what
you need to get answered, the real meaning (and thus a solution)
becomes clear.
4.
Validation - draw specific conclusions and then test these
conclusions against facts.
32
Tip
Avoid falling into:
1.
“Group Think” - pressure to play it safe and compromise vs.
stressing diversity or even dissension
2.
“Rosy Scenario” - seeing events through a mental filter that
blocks out “inconvenient facts”
3.
“Sherwin Williams Mentality” - provide analysis on every
aspect of the topic in order to predict every possible action by a
competitor
33
Data Cell Screening
Maps out cells to obtain a visual on which gaps to fill.
Steps
1. Calculate the total # of possible cells to be filled.
2.
Ask yourself: Of those categories listed, which are the ones to
focus on? Is there a key product per competitor to concentrate on?
3.
Narrow the cells to 5 or 6 to focus your investigation.
4.
Construct a matrix.
34
Example – Northern Credit Union
You work for Northern Credit Union and have been asked to collect
copies of competitor customer statements. Which statements would
make most sense for you to assess?
Statement
TD
RBC
Savings Account
ING
BMO
CIBC
HKB
?
Credit Card
?
Money Market Funds
?
GICs
?
Int’l. Equity Funds
Self-Directed RRSPs
BNS
?
?
?
35
Data Verification
Corroborates data from multiple sources
E.g. estimating the daily volume of cell phones sold by a competitor
who recently launched a 1-800 order centre
a)
Press release - 196,000 sold in 5 weeks or 5,600/day
b)
Call centre reps - sell 1,750 /day in Ont. Assuming Ont. accounts
for 40% of all sales, 1,750/40% = 4,375/day
c)
Your staff - each call center rep sells an average of 50/day and
there are 90 call center reps. 50 x 90 = 4,500/day
Conclusion: 4,375 - 5,600 per day
36
Blind Spot Analysis
Uncovers flaws in your competitor’s decision-making process
that are caused by bias and misinterpretation such as
Winners Curse - It is common at auctions to pay too much. Similarly
in business acquisitions or geographic expansion, some competitors
falsely assumed that the long term advantage will outweigh cost.
Escalating Commitment - when something does not meet
expectations, but professional pride or fear of accountability prevents
your competitor from admitting that it is a mistake. For example,
instead of cutting losses, allocation is escalated in the hope that this
will solve the problem.
37
Ratio Analysis
Used to better understand your competitor’s strengths and
weaknesses
4 types: "liquidity”, "leverage”, "turnover” and "profitability."
(Please see handout – “Using Ratio Analysis to Better
Understand Your Competitor’s Strengths and Weaknesses”)
38
Predicting Techniques
1. Historical Review - see what the competitor did previously in a
similar situation
2. Global Strategy - find out what the competitor is doing in other
countries and apply this to your own situation
3. Veto - see if the competitor has any obvious restrictions (e.g. plant
size, regulatory, manpower) that automatically rules them out as a
threat
4. War Gaming -simulate a business situation, where each team
represents a competitor. Helps pinpoint most likely attack and
defensive positions of your key competitors
39
Reporting Your Findings
40
Tips
1. Assign a level of confidence to findings
2. Promote CI positively (e.g. limit any mention to military and
avoid joking about being a spy.)
3. Clarify whether the information is fact or assumption
4. Avoid floating comparison such as “a 60% increase”
5. Weed out misinformation
41
Example
You work for a pharma company. A competitor is rumoured to be
introducing a new drug that will compete with your company’s
“blockbuster”.
42
1 - Record Interviews
Medical Information Representative
7/6/08
Do you plan to enter the Canadian market? Yes. The market
size there is large enough to make it attractive to us.
Have you submitted an application for NOC?
Yes. We did this in the past year.
When do you expect to receive approval from Health Canada?
Probably in a few months.
How soon will you launch? As soon as the product is approved.
What will the key selling message be? This drug is a safe
alternative, with fewer side effects, but equally effective.
Who will your key target audience be? Dermatologists.
How many reps will detail the product?
This hasn’t been decided yet, but probably 150 specialty reps and
another 100 GP reps.
43
2 – Set Up Summary Table
MI: Medical Information, SR: Sales Rep,
PM: Product Mgr, MM: Marketing Mgr
MI
SR
PM
MM
Total
●
●
●
●
4
Yes
●
●
●
●
4
 In the past year
●
●
Do you plan to enter Canada?
Yes
Submitted application for NOC?
 6 to 12 months ago
2
●
●
2
When do you expect approval?
 In a few months
●
●
 6-9 months
2
●
●
2
●
●
3
When do you plan to launch?
 Within a month of approval
 As soon as it is approved
●
●
1
44
3 – List Observations
Competitor X has already submitted an application for notice of
compliance with Health Canada.
Approval is likely to be in the next 3 to 9 months, with launch occurring
soon after.
Key selling message will focus on the new product being a safe
alternative and equally effective.
The key target audience are dermatologists.
Approximately 150 specialty reps and 300 GP reps will be detailing the
generic drug.
45
4 – Assess Threat Level
The threat that Competitor X poses is high:
–
–
–
–
already filed with Health Canada
expect approval as early as a few months from now
will directly position their product against ours
are committing a large sales force to support their
product
46
Templates
Eliminate the need to start from scratch each time you write a new
report .
Ensure continuity when more than one person is submitting
findings.
47
Example – Product Profile Scan
IBEX
Compex
Omni
Monitor Model
Grid A40
Triad 255
M34
Volume
140,000
86,000
14,000
240,000
56%
35%
9%
100%
Worldwide
distribution
Customer
loyalty
Aggressive
pricing
Key gap to
capitalize on
Poor
servicing
Errors in
invoices
Operational
problems
Primary target
Marketing
Scientists
Students
• Factory rebate
$75
$50
$35
$35-$75
• Vol. discount
2%
3%
None
Up to 3%
3D Monitor
Display
Loyalty
Points
Extended
Warranty
High
Medium
Low
Market share
Factors driving
success
Overall
Incentives
New developments
Threat Level
48
CI Software
49
Pros
 Saves time by creating a structure for quickly accessing, analyzing
and sharing competitive data.
 Good for storing, centralizing and monitoring large volumes of
information.
 Helps avoid information overload by filtering data from a number of
sources.
50
Cons
 Puts you in a tracking (versus investigative) mode
 Assumes all of the info needed is in the database
 “Bells & whistles” can make it too time consuming and confusing to
use
 Can be expensive and quickly become obsolete
 CI software supplier may not be available for support
51
CI Software < $10,000
Competitive Intelligence Dashboard
Features automatic news feeds from MSNBC, placeholder for
competitive graphics, a list for tracking competitive profiles,
rankings, surveys and document libraries related to CI.
Have to buy Microsoft Office Window Sharepoint Services - $4,500.
Overly complicated
52
CI Software < $10,000 (Cont’d)
Traction Software
Combines wiki style group editing with the simplicity of a blog
format.
Collects, organizes, shares, links and retrieves CI information from
many sources.
But price is steep considering the additional fees ($125 per account,
20% annual maintenance fee).
Hidden fees for upgrading software and support.
Not Canadian specific as the software is from the U.S.
53
Tips
1.
Develop your own software first
2.
Subscribe to free news service engines for weekly updates on
industry activity.
3.
Check out Assessing Competitive Intelligence Software by France
Bouthillier and Kathleen Shearer
54
Defensive CI
55
Applications
1.
Countering your competitor who is trying to get information
on your company.
2.
Eliminating leakage of sensitive information by your
employees.
56
1. Countering Your Competitor
A competitor has been obtaining information on your services
and technology by using their own clients as “trojan horses”.
These “clients” sign up and then leave after a short while.
In the interim, they gather information on your services,
technology and pricing.
What can you do?
57
What Can You Do?
1. Ask the prospective customer “who do you use now, for what
products, why do you want to switch”. And then press them to sign
up today.
2. Have your IT dept. provide you with information on these “trojan
horses”, such as which clients frequently sign up and leave shortly.
If one of these individuals tries to sign up again, they can be “red
flagged” and their application rejected.
58
2. Eliminating Leakage
Sales and Customer Service
Loaded with large amounts of information
In regular contact with competitors
Feel compelled to help
Your Website
Being scanned regularly by your competitor for references (e.g.
product claims, job postings) to use when probing your employees
for sensitive information.
Suppliers
Leak sensitive information about your company in their advertising
materials, discussions with prospective clients and personal
resumes
59
Case in Point
John H is the Sales Director for Jack Rabbit, a snow shoe
manufacturer. Recently he was invited to speak at the national
conference of winter sports manufacturers.
John was asked what strategies he found helpful in landing WalMart as a new customer. His reply - onsite product training sessions
for the Wal-Mart store staff.
Unbeknownst to John, the person who asked the question was a
sales rep for Jack Rabbit’s direct competitor, Atlas.
Within 3 months Atlas won the Wal-Mart account by not only offering
onsite training, but also a 1-800 support line exclusive for Wal-Mart
employees to call with questions relating to Atlas products.
60
Website Exposure
Source
Competitor Will
Press Release
Email asking for more details on a subject
mentioned in a release.
Career Ad
Be tipped off to changes in your staff (e.g. new
dept) or market focus (e.g. new product launch).
Product and
Services Info
Pinpoint gaps in your products and services and
could then use this information when making sales
presentations to customers.
“Who We Are”
Reconstruct your organization chart to pinpoint
weaknesses in your staff resources and/or poach
employees.
61
What Can You Do?
1.
Have employees sign confidentiality terms (when hired & leaving).
2.
Advise your receptionist to tell callers who claim they are students
to put their inquiry in writing.
3.
Get reps to follow a script when making sales calls or attending a
trade booth
4.
Make it clear to suppliers that they cannot work for a competitor
whose product competes directly with yours.
(Please see handout – “Loose Lips Sink Ships”)
62
Special Applications
63
Mystery Shopping
Acting as a customer, shoppers carefully observe and report their
shopping experiences
Onsite, phone calls or email
Competitors frequently shopped as a benchmark
Why is this important - some sectors up to 30% of new customers
leave and do not return because of a bad sales or service
experience.
Has anyone been involved in a mystery shop?
64
Evaluating Sales Personnel
Greeting
Needs assessment
Product knowledge
Use of a sales tool (e.g. brochure, price sheet)
Cross selling other products
Closing the sale
Follow up
Professionalism (polite, helpful, enthusiastic)
65
Telecom Shop
You work for a new telecom, “Horizons Plus”. One of your first tasks
is to develop sales aids.
You decide to do a phone shop to learn more about your
competitor’s sales performance.
Scenario: “I am considering changing my phone company and would
like some information about your company to help me make a
decision”.
66
Telecom Shop (Cont’d)
Call Center Rep 
#1
#2
#3
• Waited under 3 minutes for contact
Yes
Yes
Yes
• Probed shopper’s needs
Yes
Yes
No
• Listened to shopper’s expectations
Yes
No
No
• Took time to answer questions
Yes
Yes
Yes
• Explained rates
Yes
Yes
No
• Explained payment options
Yes
Yes
Yes
• Cited clarity of phone calls
Yes
Yes
No
• Cited state of art technology
No
Yes
Yes
• Cited long distance savings
Yes
Yes
Yes
• Cited long distance phone card
Yes
Yes
No
• Led conversation
Yes
Yes
Yes
• Tried to close
Yes
Yes
No
• Cross sold other product offerings
No
Yes
Yes
• Offered to email material
Yes
Yes
Yes
Total # ‘Yes’ scores
12/14
13/14
8/14
%
86%
93%
57%
Very Good
Excellent
Good
Rating
67
New Market Assessments
As an intelligence tool, CI can also be used to assess the viability of
entering a new market before investing significant time and energy.
Develop prospect lists
Pinpoint volume, sectors to target and buying criteria
Uncover hidden barriers to entry
68
Would Better CI Have Averted These
Product Failures?
Pudding Chocolate Bar – no
attempt made to investigate other
companies who had already failed
with a similar product
Tahiti Bath Foam – relied on only 1
source for volume projections
Quick & Easy Pasta Dish – did not
gauge level of awareness of Betty
Crocker frozen meals generated by
US TV border advertising
69
Sales Intelligence Report
Ice Cream Dessert Co. Targeting Food Chain
Market
Position
Budget
20% sales
growth
$25M
sales/yr.
$1.75 M
Up 10%
from last
yr.
Current
Supplier’s
Weakness
Level of
Satisfaction
with Current
Supplier
How to Win
the
Business
Next Steps
Rigid
invoicing
policy
Low
Agree to use
client’s
shipping
company
Determine if
there is a
conflict of
interest
Cash flow
problems
Frequent
shipping
errors
70
Your Turn
You have 3 days to decide whether to invest $3
million in selling wind turbines to the Canadian
residential market.
After that your competitors will be able to bid for
the turbines.
The only data you have is a report from a
consultant eagerly endorsing wind turbines and
some data from Statistics Canada on electricity
consumption in Canada.
–
–
–
–
Who will you speak to?
How will you contact these people?
Who within your co. can help you?
What does your gut tell you?
71
Wrap Up
72