Market Intelligence as a tool for leveraging business success page 4

2 Market Intelligence as a tool for leveraging business

success

2.1 The Market Intelligence approach

2 .1 .1 Evolutionary approach
Since the 1960’s businesses strive for decision-support through Information
Systems. After early setbacks caused by organizational and structural pinched
preparation, decision-supporting Information Systems gained much of acceptance
and dispersal. 9 Planning and analysis have always been an important factor of
business success and have not been invented lately as BI-components. Such
common credence is caused by misdirection through the utilization of BI as a
buzzword, which is used in a variety of meanings, only diffusing its true sense.

While a rough conceptual description will be subject to the next chapter (as far as
possible), this part sets out some further historical facts:

As the focus is set on the development of Market Intelligence, its roots can be traced
back to the statistic reporting system, with which reports have been generated,
which soon took up the shape and size of a contemporary phone book. Obviously
spreading those reports in an analogue communication environment took up much
time and lacked in efficiency as different departments had to look up the entire
report in order to find out task- and function-related information. A fragmentation of
appropriate data was desperately needed to accelerate the information process.
Thus, Data Warehouses 10 came into existence.11

Summarizing, it is to say that the classical view on information has evolved from the
data-gathering age (1980’s) to the analyzing and forecasting time at the threshold of
the second millennium. This development is bound to reach its interim climax in a
knowledge-based society, in which information is the major basis for doing
business.12

Such a progress is supported by the enormous wave of investments into information

supporting technology within the past decade and the results of a survey conducted

9
cf. Bange, Schinzer (2002), p.1
10
For further details on “Information Technology terms” please refer to the Appendix.
11
cf. Heina, Sittig (2000/2001), p.7
12
cf. Wübbenhorst (2004/2005), pp. 19 et seq.
Market Intelligence as a tool for leveraging business success page 5

by Forrester Research. This business study13 forecasts overall IT spending to grow

by a marginal 1.9 %, while among all surveyed business 45 % will soon invest into
Business Intelligence.14

The driving forces for such a tremendous augmentation in the interest in BI are
primarily the information age and the overall economy. “In the information age,
information is power. Companies that leverage, exploit and maximize their
information assets have a strategic advantage over their competitors. Business
today moves at the speed of information. Getting the right information into the right
hands at the right time is essential.”15 Moreover, caused by the volition to overcome
economic difficulties, companies concentrate on cost reduction and revenue
increase. By pulling together cost information due to BI, businesses may achieve
both and, coherently, be more competitive.

Over all, businesses have finally realized a fundamental issue: “Now is the time for
all enterprises to raise Business Intelligence to the level of a strategic initiative.”16

2 .1 .2 Conceptual approach
Business Intelligence designates the analytical process of transforming fragmented
corporate and competitive data into practice-oriented knowledge about abilities,
positions, actions and intentions of one’s own business and the competitors’.17
BI is no specific operational factor, but rather in steady progression. As every
business process generates data, whose information content may be of crucial
value to the further business development, the tasks of Market Intelligence created
to accomplish true business value have to be cyclic or at least periodical.

2.1.2.1 Approach through ‘intelligence’

Although formulated as a definition, the initial sentence to this chapter does not
render a sole indispensable perception of MI. Being used for all sorts of ‘break-
through’ business inventions, the perception of this term has tremendously amplified
over years; and thus, diluting it.

Whereas, giving a definition for ‘intelligence’ is comparatively secure, an

encyclopedia states it as a

13
Note: Although the survey results are based on interviews with 877 decision-makers at North
American based companies, it gives a good glimpse on future BI efforts around the globe.
14
cf. Wittchen (2003), p.1
15
Wittchen (2003), p.1
16
Dresner (2001) , p.1
17
cf. Grothe, Gensch (2000), p.19
Market Intelligence as a tool for leveraging business success page 6

“… term usually referring to a general mental capability to reason, solve

problems, think abstractly, learn and understand new material, and profit
from past experience. Intelligence can be measured by many different
kinds of tasks. Likewise, this ability is expressed in many aspects of a
person’s life. Intelligence draws on a variety of mental processes,
including memory, learning, perception, decision-making, thinking, and
reasoning.”18

Transforming this definition into the intelligence BI is all about, is not too hard to
accomplish. The wording itself can be mainly adapted, as learning and
understanding new competitive and environmental material and the capability to
profit from those, is an essential element of Business Intelligence. Processes, like
‘memory’ may therefore allude to the storage of obtained business data in a Data
Warehouse. Finally current procedures can be reasoned and its conclusions may
lead into accurate decision-making, which improves competitiveness.

It will be necessary to attain or improve ‘intelligent’ infrastructure or instruments to

remain capable of reacting on brisk and unpredictable shifts in contender’s business
alignments.19

2.1.2.2 Comprehending Market Intelligence

As a standardized definition may not be found, 20 MI may rather be seen as a
consolidated term – comparable to a toolbox in which decision-makers might find
everything to simplify their tasks.21

With such a toolbox corporations are better able to “track current and potential
competitors, analyze markets, develop profitable new products, determine likely
candidates for acquisition or merger (or joint venture) monitor technological,
economic, social and legislative trends with significant impact on a company’s
future.”22
However, data itself appears comparatively ineffective, if not connected to the
business content. It is only then, when it achieves its true decision-relevant value.
Such value-obtaining processes can be divided into six phases:23

18
Microsoft® Encarta® (2005), keyword “Intelligence”
19
cf. Peuschoff (2002), p.7
20
cf. Gluchowski (2001), pp. 5 f.
21
cf. Sexl (2000), p.1
22
Gilad, Gilad (1988) quoted in Davis (2002), p.1
23
cf. Grothe, Gentsch (2000), pp.19 et seq.
Market Intelligence as a tool for leveraging business success page 7

- Retrieval of quantitative and qualitative, structured or unstructured data

- Discovery of relevant connections, samples and breaks in continuity
- Gaining valuable insights in corporate structures and competitive
intentions
- Draw conclusions on effects for your own business activity
- Fractioning and utilizing of the accomplished insights to support
measures and decisions
- Benefit from an enhanced Business Intelligence/Market Intelligence

Figure 2: The usability of Market Intelligence

(based on: Wübbenhorst – Marktforschungs-Management – Markt der Marktforschung, 2004/2005,
page 25)

It is not sufficient to go through those phases once and believe that one is able to
understand markets and customers more clearly, target customer segments more
accurately or develop products, features and services that the market seeks. 24
Rather more, it is a continuous circle of processes being explained in further detail in
an upcoming chapter.

Over all BI is a “company's ability to steadily leverage the information resources that
they have available – whether internal or external to their organization – to drive real
business decisions and to take action. It's turning data into information and
information into decisions and actions.”25 If businesses want to be able to succeed in

24
cf. Imhoff (2004), p.7
25
Keen Computer Solutions: http://www.keencomputer.com/BusinessIntelligence.htm
Market Intelligence as a tool for leveraging business success page 8

the information age of today, they have to realize, that BI is no longer a luxury - it is
essentially important26, thus, making the question “Business Intelligence or Business
as usual?”27 rhetorical.

2.2 Realizing the implementation

2 .2 .1 Reasons for the realization process (opportunities)

“The time for Business Intelligence (BI) is now, as it can be leveraged as a
competitive weapon to improve efficiencies and better manage position in the value
chain. If implemented as a comprehensive solution, BI will reduce the time spent on
low- to non-value-added activities across the enterprise, as well as enhance the
organization's ability to make profit-enhancing decisions.”28

Without BI more than half of those profit-enhancing decisions within an organization

are based on ‘gut feel’ and experience, rather than sound and variable information.29
A study conducted by IBM identified that despite the fact that up to 80% of all
required data already lies somewhere within the companies’ shelves and data
storage30, the typical company utilizes only 2% to 4% of this stored data.31

Consequently, in disregard of the fact of digital gathering and processing of data,

information is not exploited to the utmost possible level. Often tediously designed
solutions allow or result in profit only to single workspaces or - in a best-case
scenario - to whole divisions. The linkage to a larger information-pool, hence the
possibility of a benefit spread over the entire company, is simply missing.32

BI can help to overcome those flaws and present data-driven information that is
accurate, insightful and actionable and therefore contributes towards:

- Competitiveness and minimum risk through development of corporate,

marketing and product strategies,
- Regaining control over all accessible information and coherently your
business activities,

26
Imhoff (2004), p.8
27
Grothe, Gentsch (2000), p.10
28
Balogh (2003), p.1
29
Business Intelligence Forum: http://www.managementlogs.com/business_intelligence.html
30
Expert interview (2004): Mr. Thomas Pilgram on introducing facts Market Intelligence
31
Cherry Tree & Co. (2000), p.2
32
cf. Heina, Sittig (2000/2001), pp. 8 f.
Market Intelligence as a tool for leveraging business success page 9

- Achieving an enhanced analysis and reporting structure – informing

about emerging trends and technologies, their possible development and
the affect on the industry and your companies’ business strategy,
- Delivering valuable insights, actionable recommendations and
measurable results.

Market Intelligence focuses on the truism stating: The power isn’t the data: It’s how
you use it.

2 .2 .2 Problems in the realization process (threads)

In the desire not to fall behind popular, ubiquitous business innovations, most
companies pursue a rather phony approach to assimilate BI and settle for data from
their finance and accounting departments to acquire proper business insight. Others
simply aggregate transaction data from their current CRM, ERP, QM and SCM
systems. The correlation between internal and external business data with the own
strategic goals is often heavily ignored, leading to a lack of business alignment.

Such errors can only be prevented due to a tight cooperation with leading managers
in order to work out a certain aim, thus preventing isolated efforts. It is also
necessary to increasingly involve all employees, as they need to be aware of an
information-seeking company environment and in consequence adapt their mode of
operation accordingly. As employees are the executive entity of any intelligence
gathering, BI needs to be accompanied by, agreed with and familiar to each of those
entities. This might require adequate training.

Implementing BI into the companies’ day-to-day business, the persons in charge

might end up achieving merely anything by trying to leave nothing undone. The
complexity of such cross-company project is simply underestimated and “more often
than not, these (BI) efforts fail and each line of business undertakes separate
projects to meet their own need, making collaboration and information sharing
across lines of business more difficult.”33

Throughout improvement of efficiency and effectiveness an accurately implemented

Market Intelligence will most possibly “... have created a tidal wave of data. This
mass of information crashes down on business users, who must get the data,
reports and analysis they need for their jobs from multiple sources and in multiple
forms. At the same time, external business conditions force these same business
users to make new and more-demanding strategic and operational decisions.
Regulations change rapidly, requiring higher degrees of data integrity and

33
Wittchen (2001), p.2
Market Intelligence as a tool for leveraging business success page 10

confidence in the information.”34 Without steady maintenance of data and – even

more important – their logical coherences, fragmented BI will result.

In aggravation competitors might foil, thwart or jeopardize one’s efforts by

intentionally generating disinformation to mislead intelligence and keep the
organization ‘preoccupied’ and ‘off-balance’. 35 Therefore, raw data has to be
evaluated and analyzed for accuracy and reliability to eliminate false entries, check
for omissions (lack of cause for a business decision) and anomalies (data that does
not fit). The failure to test and reject what others regard as an established truth can
be a major source of error.36 Therefore beware of false confirmation.

A final common problem in conjunction with the preceding one is the belief to have
obtained all appropriate information. Within BASF Greater China’s MI
implementation charts, that serious mistake has been expressed as follows:

- At best, we know what we know.

- Within the scope of our experience, we also know what we do not know.
- However, what we do not know is what knowledge lies outside our scope
of experience. In other words: We do not know, what we do not know.

Contemplated and further common errors can be categorized as seen in the table
below:
Opportunistic Level Tactical Level Strategic Level
- Scalability - Skills - Cultural
- Accuracy and quality - Politics, funding - Complexity,
- Consistency - Data access integration
- Inflexibility - Timelines - Sponsorship
- Expectations - Ability to evolve and priority
- Politics
- Mission-critical
Table 1: Failure modes of the strategic maturity spectrum
(cf. source: Gartner Inc. – BI Strategic Maturity Spectrum, 2003, chapter 3, page 15)

2 .2 .3 Structure of the realization process

The right methodology helps in raising a functioning BI structure within your
business. As tactics differ, the one illustrated in the figure below promises the best
practice for Business Intelligence initiatives.

With a clearly identified business problem that is paramount, an overall impact of the
initiative will be comprehensible (definition stage). Information deficits have to be

34
Gartner Inc. (2004), chapter 3, p.1
35
cf. McGonagle, Vella (1990) quoted in Malhotra (1996), p.3
36
cf. Vella, McGonagle (1987) quoted in Malhotra (1996), p.2
Market Intelligence as a tool for leveraging business success page 11

evaluated, before the final design constitutes the approach to information gathering
(design). Such gathering is differentiated between primary and secondary research
– a topic, which will be reflected in detail within an upcoming chapter – and applies
the appointed methods (data collection). Prior to that, data discovery needs to be
automated throughout the total lifetime of BI, to easily facilitate the data that is
bound to be statistically processed and purified within the data analysis process. As
a final result valuable assets are created, having its greatest potential when
knowledge seekers have access to it due to a proper documentation.37

Figure 3: Structure of a typical BI realization process

(based on: Gonzales – The Business Intelligence Gap: Developing a Cohesive Business Strategy to
Justify IT Planning, 2003, pages 12 f.; BI3 Solutions – Best Practices for Business Intelligence – A
guide for Financial Executives, 2003; Wikipedia – ‘Marktforschung’, 2005; Davis – Using Business
® ®
Intelligence for competitive advantage, 2002, pages 2 f. ; Microsoft Encarta – ‘Market Research’,
2005)

2.3 Content discovery (retrieval of appropriate data)

The key issue for a working content discovery is to “…have an overall data
management strategy. This addresses the data collection and processing and
reduces the time to obtain intelligence. Companies that are doing this correctly,
have the foundation in place to capture, cleanse and integrate the raw data into
databases, ready for analysis.”38 Doing this, you have to consider your sources, your
methods and your sectors of investigation, which all will be outlined in the following.

37
cf. Gonzales (2003), pp. 12 f.; BI3 Solutions (2003), pp. 1 et seq.; Wikipedia (2005), keyword
® ®
“Marktforschung”; Davis (2002), pp. 2 f.; Microsoft Encarta (2005), keywork “Market Research”
38
Wittchen (2001), p.4
Market Intelligence as a tool for leveraging business success page 12

2 .3 .1 Sources

2.3.1.1 What requirements towards data exist?

Market Intelligence offers decision-relevant aggregation of information for the

management. Such knowledge is subject to certain exigencies:39

- Reliability: Is the data authentic and are the sources believable? Can the
intelligence gained by that data be reproduced through other sources?
- Validity: Is the content correct and compatible with current business
rules? Are the methods of reception valid as well?
- Up-to-dateness: Is the data, its sources or the methods of acquisition
outdated? Do they reflect the current state of the art?
- Exclusiveness: Is the data truly qualified to gain a competitive
advantage or at least to keep up with the business situation?
- Representative: If the data is not meant to be of explorative kind, does it
meet the requirements to draw general conclusions?

2.3.1.2 Where to obtain the data from: public or private sources?

There are unbound sources to obtain intelligence of the market. They range from
precise research to sometimes just being at the right time at the right place and the
ability to convert the information into a business advantage. Further information can
simply be found in the public domain data sphere.

Thus the Market Intelligence department is bound to operate like an information

vacuum cleaner, sucking in data, information and/or knowledge from institutions,
interest groups, private sectors, media, events “… and even gossip picked up at
dinner parties or on the golf course.”40

39
cf. Enneking (2004/2005), p.10
40
Choo (1998), p.3
Market Intelligence as a tool for leveraging business success page 13

Material Institutions/Groups Internal Events and

Activities
- Statistics - Interest groups - Planning division - Current events
- Documents (academics, trade, - Individual employees - Industrial
- Brochures consumer groups, - Sales force conferences
- Technical associations,) - Marketing research - Scientific
articles - Private sector staff conferences
- Magazines - Government - Project summaries - Interviews
- Databases - Individual - Customer visit - Surveys (e.g.:
- Journals specialists reports market surveys)
- Wire services - Patent department - Defensive - Monitoring (e.g.:
- Newspapers - Advisory boards competition drive-by and on-
- Books - Distributors intelligence41 site
- Financial - Market research Competitor observation)
reports institution - Trade shows
- Industry - Publisher Instruction manuals
- - Benchmarking
periodicals - Banks Package insert
- - Dinner parties
- Internet - Promotion material
Associations (e.g.: - (gossip)
- Web session JEIA) Product-analysis
- - Questionnaire
data Reverse engineering
- - Experiments
- Catalogues of products/services
- Competitor’s
suppliers
- Fake application
Table 2: Different kinds of sources for Market Intelligence
(based on: Nakagawa – Intelligence, Trade and Industry, 1992, page 42; Meyer – Real-World
Intelligence: Organized information for executives, 1987, pages 58 f. ; Malhortra – Competitive
intelligence programs : An overview, 1996, page 3; blue=primary, black=secondary)

Collecting information is expensive; it is best to draw on the resources already

available. While government sources have the advantage of low cost, they only
deliver answers accessible to all competitors as well. But “as Business and
Competitive Intelligence evolve, an understanding of the various links of entities and
knowledge sources becomes important.” 42 Therefore, such data may become
valuable via cross-matching it with own research like selective surveys of
consumers and distributors on competitors’ products, on-site observations of
competitors’ plants or headquarters or scanning the competitors’ patent applications
to monitor their technological progress.43

As every employee, especially the sales force, is the company’s window to and from
the market (to the market through sales, from the market through information), they
are expected to participate actively in information gathering.44

41
Note: Defensive Competition Intelligence involves monitoring and analysing one’s own business
activities as the competitors and outsiders see them.
42
Liebowitz (2004), p.1
43
cf. Malhotra (1996), p.3
44
Expert interview (2005): Mr. Minoru Ohta on general requirements towards employees
Market Intelligence as a tool for leveraging business success page 14

The hereby and generally created multiple sourcing in information gathering is

tolerated and favored, as information is based on individual judgment and therefore
subjective. A great variety of sources will enrich the filtering process for valid,
reliable data.

2.3.1.3 How to obtain the data: primary and secondary research

Whilst data from the public domain sphere is inexpensive and ubiquitous, it has not
been composed for the particular intelligence use. Hence, it most likely lacks in
detail. It has to be determined whether the framework of its primal investigation
matches the demands of today’s decision support.

This approach is common known as secondary research or desk research

respectively. Its opposite is the data mining primary or field research – able to
uncover attitudes and perceptions, thus measuring customer satisfaction, product
demand and purchase intentions more accurately. Often an initial secondary
research provides knowledge on necessities for primary researches.45

The utilization of either research type is subject to environmental issues, but

comprising it is to say that one’s advantage is the other’s disadvantage – and vice
versa.

Primary Research Secondary Research

Advantages - Directed investigation - Inexpensive (cost-saving)
- Qualitative studies - Expeditious (time-saving)
- In-depth inside - Already in existence
Disadvantages - Mostly complex - Raised within a different context
- Cost- and time intensive - Not exclusive, not representative
- Random sampling - Lack of up-to-dateness
Table 3: Advantages and disadvantages of primary and secondary research
(based on: Wikipedia – ‘Marktforschung’, ‘Primärforschung’ and ‘Sekundärforschung’, 2005)

2 .3 .2 Methods (of primary research)

The acquisition of information within the framework of the primary research is widely
ranged. A rough differentiation is done between the qualitative and quantitative
survey. 46 But it is not only market research that can be differentiated in those
categories; Business Intelligence’s data handling also follows the concept of
structured, quantitative data as opposed to widely unstructured, qualitative data.47

45
cf. Wikipedia (2005), keyword “Primärforschung”, Choo (1998), p.2
46
cf. Wikipedia (2005), keyword “Marktforschung”
47
For further details on “Qualitative and quantitative market research” please refer to the Appendix.
Market Intelligence as a tool for leveraging business success page 15

Similar to data handling, research can be conducted supported and unsupported.

The equivalent praxis-oriented terms are hypothesis-free (for the qualitative
approach) and hypothesis-supported (for quantitative). Within the last approach the
user or interviewee already has a mental concept about the sought. Presumptions
are confirmed or disproved. In contrast, moving towards the answers on a
hypothesis-free basis, a concrete manuscript for survey does not exist at first.48

As a quantitative research allows also minute effects to be measured it delivers

representative, simple-to-gain response to the already known or assumed.
Qualitative research instead may uncover new coherences and supports analysis of
concealed motifs and emotions. Overall, qualitative research enhances the
efficiency of quantitative research. 49 However, the transition is fluxionary and
combinations appear reasonable in order to uncover quantitative correlations with
representative claim. Thus, focus groups or structured interviews may triumph future
research attempts.

2.3.2.1 The questionnaire

The questionnaire possesses a great variety of levels, which all relate to the contact
towards the interviewee. Differentiations are done between the face-to-face
interview and the non-personal opinion poll. The personal interviews may occur at
the respondent’s home (in-home), on the street (in-street) or in especially for such
purpose developed test-studios (in-hall). Telephone interviews (CATI), written and
online questionnaires account for non-personal interviews. Whatever type has been
selected, interviews may deliver in-depth perspective from a limited sample.

With respect of the purpose and scope of this thesis, a Japanese derivate of such
survey has to be peered at a little closer:

“Especially in Japan (…) one should reckon with a strong interviewer's influence and
imprudent or casual answers while employing the verbal survey. Meanwhile the
written method accounts for low return rates as in accordance to local hegemonic
mentality only especially vigorous subjects answer without embarrassment towards
the interviewers. With respect to the Japanese (…) environment one should
particularly consider a combination of written and verbal enquiry – the so-called
‘ryuchi’-survey.”50

48
cf. Grothe (2000), p.99
49
cf. Enneking (2004/2005), p.75
50
Park, Ki-An (1982), p.185
Market Intelligence as a tool for leveraging business success page 16

Pursuing this type of census, questionnaires are delivered to the interviewees’

homes for completion within a given timeframe. After it’s expiry they will personally
be recollected in order to assure a relatively high return-rate, a low enquirer
influence and a complete understanding due to the possibility of counter questions
and explanation at collection time. Thus, disadvantages of either style (verbal or
written) are seemingly resolved.51

However, ‘ryuchi’-surveys have their very own disadvantages:52

- The date of inquiry is not uniform,

- Third party influence (e.g. family members) is not conceivable, and
- Costs seem to be higher at first.

Over all, within the content of Market Intelligence, respectively the systematic
process for legally gathering, analyzing, and disseminating actionable
53
information about markets and competitors to decision makers, surveying
competitors’ customers or suppliers might lead towards precious business
advantages.

2.3.2.2 Further methods

Another frequent method for primary research is monitoring. Similar to experiments,
(jet another technique) this method appears to be reserved for industry and retail. It
will only find limited application in a global chemical company like BASF, as end-
consumers are not its target.

Monitoring allows a systematic compilation of observable circumstances, like

behavior patterns and expressions, but delivers no answers when attitude and
preserved values are searched for. On the top of everything it is bounded due to
privacy laws, as attendants are not aware of their participation, whereas
experiments require their attendees to ascertain independent variables
(advertisement), oblique variables (brand equity) and the influence of disturbances
(interest groups like Greenpeace). A derivate of the questionnaire, the consumer-
panel, is nothing less than a repetitious survey of the same interviewees or
companies regarding the same topics.54

51
cf. Park, Ki-An (1982), p.186; Löwenbein (1996), pp. 32 et seq.
52
cf. Okumura (not available), p.9
53
cf. Internal Presentation “Concept of Intranet Website Market Intelligence Function Asia Pacific”, p.5
54
cf. Enneking (2004/2005), pp. 25 et seq.
Market Intelligence as a tool for leveraging business success page 17

2 .3 .3 Sectors (of investigation)

“There’s very little that a BI might not encompass.” 55 Thus, Market Intelligence
claims to guarantee benefit towards all divisions of an enterprise by transforming
data into information.56 Such data derives from various different locations whose
solutions have historically been treated as isolated applications. It will be the task of
MI efforts to implement further linkage, but the intelligence puzzle (…) requires a
great deal of patience, creativity and analytical capability.”57

Figure 4: Scope of the Market Intelligence work

(based on: Website Concept MI - Concept of Intranet Website Market Intelligence Function Asia/Pacific,
Nov. 2004, page 7)

2.3.3.1 Marketplace
Knowing who your best customers are is crucial. Knowing where to find more like
them is equally important. Understanding which market areas offers the greatest
potential and how that potential can be realized most profitably is the true starting
point of BI within the marketplace. But an analysis of the marketplace embraces
further activities:58

- Define and segment the market

- Qualify market size and market share for particular products/services in
existing or new markets
- Forecast the market development (capacities, demand)
- Analyze industry trends and drivers, as well as possible substitutes
- Determine development potentials that match the competitive strengths
and represent the greatest opportunity for growth
- Provide findings for product positioning and pricing, as well as sales and
marketing initiatives
- Determine who your competitors are

55
Minatel (2004), p.2
56
cf. Bach (2001), pp. 1 f.
57
Hamretors (1992), p.119
58
cf. Marketplace Analysis: http://www.hartehanksmi.com/default.aspx?p=marketplaceanalysis
Market Intelligence as a tool for leveraging business success page 18

- Figure out competitor’s new plant investments and their size, as well as
their plans to export to other regions
- Calculate industry migration
- Keep track of new regulations and legislation changes

Observing the marketplace is BI’s part that could be best characterized as true
market research.59 It encompasses the complete process of solving market related,
microeconomic problems through objectively observing the market development and
the company’s overall environment. It is commonly referred to the selling market, but
draws its importance as well from the supplying market.

2.3.3.2 Customer

The company, as well as its subsidiaries around the globe, does not gain its market
share by selling finished goods to any consumer, but by supplying distributors and
direct customers for trade or further processing instead. That, and the fact of a far
broader scope of Market Intelligence, compared with the one of market research,
causes a limitation in examining consumer-based intelligence in the common known
marketing approach. The purchasing patterns of industrial customers are not subject
to manipulation through packing, placement and promotion. They are more
concerned about quality and usability. However, this constraint does not permit to
neglect the role of the client itself, as it is still a decisive factor for success. In fact
initial MI efforts within BJL will mainly focus on processes with customer orientation.

The sector of investigation, drawing its information from the customer, is closely
connected with CRM, as it should enable decision-makers to oversee the complex
inter-relationship that exist between customers, suppliers and business partners.
Determining the characteristics that distinguish customers (customer profiling and
segmentation) facilitates profitability-adjusted CRM, as customers should not be
treated equally. 60 Furthermore, a detailed knowledge about loyalty drivers and
overall business behavior enables adjustment towards the (future) purchaser’s
needs and performance in order to retain (and acquire) the company’s “number one
asset”. Their requirements and purchase behavior can predict future product needs
and potential value (customer value). In conjunction with information regarding their
current supplier and its price level,61 this potential value might even be increased. As

59
In the author’s opinion, market research, as well as CRM, KM, CI and SCM is all done within a
greater framework of Market Intelligence. Each being a part of the whole and contributing towards
competitive advantage through smart linkage of relevant data.
60
Wittchen (2001), p.1
61
cf. Internal Paper “Example Market Study - Deliverables Paper Asia”, p.2
Market Intelligence as a tool for leveraging business success page 19

“customer satisfaction is an essential condition, but (does) no(t) guarantee for

customer retention”, 62 BI becomes even more important to monitor customer
environment and predict business threatening changes.

2.3.3.3 Product

As the sectors of investigation are closely linked, investigation purposes become

recurrent. In addition to overlapping activities, product investigation should analyze
the current market demand and use the historic demand growth in conjunction with
further environmental issues to forecast future demand growth. Such issues might
revolve from domestic businesses, imports from other countries/regions or even
from the threat of substitution of products or entire application fields.63

Concept testing might uncover new product ideas and deliver new product concepts,
while product feature setting can determine the exact combination of features, or
bundling of products, that is most attractive to specific target markets. With precise
intelligence on price elasticity, the sensitivity in demand for products and services
based on the changes in price can be measured.64

2.3.3.4 Sales and marketing

The implementation of effective and measurable sales and marketing strategies is

pivotal to the general business success. Those strategies have to be aligned with
the brightest prospects of market opportunities and with precise target identification.
This includes the prediction of responses to particular product or service offers, the
measurement of the impact of campaigns and the recommendation of value-added
services and actions.65

2.3.3.5 Competitors

The latest buzzword for the competitor sector of investigation is Competitive

Intelligence (CI). It is bound “… to find and develop information on competition,
competitors, and the market environment. Unlike business espionage, which
develops information by illegal means … CIP (Competitive Intelligence programs)
uses public information – all information that can be legally and ethically identified
and accessed.”66 That information is composed of accurate and current data of key

62
Internal Presentation “Customer Satisfaction & Customer Retention”, p.16
63
cf. Internal Paper “Example Market Study - Deliverables Paper Asia”, p.2
64
cf. Product Analysis: http://www.hartehanksmi.com/default.aspx?p=productanalysis
65
cf. Sales and Marketing Analysis: http://www.hartehanksmi.com/default.aspx?p=
salesandmarketinganalysis
66
Malhotra (1996), p.1
Market Intelligence as a tool for leveraging business success page 20

competitors’ market share, the name and data of their manufactures, their product
range, capacities and utilization rates (output) in the past, as well as its future
development. Other necessities in CI’s data gathering are a competitor’s investment
and expansion plans, his business model, his sales and distribution structure and
his technical support. A backward integration into the raw materials of competitive
products can identify the feedstock supply and thus enabling certain benchmarking.
Next to existing threats, it is also obligatory to identify and analyze emerging new
competitors,67 as a common mistake of MI is to look at rival’s “… existing resources
rather than their resourcefulness.”68 The sources and techniques are equal to the
ones of general Market Intelligence.69

2.4 Content mining (analysis of the appropriate information)

70
Considering the Market Intelligence pyramid, gathering tons of data and
information will not gain any competitive advantage. It has to be revised and filtered
in order to get full value from it and receive strategic answers.

While content discovery71 only collects and generates information, content mining is
the actual source of knowledge and intelligence. With an overall data management
strategy and an integrated thorough perception of structures, patterns and links, a
potential loss of knowledge, caused by immense information accumulation that is
not readily accessible or in usable form, can be prevented and time needed to
obtain intelligence can be reduced.

Within the information age, quantum and complexity of data steadily increases.
Companies acquire, process and archive more and more data digitally. As a result,
data stocks are obtained, which are (supposed to be) unproblematic to analyze.
Thus, knowledge can now be generated from unstructured data as well. Such data
is found in customer e-mails (that include feedback about service and products),
intranet-documents like memos or presentations (that reflect business expertise),
Lotus Notes® databases (holding video-sequences, CAD-graphs, presentations and
more), technical reports (describing new technologies) and textual contents of web
pages, newsgroups and discussion panels (containing information on the total
business environment and competitor activities).72

67
cf. Internal Paper “Example Market Study - Deliverables Paper Asia”, p.2
68
Hamel; Prahalad (1989), p.72
69
cf. Chapter 2.3.1.2 “Where to obtain the data from: public or private sources?”
70
Chapter 1.1 “Market Intelligence in an International Context: Purpose and Scope”
71
cf. Chapter 2.3 “Content Discovery (Retrieval of appropriate data)”
72
cf. Gentsch (2000), pp. 1 f.
Market Intelligence as a tool for leveraging business success page 21

The results ought to be implemented into a business tracker for managerial use and
reporting tools for distribution, marketing, content- and product management. 73
Moreover regular reports, instant alerts, spotlights or even an in-house symposium
shall facilitate knowledge transfer. As the half-life of reports will drastically decline,
they gain event character and become a fast moving, disposable commodity.74 This
aspect emphasizes the necessity of a continuous circle of Market Intelligence
instead of a solitary effort.

A sincere content mining, which includes all company-wide and externally

accessible data, as well as the company’s data repositories, help proving John
Naisbitt wrong, when he stated: “We are drowning in information, but coveting
knowledge.”75

2.5 Bringing the MI acknowledgements into action

“Without relevant, reliable information provided in a timely manner, decision-makers
are forced into sub-optimal decisions based on assumptions and gut instinct. This
lack of fact-based decision-making places the company at risk.”76 With an optimized
Market Intelligence at hand, such risk is minimized and various business fields and
activities are supported or may benefit. Among those, the following point out
especially:

- Advertising, Balanced Scorecards, Benchmarking, Brand Equity,

Budgeting, Competitive Intelligence, Concept Design, Consolidation,
Costumer Relationship Management, Dashboards, Decision-Support,
Development, Efficiency, Forecasting, Human Resources, Idea Support
and Innovation, Investment, Market Research, Merchandising, Mergers
and Acquisitions, Planning, Pricing, Packaging, Performance
Management, Product Management, Promotions, Quality Management,
Reporting, Research and Marketing, Restructuring, Risk Assessment,
Sales Management, Segmentation, Strategic Planning, Supplement
Planning, Supply Chain Management, Target Determination, Value-
Adding Processes, etc.

This list may also include “… internal planning and operations for developing
alternative competitive scenarios, structuring attack plans and evaluating potential
competitive moves.”77

73
cf. Rodatus, Peitzker (2001), p.4
74
cf. Gilg (2002), p.2
75
Naisbitt (1984), p.41
76
Balogh (2003), p.1
77
Malhotra (1996), p.3
Market Intelligence as a tool for leveraging business success page 22

Overall, Market Intelligence has an encouragement function regarding innovations,

as it helps identifying chances and trends. It should assist to discover threats, risks
and opportunities early and support the cultivation of knowledge within the company.
Furthermore, uncertainty avoidance takes place as decision-making shifts from
being subjective to objective. Plans get structured in a superior manner and
information is purified (thus becoming knowledge) and easily accessible. Some day-
to-day business becomes automated and information synergies allow a closer
inside-view of running businesses. Reports may suggest adaptation, contingency,
an offensive, opposing, passive or redeployment strategy. However, with IT-
supported BI, all those reports and decision-supports may be issued with appealing
graphics and pleasant background-pictures – supported by corporate design.78

“Information itself does not empower people to act.”79 – Market Intelligence does.

78
cf. Schulzki-Haddouti (2001), p.2
79
Gabriel, Dittmar (2001), p.19