Collecting information on competitors should help you compete more successfully. The sort of information you should look for depends on the competitor, the market and the overall business environment.
If the competitor is winning out against you, then you need to understand how and why. Is it a problem in what you are doing – leading to customer dissatisfaction, or are they doing something better? If the competitor is winning out in the overall market, the same sort of questions are raised – although if you are holding your own against them, the priority may be different.
Typically you want to understand about their capabilities – finances, products and services offered, management skills, etc. You should also find out what their goals are and assumptions about the market. Finally, an understanding of their strategies is key – and combining all these aspects can allow you to anticipate what they are likely to do next. So things to look at include:
- financial capabilities – gathered from accounts, stock analyst reports, etc.
- indications of current strategy – what are they doing now
- positioning – how do they see themselves and how do customers view them
- strengths and weaknesses
- business outlook – where are the companies heading, what are their plans, etc.
When analysing competitor data one approach is not to think in terms of “how do I analyse these companies” but “what will I do with the information and analysis“.
This approach will help you decide what information you need and what to do with it. Each piece of information you gather needs to pass what some call the “So what” test. The “So what” test asks “What is the importance of this information and how will it impact my decision making” for each piece of information gathered. If it will not impact decision making in any way then collecting the information has no current benefit. It should either be discarded, or perhaps better, stored in case it is needed for a future decision. However time should not be wasted collecting more of the same unless there is an indication that the information will become important in the future.
It is also important to realise that the intelligence needs of senior management are very different from those of the sales force or purchasing departments, for example. Purchasing does not usually want to know about a competitor’s future plans (unlike senior management who do). They will want to know whether they are obtaining supplies at the best rate and quality – and benchmarking how your company compares to its competitors. So you need to look at the supply chain and find out who supplies what to competitors at what price. Anything else is likely to be a waste of effort as it is not or is less relevant and so ceases to be cost-effective to research. Similarly, the sales force will want comparisons between your and your competitor products and services. How do they sell? How do they attract customers? How do they locate customers? What do they offer and how? The sales force is not particularly interested in a financial assessment of the competitor strengths, weaknesses and financial capabilities.
Also identify who will use the analysis. By knowing their requirements you can focus on what aspects to look at and how. However just because one item of information has no benefit to one business area – it fails the “So What” test – does not mean that it will have no benefit for any other department. Each needs to apply the test, or better, the competitor analyst needs to have an overview of all user requirements for CI. This can come from identifying each user’s key intelligence topics or KITs – or alternatively our brief guide to competitive intelligence.
A key source for information is the company’s annual report which will detail the competitor organisation’s financial situation and for public companies give much more – including general strategic approach, goals and provide an understanding of their assumptions on the market.
The company website is another source for information. You should go through the whole web-site looking for clues and also any sister sites in other countries, or product sites. Keep monitoring these for changes. Also monitor the press for any news about the competitor. Look at local and regional press, national press and trade press as all will cover different aspects. Check the job advertisements – in case the company is recruiting as this can provide clues on strategy, especially if the role advertised is new.
Most of this information is in the public domain and should be fairly easy to collect for most markets. In the US, public companies need to file financial data via the SEC and this data is freely available at the SEC web site (http://www.sec.gov). You will also find a number of services that hold much of this information, in an analysed format. An example is Hoovers, at http://www.hoovers.com.
In many countries there is a legal obligation to file financial information even for private companies. In most of Europe, for example, annual sales and number of employees can be found in the company accounts of all but the smallest businesses. A source to find the company registries for many countries in Europe is the European Business Register at http://www.ebr.org. This holds links to the registries for multiple European countries, e.g. Austria, Belgium, Denmark, Finland, France, Greece, Italy, Norway, Sweden, Latvia, Germany…. The UK registry is held at http://www.companies-house.gov.uk.
Even where such information is not available from company registries, company information agencies such as Dun & Bradstreet usually obtain such data as part of their overall business reporting operations. Thus D&B reports typically include year established, number of employees, annual sales over 3 years (allowing you to get a growth rate) and more. An excellent general resource that combines a number of country services, including D&B, is Skyminder at http://www.skyminder.com.
Market share information will need to be calculated using knowledge of the total sales of all your competitors – although there are frequently detailed market and industry reports available which include estimates of total market size. From this, the market share of any individual company can often be estimated. Such reports are held in the major business libraries and can usually be purchased online from the producer. It is also possible to download selected parts from host database companies such as Factiva, Lexis-Nexis or Proquest’s Dialog service.
Unfortunately not all information will be available, even checking the above types of sources. For example, budget information can give indications on where money will be spent but this is likely to be internal to the company and not readily available. It is sometimes possible to assess investment budgets by identifying purchases and investments over a fixed period using details held in the cash flow statements and balance sheets filed in the publicly available sources. You may also obtain this kind of information from primary research and direct competitor interviews, although you will need to be careful not to overstep ethical boundaries when conducting this kind of in-depth research.