Organizing the Market Intelligence Function

ORGANIZING THE MARKET INTELLIGENCE

FUNCTION A BENCHMARKING STUDY Audrey Guskey, Robert Heckman

The purpose of this study was to obtain information which can be used as input to the processes of organizing and staffing a Market Intelligence function. This paper proposes how a firm takes a Market Intelligence process model and organizes it into a living, breathing organization. It builds on a process model previously developed by the authors. A benchmarking study of 16 companies was conducted to determine how the market intelligence function is structured in these organizations. Information on the current state of industry practice in the area of competitive intelligence and market intelligence is presented. Implications of how an organization can take a process model and change it into a workable, effective organization are discussed.

INTRODUCTION Intelligence in an organization, little research has been done to demonstrate the process for effectively Market intelligence is a strategic tool which enables organizing the intelligence process. (For an senior management to identify key driving forces and exception, see Gilad 1991 which describes the NSI anticipate future market directions. It is the process (National Security Intelligence) government model through which information from multiple sources is as a blueprint for corporate intelligence systems.) gathered, interpreted, and communicated. Market This paper briefly describes a process model, which Intelligence can provide support for strategic decision was previously developed by the authors. The paper making, early warnings of opportunities and threats, then presents a review of previous research and the competitor assessment and tracking, and advice on results of a benchmarking study to answer questions effective implementation. It is proactive, opportunistic, regarding resources and organizational commitment and forward thinking. Today, more companies are in the development of a Market Intelligence attempting to incorporate some form of market function. Combining previous research studies intelligence into their organization (Marketing News and the benchmarking report, this study represents 10/9/95). information about the organizational strategies of 629 companies. With the competitive nature of the marketplace, companies are finding they have less room for PROCESS MODEL OF MARKET INTELLIGENCE mistakes. According to Bernhardt (1994), the consequences of executing a business strategy The authors have developed a process model without having actionable competitive intelligence are that incorporates various functions into a market serious. Despite the recognized significance of Market intelligence system. The functions include:

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users, assess intelligence needs, sources Offer to help analyze those that go to the booth. The of information, gather information, interpret starting point is something I mentioned in my last information, intelligence library, and communicate 1column is analytics and customer profiles (Calof intelligence. The process model is shown in 2014). CI has much to contribute to this. You should offer Figure 1. to help the booth personnel profile those that came to the booth to identify appropriate approach strategies after the show. There is much in the SCIP literature on how to develop profiles and readers are urged to read up on it. Event ROI can be enhanced if those that come to your booth are profiled with appropriate follow up strategies developed based on analysis. You need to consider profiling both the customer and the organization (more information on this is provided in recommendations the next recommendation).

Development of booth information collection plans. Customer analytics requires the appropriate 2information be captured at the booth. As I was able to tell during my time at that particular booth, the boother was not really interested in my tech watch project or any background on the organization or me, rather, she was busy answering my questions (professionally I might add) and capturing my badge information. Put another way, the questions required to develop the appropriate profile where not asked, Here is where CI has a big role to play. What information does CI say needs to have gathered so that proper profiles and follow up plans can be developed? Think about putting together Market Intelligence Process Model a customer profile form that boothers can use as the basis for information asked at the booth. Here are a few pieces of information that would help in profiling the Figure 1:

Users Assess intelligence needs The market intelligence process should begin and This is a critical component that is sometimes end with the users. There are two categories of overlooked and yet is the key to the success or failure users: strategic users and tactical users. Although of the market intelligence function. There are certain the initial emphasis should be on strategic users, as guidelines a company should follow to assess the the process becomes institutionalized tactical users intelligence needs of its users. A company should should get involved. establish a mechanism to continuously assess the needs of users. The needs must be prioritized and Sources of information include a forecast of needs users may not be able There are many diverse sources of information to articulate. such as customers, competitors, associations, employees, company records. From some of these Gather information sources, information is actively sought. For others, it Companies gather information from four basic areas: is accidentally found. Each needs to be nurtured and secondary data, primary research, word-of-mouth developed so that information is constantly flowing communication, and Management Information into the system from numerous sources. Many Systems (MIS or information within the databases sources are housed within the organization itself. of an organization). Sales reps, customer service agents, employees with relatives working for competitors are all rich sources Interpret information of information. Although Competitive Intelligence The next phase includes the compilation of information is often thought of as corporate espionage, much from these various sources. Zaltman and Barabba of the competitive information is readily available in (1993) compare it to a knowledge loom which weaves public sources. together various types of marketplace information.

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Filter reporting relationships, budgets, and the type of A filtering device must sift through the large volumes projects that are undertaken. It is clear from the of data and selectively choose which information is studies that there is no single organizational structure significant and to whom. In that sense, one can that is used by the majority of firms. Table 1 shows the minimize information overload and information organizational location of this function in the survey anxiety. This process can be benefited by technology. samples.

Intelligence library Table 1: Organizational location of the mi function This model proposes the intelligence library as a repository for intelligence and a focal point of the entire intelligence process. The library should also be at the heart of the secondary data collection. A retrieval system should be user friendly to encourage utilization.

Communicate intelligence Human Resources Allocated to the Intelligence The key to success of any Market Intelligence system is Function the infusion of market intelligence into the institution’s strategic business process. Communication can take Table 2 shows the human resources allocated to the many forms such as competitive profiles, executive intelligence function as reported in the three studies. summaries, electronic mail, briefings, and executive These data include over 600 observations, and they meetings. The form presented should be consistent further indicate that there is wide variance in the with the desires of users. staff members allocated to this function. Except for the packaged food industry (which may be skewed In the next sections, literature is reviewed and a by due to the low level of responses), it appears that benchmarking study is conducted to determine the average intelligence staff consists of 2-3 full time how organizations can take this process model and professionals supported by 1-2 clerical staff. develop it into a living, breathing organization that is an effective, integral part of the company. Table 2: Staff allocated to the intelligence function

PREVIOUS RESEARCH ON ORGANIZING THE INTELLIGENCE FUNCTION

Three previous studies were identified which provide rich description of the practices used by United States firms in organizing the competitive intelligence function (Prescott and Bhardwaj 1995; Jaworski and Wee 1993; Prescott and Smith 1989). These studies looked at various Financial Resources Allocated to the Intelligence organizational issues regarding the placement of the Analysis Function Market Intelligence function and the commitment of resources to the intelligence function. The The average budget reported for the CI function also Prescott and Bhardwaj study examined 390 different shows significant variance. The following table shows companies; the Jaworski and Wee study examined the financial resources allocated to the intelligence 22 telecommunication companies, 11 packages food analysis function. companies, and 51 pharmaceutical companies; the Prescott and Smith study looked at 95 different Table 3: Budget allocated to intelligence function companies.

Organizational Location of CI /MI Programs

The location of CI and MI programs is important because it often influences

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DESCRIPTION OF BENCHMARKING STUDY capture word of mouth. • The number of employees staffed in the A benchmarking study was conducted to determine intelligence function varied depending on the the organizational structure of the Market Intelligence size of the organization (the larger the function in various companies. Telephone interviews organization, the larger the MI staff) and the were conducted with market intelligence directors length of time the intelligence function has from 16 companies who are considered leading been in place (the newer the MI functions, the Table 1: Organizational location of the mi function organizations in market intelligence as recommended larger the MI staff). by experts in the field. These national intelligence leaders are: 3M, Arizona Public, AT&T, Kodak, US Personnel/Staffing West, Alcoa, Bayer, PPG, Allina Health Systems (Minneapolis), Astra Merck, Blue Cross of Illinois, • Education levels were high for MI personnel; Iowa, Minnesota, Health Net (CA), Health Partners Many firms require a master’s degree. (Minneapolis). • Seasoned veterans were best suited for the director position. The purpose of the telephone survey was to address • Those surveyed suggested individual the following questions: characteristics needed for success in market intelligence included being well connected • How is the market intelligence (MI) function in the industry, having integrity, being structured within organizations? creative, having imagination, expressing • What are the personnel requirements of MI? curiosity, having good networking skills, and • How does the library fit organizationally into possessing good communication skills. the intelligence process? • How is intelligence stored and communicated? Role of the Library • How is the MI function evaluated? • What is the philosophical approach to MI • Although the placement of the library varies within the organizations? from organization, many housed it in the MI function. SUMMARY OF RESULTS OF STUDIES • Many MI directors believed the library should Table 2: Staff allocated to the intelligence function be within the MI function. Organization of the Market Intelligence Function • Much of the CI literature suggests that the library would be a strategic asset for the MI • There is no single organizational structure function. which is used by the majority of firms. • Leading intelligence companies such as • The Market Intelligence function is usually Kodak are looking to add the library to the MI housed in the Marketing/Marketing Research function. department or Strategic Planning. • Most companies have only a Competitive Intelligence (CI) function, rather than a more Storage and Communication of Intelligence encompassing Market/Business Intelligence function (MI). • Electronic storage was frequently used and • When MI personnel had both market allowed for easy access by many within the intelligence and marketing research firm. responsibilities, the marketing research • Many health care organizations provided responsibilities took precedence and the MI monthly newsletters with competitive function suffered as a secondary function. information. • Those organizations with a more established • Technology was a critical component in the MI function had Senior Management playing success of MI. The results suggest technology a critical role in the assessment of intelligence drives MI. needs. Table 3: Budget allocated to intelligence function • When a company emphasized active participation among all company personnel to gather intelligence, the MI function seemed to be more effective. Many used some form of multi-divisional teams to gather the intelligence. Training programs, motivational programs, and other incentives were used to

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PROPOSED ORGANIZATIONAL STRUCTURE

From the previous studies and the benchmarking results, an organizational structure is proposed. The process of Market Intelligence requires three basic building blocks. They can be combined in a number of ways. The three basic building blocks are:

SUMMARY AND CONCLUSION

This paper examines the functions of the Market Intelligence process within 16 leading intelligence companies. The building blocks proposed are the foundation of constructing an effective system within an organization. A company committed to market intelligence needs to lay the foundation, build the infrastructure, and leverage market intelligence on an ongoing basis. User orientations, total corporate commitment beginning at the CEO level, and effective distribution channels are key elements to the success of any Market Intelligence function.

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REFERENCES ______

Bernhardt, Douglas (1994), “‘I Want It Fast, Factual, Actionable’ - Tailoring Competitive Intelligence to Dr. Audrey Guskey is an associate professor of marketing Executives’ Needs”, Long Range Planning, Vol. 27, at Duquesne University. She is considered to be one of the No. 1, p. 3-11. nation’s leading consumer experts appearing in over 3,000 TV, radio, newspaper, and magazine interviews discussing Caudran, Shari (1994), “I Spy, You Spy”, Industry Week, consumer trends including the Fox News Channel, October 3, p. 35-40. CNN, MSNBC, CBS, The Wall Street Journal, Fortune, Newsweek, Time, US News & World Report, USA Today, Gilad, Benjamin (1991), “Intelligence System: Model for The New York Times, and Smart Money Magazine. Catch Corporate Chiefs”, Journal of Business Strategy, May/ her latest consumer tips and trends video series ¢on$umer June, 20-25. $en$e at draudreyguskey.com. Dr. Guskey received her MBA and Ph.D. in marketing/consumer behavior from the Jaworski, Bernard and L. C. Wee (1993) “Competitive University of Pittsburgh. Intelligence and Bottom-Line Performance”, Competitive Intelligence Review, Vol. 3, No. 4, p. 23-27. Dr. Robert Heckman is Associate Professor of Information Systems at the School of Information Studies, Syracuse Prescott, John and Baurab Bhardwaj (1995), University. His research interests include design of “Competitive Intelligence Practices: A Survey”, work-based learning experiences, learning strategies Competitive Intelligence Review, Vol. 6, No. 2, Summer, for information professionals, self-directed learning, p. 4-14. and collaboration in virtual communities and teams. He received his Ph.D. in Information Systems from the Prescott, John, and Daniel C. Smith (1989), “The University of Pittsburgh. Largest Survey of Leading-Edge Competitor Intelligence Managers”, The Planning Review, Vol. 17, No. 3, p. 6-13.

The article “Organizing the Competitive Intelligence Function : A Benchmarking Study” was published in Competitive Intelligence Review in 2000, listing the authors as Conway Lackman, Kenneth Saban, and John Lanasa, all from Duquesne University. The fact is that this article had been previously published by Audrey Guskey and Robert Heckman in the Proceedings of the Marketing Theory and Practice Conference in 1996. The plagiarized article was taken verbatim from the Guskey/ Heckman article and also included verbatim text from a proprietary market research report prepared by Guskey and Heckman for a client. This article was published again by Lackman, Saban, and Lanasa as a chapter in the book Proven Strategies in Competitive Intelligence: Lessons in the Trenches, edited by John Prescott and Stephen Miller. The editors of CIR and the editors of the book were unaware of this at the time of the publication, and the plagiarism was only recently discovered by one of the original authors.

SCIP is pleased to publish the original article crediting the authentic authors – Audrey Guskey of Duquesne University and Robert Heckman of Syracuse University.

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