What is Competitive Intelligence and How Can it Be Leveraged for Business Success?

Competitive Intelligence in A Nutshell

Have you ever wished you could be a fly on the wall of your competition’s board room – or that you could get a peek at their earnings before they came out? 

These may be out of reach – but fortunately, there are legitimate and effective ways to gain insights of similar value through competitive intelligence. This process allows businesses to lawfully and ethically gather and analyze crucial information about both their competitors and broader market dynamics. 

But what exactly is competitive intelligence? How is it collected, and what makes it different from corporate espionage? And what tools and platforms can be harnessed to facilitate the process?

Read on to learn all about competitive intelligence – and why it is so important for business decision-making. Some of the topics that will be covered in this article include:

• The definition of competitive intelligence.
• Different types of competitive intelligence and methods for gathering it.
• A concrete example of how competitive intelligence analysis is conducted.
• Practical tools that make it easy to conduct quick and efficient competitive intelligence analysis. 

What is Competitive Intelligence? 

Competitive intelligence is the process of systematically collecting and analyzing information about factors external to an organization that may impact its competitive edge. The term “competitive intelligence” can also refer to the information, insights, or knowledge derived from this process.

While gathering data on the organization’s competitors is one important facet of competitive intelligence, the scope of the endeavor is actually much broader. Competitive intelligence seeks to gain actionable insight into all the various elements – from general market trends to evolving customer preferences – that may affect an organization’s strategic positioning. 

Unlike corporate espionage, which involves spying on competitors through illicit means like hacking, wiretapping, and stealing documents, competitive intelligence is completely aboveboard, as it entails gathering and synthesizing only information that is lawfully available.

Types of Competitive Intelligence

Professionals commonly distinguish between two different types of competitive intelligence: Strategic intelligence and tactical intelligence. Strategic intelligence is concerned with the big picture – focusing on broad trends and market dynamics that may influence a company’s long-term competitive positioning. It aims to answer questions like:

• How is our industry’s competitive landscape evolving? Which new players are emerging and how likely are they to gain market share?
• How will changing consumer preferences and emerging technologies influence demand for our products over the next five years?

Tactical intelligence, on the other hand, is more short-term in nature and aims to inform specific decisions or respond to concrete challenges. It focuses on questions like:

• Where are key competitors opening new stores – and how should we respond?
• Where is there untapped demand for our offerings, and how can we adjust our site selection tactics to better identify potential expansion areas? 
• How should we adjust our merchandising strategy to compete more effectively and capture additional local market share? 

Competitive Intelligence Gathering

Competitive intelligence can be collected in a variety of ways. Some of the most common sources include:

• Publicly available information. Company websites, social media accounts, press releases, financial reports, patent filings, customer reviews, and news articles can all be invaluable sources of information about a given business’s competitive environment. 
• Data collected in the field. Businesses can learn a lot about their rivals’ business practices and performance by visiting competitors’ venues, trying out their products, and conducting consumer surveys. In retail, chains sometimes hire mystery shoppers to patronize competing brands and report back on their experiences.
• Proprietary datasets and specialized competitive intelligence tools. Given the importance of competitive intelligence, many businesses invest in paid products, such as proprietary data sets and comprehensive industry reports, that offer insights that can’t be found just by trawling the web. Website analytics firms, for example, provide businesses with troves of data on competitors’ online marketing strategies, website traffic and engagement. And in the offline world, location analytics platforms allow businesses to monitor the performance of brick-and-mortar competitors.

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Methods of Competitive Intelligence Analysis

Once collected, raw competitive intelligence must be rigorously compiled and analyzed in order to yield actionable insights. This often involves combining multiple data sources to generate relevant conclusions. Whatever the specific method of analysis employed, a competitive intelligence report should provide coherent, actionable insights that can effectively guide decision-making. 

Some common forms of competitive intelligence analysis include:

‍SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

SWOT is a data-driven strategic planning technique that seeks to assess a given company's competitive positioning. The first two steps of SWOT analysis – strengths and weaknesses – are inward-looking, focusing on the company’s own performance, financial strength, and other factors. Strengths can include things like impactful branding, a strong balance sheet, or a growing customer base. Weaknesses may include things like underperforming venues, customer service issues, or inadequate advertising resources.

The second two steps of SWOT analysis are outward looking, focusing on external forces that may hinder or enhance a company’s future performance. Threats can come in the form of increased competition, potential supply chain disruptions, changes in consumer sentiment, or disruptive technologies. Opportunities, on the other hand, may include untapped markets, partnership opportunities, or positive regulatory changes on the horizon. 

SWOT analysis can be used to evaluate one’s own company – but it can also be used to evaluate competing businesses for the purposes of competitive benchmarking. 

PESTLE Analysis (Political, Economic, Social, Technological, Legal, Environmental)‍

This type of competitive intelligence analysis focuses on the various macro-environmental factors that may impact a company’s strategic edge. Unlike SWOT analysis, which considers both internal and external variables, PESTLE is concerned with the wide landscape a company operates in. 

PESTLE analysis accounts for a broad range of factors, including: 

• Government actions and policies; 
• Evolving political trends; 
• Inflation, interest rate fluctuations, economic growth or recession;
• Society-wide demographic and lifestyle changes, shifts in consumer attitudes and opinions, cultural norms;
• Technological innovations and developments;
• Evolving legal frameworks;
• Ecological considerations.

Porter’s Five Forces Analysis

‍This method, developed by Harvard Business School Professor Michael Porter, focuses on the broader industry that a company belongs to. It evaluates the industry’s competitiveness and profitability by analyzing five key forces: 

• The competitive landscape: How many competitors are there, and what kind of hold do they have on the market? 
• The power of suppliers: How dependent are companies in this industry on specific suppliers? Is there a broad range of potential suppliers or do one or two big players dominate the market? 
• The power of customers: How large is the potential customer base, and how much negotiating power would individual customers have? 
• The threat of new entrants into the industry: How easy would it be for new players to enter the market? What are the barriers to entry?
• The threat of substitute products or services: How easily can the industry’s offerings be replaced? 

SWOT Analysis in Practice: A Competitive Intelligence Example

To better understand how competitive intelligence works in practice, we’ll delve into a practical scenario – using the specific example of a retailer conducting SWOT analysis informed by location data.

Imagine you run a 50-unit chain of sporting goods stores. You are considering an expansion and want to conduct a thorough competitive intelligence analysis using the SWOT framework. Your evaluation process may include some of the following competitive intelligence data points:

Strengths:

• Sales data shows that 30 of your stores experienced significant revenue growth over the past year. Foot traffic data confirms that visits to these stores increased over the same period by 8.0%-12.3%.
• Location data shows that the overall number of visits to your chain increased by 11.0% in Q3 2023 compared to Q3 2022. You opened five new stores in 2023, and some of that increase is due to fleet expansion. But the average number of visits to each location also increased by 5.0% year over year (YoY) – vindicating your growth strategy. 
• Location data also shows a significant uptick in customer loyalty: Some 15.0% of your customers visited the chain more than once in Q3 2023 – up from just 7.0% in Q3 2022. 
• Foot traffic data, combined with demographic and psychographic data, shows that your customer base has diversified over the past four years: Although your stores are relatively upscale, the share of average-income shoppers in your stores’ captured markets jumped by 7.0%. Also, locations that broadened their assortment of high-end yoga equipment saw an appreciable increase in the share of yoga fans over the same period. 

Weaknesses:

• Sales metrics show that 15 of your venues are underperforming – with eight seeing stalled growth, and seven experiencing significant YoY losses. Location data reveals that of these seven venues, only four saw dips in foot traffic, while three actually saw visit increases. The fact that sales are declining at stores that are receiving more visits indicates a conversion problem – meaning that fewer visitors to these stores actually buy something.
• Foot traffic analytics also reveal that a smaller percentage of customers are visiting your chain on the weekends this year, and that on average, they are spending less time in-store. 
• Your recent promotions have had diminishing returns: Foot traffic data reveals that your most recent basketball promotion resulted in just a 107.4% visit spike, compared with 220.4% last year. 

Opportunities:

• Trade area analysis reveals that the potential markets of twenty locations are over-indexed for cyclers – indicating an opportunity to attract these customers with an expanded assortment of biking equipment and paraphernalia.
• Cross-shopping data shows that an increasing share of shoppers at your chain visit local gyms and coffee chains – making these nearby businesses ideal partners for potential promotions. 
• A thorough void analysis of vacancies in nearby regional malls uncovers several centers with visitor profiles similar to that of your own, and strong, untapped demand for your offerings – making them the perfect sites for new stores.

Threats:

• A SWOT analysis of competing chains reveals that your main competitor is seeing a 33.0% chain-wide YoY increase in visits, as well as significant upticks in customer loyalty and dwell time.
• A demographic analysis of your trade areas and those of your competitors shows that they are more successful at attracting Gen Z customers than you are. Given the recent influx of younger residents to your store’s areas, this presents a significant challenge to your future growth. 

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Of course, these are just a few of the kinds of data points that may inform your assessment. SWOT analysis seeks to account for all the various factors – from the strength of your supply chain to your relative success at attracting and retaining top talent – that may impact the competitive positioning of your company. 

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Placer.ai: Your Competitive Intelligence Solution

Competitive intelligence can be daunting. Collecting all the relevant data is a difficult task – and even once you have it, information overload can make it difficult to pinpoint significant trends and identify actionable insights.

Competitive intelligence software that aggregates and analyzes relevant data sets – including location analytics – can help overcome these hurdles. Placer.ai’s user-friendly and privacy-respecting location intelligence platform harnesses AI and advanced data science to provide unprecedented visibility into consumer behavior across the physical world. And with Placer’s Data Marketplace, customers can quickly and efficiently layer a variety of demographic and psychographic datasets on top of foot traffic data, to segment audiences and understand consumer profiles across industries, regions, chains, and individual venues. 

Placer offers businesses the tools they need to conduct both strategic and tactical competitive intelligence – analyzing everything from broad market and consumer trends to the specific performance of competing companies. 

To read more about how Placer.ai can help you take your competitive intelligence efforts to the next level, check out our solutions for retailers, shopping centers, brokerage firms, CPG companies, and others.  

The Future of Competitive Intelligence

Competitive intelligence is a must-have for any organization seeking to maximize its strategic advantage. And in today’s marketplace, location data plays a key role in evaluating a given company’s strategic positioning, and in assessing the strategies, strengths, and weaknesses of the competition.