Overview
In contrast to business intelligence, which
deals with facts and information about one's own business, competitive
intelligence (CI) focuses on information about competitors. When a
company searches for information related to a competitor's products,
customers and processes to gain a competitive advantage, that is
competitive intelligence. However, it is very important to note that it
is not the same industrial espionage, which is used to get information
about a competitor through illegal means. Stealing a secret formula or
patented method of manufacturing, for instance, would be industrial
espionage. Learning about a competitor's customers and their desires and
preferences about their products would be an example of competitive
intelligence.
Another key distinction between industrial espionage and competitive
intelligence is that CI focuses on the external systems of the
competition, or information that can be gathered from the company. Make
sure that you can gain competitive intelligence without inside
information. If you use inside information, you could be accused of
committing industrial espionage.How It Works
Competitive intelligence can be gathered in many different ways. You look through documents including newspapers, statistical reports, and company data that is available in the public domain. Essentially, someone gathering CI would use public information and correlate it with their own information that comes from market research and surveys. This information can then be used to analyze their own data against that of the other company. Based on all this information, a company can try to see where they can align themselves better with the current markets and consumer preferences to derive maximum competitive advantage.Many large corporations have an entire department devoted to competitive intelligence and regularly gather information for CI purposes to give their companies a competitive edge. They also use the information to find new ways to enrich the marketplace and expand beyond their current market share. Companies also gather market intelligence, which is less about their company or the competition but the market in general, so they can decide how to apply the competitive intelligence they have gathered about other companies.
Benefits
Competitive intelligence helps small and medium enterprises by focusing their attention on the competition and by deriving plans to compete in the market place. Larger corporations, on the other hand, need CI just to stay viable in the market. Without CI, large corporations would be squashed by competition. Consequently, they focus on strategic intelligence, which is a long-term view of about two to three years, as well as tactical intelligence, which affects the planning of day to day operations. It also helps in identifying trends that are unique to the industry and can be beneficial in identifying potential targets for mergers and acquisitions.Costs
The cost of CI software depends on the functionality and the number of licenses that are needed for the organization. The size and requirements of the business also plays a major role in the cost. Typically, competitive intelligence software ranges from $1,000 to $25,000 for enterprise level software. There are also monthly subscription options available for as little as $100 a month.Some businesses have competitive intelligence departments. If you have your own department, you will need to fund resources and staff. Some companies choose to conduct competitive intelligence as part of their marketing or product development practices.