investors. Take, for example, information from government sources. Under the Freedom of Information Act, a great amount of information can be obtained at low cost.
As far as information from its own sources is concerned, the company should develop a structured program to gather competitive information. First, a tear-down program like Ford's (Exhibit 4-3) may be undertaken. Second, salespeople may be trained to carefully gather and provide information on the competition, using such sources as customers, distributors, dealers, and former salespeople. Third, senior marketing people should be encouraged to call on customers and speak to them indepth. These contacts should provide valuable information on competitors' products and services. Fourth, other people in the company who happen to have some knowledge of competitors should be encouraged to channel this information to an appropriate office.
Information gathering on the competition has grown dramatically in recent years. Almost all large companies designate someone specially to seek competitive intelligence. A Fortune article has identified more than 20 techniques to keep tabs on the competition. These techniques, summarized below, fall into seven groups. Virtually all of them can be legally used to gain competitive insights, although some may involve questionable ethics. A responsible company should carefully review each technique before using it to avoid practices that might be considered illegal or unethical.
1. Gathering information from recruits and employees of competing companies.
Firms can collect data about their competitors through interviews with new recruits or by speaking with employees of competing companies. According to the Fortune article:
When they interview students for jobs, some companies pay special attention to those who have worked for competitors, even temporarily. Job seekers are eager to impress and often have not been warned about divulging what is proprietary. They sometimes volunteer valuable information. . . . Several companies now send teams of highly trained technicians instead of personnel executives to recruit on campus.
Companies send engineers to conferences and trade shows to question competitors' technical people. Often conversations start innocently—just a few fellow technicians discussing processes and problems . . . [yet competitors'] engineers and scientists often brag about surmounting technical challenges, in the process divulging sensitive information.
Companies sometimes advertise and hold interviews for jobs that don't exist in order to entice competitors' employees to spill the beans. . . . Often applicants have toiled in obscurity or feel that their careers have stalled. They're dying to impress somebody.
In probably the hoariest tactic in corporate intelligence gathering, companies hire key executives from competitors to find out what they know.
2. Gathering information from competitors' customers. Some customers may give out information on competitors' products. For example, a while back Gillette told a large Canadian account the date on which it planned to begin selling its new Good News disposable razor in the United States. The Canadian distributor promptly called Bic about Gillette's impending product launch. Bic put on a crash program and was able to start selling its razor shortly after Gillette introduced its own.
3. Gathering information by infiltrating customers'business operations. Companies may provide their engineers free of charge to customers. The close, cooperative relationship that engineers on loan cultivate with the customer's staff often enables them to learn what new products competitors are pitching.
4. Gathering information from published materials and public documents. What may seem insignificant, a help wanted ad, for example, may provide information about a competitor's intentions or planned strategies. The types of people sought in help wanted ads can indicate something about a competitor's technological thrusts and new product development. Government agencies are another good source of information.
5. Gathering information from government agencies under the Freedom of Information Act. Some companies hire others to get this information more discreetly.
6. Gathering information by observing competitors or by analyzing physical evidence. Companies can get to know competitors better by buying their products or by examining other physical evidence. Companies increasingly buy competitors' products and take them apart to determine costs of production and even manufacturing methods.
In the absence of better information on market share and the volume of product being shipped, companies have measured the rust on the rails of railroad sidings to their competitors' plants and have counted tractor-trailers leaving loading bays.
7. Gathering information from competitors' garbage. Some firms actually purchase such garbage. Once it has left a competitor's premises, refuse is legally considered abandoned property. Although some companies shred paper generated by their design labs, they often neglect to shred almost-as-revealing refuse from marketing and public relations departments.7
Competitive, or business, intelligence is a powerful new management tool that enhances a corporation's ability to succeed in today's highly competitive global markets. It provides early warning intelligence and a framework for better understanding and countering competitors' initiatives. Competitive activities can be monitored in-house or assigned to an outside firm. A recent study indicates that over 500 U.S. firms are involved or interested in running their own competitive intelligence activities.8 Usually, companies depend partly on their own people and partly on external help to scan the competitive environment.
Within the organization, competitive information should be acquired both at the corporate level and at the SBU level. At the corporate level, competitive intelligence is concerned with competitors' investment strengths and priorities. At the SBU level, the major interest is in marketing strategy, that is, product, pricing, distribution, and promotion strategies that a competitor is likely to pursue. The true payoff of competitive intelligence comes from the SBU review.
Organizationally, the competitive intelligence task can be assigned to an SBU strategic planner, to a marketing person within the SBU who may be a marketing research or a product/market manager, or to a staff person. Whoever is given the task of gathering competitive intelligence should be allowed adequate time and money to do a thorough job.
As far as outside help is concerned, three main types of organizations may be hired to gather competitive information. First, many marketing research firms (e.g., A.C. Nielsen, Frost and Sullivan, SRI International, Predicasts) provide different types of competitive information, some on a regular basis and others on an ad hoc arrangement. Second, clipping services scan newspapers, financial journals, trade journals, and business publications for articles concerning designated competitors and make copies of relevant clippings for their clients. Third, different brokerage firms specialize in gathering information on various industries. Arrangements may be made with brokerage firms to have regular access to their information on a particular industry.
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