Pitfalls of competitor profiling
By Karen Rothwell
Competitor profiles are one of those competitive intelligence (CI) topics that can generate wide differences in opinion. Profiles can provide information on a competitor's strengths and weaknesses, allowing your firm to assess how to best compete with that firm from a pricing, product or service standpoint. Access to this information can give your firm a strategic or defensive edge as you plan how to compete against them. This can be helpful during a new proposal, the renewal process, or longer-term, as firms develop their annual plans and budgets.
I believe competitor profiles can have a role for individuals responsible for gathering intelligence on existing companies they compete with, or for new players to the market. But beware of the many pitfalls associated with them. In my experience, the biggest pitfall associated with competitor profiles is not having an understanding of how to use them effectively.
Competitor profiles provide value in establishing a reference point for CI analysts to perform competitive analysis. All competitor profiles vary slightly, but most should contain basic data required to analyze a company's competitive position. This includes data such as:
- Financial highlights and ratios
- Executive management team
- Product and service offerings
- Targeted customers
- Distribution model and network
- Current business strategy
- Pricing patterns and trends
- Recent company events (e.g., acquisition)
For some firms, competitor profiles are for the purview of the competitive intelligence team only. Other firms disseminate competitor profiles selectively but not as true intelligence deliverables, and especially not to senior management. Here is a list of common pitfalls you want to avoid when utilizing competitor profiles.
Pitfall No. 1: Passing on competitor profiles as a deliverable to senior management. Resist the desire to pass on a profile as a CI deliverable despite the time that can go into producing one. Competitor profiles can be very lengthy, which would overwhelm most senior executives who are short on time and only interested in focused findings.
Pitfall No. 2: Not presenting profiles in a succinct manner. Since there is the potential to report on vast amounts of detailed information, organize the profile into logical sections, providing the most important and current data for each section. It is very easy to turn a profile into an irrelevant data dump. Provide links to other data-rich sources when possible to cut down the size of the profile. For example, reference an SEC site or public firm's corporate Web site for previous years of financial statements instead of cutting and pasting the previous three to five years in your profile.
Pitfall No. 3: Preparing a competitor profile for an internal customer that has not thought through what their specific key intelligence questions are. Many customers who unclear on their intelligence requirements will ask for an entire profile to be produced -- "tell me everything about ABC competitor." Push back on these requests. Try to identify what exactly your internal customer is looking to answer and how that information will be utilized. This will help pinpoint what type of intelligence deliverable you need to produce.
Pitfall No. 4: Expecting a traditional competitor profile to provide analysis on competitor future intent or strategic moves. A competitor profile is just that, a profile that contains static data on a competitor, but not detailed analysis. The profile is useful because it should contain much of the data required to begin a competitor analysis. Be sure to set expectations with internal customers on what a competitor profile can and cannot provide.
Pitfall No. 5: Misusing the term competitor profile. If what you are providing is true competitor analysis, then you should rename your competitor profile to XYZ competitor analysis for instance, so the title is indicative of the type of CI document you are producing -- intelligence rather than information.
As stated up front, competitor profiles have a role, but they are not a deliverable unto themselves. They should be used as references upon which an intelligence analyst can base more detailed analytical work.
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