A Market Intelligence Primer

By Ed Crowley

True power comes from the integration of all four cornerstones of Market Intelligence.

So what is Market Intelligence? In its broadest sense, Market Intelligence is the capturing of information relevant to a companies markets. In a more practical context, it is the gathering, analysis, and dissemination of information that is relevant to the market segments your company participates, or wishes to participate in. As the diagram at below shows, this really encompasses four major activities; competitor intelligence, product intelligence, market analysis, and market research. Market Intelligence is not just data. It's the combination of data and analysis that generates information which is relevant to making decisions.

The four cornerstones of Market Intelligence are Competitor Intelligence, Product Intelligence, Market Understanding, and Customer Understanding. Each of these areas can be a discipline in and of itself. However, their true power comes from the integration of all four of these disciplines. For example, you may know that a competitor is pricing a product below their normal pricing range (Product Intelligence). However, when you also know that this company is planning on replacing this product with an entirely new line of products (again Product Intelligence), the reason for their pricing action becomes clear. When this information is combined with the knowledge that the companies board of directors has challenged the CEO with growing market share (competitor intelligence) and that they have a strategic goal of entering into a new market segment (again competitor intelligence), this information becomes much more valuable.

Knowing that a competitor has reduced pricing in order to prepare for the entry of a new product line in order to gain share in a new market segment is valuable. But how valuable is this market segment, and what will it take to be successful in the market segment? This is where Market Analysis and Market Research comes in. By analyzing secondary data regarding the market, market share trends, and other market data one can understand whether this is a segment that will 'fuel the competitors' growth, or whether it will be a drain on their resources (Market Analysis). Market research provides tailored insight into the key customer requirements, loyalty of customers to existing vendors, and other factors, which will impact a firms potential for success in a new (or existing) market segment.

So what does it take to deliver world-class market intelligence? There are four key ingredients for a world-class market intelligence organization.

  1. Data sources and field resources
  2. Analytical skills and processes to pull the data together
  3. Technology foundation and platforms to deliver, store, process, and distribute the information
  4. The support of, and access to top management

Data gathering and field resources are the foundation for any Market Intelligence organization. This is the set of individuals, processes, and information services (often third party companies such as IDC) that provide the basic data on product shipments, competitor profiling, and other data relevant to the market. A world-class MI organization finds ways to turn the entire organization into one large intelligence-gathering unit. By the use of incentives, education, and existing information infrastructure (such as email) the entire organization including sales, purchasing, finance, and development can become a source for gathering competitive and market information. For example, one Fortune 500 Company offers its sales people a monetary incentive to turn in competitive tips. As a result, the sales people are always on the lookout for new products in customer sites and resellers locations. In some cases, these sales people have even encountered pre-introduction beta or evaluation products in customer's sights. These ?first looks? at competitive products can be invaluable in planning pre-emptive actions to attack new products from your competitors.

However, gathering the data is not enough. Without rigorous analysis and insightful reporting, the data remains simply.. data, it never becomes useful information. In order for Market Intelligence to be useful, different types of data (market share, competitor product cost data, etc..) must be merged together into information which is relevant to key decision makers and the decisions they are making. The ultimate test of the data and the analysis is whether it provides the right information in order to let the decision makers make decisions with confidence.

For example, reporting to the executive team that the company is gaining market share in a specific market is important. However, that data is only marginally beneficial. It's true power is unlocked when it is combined with information about competitor's actions, sales and channel activities that have resulted in competitive advantages, and a succinct and accurate definition of all the other factors that are driving the market share gains. And it will only be impactful if it is presented in a concise and well articulated report or presentation.

Another key aspect is having the right information infrastructure to support the flow of information in and out of the analytical team and to ensure that the ?data? is processed with as little manual intervention as possible. For example, often times the data on market share provided by large market data providers such as IDC or DataQuest is not in the right format, or is not defined in such a way as to be useful to the ultimate marketing decision maker. It may be composed of product segmentation based on processor speed (in the case of PC's), when the decision-maker uses segments based on customer types. In this situation, an investment in developing a database to convert the data providers segments into the segments used by the decision-maker is critical. Without this investment in automation, a very experienced Market Analysts must spend considerable time making manual conversions using spreadsheets, pivot tables, and power point slides! This is a very inefficient use of valuable market intelligence resources.

Finally, it is very critical that the Market Intelligence group has access to top decision-makers. This can be a challenge for many reasons. Often this is due to the decision-makers believing that Market Intelligence has little value relative to their own ?gut? instinct. Sometimes the Market Intelligence organization has historically provided ?low impact? market intelligence and thus has little perceived value with the decision-makers. And in the worse case, it can be the result of missed expectations in the past resulting in low credibility for the Market Intelligence organization.

No matter what the current state of the Market Intelligence teams access to decision-makers is, it is possible to improve the situation. And the more this situation improves, the better the Market Intelligence team will understand the key decision-makers needs. This in turn, will result in better analysis and information being provided to the decision-makers, which in turn will result in greater access to these same decision makers.

Creating boundaries for Market Intelligence. It is also very important to understand what Market Intelligence is not. Market Intelligence is not a crystal ball into the future! While predictability is improved with good Market Intelligence, there are far too many variables in the market place to ever provide 100% accuracy into the future actions of competitors or customers / markets. It is also important to understand that the Market Intelligence agency is not the decision making team. In fact, while the Market Intelligence team needs to have an intimate understanding of the issue at hand, and to know the information needs of the decision-maker, and even provide recommendations and potential outcomes based on those recommendations, they should not be the decision maker. Why? Because, once they become the decision-maker, they have a vested interested in the outcome and loose objectivity. One of the key functions of a good Market Intelligence organization is the ability to monitor the firm's progress versus the market after decisions are made in order to determine if mid-course corrections are needed.

A true-life example. In a recent assignment for a Fortune 500 technology company I was challenged with turning a division level marketing research organization into a world-class market intelligence group. While the marketing research team had a significant amount of talent, it was not seen as key to the divisions business making process. By leveraging the existing talent within the team, investing in database development and automation, focusing on key executive information needs, and reaching across organizational boundaries to integrate all types of market intelligence sources, this division level research team became the premier Market Intelligence organization for the corporation.

A few of the key actions that enabled this change are as follows:

  • Ensuring that everyone on the team is sharing a common vision for what the Market Intelligence group should be, what it should deliver, and what are the key focus areas for improvement. It is important that the entire team is involved in this process, and that they feel ownership for the final results. Our efforts in this area resulted in a very actionable mission statement, annual group objectives, and the definition of career development paths. As a result, the entire team was bought into the process and focused on achieving world-class status.
  • We invested significant time and financial resources in building databases and tools to automate the analysis process. In fact, at one point, one analyst spent about six months of full time effort managing the development of these tools. This was a difficult investment to make since the team was already understaffed. However, as a result of enabling these tools, we were able to go from having 3 staff members spending 80% of their time in generating one global market share report on a quarterly basis, to having 1 staff member and two interns spending 50% of their time in generating 42 highly segmented (and impactful) market share reports over the course of a year. As a result of this significant productivity improvement, the team is able to spend significantly more time in developing customized analysis, which is highly tuned to the executives needs.
  • Our team began hosting worldwide / cross-divisional summits for the marketing research and competitive analysis units within the corporation. These summits resulted in significant collaboration across teams and a better flow of information and analysis. This improved the information flows and the entire organization's analysis.
  • During the early stages of this assignment, and on a regular basis thereafter the team would meet with executives and internal clients to understand what information they needed, what they were not getting, and what was working well. As a result of these meetings, and following through with information tuned to the clients and executives needs, the team became 'the? source for market information. From the board level, to other marketing intelligence teams, to the clients, this team became the source for critical market information. In fact, this information gathering and analysis process became a critical and required component of the decision-making process.

Over the course of three years this team transitioned from a very effective marketing research team to a world-class market intelligence organization, which is a model and resource for the entire organization. In fact, the team became so effective that they began driving corporate level issues such as developing a corporate wide market-forecasting model, which is a foundation for the executive strategic planning process.

In summary, there are many critical elements to building a world-class Market Intelligence team. And it is not a quick process. However, with time, investment, and patience, the development of a world-class Market Intelligence team is possible. And this team can become a strategic asset to the company.

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