Exam 1 (Chapters 3-4) Flashcards
Competitive Intelligence
CI is a structured, ethical and legal process designed to gather, analyse and distribute data/information relating to current and potential, competitors. The key to successful CI is the ability to turn basic raw data into actionable intelligence. Actionable intelligence involves providing decision makers with timely, appropriate information which facilitates action. Additionally, CI stresses the need to protect business activities against competitors’ intelligence gathering operations.
Two categories of current management info
Firstly, reporting and control information. This monitors what has happened internally within any given period. Secondly, information relating to key performance indicators providing measures of success/failure relative to pre-set benchmarks (e.g. account- ing ratios, profit and loss accounts, etc.). Such data is of course necessary, but managers increasingly need to be forward looking.
The CI Cycle
Planning and directing- establishing intelligence requirements
Collection- translating key intelligence requirements into more specific key intelligence questions and then identifying and monitoring intelligence indicators.
Analysis- converting raw data into useful information. The process involves classification, evaluation, collation and synthesis.
Dissemination- CI needs to be tailored to meet user needs. Effective dissemination is based on clarity, simplicity and appropriateness to need. many CI projects fail during this phase.
Targeted vs situational intelligence
‘targeted intelligence’ – collected to achieve a specific objective – and ‘awareness intelligence’ – collecting general information which will be ‘filtered’ in order to build a general picture of the competitive environment. Targeted intelligence is used to resolve specific problems, while awareness intelligence is designed to monitor the competitive environment on an on-going basis.
History of analysis
Most military, political and commercial intelligence failure has not been due to inadequate information collection, but due to poor evaluation of available information.
Sun Tzu, The Art of War: “Know the enemy and know yourself, in a hundred
battles you will never be defeated.”
• Globalization and rapid technological and societal changes make CI more
important than ever
Three general areas where competitive information comes from
Firstly, ‘public domain’ information – information available to anyone
Secondly, ‘internal’ information. It is often surprising just how much information organisations already hold on competitors.
Finally, ‘third party’ information – specific sources not directly connected to the competitor (e.g. market research agencies, media/journalists, credit rating organisations and consumer groups).
Benefits of CI
• CI can improve a number of functions within an organization
− Anticipating competitors’ activities
− Analyzing industry trends
− Learning and innovation
− Improved communication
• CI offers the opportunity to bring together various sources of information into a
single cohesive system
Purpose of segmentation
decisions about the markets to be serviced are a critical step in strategy formulation. The segmentation process is there- fore central to strategy.
Market segmentation is the process of splitting buyers into distinct, measurable groups that share similar wants and needs. Once different segments are identified, marketers determine which target segments to focus on to support corporate strategy and growth.
Criteria for segment
● The consumers in the segment respond in the same way to a particular marketing mix.
● The consumers within the segment have to react in a clearly different way from other groups of consumers to the marketing mix on offer.
● The group has to be large enough to provide the return on investment necessary to the organisation.
● The criteria used to identify the segment have to be operational.
Marketing mix
by developing a distinct marketing mix for each consumer segment an organisation can offer customers better solutions for their needs.
the organization’s marketing mix (4Ps) – product, price, promotion, and place
Perception on a persons reaction
The way an individual perceives an external stimulus will influence their reaction. Individuals can have different perceptions of the same stimulus due to the process of selective attention, selective distortion and selective retention:
− Perception: different people can have different perceptions of the same stimulus
Selective attention: not everything is taken in
Selective distortion: perception is adjusted to conform to current mindset
Selective retention: not everything taken in is remembered.
Involvement in the Buying process
The buying process an individual goes through when making purchasing decisions is affected by the particular situational factors surrounding the activity.
Buying process: need recognition > information search > evaluation of alternatives > purchase decision > postpurchase behavior
− The buying process a consumer goes through when making purchasing
decisions is affected by the situational factors surrounding the activity
Self-image
Perceived risk
Social factors
Hedonic factors
Organizational macro and micro market segmentation
Macro (characteristics of the organisation):
● Industry sector
● Size of the organisation
● Geographic location
● End-use application
Micro (characteristics of the DMU):
● The structure of the DMU
● The decision-making process
● Structure of the buying function
● Attitude towards innovation
● Key criteria used in reaching a decision on a purchase: These can include product quality, price, technical support, supply continuity and reliability of prompt deliveries.
● Personal characteristics of decision makers
Consumer segmentation criteria
• Profile Variables: are used to characterize the consumer but in terms that are
not expressly linked to, or predictive of, an individual’s behavior in the market
• Behavioral Variables: Identifiable behaviors and motives such as benefits
sought, usage, purchase occasion
• Psychographic Variables: Identify individual’s attitudes, opinions, and interests
to build up a lifestyle profile that includes the consumer’s consumption patterns
• Marketers can use any variable as a starting point for segmentation
