Developing tactical forecasts
In view of increased competitive pressures and fewer launches, companies are taking steps to
By on Sep 9, 2009In view of increased competitive pressures and fewer launches, companies are taking steps to bolster strategic planning and make the most of their assets by shifting their strategic resources into larger decision support groups, as revealed by our competitive intelligence study. By building integrated decision resource centers and by centralizing departments, companies increase efficiency and develop consolidated and robust intelligence. The integration of market research teams into larger market intelligence groups link all aspects of decision support, such as lifecycle management, competitive intelligence, forecasting, and strategic planning. By locating these teams under one unified umbrella, intelligence functions can draw on each other to create strategically pointed deliverables which in turn benefit faster decision-making processes at the management level.
For these groups, delivering strategic value means delivering plans of action and showing what their research actually means for the market rather than just providing mountains of un-interpreted data. With their expertise, these groups can analyze events and provide guidance and suggestions. These abilities establish market research, forecasters and CIs value as a resource by both relieving internal clients of a task and providing insight beyond what the client themselves might be capable of doing.
For busy clients such as senior executives, brand managers and business development professionals, these functions must boil down research and data into thoughtful analysis. This is imperative to proving value for each department. Delivering unique, forward-thinking analysis upon which clients can set or alter strategy shows the difference between business intelligence and other closely related market surveillance functions.
Even if clients do not necessarily act on insights and suggestions, the functions still serve as resources because clients can depend upon them to deliver the analysis necessary to make the next step. Still, measuring ROI is CIs chief challenge, according to survey results (Figure - Rating CI's Biggest Challenges).
A survey conducted by Covance showed that intelligence generated by CI/MR departments is directly channeled to CEOs and SVPs in 92% of the cases and that 58% of SVPs are most likely acting on this intelligence. In addition, marketing and medical affairs departments were cited as creating the most demand for intelligence put together by CI and MR functions. The survey also revealed that competitors pipelines, products and strategies are the most common topics researched and analyzed by CI and MR groups.
An important component to the forecasts and positioning strategies has to do with signals; informal warnings or hints sent out by companies through their initiatives and public activities. Often, these signals are picked up by competitors, analyzed and used in counter-competitive strategies. During periods of economic stability, companies tend to send out somewhat clear signals about their strategies, employing steadier growth and development approaches. This makes it easier for competitors to identify each others blueprints and plan their next move accordingly. But in a time of economic chaos, companies adopt survival behaviors, often testing multiple strategies simultaneously to try and find ways to reduce risk. In this survival mode, the usual signals become scrambled, sending hectic and mixed messages picked up by other companies, which in turn brings added confusion and turbulence to the markets. This disorder slows down once companies adopt the tested strategies that reestablish stability.
But, forecasters, intelligence and market researchers often fail to include a distinctive component: What will the competition do or how will they react to our next move? We often look too much at the past patterns and base scenarios from our company perspective, business philosophy, culture and experience. In the HBR article Predicting your Competitors Reaction, Kevin P. Coyne and John Horn tackle this issue by first suggesting putting yourself your company in your competitors shoes. Then, draw up most likely scenarios of what options you (in the competitors skin) will adopt. Here are some of the basic - and some surprising - findings from the survey results:
- Very few companies include most likely competitors reactions in their forecasts
- Close to 17% of the companies do not react to rivals key initiatives
- Most companies consider less than four response alternatives, and it's almost expected that among them will be the most obvious (introducing a me-too product or a price matching change) and also the one that they consider to be most effective
- Most businesses analyze only one round of moves and countermoves
- Most companies calculate their options using simple, short-term measures
Based on these nuggets, going a step further in the analysis / forecast doesnt seem too much of a stretch and will keep your company a step ahead of the competition. It will take time to build the scenarios sort of war game analysis but it will make the forecast an invaluable strategic executive tool.
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