Page 311 - Introduction to Business

CHAPTER 8 Marketing Basics 285

Competition
Most large companies have established competitor intelligence (CI) programs to competitor intelligence (CI) Information
monitor their competitors. The Quaker State chairperson and CEO, Herbert M. about competitors
Baum, justifies his firm’s CI program like this: “I don’t ever want to be in a fair fight,
I want an edge everywhere I go.” 9
Companies that have installed CI programs have benefited greatly. Nutra Sweet
put an $84 million advertising campaign on hold when it discovered Johnson
& Johnson’s Sucralose would not get quick approval by the Food and Drug
Administration. (Nutra Sweet estimates that its competitor intelligence unit is
worth at least $50 million annually in sales gained or revenues not lost). Marriott
built a new chain of hotels, Fairfield Inn, which has an occupancy rate 10 percent
higher than similar operations, when it found some travelers prefer lower-priced
lodging with less amenities. 10 Texas Instruments gathered information that
prompted it to acquire two firms and resulted in a “leaner and more decisive
investment strategy.” 11
The first step in any CI program is to identify who the competition is. Compa-
nies that are leaders in an industry, produce and market the same products or serv-
ices, and have the potential for a significant technology breakthrough are those that
technology The development of new
should be included on the list. Foreign competitors should not be ignored,
products and processes
particularly those that market products and services in the domestic market and in
overseas markets where a firm is operating.
A shopper scans her groceries in a
The next step is to determine what information about competitors is needed.
supermarket. This technology helps
Their strategies, prices, strengths and weaknesses, objectives, market shares, and
customers save time.
new product plans are usually considered to be the most
desirable information. Then, ways to collect the information
have to be developed. It should be emphasized that firms
need to employ ethical and legal means. Paying janitors to
root through competitors’ trash and planting electronic
bugs in competitors’ conference rooms are not acceptable.
Besides, 95 percent of what is needed can be gotten by
studying magazines, newspapers, annual reports, sales
force reports, competitors’ advertisements, and their execu-
tives’ speeches. Emmanuel Kampouris, CEO of American
Standard, a $5 billion manufacturer of toilets, brakes, and
air conditioners, uses the press, financial reports, and mar-
ket research. “I don’t consider our competitors as Commu-
nists or Hitler,” he said. 12

Technology
We see the results of technology all around us—personal
computers, Internet, interactive television, high-definition
television (HDTV), microwave ovens, cell phones, laser sur-
gery, more-fuel-efficient cars, and so on. Technology refers
to the development of new products and processes. Com-
panies need new products to replace existing products that
have to be phased out and to help the firm to grow. New
processes, such as those applied to a company’s manufac-
turing or logistics operations, help companies to reduce
their costs and operate more efficiently.

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.