No matter what your business niche is, you are likely to constantly face new market challenges and deal with the growing market competition. To stay ahead of the pack and differentiate yourself from your competitors, you need to take well-informed, data-driven decisions. Beyond any doubt, competitive intelligence analysis is a powerful analytical tool that provides you with fresh insights into the marketplace dynamics. What is more, according to Forbes , competitive intelligence should be viewed as an essential element of a successful contemporary business strategy.
What Is Competitive Intelligence?
Competitive intelligence (CI) is the systematic collection and analysis of relevant information about the external business environment, including competitors, customers, products, and markets. CI has three main objectives: to understand competitor motivations and behaviors, to identify key market challenges and advantages, and to build a company's development strategy. As opposed to industrial espionage, which is illegal practice, CI fully conforms to antitrust and trade secret laws, as well as ethical and legal best practices. While incorporating external market forces into a company's own strategic planning, CI enhances the effectiveness of business operations, improves risk-based decision-making, and minimizes uncertainty about fluctuating market dynamics.
3 Reasons to Use Competitive Intelligence
Practical applications of CI are very different. Here are 3 reasons why your company needs CI:
- To gather information about your competitors? motivations and behaviors. In case your competitors change spontaneously their business strategies, CI will help you stay informed about what they do. Furthermore, CI allows you to benchmark yourself against your competitors and shape your unique brand identity.
- To learn more about the marketplace and identify better your business opportunities. With the use of CI, you can evaluate the positioning of your product in the market and, fill in market gaps, and enhance profit margins. In addition, by means of CI you can anticipate future market trends, identify disruptive innovations, and prepare new product launches.
- To take thoughtful strategic decisions. While revealing fact-based, up-to-date market insights, CI assists you in better planning your strategic moves in the market. On top of that, CI provides you with valuable information about the market dynamics that will contribute to your company's competitive advantage.
How Does Competitive Intelligence Work?
CI gives concise and accurate information about market competition and business trends that can help your company thrive in the future. But, what does it exactly mean for a company to conduct CI analysis? How can a company, actually, organize an effective CI timeline?
- In the majority of cases, CI starts with the collection and analysis of competitor data. You need to identify which information you are looking for and understand for which purposes you want to investigate it.
- The next step of CI is synthesis. You need to sort through the CI data, arrange it in a meaningful order, and extract from it the most vital pieces of information.
- The final stage of CI is action or turning data into results. You need to make your data actionable for your overall business strategy.