Keeping an eye on the market

Steinbeis CI system helps companies analyze competitors

Globalization and the accelerating nature of markets are a major challenge for international businesses. Firms need market information that not only highlights fundamental issues but is also highly specific to individual sectors. Heterogeneous, up-to-date information has to be merged to establish a solid basis for business strategy planning. This allows the unique positioning of the company based on its competitive advantages. Competitive intelligence (CI) provides a framework for gathering knowledge in the company in a transparent and upto- the-minute system. The Steinbeis Transfer Center of Business Development, which is based at Pforzheim University, helps companies with the introduction of CI systems.

In many companies, staff members already have an intrinsic knowledge of markets and competitors; country managers have a good feel for their markets; salespeople know a good deal about competitors and their products. The picture is similar for product managers, who often monitor competitive products and marketing activities. To share knowledge, companies hold sales meetings, and materials (such as trade show catalogs and speeches made by competitors at conventions) are kept and evaluated in different parts of the company. But information tends to be held in different places and is disorganized, making it difficult to share knowledge and keep an overview of all markets and competitive activities. This is made worse by departments within companies having different motivations for analyzing markets and competitors.

Given the fact that there are no standard information sources, and sometimes studies are missing, it often makes sense to gather information at the local level and consider competitive observation options via the inter- net. CI systems can gather information directly or transfer it to a CI manager who is responsible for organizing and validating data. Also, competitors’ websites can be monitored for changes, providing information that also goes into the system. The company itself can also be monitored by systems to compare performance to the rest of the market. This addresses an important role played by a CI system: namely, that it should gather competitive intelligence information that can be used in a situational analysis. A proper CI system also evaluates, consolidates and distributes information, sometimes automatically with standard reports. Reports and dynamic analytical tools provide a good basis for regular market and competition analyses, which can feed into management decision-making. Of course, keeping such a system alive is only really possible if the upper echelons of management not only drive the system but also use it.

ESBE, a Swedish manufacturer of valves and actuators used in heating and cooling systems, decided that whenever it carries out a competitor analysis from now on it wants to use a software-based system solution. The Steinbeis Transfer Center supported ESBE with its CI solution "Management Monitor".

ESBE operates in a number of countries and had three goals for its new system: it should map complex business structures; it should be possible for people working in different departments to gather data; the system should draw on uniform data but also allow users to view data in different ways, by means of role-based access control.

One of the particular challenges with competitor analysis is that the information users need is often not freely available, or it cannot be compared, or to a certain extent, data has to be deduced or estimated from hypothetical scenarios. Simple requirements such as availability, completeness, certainty – or users’ desire for the detailed facts they need to make decisions – are partially contradictory. Given this known state of affairs, the Steinbeis experts worked up the ideal approach together with ESBE:

  • The sights were set high – this decision made it easier to take the goals of different departments into account and, from the outset, made it possible to define a clear and coherent plan to develop the system in several stages.
  • Simultaneously, ESBE accepted that supplying data of a satisfactory quality across markets at different levels of maturity and customer penetration would sometimes take more time and involve several iterations or supplementary rounds of data validation.
  • A prerequisite for good information is an expert understanding of markets, so the priority should be to provide resources from within the company at a local level. The tools used to gather information should be standardized. The task of gathering data, quality assurance, validation, managing supplementary ad hoc research and systematically analyzing secondary sources should be given to a competitor analysis specialist. Only once data has been screened and checked for relevance and quality would information be released to users.

ESBE is already enjoying the advantages of the new CI tool with its current strategic project. An analytical tool provides drill-down options and standard reports, making it easier to deal with the complexity of the data. It is also easier to recognize and present complicated correlations, strengths, weaknesses, opportunities and threats. Also, competitor information has gained significantly in terms of credibility, directing more focus on market-based thinking. Systematically capturing and storing information is good for continuous improvement processes. The new system is ideally suited to the matrix organization of ESBE sales, which has regions and support functions spanning different sales areas, each of which reports to global sales management. Users now look at the same data from different angles, stimulating more detailed discussion into different courses of action. Ultimately, this is expected to improve strategic decision-making and acceptance.

Contact

Professor Dr. Elke Theobald
Steinbeis Transfer Center Business Development Pforzheim University (Pforzheim)
su0587@stw.de

Karsten Pillukeit
ESBE AB (Schweden)

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