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Chapter 2 Instructor Shan A. Garib, Winter 2013

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Overview Raw data alone are not enough to develop a company’s market intelligenceData must be analyzed to give meaning and put in context to generate insights - this process is called…

Market Intelligence: acquire and analyze info to understand the market, to determine current and future trends and preferences and to assess changes in the business environment

Competitive Intelligence: analyzing info about all aspects of competitive environment to formulate plans and strategies and making decisions

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Overview

Competitor Intelligence: gathering and analyzing information about competitors’ actions and business strategies

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What is Market Intelligence?

Intelligence: ability to learn or understand, the ability to apply knowledge to manipulate one’s environment or to think abstractly, or the act of understanding

When companies develop market intel. they seek to take raw data and process them to develop knowledge

Process involves filtering the information, ensuring it’s validity and selecting relevant parts and deducing some meaning from them

Market intel. Includes tacit knowledge (personal knowledge not easily transferred) and explicit knowledge (knowledge easily communicated)

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Type of Market Intelligence

Depends of target market and strategic objectives

For each global market being considered, researchers should gather 4 classes of info:

◦ The factors shaping the political, legal and business environment - access general market conditions including risk

◦ The market infrastructure – evaluate the difficulties and costs with distribution

◦ The forces affecting the market – market size, consumer trends and market dynamics and potential sales/profit

◦ Product-specific or service-specific data – eval. suitability of companies product and determine adaption, if needed

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Type of Market IntelligenceInformation about the political, legal and business environment

Political Stability Level of pol. stability is likelihood that government will be

destabilized by unconstitutional means May result in frequent changes in regulations and laws,

increase in prices

To develop answers to the level of political stability, find answers to the following questions:• How stabile is the government and how often does it

change?• What is the support for regime?• Strength and nature of opposition

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Type of Market IntelligenceInformation about the political, legal and business environment

Hostility to foreigners

To develop answers to the level of hostility, investigate the following issues: •General attitude towards foreigners, foreign trade and foreign investment•The key decision makers and their attitudes and preferences toward foreigners

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Type of Market IntelligenceInformation about the political, legal and business environment

Control over Commerce Can lead to situations feel pressured to bribe to

secure permits to conduct trade Research will help ID such companies

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Type of Market IntelligenceInformation about the political, legal and business environment

Weak Legal Protection for Property and Intellectual Property Rights Essential for economic growth and innovation

Researchers should investigate the following areas: •What property and intellectual property rights are recognized. How protected and enforced?•Recourse available for losses?

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Type of Market IntelligenceTax Regimes

Researchers should investigate the following questions: •What are the tax rates?•How many companies export to target country?•How successful are competing companies?•What prices do they charge?•What are their brands? Level of Brand recognition?

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Type of Market IntelligenceCustoms Rates

Researchers should investigate the following items: •Customs rates•Valuation methods•Clearance Procedures•Procedure for Appeals

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Type of Market IntelligenceEconomic Conditions

Researchers should investigate the following items: •Inflation & Interest rates and trends and expectations•Who sets i

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Type of Market IntelligenceForeign Exchange Rates

Researchers should investigate the level of risk by following items: •Exchange rates and trends and expectations•Currency Policies controls and restrictions• Who sets currency policies

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Type of Market IntelligenceCurrency Controls

◦ Measures like interest rate changes, financial laws, and printing of money to regulate currency value

Business Conditions◦ Business taxes, availability of loans and laws signal

availability and strength of local partners and risks of bankruptcy

Researchers should investigate the following items: Number of large companies? And tax ratesBankruptcy rate and how are failed businesses treated

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Type of Market IntelligenceInformation about the market infrastructure

◦ To determine challenges and costs involved in getting products and service to foreign customers

Researchers should investigate the following items: •Geography•Available transportation infrastructure•Telecomm networks•Distribution channels

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Type of Market IntelligenceInformation about the market infrastructure

GeographyResearchers should investigate the following items: •Geography – total area of country? Major centers?•Topography – features of terrain?•Climate – mean temps? Seasons?

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Type of Market IntelligenceInformation about the market infrastructure

Available transportation infrastructureResearchers should investigate the following items:

How much trade volume can network carry? Roads – key linkages? % country accessible by roads? Rail networks – national rail coverage? Air transport – major air carriers? Bridges and Ferries – how many major bridges are there? Ports – where are the major ports?

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Type of Market IntelligenceInformation about the market infrastructure

Communications StructureResearchers should investigate the following items:

Phone and Internet Services – availability? Speeds? Reliability? Media – size? Reach? Rail networks – national rail coverage? Mail Services – reliable? Frequency?

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Type of Market IntelligenceInformation about the market infrastructure

Distribution channelsResearchers should investigate the following items:

Retail networks – most important retail chains? Size? Commission do they charge?

Sales Agents – who are they? Wholesale Distributors – who are most important? Size?

Capabilities? Located? Transportation Companies – who are the carriers? Costs?

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Type of Market IntelligenceInformation about the Services available in the market

◦ To determine challenges and costs involved in getting products and service to foreign customers

Researchers should investigate the following items: •Power and Energy supplies – how available are the energy supplies? Reliability? Costs?•Business Services – which marketing orgs. Advert agencies, bus. Associations and key contacts will be helpful?•The Labour Market – general level of education in workforce? UN rates? Extent of unionization?

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Type of Market IntelligenceInformation about the forces that affect the market

◦ Two main areas to assess Competitive and country environment

•The Competitive environment is assessed through Porter:

• Rivalry's• Buyer Power• Supplier Power• Threat of Substitutes• Barriers to Entry

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Type of Market IntelligenceInformation about the forces that affect the market

•The Competitive environment is assessed through Porter:

• Rivalry's• Number of companies in the market – higher, more intense• Slow Market growth – slower more aggressive• High Fixed costs – companies work towards EOS and

increase products for sale in turn increases competition• Low Switching Costs – lower, more pressure to keep

customers happy

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Type of Market IntelligenceInformation about the forces that affect the market

•The Competitive environment is assessed through Porter:• Threat of Substitutes• More, the more intense competition

• Buyer Power• More power when there are few buyers or when they buy in bulk• More power, less competition

Supplier Power More power when fewer or when cost to switch suppliers is high

for buyers More power, more competition