The Top 4 Competitive Advantage Traits Ceos Have in Common
Your business doesn't exist in a vacuum. Whatever sector you operate in, and however unique your selling proposition, there will always be other businesses competing for customers in your field.
Perhaps you compete for customers on price, the type of product you sell, the variety of promotions you run, or your service quality.
But how much do you know about your competitors? What new products are they developing? How effective are their current operations? How satisfied are their customers? These are all essential questions you need to be asking yourself to ensure that you stay ahead of the pack.
This article will look at how you can do this using Competitive Intelligence and explain more about what it is and how to develop it.
What Is Competitive Intelligence?
Competitive Intelligence (CI) is the systematic monitoring of your competitors' actions to determine what they're doing now – and what they're likely to do in the future. This information can help you make better strategic and tactical decisions and better understand your competitive position.
For example, suppose you know that a significant competitor is pursuing an acquisition strategy. You might decide not to compete on size but to focus on quality and customer service instead. Or, if a competitor starts to buy raw materials from another country, you might emphasize using "locally-sourced" materials as a theme for your next advertising campaign.
Competitive Intelligence focuses on five primary categories of Information:
Strategy Assessment – What are your competitors' strategies?
Current Operations – What are your competitors doing right now?
Competitor Perceptions – How do customers perceive your competitors?
Competitor Capabilities – What advantages can your competitors use now and in the future?
Market Prospects – In what direction is the market moving, and how well-positioned are your competitors to roll with it?
By discovering information relating to these five areas, you can plan your actions – and reactions – accordingly.
Competitor Information: Where to Look
The most prominent question people usually have about compiling competitive Intelligence is where to look to find it.
Competitors aren't actively going to make public the type of Information you want to know. However, there are a wide variety of sources that can still provide some great insight:
Brochures and other marketing materials.
Buy your competitors' products, and analyze them.
Shareholder reports and notices.
Stores and outlets.
Social media platforms.
Survey customer satisfaction with your products versus competitors' products.
Create scorecards for customers based on your critical success factors.
Ask customers why they might buy from your competitors and not from you.
When speaking to your customers, note any comments – good or bad – that they make about competitors.
If your customers are large organizations, follow or link up with them on social media, subscribe to any newsletters they publish, and add yourself to their mailing lists.
Attend events, conferences, and presentations sponsored and attended by suppliers, and see which ones your competitors go to.
Consult supplier websites for any mentions of your competitors, current customers, or potential customers.
Follow your suppliers on social media and set up notifications for new posts.
Sign up to suppliers' mailing lists, and subscribe to their newsletters or publications.
Industry associations – Join associations and business groups related to your industry.
Conferences – Attend conferences and other events in your industry.
Trade journals – Subscribe to publications from your industry, regulatory bodies, business associations, local business groups, etc. This will help you stay up to date with the latest industry information. Many communities and university libraries will have this material if you don't want to spend the money on these publications.
Online – Search relevant websites, blogs, and social media channels.
There are also many competitive analysis tools and software you can use to collect and monitor CI data. For example, Google Alerts and Talkwalker Alerts allow you to track and monitor your brand, competitors, and other topics across the web. At the same time, more comprehensive tools like Deep Dive Duck and Competeshark enable you to analyze and monitor direct changes your competitors are making on their websites.
You might also want to consider signing up for competitive analysis tools like Feedly, which allows you to follow blogs and news streams and get regular updates on any new content your competitors publish. Like Semrush Traffic Analytics, other tools can help you keep tabs on the traffic being directed to your website and those of your competitors. While social listening tools, such as SocialBakers, enable you to monitor and manage your own social media activity and benchmark it against your competitors.
If you want to delve even deep, you might be best off getting some external support – for example, by hiring a competitive intelligence professional who can gather information for you. The Strategic and Competitive Intelligence Professionals (SCIP) association is a great place to start your search.
Note: Make sure you follow ethical and legal guidelines when gathering competitive Intelligence. There's no need to use illegal practices when so much information is readily available. If you aren't sure if the information you have was gained legally, consult a lawyer who specializes in competitive Intelligence.
Understanding Your Competitive Position
By now, you might well have built up a detailed picture of your competitors – how they operate, their performance, and their key objectives. But what about you?
To truly understand your market, you also need to clarify your position and where you sit about your competitors. There are several valuable tools you can use to do this:
USP Analysis can help you understand how your unique qualities compare to those of your competitors. It helps to define and establish your "competitive edge" and how you differentiate your offering from your competitors.
Core Competencies Analysis allows you to identify what your company does uniquely well and those other businesses can't copy quickly enough to affect competition. You can test whether they are proper core competencies by analyzing how far they influence customers to buy from you, how difficult they are to imitate, and whether they can be applied to a broad range of potential markets.
Porter's Five Forces enables you to assess the competitiveness of a particular market. It can be beneficial when you want to analyze whether a potential new product or service would be successful. The tool looks at the strength of five fundamental forces that affect competition: supplier power, buyer power, competitive rivalry, the threat of substitution, and the threat of new entry.
Porter's Generic Strategies looks at the three main ways to gain a competitive advantage in your sector. According to the model, you can achieve this by focusing on cost, offering a niche service in a specialized market; or making your products different from and more attractive than those of your competitors.
Bowman's Strategy Clock expands Porter's three strategic positions to eight. This model looks at different price and perceived value combinations and how successful each one is likely to be. It can help you choose the route to the competitive advantage that best suits your organization's competencies.
VRIO Analysis helps you evaluate how your organization's resources (people, processes, or other physical assets) contribute to your market position. VRIO enables you to assess your resources' value, rarity, and inimitability and how well your organization can use them.
You've probably heard sensational stories about unethical competitive espionage – like companies sending spies into a competitor's research and development department or paying a former staff member for Information about another business. You don't need to resort to these measures to collect CI. At the same time, you need to protect your organization from such attacks.
This is known as counterintelligence, and it's just as important as competitive Intelligence. While you're seeking information on your competitors, you should actively protect your Information. You'll probably never be able to keep everything a secret. Still, you can consult the same sources we've mentioned for Information about your operations – to discover if something is public that shouldn't be.
Also, develop practices and systems that keep your information safe. For example, you could require your staff to sign confidentiality agreements, safeguard your files using best practice cybersecurity protocols, limit all media access and public reporting to a communications specialist, and use careful hiring and firing practices.
Competitive Intelligence Strategy
With so much information available, it's easy to get lost and lose direction. Not every piece of information you gather will be necessary. So you must develop a competitive intelligence strategy that fulfills your key objectives.
Four essential components make up a sound CI strategy. These are:
Determine what you need to know and why.
What Information do you need to know?
Why do you need to know it?
What do you already know?
What will it cost to gather the information that you don't have?
What will you do with the information once you have it?
Your answers will help guide your decisions about which resources you'll use and how much time and energy you'll invest in your CI strategy.
2. Collecting Information
Once you've determined what information you need and why you need to start collecting it. Before you start, it can be helpful to think about the following questions:
Where will you look?
Who will be responsible for collecting and storing the Information? Will you use internal or external staff to do it?
How and where will you store the Information that you collect?
Will you use specialized software that can automate information gathering?
What guidelines do you need to ensure that the process you are collecting Information is ethical and legal?
Now, it's time to analyze the information you have. Think about:
What can your company do better than other competitors?
What can you do differently?
What strategic moves are your competitors likely to pursue?
How are your competitors likely to react to current trends and events in the industry?
CDPS Tip: Completing a SWOT analysis on your competitors is a great way to frame your discoveries and to map your own best strategies and actions.
4. Communicating and Storing Information
You probably won't use all the information you gather, so decide how you'll distribute your findings, now and in the future.
What Information should you tell your staff now? And in the future?
Who needs to know this information now? And in the future?
How will you store the information for future use?
How will you learn from your experiences?
Competitive Intelligence involves a lot of predicting and guessing. By developing a strategy to follow, you'll put yourself in a better position to understand what you need to know and how you should use that knowledge. Being proactive rather than reactive will keep you ahead of the game.
Key Points Competitive Intelligence involves collecting and analyzing information about your key competitors. This can help you understand more about the market you're operating in and enable you to make informed strategic decisions to improve your market position and gain a competitive edge. Before you start gathering competitive intelligence, it's vital that you set up an effective CI strategy that encompasses these four key steps:
Planning – understanding what you need to know and why.
Collecting Information – decide what primary sources of information you'll use and who will be responsible for collecting and storing it.
You were analyzing – using CI information to understand how your organization is performing compared to your competitors, such as financial performance, customer satisfaction, and strategy.
Communicating and Storing Information – deciding how you'll use the Information you've collected going forward and who will have access to it.