Commentary & Analysis
The Monthly Hot Roll: Developing A Product Intelligence Capability
By Ed Crowley May 3 ,
By WhatTheyThink Staff
Published: May 3, 2004
By Ed Crowley May 3 , 2004 -- What is product intelligence? What is product intelligence capability? And do you have it? By utilizing market research you can ensure you identify the right product metrics that are most important to your customer. Product intelligence capability is having a strong understanding of competitive products, assessing how well your products compare to these competitive products, and distributing this information to the right individuals in your organization at the right time. Products are to the business world as weapons are to war. In war, your weapons technology can make the difference between winning and loosing. No matter how strong your personnel are, no matter how good your logistics are, without (at a minimum) competitive weapons technology, it is almost impossible to win. For example, during the Middle Ages, the English 'long bow' resulted in a significant competitive advantage for the English army because it could pierce knights armor and it allowed 'distance fighting' versus hand-to-hand combat. During WW II, the Russian army had a distinct advantage over the German army due to their tank technology (the Germans used diesel powered tanks that were very ineffective in the cold harsh Russian winter, while the Russians used gas powered tanks that were all but immune to the cold weather). In business, the same principal applies. While a superior product is not the only factor to success, it is an important one. For example, Hewlett Packard was first to market with an 'affordable' laser printer (at the time about $6,000) which offered quality comparable to color copiers that cost over $50,000. By setting an entirely new price/performance point, HP was able to capture a market position that no competitor has yet been able to eclipse. During the 1950s, IBM developed a new technology for mainframe computers with the 360 Series mainframe computer. This technology lead established a leadership position that lasted for almost 20 years. And when we say products, don't think in terms of just tangible products. Intangible products are just as critical to track. For example, the product feature and pricing bundle that makes up your competitor's service offering for a large-run print production job are just as important to track as the hardware features and pricing are for a manufacturer. So whether you are a manufacturing or a service-based company, developing a product intelligence system is critical Note that I call it a product intelligence system, versus simply product intelligence. Static, point-in-time information is of limited usefulness. The information gathering, analysis, and distribution must occur in 'real time' on a regular basis to make product intelligence relevant and useful. For this reason, it is important to use a product intelligence system . So what are the key elements of a product intelligence system? Key considerations When building a product intelligence system, the first thing to consider is what are the key product attributes that you need to track and compare against. For every industry and product category, there are 'make or break' product metrics that must be tracked relative to the competition i to ensure you are competitive. In the monochrome laser printer product category, for example, the key metrics have traditionally been speed (measured in pages per minute) and price. For your industry and product category the key features may be different. The most important point is to make sure the metrics you define are the metrics that are most important to your customers. By utilizing market research you can ensure you identify the right product metrics that are most important to your customer. The critical factor is to make sure that all of this information is captured into a comprehensive Market Intelligence system. It is also important to understand the competitive product's cost structure (versus just dealer or end-user pricing) in relation to your own product's cost structure. This effectively tells you how much room the competition has to make price changes, or even more importantly, whether their new aggressive pricing strategy is sustainable in the long term or merely a near-term attempt to capture market share. In essence, does your competitor have a sustainable cost advantage versus your products? Next, it is important to have a thorough and up-to-date understanding of how your product compares to the competition . This comparison should be in the context of the product metrics that are most important to your customer. This comparison is a very valuable tool at all levels of the organization. The comparisons can be as simple as an excel spreadsheet, or, as sophisticated as a constantly updated on-line web site for 'live' comparisons (there are several vendors offering this capability on a fee basis). Again, as always, the critical factor is to make sure that all of this information is captured into a comprehensive Market Intelligence system. Product intelligence is of limited use without the insight provided by complimentary market analysis, competitive intelligence, and customer understanding. While it is important to understand how your products compare to the competition, without a thorough understanding of all of the dynamics associated with the market environment, your ability to make decisions is limited. Space constraints limit me from delving into the details of how to build a product intelligence system, the different approaches for making the information accessible to end users, and how this system can be integrated within the framework of a complete Market Intelligence system. However, you can find more information on this (and other Market Intelligence topics) at the Photizo Group web site at www.photizogroup.com . You can also subscribe to the Market Intelligence newsletter, the Intelligence Briefing, at this site.