Competitive Intelligence on a Shoestring
Does the following scenario sound familiar to you? You have an idea for a product or service, and you're reasonably certain the market for the product exists, so now you want to check out the competition. But you're in startup mode or have very limited financial resources. So just how do you go about investigating your competitors and gathering information without spending a fortune?
The good news is, there are a number of free and low-cost options available to help you collect that information. Here are six budget-friendly choices:
1. Network. Tapping into your network of friends and associates is an excellent way to leverage their knowledge of your competition. Odds are, you'll be launching a business in an industry you're familiar with and have some history with. Former business associates are an excellent resource. Before you start making those calls, though, take a minute to collect your thoughts and make a list of the information you want to gather (things like pricing, service, reputation and so on). Once you've determined your objectives, start contacting your network to see what they know about your potential competition.
2. Talk directly to your competitors. What better source of information on your competition than the competitors themselves? Depending on the nature of your business, you'll either be able to speak directly with the competition, visit their place of business, call them on the phone or visit their booth at a tradeshow. The Society of Competitive Intelligence Professionals (SCIP) provides some guidelines on ethical conduct when talking with the competition.
3. Check out your competitors' websites. If you're not comfortable speaking directly with your competitors or this just isn't feasible, the next best way to get to know your competitors is a quick visit to their website. Websites contain a wealth of information regarding your competition and offer a good starting point for gathering a lot of information very quickly. Also, the information you gather while searching your competitors' sites can be used to help you refine additional internet searches on your competition.
The "About Us" or "Company" link will usually have information regarding the company's financial results, their management team, any press releases and other useful information, including whether the competitor is public or private. If the business is a publicly traded company, then you have a host of other resources available to check them out, which we will cover a little later. If the competitor is a privately held business, it'll be more of a challenge to obtain information but it can be done.
The "Management" or "Team" link will list the companies' executive team; you can use this information to contact the executive team directly or search for additional information on the target company. The "Press Releases" section should contain information regarding your competitors' partners, suppliers and customers. "Product" and "Services" pages contain data sheets, brochures, white papers and other reference material that you can use to compare what they have to offer against your product or service. The "Career" pages should provide an indication of positions being posted and, if you read between the lines, can provide some insight regarding which products or services are doing well.
4. Investigate the companies' Security Exchange Commission (SEC) filings. Publicly traded companies in North America and some other countries must file documents regarding the nature of their business and its financial performance. This information is intended to provide transparency and protect shareholders; however, because the documents contain a good deal of information related to the companies' industries, markets, business structure, sales and overall performance, they'll also be useful to you.
In the United States, companies must file a detailed annual report known as a 10K report (other countries have similar type documents). The 10K, or its equivalent, provides an excellent source of information on the competition. SEC documents, including 10K reports, can be found on Free Edgar, MSN Money and Yahoo Finance, among others. (Try looking for an "SEC filings" or similarly worded link on these sites.) Or you can contact the SEC directly. (For the SEC in the United States, go to http://www.sec.gov/edgar.shtml. For the Securities Administration in Canada, go to http://www.sedar.com.
If you're interested in a broader perspective on the competitive environment, you can use Standard Industrial Classification (SIC) codes to gather information on an industrial sector. SIC codes are categories of similar types of companies--for example, SIC 2750 identifies companies in the commercial printing industry--and there are reports that summarize financial results of the companies within each SIC code. To determine the SIC code for your industry, you can do one of two things: You can track down the 10K report of your closest publicly traded competitor and look it up in the report. Or you can visit the U.S. SEC site to view the complete list of SIC codes and choose the most appropriate one for your business. There are also a number of websites, such as the NAICS (North American Industry Classification System) Association and Performance Plus, that have tools to generate industry-specific SIC code reports for free or at a moderate cost.
5. Search online at the Dun & Bradstreet or Hoovers sites.Dun & Bradstreet compiles credit reports, which contain information on companies' payment and credit histories, on most small businesses in North America. These reports can be ordered on an individual basis, or you can purchase a subscription service at a reasonable rate. Hoovers also generates company reports on most North American businesses, but these reports contain revenue, employee and general information regarding the companies. The reports from Hoovers range in content and price from about $10 to approximately $150, depending on the amount of content you purchase. Both Dun & Bradstreet and Hoovers offer a range of other services you can utilize when gathering data on the competition. Dun & Bradstreet, for example, allows you to look up corporate hierarchies, so you can determine just who owns your competitors, and find out your competition's corporate structures. Hoovers offers the ability to search for companies based on their location (country, state, metro area), number of employees, annual sales and more.
6. Expand your internet search by using search engines such as Yahoo! or Google. There's an incredible amount of information available on the internet; however, finding information that's relevant to your purposes can be a challenge. Knowing what type of information you're looking for before you start will help refine your search. For example, if you're searching for product pricing information, use a keyword phrase like "price book" or "list price" plus the name of the company or the name of their product. A search like this should yield distributors that carry online pricing information regarding your competitor. If you're searching for product information, use the competitor's product name in the search and a keyword phrase like "technical manual" or "product overview."
The more specific your search criteria, the better the quality and probability of finding the information you're looking for. The combinations and permutations of search criteria are vast, so knowing exactly what you're looking for and finding the appropriate search terms requires some creativity and experimentation.
There are many other sources you can use to find the competitive information you need. However, I've found that the free and low-cost sources listed in this article provide the best value when you consider the time you'll invest and the amount of information you'll gather. Good luck on your search!
Ian Graham is the principle and founder of Ottawa, Canada-based Klondike Marketing and Consulting, which specializes in business/market planning and competitive intelligence. Ian has over 15 years business experience working for a number of leading telecommunications companies and has earned his MBA from the University of Ottawa.