Competitor profiling: Many needs behind the need

ValueNotes White Paper

April 2012

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White paper | April 2012 | Competitor profiling: Many needs behind the need

Competitor analysis is a key input in the strategic planning process. It

enables the organization to analyze its own position in the industry. While

the need for the profile is generally clear, the end users are typically ill-

defined. As a result, the information presented is misaligned with their

needs, resulting in a sub-optimal return on the investment made by the

analysts. This white paper presents a framework for efficiently creating

competitor profiles that meet the needs of multiple users in the

organization.

Executive Summary

Profiling is a key tool that enables organizations to undertake competitor analysis. They:

o Cut out the “noise” and provide relevant insight into the hearts (resources, capabilities

and cultures) and minds (objectives, strategies and assumptions) of an organization‟s

competitors

o Enable an organization to flag off areas that need attention and further investigation

Competitor intelligence needs of different functional units vary. In order to avoid information

overload to users of the profiles from different functional units, their individual needs must be

recognized. Further, an understanding of key pain points of each internal client group is

essential for customizing analysis and presentation to requirements.

To derive maximum value from competitor profiles, competitive intelligence (CI) professionals

need to master the art of packaging for different customer groups. The old „everything for

everybody‟ adage needs to be re-looked at, to instead deliver ‘just the right thing for each

person’, making CI dissemination more meaningful.

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White paper | April 2012 | Competitor profiling: Many needs behind the need

Contents

1. What are competitor profiles and how do they fit into competitor analysis? ................................... 4

2. Why are they still relevant, in the age of information? ........................................................................ 4

3. Who are the different internal clients for competitor profiles and how do their needs

differ? ....................................................................................................................................................... 5

4. How do we make the most out of competitor profiles, for these different users? ............................ 6

5. A sample competitor profile framework ............................................................................................... 7

6. Final thoughts… ..................................................................................................................................... 8

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White paper | April 2012 | Competitor profiling: Many needs behind the need

1. What are competitor profiles and how do they fit into competitor analysis?

Competitor analysis is a key activity in the strategic planning process. It presents to the decision-makers; the

evolving competitive environment in which a company operates, a comprehensive view of competitors,

competitor benchmarking, analysis and recommendations for current and future strategy development, and

forecast of future business opportunities and threats.

Tracking the competition is critical in understanding current behavior and predicting future direction. Profiling

is a key tool that enables organizations to undertake competitor analysis. The information areas in a profile

serve to provide fresh insight into the hearts (resources, capabilities and cultures) and minds (objectives,

strategies and assumptions) of an organization‟s competitors. Competitor profiles thus enable an

organization to undertake extensive competitor analysis, by identifying key information (for each function) to

flag off areas that need further investigation. E.g. If the competitor‟s margins are much higher than ours – we

know we need to look at our own and their cost structures. Similarly, for the marketing function, if a

competitor website ranks higher on SEO, marketing needs to sit up and take notice. Flagging off top-level

warning signs is a critical function of competitor profiles.

Depending on the current level of knowledge, we may choose to start with a basic profile of a competitor and

move to increasing levels of granularity, based on our diagnosis of which areas of the competitor‟s

operations pose a threat to our position and performance.

2. Why are they still relevant, in the age of information?

In today‟s „information overload‟ age, there is a wide array

of information available about a company‟s competitors.

However, it is more than likely that not all of this

information will merit equal importance in a competitor

profile. Profiles help filter out the noise, presenting only the

most relevant data and top-level analysis to stakeholders.

As competitive intelligence gathering moves to a dynamic,

multi-channel method, competitor profiles must evolve and

deliver more value accordingly. What an inebriated

executive may spill on Twitter about his company needs to

be corroborated and analyzed against the entire firm‟s

dataset, to really make sense. This is all the more essential

with “counter intelligence” tactics developing online.

And even when we have all this filtered information, a CI profile is only useful when it can contribute

meaningfully towards solving business problems. Meaning, less chatter, more analysis. Profiles that read

like Google News Alerts (or even expensive information databases) are surely redundant. Good competitor

profiles must facilitate strong analysis; it is enabling the extrapolation, massaging and scenario testing that

still offers competitor profiles a place at the CI table.

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White paper | April 2012 | Competitor profiling: Many needs behind the need

A key property of a CI deliverable is that it must be actionable by decision-makers that use it. To that extent

a standalone competitor profile is not a CI deliverable; the competitor analysis that it facilitates, is.

3. Who are the different internal clients for competitor profiles and how do their needs differ?

Competitor profiles are potentially useful to multiple business functions within an organization. There is a

wealth of valuable information that can be cross-examined and „actioned‟ by different organizational units, to

truly benefit from competitor analysis.

In our experience, most often, the need for the profile is generally clear, but the end users are not clearly

identified. Hence, the profile is created with an all encompassing scope of content. The breadth of

information presented is misaligned with the needs of the users and under-utilized overall. It creates an

information overload for the personnel, resulting in a sub-optimal return on the investment made by CI

professionals.

When creating a competitor profile, analysts must first identify the business users of the intelligence. The

need, for instance may come from the marketing function, but analysts can recommend a wider audience

from other functions such as finance, HR, sales, etc. so as to increase the utility of the profile within the

organization. CI analysts can present their analysis in the context of these varied business needs.

a) CXO level – The senior management audience is concerned with the implications of various strategic

decisions, at the corporate level. This means they don‟t look for tactical and data heavy profiles. Rather,

they value the competitor analysis that comes out of profiling of competitors - early warning signs,

business threats and opportunities.

b) Line of business (LOB) executives (VPs, Directors, etc.) – At this level, executives look for more

detailed profiles that present analysis, as well as hard data about market conditions and competitor

benchmarks (market shares, functional unit information, etc.).

c) Functional units – There is large amount of information about competitors that functional units

(especially customer facing) can use to plan for the future. At this level, we‟re talking real time tactical

inputs that guide operational level decision making, in response to competitive conditions. The most

prominent units for competitor profiles are illustrated in the adjoining figure (though this will vary slightly

with different industries).

Which brings us to the next question…

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White paper | April 2012 | Competitor profiling: Many needs behind the need

Exhibit 1: User groups for competitor profiles

4. How do we make the most out of competitor profiles, for these different users?

Now that we‟ve outlined the multiple internal beneficiaries of competitor profiles, one thing becomes

apparent. To derive maximum value from these profiles, CI professionals need to master the art of

packaging for different customer groups. The old „everything for everybody‟ adage needs to be re-looked at,

to instead deliver ‘just the right thing for each person’, making CI dissemination more meaningful.

Before even beginning to collect intelligence for compiling competitor profiles, practitioners must broach the

subject with a wide (but relevant) audience in the organization (some of which have been identified above).

An understanding of major pain points of each internal client group is essential. Based on this, CI

professionals can understand the common and independent information areas (key factors and variables

which address pain points) that are of interest to these stakeholders. This will enable them to understand

how each information area means different things to varied business users. Most importantly, practitioners

develop a better understanding of the end objectives of the activity, and analysis and presentation can then

be customized to requirements.

Exhibit 2: Process for creating actionable competitor profiles

Identify users

Understand their pain

points

List common and independent

information areas

Collect information

Customised packaging for user groups

Sales and

Marketing

Research and

Development

Operations

Human

Resources

Finance

Users of competitor

profiles

CXO

LOB

Function

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White paper | April 2012 | Competitor profiling: Many needs behind the need

5. A sample competitor profile framework

The following table elaborates on the most meaningful elements of a competitor profile, as they are used

today. That is, as far as generic industry-agnostic profiles go; these are meant to be customized according

to the needs of the competitive environment a particular industry faces.

Exhibit 3: The meaningful elements of a competitor profile

Information area Details usually included in a competitor profile

General

Information

Operational - Name, Location, Short description, History, Organizational structure, Management

team, Contact details, Stock information

Strategy

Strategic - Mission and vision, Goals, Objectives, Future plans, Positioning, Synergies, Corporate

portfolio, Strengths and weaknesses

Operational - Resources/capabilities, Core competencies, Innovations

Products and

Services

Strategic - Number of products/services, Breadth of product lines, Share of revenues, Quality,

Embedded customer value, Projected new products/services

Operational - Current market shares by product and product line, Workforce and revenue split by

products/services, Quality levels/framework, Product/service delivery mechanisms

Sales and

Marketing

Strategic - Market segmentation strategies, Branding/Image, Probable growth drivers,

Advertising/promotions, Market research capability, Customer service emphasis, 4 P parameters,

Sales/ channel strategy, Product development

Operational - Sales network, Channel partner network, Marketing spend, Key customers,

Customers types and numbers, Geographical distribution of customers, Customer satisfaction

levels

Operations

Strategy - Delivery models, Engagement models, Outsourcing, Sourcing strategy

Operational - Delivery/ manufacturing centers – size & locations, Delivery capabilities/ capacity,

Process technology, Key suppliers, TQM, Customization, Overhead costs

Human Resources

Strategic - Level of training, Flexibility, Talent sourcing strategies

Operational - Number of employees by geography, Type & qualifications, Attrition rates, Union

relations

Function-specific- Hierarchy, Size, Compensation structure, Qualifications, Key functional head

profiles, Key promotions, Hires and exits, Depth of managerial talent

Financial

Information

Strategic - Capital structure

Operational - Financial statements, Key financial ratios – liquidity, Profitability, Activity analysis,

Capital market analysis, Stock performance

Function-specific - Budgets and operational overheads

Technology Issues

Strategic - R&D strategy, Internal technology strategy, Access to outside expertise through

licensing, Alliances, Joint ventures

Operational - Proprietary technology, Patents, Copyrights, Process technology, Information and

communication infrastructure, R&D expertise

Source: ValueNotes Research (2012)

Following the theme we‟ve developed thus far, it is possible to map out the applicability and potential

benefits of presenting relevant information areas to different internal client groups. In the format presented

below, we have considered the five functional organization units identified earlier – Finance, HR, Operations,

Research & Development and Sales & Marketing. It is easily possible to add others as required.

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White paper | April 2012 | Competitor profiling: Many needs behind the need

Exhibit 4: Competitor profile with functional usability mapping

Information area Finance HR Operations R&D S&M

General Information

Strategic

Y Y Y Y Y Operational

Function- specific

Strategy

Y Y Y Y Y Strategic

Y Y Y Y Operational

Function- specific

Products and Services

Y Strategic

Y Y Y Y Operational

Function- specific

Sales & Marketing

Y Y Y Strategic

Y Y Y Operational

Function- specific

Operations

Y Y Y Y Strategic

Y Y Y Y Operational

Function- specific

HR

Y Y Y Strategic

Y Y Operational

Y Y Y Y Y Function- specific

Financial Information

Y Strategic

Y Y Y Operational

Y Y Y Y Y Function- specific

Technology Issues

Y Strategic

Y Y Operational

Function- specific

Source: ValueNotes Research (2012)

This functional usability mapping highlights the different needs that functional units have for competitor

profiles, and how they may be addressed at a broad level. If we were to present the entire superset (Exhibit

1) to say, an HR professional, it would most likely be unusable due to an information overload, and lack of

relevancy. Imagine those data-heavy profiles (and accompanied analysis), created for several competitors –

why would HR be interested with, for example, strategic level R&D inputs? Instead, a customized HR profile,

as mapped above, would better help it identify its early warning signals, and raise flags for further

investigation (e.g. significantly higher retention rates for competitors). This mapping exercise, naturally,

needs to be granular and customized to address a company‟s specific competitive environment and CI

needs.

6. Final thoughts…

We have highlighted the different potential patterns of (and opportunities for) consumption of competitor

profiles by different „internal client groups‟ in an organization that will enable CI analysts realize greater ROI

on their efforts. We would like to reiterate that this is meant to be an illustrative „matching‟ exercise, which

will hopefully stimulate more discussion among our CI peers!

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White paper | April 2012 | Competitor profiling: Many needs behind the need

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Copyright © 2012 ValueNotes Database Pvt Ltd

All rights reserved

For more information, please contact:

Varsha Chitale

Director, Competitive Intelligence Practice

T: +91-20-6623 1767 / 1743

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