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Competitive Intelligence: How to Keep Pace with Emerging Markets

Keeping your finger on the pulse of emerging markets in the global business world through your competitive intelligence work enables you to preempt competitors by

  • Planning and perhaps even starting to execute your response before the market fully emerges.

  • Mitigating the financial damage that may result from an emerging market that draws profits away from your traditional market. By knowing about the emerging market, you can start to reduce the damage before the event begins to impact your bottom line.

In its broadest interpretation, an emerging market is one that arises where no such market existed previously, usually in the context of the global marketplace. For example, when analysts talk about emerging markets, they’re often referring to Brazil, Russia, India, and China.

An emerging market may also arise out of a new use for a product, as in the case of corn being used to produce ethanol. In the United States, the federal government’s mandate that gasoline contain 10 percent ethanol fueled an emerging market for biofuels.

When conducting analysis on emerging markets, focus on key drivers. What are the forces that drive the emerging market you’re observing or expecting? Key drivers may include anything from technology to economy to government regulations or even consumer sentiment. After you identify the key drivers, you know exactly where to focus your future CI efforts.

When you spot a declining market, look for an emerging market in another area. A declining market is usually the product of an emerging market.

How to watch out for counterfeit shifts

Keep an eye out for counterfeit shifts — emerging markets that are artificially manufactured. An example of a counterfeit shift is the market for ethanol in the United States. As pointed out in “The Great Ethanol Scam” (by Ed Wallace of Bloomberg Businessweek), very little hard data supports the government mandate for using ethanol:

  • Ethanol-fuel mixes produce more smog than non-ethanol gasoline.

  • Ethanol decreases gas mileage by up to 20 percent or even higher in blends that are more than 10 percent ethanol.

  • More than 1 gallon of ethanol is required to produce 1 gallon of ethanol.

  • Ethanol damages fuel systems.

To spot a counterfeit shift, answer the following three questions:

  • Does the basic data contradict what’s happening?

  • Are political forces at play?

  • Could any other unseen factors (other than market forces) be driving the shift?

If the answer to any of the three questions above is “yes,” you need to be wary. It’s important to remember that global economic forces will tend to destroy a counterfeit shift at some point.

As an analyst, you need to determine how long the counterfeit shift will last; in this case, whether the mandate will continue and for how long. The problem is, you can’t predict how fast or when a counterfeit shift will succumb to reality, so you need to maintain a dual-track strategy. Here’s how:

  • Maximize your profit by carefully riding the wave of the counterfeit shift.

  • Run a parallel planning effort that focuses on the product or service that will probably end up as the winner.

Keep in mind that the CI team’s role is to act as trusted advisor. You may suggest a dual-track strategy, but the decision on how to respond lies in the hands of your organization’s leaders. Keep senior management informed of the risk issues as well as the most probable replacement if and when the counterfeit shift ends.

How to maintain competitive intelligence focus on future developments and trends

Predicting future developments and trends is often difficult, simply because they often involve forces and factors that are novel as opposed to an extension of the past. A great way to start gathering information about the future is to consider next-little-thing and next-big-thing analysis. Here’s one approach:

  1. Make a list of your prime competitors, and then try to figure out the answers to the following questions about each competitor:

    What are the next little things I expect this competitor to create?

    What are the next big things I expect this competitor to develop?

  2. Answer the following questions about the industry or sector as a whole:

    What are the next little things I expect to emerge in this industry?

    What are the next big things I expect to emerge in this industry?

    What next little things and next big things keep your CEO up at night?

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