Market intelligence for decision makers - ideas on how to make corporate decision making more data driven with minimal efforts and costs

Market Intelligence
for decision makers

Ideas on how to make corporate decisions more datadriven with minimal efforts and costs

Frederic De Meyer

©Institute for Future Insights (i4fi) 2014
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Market Intelligence for decision makers
Frederic De Meyer – i4fi

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Content

Introduction

1. Debunking myths about market intelligence
1. Myth 1: market intelligence is expensive
2. Myth 2: market intelligence should be 100% accurate
3. Myth 3: market intelligence is complex
4. Myth 4: only external agencies can provide market intelligence
5. Myth 5: market intelligence is cumbersome
6. Myth 6: market intelligence is unambiguous
7. Myth 7: understanding market intelligence is easy

2. Some examples of how to build market insights to support strategic
decision taking in specific areas… all by yourself !
1. understanding your business environment
2. prioritizing investment decisions
3. assessing your competitive situation
4. get value from account planning
5. innovate based on megatrends

3. Ideas on how to implement a market intelligence practice in your
company
1. a full time job, or not?
2. Who to report into?
3. Which frequency of reporting?
4. Which communication means to use?


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Introduction


4

A

s a corporate decision taker you undoubtedly have to deal with tough
decisions. You are most likely to rely on your experience and your gut feel
in making these decisions. This makes sense. After all you often don’t have

the time, the resources or the budget to look for market insights to support your
critical decisions. Market insights, at least reliable ones, might not even be available.
But how does this influence the outcome of your decision? Wouldn’t it make you feel
more comfortable to have at least some neutral proof points? Wouldn’t it make it
easier for you to communicate your decisions, or have them accepted, if they were
based on clear and undisputable facts?
While this is not always achievable (especially the ‘undisputable’ part), in many cases
the most obvious and freely available sources are disregarded. With a little
additional effort, more sophisticated insights can be obtained that enrich your
decision processes in very profound ways. This book aims to give you some concrete
examples on how to do this.
For instance, how often do you search your competitors on Youtube? You would be
surprised to see how many employees, both senior and junior, post critical business
information on this media. From loose interviews with sales managers at trade fairs,
to footages from keynote speeches at the yearly sales meetings, you are likely to
discover new insights from your competitor more quickly than if you would wait for
your competitor’s quarterly analyst calls.
Or take another example. Let’s say you are a provider of medical devices, actively
looking to expand to new geographical markets. You would be surprised to find out
how much freely available information you can retrieve from the databases of the
OECD, the IMF, the Worldbank or the World Economic Forum, with which you can
prioritize your next expansion investments. Surely, these databases take a little effort
to learn how to use them efficiently, but once you do a valuable stream of frequently
updated and reliable information is at your service to base a huge amount of critical
business decisions on.

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This book aims to show you how.
Through many examples and practical advice, we will show that building a market
intelligence practice should be neither time or budget consuming, nor should it be
complicated or cumbersome. At any rate, it should form a valuable contribution to
the majority of decisions you have to take.
The first chapter of this book will demonstrate that many of the ideas –let us call
them preconceptions- we have about market intelligence are flawed. We will, in
other words, demystify certain myths some decision takers might still have with
regard of using market intelligence for their decisions.
In the second chapter, we will use some of the conclusions of the first, and apply
them on specific business practices such as competitive analyses, long-range
planning, business environment assessments and account planning. The aim of this
chapter is to demonstrate that building market insights is well within the capabilities
of any decision taker that cares to invest some time in collecting data and translate it
into a usable, conclusion-driven form.
In the third chapter we will briefly elaborate on setting up a market intelligence
practice within a business organization. I am well aware that this is a risky task.
There is by no means a ‘one size fits all’ answer to this type of questions.
Furthermore, dependent on your industry and company size you might very well
already have a performing market intelligence team in place, so you might find the
recommendations in this chapter very futile and light. Or, on the other side of the
spectrum, you might be a startup with very little budget to spend on market
intelligence, let alone build a team for that matter, so the advice in this chapter
might come to you as an inaccessible dream. Each situation will require a different
approach, for sure. But my hope with this chapter is to at least provide an idea of
how a ‘standard’ market intelligence practice might look like, say, in an average sized
company with limited resources to spend on market intelligence. We will discuss the
structure and responsibilities linked to such a practice, as well as how the people

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performing it should be measured, in other words: which Key Performance
Indicators should your market intelligence resources aim for.

Many of the insights I present in this book are inspired by my own professional
experience, more specifically in the ten years I served in a market and business
intelligence position for a global American technology company. In these years I
have initiated and led a huge and varied number of research missions as a
contribution to strategic decision making at EMEA level (Europe, Middle East and
Africa). These projects ranged from strategic planning, competitive assessments,
strategic account programs, balanced scorecards, investment prioritization and goto-market optimization, to name just a few. The target audience for these projects
was extremely diverse, ranging from senior corporate decision takers to local
business developers and sales teams.
It is this huge and varied number of market intelligence missions that inspired me to
write this short book. Due to time or budget constraints I was very often pressured to
focus on the most relevant pieces of insight to support a decision, or to make sure
the information I spread was useful to as many stakeholders as possible. On the
other hand I needed to make sure the insights I produced generated a tangible
impact, which was particularly challenging due to the very diverse nature of my
stakeholder base. However, these challenges inspired me to break loose from
‘traditional’ ways of obtaining market insights, be creative with finding and utilizing
market sources, and build automated processes to turn data into decision improving
intelligence.
The fact that so many of the insights and ideas in this book originate from my own
professional experience, also forms one of its major shortcomings. After all, the
majority of my professional experience was situated in a business-to-business
environment. I can only hope the thoughts expressed in this book will be of use to
professionals in a business-to-consumer environment, but I can offer no guarantee

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they will. Also, while I will provide loads of examples of different industries in this
book, the variety of business functions I will use for these examples will be limited.
After all, there are some business functions I know nothing of, like logistics or supply
chain management, so I will not fake any knowledge in these fields. Rather, the
examples I will use will mostly align with the marketing, operations, finance and
corporate strategy aspect of businesses. Lastly, since the main source of inspiration
of this book is my actual professional experience, it has no academic aspirations
whatsoever. No academic work has been consulted while writing it, and even in its
structure and form this book will come nothing close to an academic paper. But
then, neither is it intended to be one.
Despite these shortcomings I trust that this book can be of use to any professional
dealing with difficult decision making, be it as a source of inspiration, or –if nothing
else- as a showcase of how a little creativity and a little time-investment can be
sufficient to make decision taking more insight-driven, and hence more successful.
A final word to close this introduction: this book contains a fair deal of tables and
graphics. I do realize some readers might get a feeling of repulsion at the thought of
it. Indeed, some parts of this book will require some attention, even some thinking
from its readers, in order for them to comprehend the precise meaning of the ideas
and thoughts expressed in it. On the other hand, this book is aimed at professionals
that shape the strategy of their business, which is hardly ever done without numbers
and graphics, so I expect the majority of the readers will already be comfortable
using them. The aim of this ‘pictural’ approach is also to demonstrate how visuals
can truly help decision taking, much more than numbers, and hence can contribute
tremendously to better decision making. I guess no decision taker will be reluctant to
this prospect.

Frederic De Meyer
January 2014

8

Debunking myths
about
market intelligence


9

T

he fact that relatively few companies have a dedicated market intelligence
practice in place is most probably due to a couple of misconceptions about
the exact nature of this activity, as well as its consequences. Decision makers

might find the outcomes of market insights inevitably unreliable, not worth the
expenses, or too cumbersome a process to have resources focused on it.
In this chapter we will discuss the most common of these misconceptions or ‘myths’,
and along the way we will show how some fair level of market insights could be built
easily and at virtually no cost, as a valuable input for the market decisions
corporations make.

Myth 1: Market Intelligence is expensive
Let me be clear here: a great deal of strategic questions will require a considerable
amount of investments to answer. But certainly not all of them! Much depends on
the level of accuracy that is needed, as well as the precise moment at which
conclusions can be drawn from the available insights.
In general, following relationship can be distinguished between the cost of obtaining
strategic insights, and their accuracy:


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Simply put: the more accurate the insights need to be, the higher the investment that
will be required. A 20-80% rule could be applied here: the efforts to obtain the last
20% of accuracy could very quickly require 80% of the resources. So the question
arises: is the 20% incremental accuracy really needed?
Very often, it is not.
Using the chart above, we could make the distinction between four ‘phases’ when
collecting market insights:


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1. Creative knowledge
Decision takers, and the teams supporting them, tend to forget this simple fact: a lot
of information can be obtained with relatively little resources (I will provide a couple
of practical examples of this in the next chapter). These insights are ‘creative’ in the
sense that they are based on freely available information, but require some
manipulation in order to turn them into meaningful insights.
In this phase it is crucial to tap into new sources of information, sources that are
frequently forgotten in typical market intelligence efforts like internal data obtained
from business intelligence or the knowledge that resides with your employees but is
mostly unrecorded.
Strangely enough, many organizations are under-utilizing these two sources.
The business intelligence function is very often separated from the market
intelligence function, while combining both can very often help to explain findings
from either one of them, for instance when exploring the reasons behind shifts in
market shares. In the next chapter I will provide a practical example of how a
combination of market and business intelligence can provide some valuable strategic
insights.

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Another source often forgotten is the knowledge that resides with the employees of
an organization. Despite all the efforts in CRM and customer relationship databases,
much of the information that employees collect about the market is plainly lost, or –
at best- collected in ways that don’t necessarily make the best use of it. I will discuss
this more in depth as well in the next chapter.
Apart from business intelligence and employees, plenty of valuable information can
be collected from freely available sources. Databases from government or supranational entities, from industry federations or analysts, can in many cases form an
excellent and sometimes sufficient basis to build your market insights on.
These sources sometimes require some time to deal with efficiently, but once you get
acquainted with them they will provide a wide range of insights.
The practical examples in chapter 2 aim at showing how you can maximize the value
of this phase 1.
2. External endorsement
For the majority of decisions, relying on internal or freely available data will not be
sufficient. The insights obtained might not provide a sufficient level of certainty, or
some vital information might just not be available.
At that point a need for an external market research bureau will emerge. Virtually all
industries have specialized research companies, from Gartner and IDC in the
technology sector, to GfK and Nielsen in the consumer business. For competitive
assessments one can rely on companies such as Fuld. For more specific queries one
might try out some Indian market research companies such as Infinity.
Regardless of which (type of) research company you ultimately work with, what is
certain is that it will lead to additional costs. How much precisely will quite
obviously depend on the exact nature of your question. The natural inclination of
many decision takers is to ask for much more information than what is actually
needed, or to phrase the research question in vague and general terms. Having as

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much information as possible, even if it is not directly relevant to the decision under
investigation, seems to increase the level of comfort of decision takers. However, the
risk is to be drawn in an overload of information, and to end up spending much
more than what is actually needed.
3. Inefficiencies
If you keep on spending money to obtain additional information, you could rapidly
find yourself in the phase of inefficiency. In this phase, you might very well find
yourself spending 80% of the efforts to increase the accuracy of the insights with
20%. This sometimes makes sense, but very often does not. The ultimate question
you need to ask yourself in this phase is:
Would any additional information alter my decision?
Dependent on the quantity and quality of the information you have collected at this
stage, the answer to the question here above will frequently be negative. Your
decision is already taken, or your gut feel will have completed the missing
information already. The only argument that would justify the collection of
additional insights is to give more weight to your decision, for instance to convince
stakeholders such as employees or shareholders of the validity of your decision.
It is a thin line to cross, and it is one that is not determined by exact science. There is
no way to know when the line is crossed, but it is nevertheless something we need to
take into account while gathering and building market insights.
4. Delusion
To put it bluntly: in most markets it is impossible to obtain a 100% accurate view.
Take the information technology (IT) industry as an example. Would it be possible to
have an accurate view of the IT spending in a given market, say, France? No way.
Even if you would ask all IT managers in France for their current and future budgets,
it would still not give you an accurate view of the overall IT spending. For one thing,
the result would not take into account what is called ‘shadow IT’, spending on

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technology done by other departments that are not included in the official IT
budgets (the so-called ‘shadow IT’). But even if you would ask other departments
about their spending on technology and add this to your prior query of the IT
budgets, it would still not provide you with an accurate view of future spending,
since even IT budgets sometimes are subject to changes.
Point is, in most markets a 100% accurate view of its current and future size is
impossible (there are a couple of exceptions to this, as we will see in the next
chapter). But should this really matter? Let us investigate this with the next myth.

Myth 2: market knowledge should be 100% accurate
Since in most cases the size of a market cannot be measured with complete accuracy,
it means that in most cases we will have to use a model of some sort in order to
perform this task. Such models will be more or less accurate according to the specific
market we are in, or, to be more precise, on the availability and the nature of the
‘keys’ we will use in the model.
If, for instance, we would want to size the potential for private energy consumption
in a country, we could make a calculation based on:
1. The number of households in that country (a number we can track and predict
with relatively high exactitude);
2. The average number of persons in a household (a number we can track
accurately in the past, but for which we will have to make some assumptions
to take its future evolution into account);
3. The average energy spending per household, broken down in spending that is
household specific, like house-heating, and person-specific, like the energy
consumed for personal care (these numbers will already be harder to track or
to predict);


15

4. Last but not least, we will have to take into account the probability and the
impact of exceptional circumstances, like extreme weather conditions (we
might be able to track the historic impact of these, which, in combination with
the likeliness of extreme weather, could provide us with a probability range of
private energy consumption).
This –simplified- example shows that we will almost always have to cope with both
reliable data and uncertain figures. Things can quickly become complicated though.
Just compare the previous example –sizing the market for private energy
consumption- with sizing the market for sun protection products or Chinese readymade meals, you will quickly find yourself dealing with many more uncertain factors
to take into account. Obviously, the more uncertain elements you put in your model,
the less accurate the ultimate outcome will be.
But should you really matter?
I know this will make a lot of corporate decision takers feel uncomfortable, but the
answer to this question is: no!
Fact is, virtually all decisions will be taken somewhere in the middle of the costaccuracy curve we showed earlier:

To demonstrate this: let’s say your company is active throughout Europe and you are
soon to launch a brand new product peripheral to your current product portfolio.

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Your resources are limited however: you only have one business developer and two
sales managers to support the launch of this product, and your marketing budget is
rather limited as well. Ultimately you will have to answer this critical question:
which markets should I focus my resources on in order to maximize my return?
We will develop this case in more details in the second chapter. The point we want to
make here is that your choice to focus on country A rather than on any other
country, will in most cases be made surprisingly early in the intelligence gathering
process:

Myth 3: market intelligence is complex
Admittedly, this is often the case. But not always. Very often the most obvious,
readily available information is omitted from the ultimate decision. Take this extract
from Amazon, where the book ‘The price of inequality’ of Nobel prize winner Joseph
Stiglitz is offered by Amazon in new condition, as well as by third parties either in
new or in used state:


17

You don’t have to be an experienced market intelligence professional to see what is
wrong here. Did the provider of second hand books even bother to check the price at
which the book is offered in new condition by their competitors? Most probably not.
This example can seem to be ridiculously simple, but it is set to make a point: do not
omit the bleeding obvious!
To take a less obvious example, let’s look at the Nano, the cheapest car on earth,
specially designed by Tata car to serve the vast amount of consumers that are joining
the middle class in India each year. It sounds like a no brainer: the market consists
of millions of people (and growing by millions each year), so even if only a small
portion of them would want to exchange their motorbike for a status symbol such as
a car, it would still represent a considerable market opportunity. Still, the sales of the
Nano car, at least in the first few years after its introduction, was well below
expectations. So what went wrong? A couple of things, apparently, and some were
very obvious. For instance, even of the Nano was the cheapest car on earth, it still
sold for about a full year’s salary of the middle class consumer it was aiming for, and
Tata car omitted to offer the possibility to buy the car through leasing! Sure they
must have had good reasons to do so, after all leasing is a completely different
business compared to making and selling cars. Nevertheless, this omission certainly
forms one of the reasons why the Nano car’s sales figures turned out to be rather
disappointing. And it is a reason it could have anticipated even before launching the
car.


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There are other obvious sources that many professionals are underutilizing in their
decision making process. Take competitive information as an example: how many of
you are checking the websites of your main competitors on a day-to-day basis? Most
of you, hopefully. But how many of you have the newsfeeds of your competitors fed
into your RSS feeds? Are you following their activities on Twitter, Facebook,
Instagram, Pinterest?
More importantly, are you checking your competitor’s activity on LinkedIn? Do you
use this source to check which profiles are leaving them, and which ones are joining?
Quite a reliable early warning signal of the strategic choices your competitor is
making, even before they communicate about them officially. You can also check
which discussion forums your competitors are most active on, which is also an early
warning for their future strategic direction.
Last but not least, have you checked your competitors’ activity on Youtube? You
would be surprised by the amount of information you can find there, from unofficial
interviews with sales managers on trade fairs, to complete speeches of the CEO at an
annual sales meeting.
These are all simple tools and activities that can be performed by anybody, but that
could tremendously increase the insights on which to build decisions on. And, no,
they are not complicated at all…

Myth 4: only external agencies can provide you with the necessary
information
Of course, you already realize that this myth is inaccurate. After all, you are likely to
collect a huge amount of information by yourself already, through your CRM or
Business Intelligence systems, through your contacts on trade shows and
conferences, or through your yearly customer satisfaction surveys.


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But what about information of a different nature? Where do you find information
about the near-term prospects of the retail market in your home country? About the
level of digitalization in the education system in each European country? About the
investment plans in alternative energy worldwide? The penetration of mobile phones
with the youth in Africa? Surely, if this type of information is related to the market
you are serving, you would be willing to pay for it, wouldn’t you?
You shouldn’t. At least not after checking the vast amount of freely available –and
reliable!- sources at your disposal. A short overview:
1. Supranational organizations
Admittedly, you will have to spend a considerable amount of time getting acquainted
with the databases of supranational institutions before you can use them efficiently.
But once you do, you will find a wealth of information on virtually any topic, in
virtually every industry.
Take the database of the European Commission, Eurostat, as an example. This
database contains valuable statistics on topics like transport, energy, health,
sustainability investments, to name just a few. It also contains a number of regularly
updated indexes that might prove invaluable to assess your market conditions, like
the monthly, survey based Economic Sentiment Indicator, broken down into
industry, services, construction, retail and consumers. If you are serving one of these
markets you might find out that this Indicator provides a fairly accurate early
warning signal for where your own business is heading, as we will explain in chapter
2.
While you are at it, you might as well check the databases of the International
Monetary Fund (IMF), the Worldbank, the Organisation for Economic Cooperation
and Development (OECD), where loads of information are available at no cost at all.
At the end of this book you will find a list of these sources.
2. Consultants

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Consultancy companies, big and small, also provide a wealth of information through
industry specific reports. Of course, these reports are meant to showcase their
expertise in these markets, and most of the time you will have to leave your contact
details behind before accessing these reports. But these reports are well worth the
efforts, and would have cost you a couple of thousand dollars if you would have them
performed for you.
The best known source for these type of reports is consultancy McKinsey, through its
McKinsey Quarterly website, but also through its McKinsey Global Institute. The
other big consultancies like Accenture, PWC, Deloitte, Arthur D Little etc also
provide valuable industry insights. Not to mention the vast amount of smaller,
specialized consultancies.
3. Professional federations
Each industry is likely to have a professional federation of some kind, itself a
member of a larger international federation. These federations gather loads of
information about your industry, even if they not always share all of it through
official communications. You should not hesitate to check the information available
(also with industry federations outside of your home country), or try to obtain
specific information you need from the employees of these federations.
4. Social media
This will sound like the most obvious statement in history: in recent years social
media became an invaluable source of information about markets and competitors.
But do you use it to its full potential? Facebook and Twitter are quite obvious
sources, and I mentioned earlier about the possibilities to use Youtube or LinkedIn
as a competitive information source. But you could use these sources –especially
LinkedIn- as a mean to detect market trends, sizes and shifts as well, through its
discussion forums for instance. Some bright people even use LinkedIn as a kind of
qualitative (but non commercial) survey tool !


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5. Internal sources
Of course, you retrieve a lot of business information from your CRM or Business
Intelligence tools already. However, these will mostly be internally-driven, and very
data-focused. But how do you collect the anecdotal information, the insights your
employees (all of them) obtain through discussions with external contacts and that
might be of tremendous value to your market insights efforts? Organizing some form
of bottom-up market discussions, as we will advocate in the second chapter, might
prove to be more accurate than any external view you would obtain, provided that
you find way to collect them structurally in order to scale them to a level where
valuable insights emerge.

What these short examples attempt to demonstrate is that you don’t necessarily have
to invest any money to collect and digest a sufficient amount of relevant market data
to build your insights on. However, dependent on the amount of information you
will be using, you might go through a steep learning curve in order to use these
sources efficiently, or you

might need some internal resources to collect the

information and translate it into a usable format. We will get back to this point in the
third chapter.

Myth 5: market analysis is cumbersome and extensive
Do you get annoyed whenever you ask for specific market data and you receive a
deck of hundred slides where every single datapoint is twisted in fifteen different
ways, accompanied by a two hour long debriefing en unfruitful discussions about the
figures?
Well, stop asking for it.


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Fact is, whether you rely on external market research companies or an internal team,
they will naturally be inclined to provide you with as much details as possible. How
else could they justify their cost?
Forgive me my cynical tone. It is far from my intention to laugh with market
research companies or teams. In a way this behavior is perfectly logical: how would
you react if you ask a market research question, a team works for a complete month
and with several thousands of dollars budget on producing an answer, but all you get
at the end is a single chart? I bet you would start to doubt the soundness of this
investment or –even worse- the professionalism of the market intelligence team who
worked on your question.
But what is wrong with that single chart, if it allows you to make a well grounded
decision? Or, better: if it leads to valuable discussions based on an unambiguous
market view?
As the philosopher Blaise Pascal once wrote in a letter to a friend (before you ask: it
has been used by Lincoln, Mark Twain and Bernard Shaw after him, albeit in slightly
different forms):
‘Forgive me to write you a long letter,
but I did not have enough time to write a short one’
Conciseness, even in market intelligence issues, can be a blessing, and is indeed very
hard work.

Myth 6: market figures are unambiguous
Throughout my career as a market intelligence professional I have always found it
hilarious to watch people discuss market numbers. Even four simple datapoints
could often lead to fervent –and lengthy- discussions about their exact meaning. I


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stopped laughing, however, when I started to realize that the length –and the feverof these discussions was my own fault.
Why is this? Well, say you have to make an investment to grow a product or service,
and you have to make a choice between two countries in which to make this
investment (don’t worry, the same logic would apply on other strategic decisions as
well, I use this simplified example just for the sake of argument).
In its most basic form, this choice would be made based on the size of both market
(the ‘Addressable Market’, which is the total spending on products and services
similar to yours; or, put more simply: this would be your revenue if you had no
competitors). This would look like this, for instance:

Addressable Market Size
120
100
80
60

40
20
0
Market 1

Market 2

Quite obviously, you should invest in Market 1, since its potential is so much bigger
than Market 2. Right? Wait a moment. What exactly is our starting position in these
markets… Would it be easier to benefit from the additional opportunity in a market
where we have a high market share already? Or rather the opposite?
With this extra dimension, two different scenarios emerge:


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Addressable Market Size and share

Addressable Market Size and share

(scenario 2)

(scenario1)

120

120

100

100

80

80

60

60
40

40

20

20

0

0
Market 1

Market 2

Market 1

Market 2

Which market is the most promising now?
Say the lighter bars represent your turnover, and the darker bars represent the
untapped market potential (so the proportion of the light orange to the overall
orange bar represents your market share). Both these scenarios will now lead to
completely different conclusions about the market to develop and where to get
additional growth from. In the second scenario for instance, the portion of the
market that you don’t cover yet is much tinier in Market 1 compared to Market 2.
Okay, so dependent on which scenario turns out to be true, we now have our answer.
Right? Not so quickly. We need to take a third dimension into account. The market
sizes might be different, our starting position (our market share) will probably be
different, but the overall market growth is likely to be different as well.
See the example beneath, where just one of the possible scenarios is highlighted for
our original question to know in which market to invest in order to maximize the
overall growth potential:


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Strategic market positioning

Market share

100%

50%

0%
0%

25%

50%

Market growth
Bubble size = market size

This provides a more subtle view of our market potential already, and certainly a
better insight to know in which market to invest. Our Market 1 now finds itself in a
quadrant with low growth (horizontal axis), high market share (vertical axis) and a
big size (bubble size). Our market 2 finds itself in quite an opposite situation: high
growth, low market share, and relatively small market size.
So it’s clear now, no? Invest in Market 2. Any market share point gained in this
market, will leverage more in terms of turnover growth (since the market itself is
growing faster). Easy, right?
Not quite yet. It appears that we have much more to gain in Market 2 indeed, if –and
only if!- we have the means to gain market share in this market. Are our sales people
sufficiently trained to chase this market? Are our channels sufficiently loyal to
support us in this endeavor? Or are they likely to promote our competitors instead?
Do our competitors have special advantages over us in this market, like locked-in,
multi-year contracts (which would reduce our available market)?
And, combined with this, we need to ask additional questions about Market 1: can we
leverage our solid market position to introduce new products or services with
success? Is perhaps our install base in this market due for renewal in the coming

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year(s), hereby increasing our market potential? What is the risk of losing market
share in this market, and how would this affect our overall turnover?
An answer to all these questions would require many more dimensions than those
we used up to now, but you will have noticed that the answers to these questions are
starting to be much more qualitative than quantitative. So, in a way, the bubble chart
with

the three dimensions has provided a –perhaps sufficient- basis on which

judgment can be used to come to conclusions.
We will see in chapter 2 how even qualitative judgments can be quantified and put to
use to give decisions more factual weight. But the point for now is that market
insights are anything but unambiguous. The conclusions we draw from them are
subject to interpretation and are dependent on the number and type of elements we
take into account when building the insights. These elements can be numerous, but
will never be endless. After all, not all of them will be of value for the strategic
choices we are facing.
But on the other side, as this chapter aims to demonstrate, we need to be careful to
use a sufficient amount of elements or ‘dimensions’ in our insights, to reach the level
of granularity with which conclusions become as ‘unambiguous’ as possible. There is
a simple rule anyone can use: just as long as people involved in the decision process
are still arguing about the interpretation of the data (‘what does it mean?’) instead of
the decision at hand, it means that the market insights has not yet reached the ideal
level of granularity. Dig deeper.

Myth 7: the interpretation of market intelligence is easy
No, it is not. And much has to do with the level of granularity we discussed in
previous point. To illustrate this, let us take one conviction that I personally heard
brilliant decision takers express over and over again:


27

“If my market is growing with x%, and we keep the same market share,
our turnover will grow with x% as well”
Do you agree? It sounds logical, right? Nevertheless, in virtually every case this
conviction is nothing less than untrue. I can even predict that in most cases you will
find yourself losing market share overall, even if you gain market share in each
segment you serve !
How can this be?
Well, fact is: just as long as you are serving different market segments with different
products or services, these markets are likely to behave differently from each other,
and your resulting overall turnover evolution will certainly behave differently from
the overall market you operate in. Additionally, if your market share is less than 50%
in the biggest markets or the markets with the highest growth, your overall market
share is likely to decline over time.
Let us look at an example to illustrate this fact. Let’s say your company has a
portfolio of 5 products (the same would apply for services or market segments,
geography, or a combination of any of those). For the sake of simplification, let us
assume you only serve one market segment with these products, in one single
geography. The table here under shows the addressable market size for each
product, for calendar year CY00 and CY01, as well as the market growth, the revenue
of each product and the resulting market share:


28

Market size

Market size

CY00

CY01

Market
growth
CY00-01

CY00

Market
share
CY00

Product 1
Product 2
Product 3
Product 4
Product 5

80
60
30
20
10

82
63
40
35
20

3%
5%
33%
75%
100%

56.0
36.0
7.5
4.0
1.0

70%
60%
25%
20%
10%

Total:

200

240

20%

104.5

52%

Revenues

In this example, we have a high market share in the biggest but stagnant market, and
a low market share in the small but growing markets. Our overall addressable
market grows with 20% year-on-year, and our initial overall market share is 52%.
Let us now look at what happens with our turnover in CY01 in two scenarios: if we
keep the same market share in each market (scenario 1), and if we gain market share
by 2% in each market (scenario 2):
Scenario 1: keep same market shares

Scenario 2: 2%market share increase

Market
share
CY00
Product 1
Product 2
Product 3
Product 4
Product 5
Total:

Revenue
s
CY01

Revenue
growth
CY00-01

Market
share
CY00

70%
60%
25%
20%
10%

57.4
37.8
10.0
7.0
2.0

3%
5%
33%
75%
100%

72%
62%
27%
22%
12%

59.0
39.1
10.8
7.7
2.4

5%
9%
44%
93%
140%

-

114.2

9%

-

119.0

14%

CY01 Market share:

48%

Revenue Revenue
s
growth
CY01
CY00-01

CY01 Market share:

50%

What do we see? Even if our addressable market is growing with 20%, our turnover
will only grow with 9% -even if we keep the same market share in each product-,

29

resulting in a decline of 4% in market share. And what if we gain 2% market share in
each product? Our turnover would grow by 14%, still resulting in a market share
decline of 2%.
This example is extremely simplified, of course, but the fact remains that you will
always lose market share on your overall addressable market if you have a lower
than 50% market share in the areas with the highest growth.
And in a way this is a good sign ! It does mean that you are present in markets that
have growth potential for your business, either by a strategy of taking market
(share), or by organic growth. However, to stop the overall market share bleeding,
you should aim at a market share of above 50% in these markets.
To get back to your seventh myth: no, the interpretation of market insights is not
always that simple, even if you have reached a sufficient level of granularity. All too
often simple conclusions are drawn over market data, while they just require some
further manipulation in order to draw the right conclusion from them, like we’ve just
done with our market share scenarios.
The examples in the next chapter will demonstrate this even more clearly. For each
of the examples we will provide, we will also score our ideas and recommendations
on how well our advice in this chapter has served them, in other words: how our
‘myths’ from this chapter are being demystified by the examples. This will clearly be
a subjective exercise. After all I sometimes use my gut feel as well. But if you disagree
with it, you are invited to give feedback through my blog about the subject of this
book

(at

the

time

of

writing:

corporatemi.blogspot.be),

through

e-mail

(Frederic@i4fi.com) or any other channel you can reach me on.


30

Examples of how to
build market insights
for strategic decisions


31

Chapter 2: some examples of how to build
market insights to support strategic decision
taking in specific areas… all by yourself !

I

n this chapter we will apply the advice from previous chapter on a number of
very specific corporate strategy tasks. The aim here is certainly not to cover all
aspects of market intelligence, nor is it to discuss every strategic decisions that

could be based on these. As said in the introduction to this book, this is not a
scientific work. Rather, it is our intention to show concretely how with relatively few
efforts and budget, but with a solid dose of creativity, a corporate decision taker can
arm himself with a sufficient load of market insights to enrich, and even improve his
decision making process.

1. Monitoring your business environment
A great number of industries –although not all of them- are highly dependent on the
economic climate for the growth of their business. A decline of economic activity will
make consumer spend less, due to increased joblessness or a wide-spread feeling of
uncertainty about the future prospects of people. Since people will consume less,
overall trade will decline as well. The decline in trade will then affect transport and
logistics, as well as the manufacturing of consumption goods. This will then impact
the manufacturers of machines and resources that are designed to manufacture
consumption goods, etcetera. Our global economy –even our local one, this is not
necessarily a phenomena that is only due to globalization- is so mingled that
virtually any company will experience the impact of a negative evolution on its
business.


32

Hence the importance of monitoring this business environment. To be prepared, and
eventually act on changing factors in your business environment that might impact
your very own business. However, not every corporate decision taker is necessarily
an economic expert, neither does he necessarily find the time to go through a vast
number opaque economic reports. Nor should he. There are easier ways to assess
one’s business environment.
If your business is located in Europe, for instance, you could benefit from checking
the official statistics database of the European Commission, Eurostat, on a regular
basis. In its database you will find a vast array of data about the economic condition
of the European Union member states and, for some metrics, even of other
countries, in all possible forms and timeframes.
The example hereafter aims at showing how this information could be relevant for
your business. One of the indexes you can find in the Eurostat database is the socalled ‘Economic Sentiment Indicator’. This index is based on a monthly survey
conducted with the main economic actors, both companies and consumers, and
reflects the confidence these actors have in their short-term economic prospects.
Any number above 100 indicates that there are more economic actors that are
confident about their prospects in comparison to those that are negative about it.
The importance of this index is that it is published at the end of each month and, as
shown in the graphic below, there is a strong correlation between this Economic
Sentiment Indicator and the overall European economy (shown here as the %
quarter on quarter change of the Gross Domestic Product):


33

Economic Sentiment

120

1,5
1,0
0,5
0,0
-0,5
-1,0
-1,5
-2,0
-2,5
-3,0

110
100
90
80
70

Economic Sentiment EU(26)

nov/12

jun/12

jan/12

aug/11

mrt/11

okt/10

mei/10

dec/09

jul/09

feb/09

sep/08

apr/08

nov/07

jun/07

jan/07

aug/06

mrt/06

60

Economic growth (%)

Correlation Economic Sentiment vs
economic growth

Quarterly GDP growth

One does not have to be an economic genius to observe a strong similarity between
both parameters, they grossly behave the same way. But the importance here is that
the Economic Sentiment is a figure that is released at the end of each month, while
the official GDP changes are released one or two months after each quarter! In other
words: the Economic Sentiment becomes a leading indicator for the overall
economy, since its patterns are likely to predict the patterns of the overall economic
evolution.
Hence, if your business is closely impacted by economic growth, you might get early
signals of how you will fare in the near future by looking at the Economic Sentiment
Indicator on a monthly basis, instead of waiting for the official GDP figures to be
published.
But how can you know for sure if –and to what extend- your business is dependent
on the economic evolution? Here again you don’t have to be a mathematician to
uncover this relationship. If in the chart above you would replace the quarterly GDP
evolution with, say, the turnover growth of your company or business unit, you
would virtually see whether there is a correlation or not.

34

Admittedly, in many cases you would need some statistical skills to uncover the exact
nature of this correlation, but mapping it on a chart is something you can do
yourself, and it provides you at least with a first hint of the existence of such a
correlation. Furthermore, the overall economic growth and the Economic Sentiment
Index might be metrics that are too general to look for correlations with your
business. You might have to drill down into the components of the Economic
Sentiment (as a reminder: manufacturing; retail; services; construction and
consumers), or you might need to look for a completely different metric altogether,
like the Baltic Dry Index of you are in the shipping business, the Purchasing
Managers’ Index if you are in manufacturing, the Industrial Orders Index if you are
in the business-to-business industry or services. If the public sector constitutes an
important part of your sales, you might want to monitor public sector spending
metrics more closely.
So, you might spend some time finding out which metrics you should use to monitor
your business environment. But once you found them, they will prove an invaluable
management decision tool.
It is important however to notice that the type of correlations to look for are not
necessarily direct, one-to-one correlations (where the patterns of two metrics follow
each other in the same time lapse and to the same extend). For instance, in many
cases the impact of a change in index (say, the economy of a specific country, or
GDP) will have a delayed impact on one’s business, like in this hypothetical example,
where it takes one quarter before the economic shifts impacts our turnover:


35

Correlations business environment vs
turnover (ex 1)

Economic Sentiment

Turnover growth (%)

mrt/12

nov/11

jul/11

mrt/11

nov/10

jul/10

mrt/10

nov/09

0,0

jul/09

0,2

mrt/09

70

jul/08

0,4

nov/08

80

mrt/08

0,6

jul/07

90

nov/07

0,8

mrt/07

100

jul/06

1,0

nov/06

110

mrt/06

1,2

60

Economic Sentiment

120

Turnover growth

Another situation arises when the index is impacting your business only in the
direction it takes, and not in the intensity of this impact. In the hypothetical example
beneath, the evolution of the economy has an impact on our business only when it
changes direction:

Correlations business environment vs
turnover (ex 2)

Economic Sentiment

Turnover growth (%)

jun/12

jan/12

aug/11

0,000

mrt/11

60
okt/10

0,200

mei/10

70

dec/09

0,400

jul/09

80

feb/09

0,600

sep/08

90

apr/08

0,800

nov/07

100

jun/07

1,000

jan/07

110

aug/06

1,200

mrt/06

Economic Sentiment

120

Turnover growth


36

Chances are that there will be no single metric that unambiguously predicts where
your business is heading in the near future. Most likely you will have to combine a
number of metrics with some impact (of some kind) on your business. But this
combination will provide you with a solid early warning signal of times to come.
Furthermore, as the example above tries to demonstrate, you could do it with
relatively few efforts and at virtually no cost at all.
Now, let us look at how well this example scores on our ‘myth debusting’ dashboard.
Did these examples debunked the myths about market intelligence?
MI is expensive
MI has to be accurate
MI is complex
MI requires an external agency
MI is cumbersome
MI is unambiguous
MI is easy to enterprete

For the examples in this chapter we only used freely available source, both externally and
internally
In this chapter we worked with indicators and estimations of correlations, none of which are
'exact' figures.
We tried to demonstrate that anyone with some knowledge of spreadsheets can build the type of
correlation charts, which in most cases will be sufficient to draw relevant conclusions.
All the information in these examples can be collected by anyone without intervention of an
external agency.
Finding the relevant information and trying out different correlations to determine which ones to
use can be time consuming, but whenever the metrics are chosen updating them will be easy.
The results of this exercise might be prone for discussion and interpretation, for instance about
the causality of the correlations.
In this type of work we frequently use macro-economic data which is not necessarily easy to
comprehend for everyone.

2. Prioritizing investments
Corporate decision makers often have to deal with making choices based on
priorities. In which country or segment will we invest? Where do we put our sales
people and our marketing budget for a maximal return? In which markets will we
introduce our new product or service first? These are often tough choices since they
need to take into account many parameters, while not all of them are necessarily
known or available.
While I was working as a Market and Business Intelligence manager at an American
multinational, I received plenty of such type of questions. I remember one of them
very clearly, since it posed some very particular challenges. It was on a Friday late

37

afternoon when a colleague called me for an urgent question –I found out most of
the urgent questions tend to be asked on a Friday afternoon, strangely enough. My
colleague has just been appointed to head a team that would introduce a new
product on the European market. Nice challenge, except that he was given only two
sales people and a very limited marketing budget. You can probably guess what his
question to me was: which countries should he focus on to maximize the success of
this introduction.
Oh, I forgot to mention: he needed to take the decision the next Tuesday, and he had
no particular budget to spend on getting data to support this decision.
The technology being too new, we could obviously not rely on any existing market
research to help us out. So what could we base our decision on? Actually, there were
a couple of things we did know, and could use to build our market insights on. For
instance, the new technology was specifically relevant for only a number of
industries, and we did have some good insights in the IT budgets of these industries.
Based on our previous experience, we also knew in which countries our sales
channels were best prepared to introduce new technologies to their clients. Based on
the same experience from past introductions of new technologies, we had a good
knowledge of which countries were fastest in adopting new technologies.
Very soon we came to the conclusion that the information we did have available
could be categorized in three types. The first category, let’s call it ‘Business Context’,
contained information about the business environment of the European countries,
like economic growth projections, addressable market growth for our existing
technologies and IT budget spending. The second category, let’s call it the ‘Internal
Readiness’, contained internal information that provided indications of how
successful the introduction of a new technology could be in the European countries,
like the pace at which previous technologies were adopted by the countries, or how
many sales channels we could leverage to introduce the new technology. The third
category, let’s call it the ‘Industry Relevance’ contained information about the
potential of the industries for which the new technology was designed for.

38

We ended up with following list of metrics we could use:
Business context
Economic size
OECD Composit Leading Indicator
Economic Sentiment
Addressable Market size
e-Readines factor (WEF)
ICT Development index (WEF)

Internal Readiness
Tech A 3 year growth
Tech B 3 year growth
Tech X total bookings to-date
Tech X as % of total bookings
Tech X number of potential channels
Tech X bookings vs. # partners

Industry relevance
Retail (IT spending as % of total)
Media (Digital TV penetration)
Finance (Weight of Top 10 banks per country)
Education (internet in schools WEF ranking)
Government (IT adoption in governmental offices)

(‘Technology X’ in the list designs the technology we needed to introduce. The
technology was already available in the US and, while there was no special emphasis
on it, already sold in the European markets. So we had some insights in the early
adoption of the technology)
These three categories answered three crucial questions we had to answer to make
our prioritization question:
-

Which markets have the most favorable business environment in which the
introduction of our new technology would be successful?

-

Which markets have shown in the past to be the quickest adopters of new
technologies?

-

In which markets are the industries we focus on the biggest and most
promising?

But how could we use all the metrics above in order to answer these three questions?
It is important to keep in mind here that our single aim was to prioritize the
countries in which to introduce our new technology. In other words: we were trying
to measure their relative attractiveness for this technology. Hence, in the initial
stage at least, we could rank the countries for each of these metrics.
For the first category for instance, this provided us with following view:


39

This table compared countries to one another based on how well they scored on the
business environment metrics. It is a ranking, so a ‘1’ indicates the best performing
country. For instance: Germany is the biggest European economy and hence had the
score of 1. The composite Leading Indicator of the OECD (an indication of how well
the economies will perform in the near future) indicated that Greece had the best
economic growth prospects, hence Greece was given a score of 1. Before you ask: this
analysis was performed well before the 2008 financial crisis and its subsequent
economic troubles.
By taking the averages of the scores for the three categories, we obtained a solid view
of the different countries’ attractiveness for the new technology, and where our
investments would have the highest return. At this point, each country had three
scores, which we could then map on a single chart, for instance a bubble chart (ideal
when working with three dimensions). For instance, we could map the scores for the
business environment in the X-axis, the scores related to the internal readiness on
the Y axis, and the bubble size could represent the industry relevance metric. This
would provide us with a view in which we can recognize four country segments, each
with their specific conclusion for how to go-to-market with our new technology:


40

“Ideal world”
Countries in this segment are ideally suited to introduce the new technology in. They
have a promising economic climate and have proven in the past to be eager adopters
of new technologies. To realize their full potential these markets need to be
addressed with sufficient focus and, eventually, budget. In our case, this would mean
putting our sales resources on these markets.
“Seed”
The countries in the top –left segment need a different approach. These are
countries that benefit from a favorable business environment, but have proven to be
slow adopters of new technologies (at least ours). Sales activities in these countries
are not likely to succeed quickly, at least not in comparison to the countries in the
“ideal world” segment. We should rather sell the bigger picture in these markets,
trying to evangelize the need for and the benefits of new technologies, and
investigate which arguments might make them more favorable to these new


41

technologies. One could argue this is a challenge for the marketing department, so
perhaps we should reserve some of the marketing budgets for these countries.
“Harvest”
The countries in the bottom-right segment have shown to be smooth adopters of
new technologies in the past, but the current unfavorable business environment
might hinder them to be early adopters of the new technologies, at least for the time
being. Though we need to prepare these markets for when the market conditions
turn favorable, we should not seek to invest too much efforts in sales right now, at
least not by dedicated sales people. Perhaps we need to single out top potential
customers in each of these markets, and have them covered by a business
development resource, or by internal sales.
“Wait”
Countries in the top-right segment endure difficult market circumstances and have
proven to be slow or lagging new technology adopters. Given the limited resources at
hand, we would not put any particular emphasis on these markets.

We now obtained some insights to base our decision on:


42

In our specific case we might conclude to put the two sales resources on the German
and British market, if at all possible in conjunction with the Italian market. We
should use our marketing budget to increase the adoption rate of Sweden, France,
Netherlands and Switzerland , and invest in informing the Danish, Spanish, Belgian
and Greek customers about the introduction of our new technology, perhaps through
the existing sales force (which would require some additional training).
Of course you will argue that the lines we have drawn to define the segmentation are
completely subjective. And, indeed, if we would have had access to four sales people
instead of two, we could have drawn the vertical line somewhat more to the right.
The separation line is subjective, and should adapt to the resources at hand. Do not
forget this exercise was aiming at comparing countries in terms of the success with
which we could introduce a new technology. The chart above provides an
unambiguous answer (although the metrics themselves might lead to ambiguity,
dependent on which ones you chose to include).


43

Working with aggregated indexes, like we have done in this example, has the
advantage of including a large and varied array of arguments and parameters into
our decision equation. We could refine it further by giving different weights to our
parameters, favoring those we are sure to have an impact on our decision over ones
that are only vaguely related to our subject.
I do realize that many decision takers will not feel too comfortable with these
aggregated indexes. Many will rather have the full list of parameters with their
scores, eventually put in a ‘heat map’ in which they can quickly judge on the overall
attractiveness of a country –and the reasons behind it. Fair enough, both views can
coexist since they basically tell the same story, and the overall conclusion will
invariably be the same with both views. My preference for the aggregated score
originates in the simplicity the ultimate view offers, the fact that so many arguments
come together in a limited number of factors.
Also, many decision takers might feel uncomfortable with this exercise since it offers
no guarantee of accuracy. However, we need to keep in mind the initial request when
building this type of insights. The aim of this exercise was to prioritize countries in
which to invest, in other words: to compare countries based on specificities that
undoubtedly are relevant to our decision. Putting them together does not alter the
accuracy of the picture we are building, and certainly does not diminish the degree of
confidence with which we take our decision. Quite on the contrary, if we find a
sufficient amount of metrics, and if these are sufficiently related to our decision, we
will increase our confidence, since mistakes or misjudgments will be countered by
the many other metrics that are accurate. In a way this reduces your error margin.
And, as was the case with this exercise, sometimes it is the only type of insights one
can build for a decision.
Did this example debunk the myths about market intelligence?


44

MI is expensive
MI is complex
MI is cumbersome
MI is unambiguous

Some factors in the index we have built originated from -expensive- external reports. Though we
could have done without, the external reports helped is increase the validity of the findings.
Working with multiple factors to build the index has certainly decreased the overall error margin.
Though the result will not be 100% accurate, the conclusions will be trustworthy.
The overall logic of this type of work can be easily explained, especially if factors are used that
have a clear relationship to the decision we have to take.
All the information we used in this exercise, as well as the calculations to build the conclusions,
were easily performed by ourselves.
Building the logic and finding the right information can be time-consuming, but the ultimate
insight on which to base our decision can be very succinct.
This methodology can lead to some discussions, especially on the choice of metrics to include, but
once agreement has been reached it should lead to unambiguous conclusions.
The ultimate picture will need some thorough explanation, but once the methodology is accepted
the resulting insight should be easy to understand.

3. Assessing your competitive position
Needless to say, we live in an era where most markets face an ever increasing
competitive threat. Globalization and the liberalization of multiple markets have led
to the emergence of new competitors with –for the moment- a significant cost
advantage in comparison to companies in the developed world. Furthermore, the
digitalization of businesses and the emergence of mobile communication have led to
a significant reduction, if not the complete abolition of entry barriers. In many
industries the competitive threat does not arise from competitors doing the same
thing at a lower price or better quality, but from a completely different business
model that simply replaces your value proposition. Newspapers have seen their
relevance evaporate with the emergence of blogs and social media, retail companies
have seen their business model pressured by the growth of online shopping, the
traditional photo shops have lost much of their value to online document sharing
tools such as Instagram, Picase and even Facebook. In the future, manufacturers
might face the pressure of 3D printing; car manufacturers and transport might see
demand for their products and services diminish with the emergence of the ‘sharing
economy’; banks might be attacked in their very core business –lending money to
people- by the emergence of peer-to-peer lending and crowdfunding.
Competitive pressure will rise, undoubtedly. Luckily, there are now more tools
available to monitor and assess this competitive threat. The days where one had to

45

roam through conferences and trade fairs or spend hours analyzing the financial
reports of competitors in order to assess his competitive positioning, are long gone.
Youtube and Slideshare now offer valuable ways to check what your competitors are
planning for the future, or even how they position themselves in comparison to your
business. On LinkedIn and jobsites you can check what type of experience your
competitors are currently recruiting (or which profiles are leaving the company), an
invaluable sign of the strategic direction they are likely to take. Say you are in the
fashion business, and you see on LinkedIn that your competitor is hiring a
professional with a solid experience in developing outlet stores, it would give you a
solid clue about their plans in the near future, wouldn’t it?
However, all this information is rather anecdotal. It cannot be put in figures and be
aggregated to a point where it would lead to relevant insights and conclusions that
would help you design a successful competitive strategy. For that, you need hard
facts and figures.
This would be fairly easy of your market was dominated by a small amount of
companies that all publish their results in full detail. In most markets, however, this
will not be the case. You will have to assess your competitive situation indirectly.
Provided that you have some budget available you will be inclined to pay for services
like Nielsen and GfK in the consumer industry, or IDC and Gartner for the ICT
industry, that regularly communicate detailed market share figures in their
respective markets. However, it is important to keep in mind that these market share
figures in many cases contain a vast amount of assumptions and calculations, which
sometimes reduces their accuracy.
Just as an example: market research company IDC bases its market share figures
mainly on the input of all the vendors within a specific market. However, many of
the biggest vendors provide their figures only at worldwide level, and provide some
guidance on the split of these figures by region. So IDC has to make a fair number of
assumptions in order to report market shares at country level, which they do by

46

modeling the numbers based on –albeit sophisticated- assumptions. I know from
experience that the resulting market shares often make sense in bigger countries, but
much less so in smaller markets or segments. Furthermore, the definitions these
research companies work with, both in terms of market segments and product or
services range, do not always match with the ones used within companies, which
sometimes makes it difficult, if not impossible, to use them for planning or
(competitive) strategy purposes.
Let me be clear here: the observations above are not meant to state that these market
research companies are useless in terms of market share reporting. Far from it. If
anything, the market shares these companies report do reflect trends and directions
that are extremely valuable to understand your competitive position, and hence,
even if sometimes inaccurate, they provide a very solid basis for further
investigation. What I am saying, however, is that the market share figures from
specialized companies should not be taken at face value, and should be discussed
and validated internally by the people that are best positioned to assess their
accuracy: your sales force.
I know, this statement will make a lot of corporate decision takers quite
uncomfortable. Asking the opinion of sales people about such things as market sizes
and shares? They certainly are bound to minimize the former and maximize the
latter, no? After all, their targets will depend on these figures!
Well, from my own years of experience organizing such validation discussions, I can
tell this is not necessarily the case. For one, sales people seeking extra investments in
their market will be inclined to over-estimate its size instead of minimizing it. At any
rate, just like data from external agencies should not be taken for granted, the view
you build based on feedback from sales people should not be neither. Both are
nevertheless very complementary in building a more accurate view of the market.
Furthermore, there are other advantages linked to such a validation process:


47

 Such a validation exercise certainly offers a chance to eliminate the
aberrations of the market data you use for planning (sometimes, by
comparing external market data with internal sales figures, you might find out
you have a market share of more than 100%!). By building a market view with
a combination of external and internal views, you will end up with a market
view that is agreed on by everyone, and hence forms the best basis for
planning purposes;
 Dependent on the size of your business and the level of granularity you ask for
validation, inaccuracies of the sales view will quickly become visible. If for a
specific product or service the sales teams in ten countries tell you the market
is growing with, say, 20%, but in just one other country the feedback from
sales is that the market is stagnant, you know something is wrong. There
might be good reasons for the sales team in this country to think their market
is not growing, or they might just miss out on opportunities other sales teams
have spotted. In that sense, such a validation exercise forms a very fruitful
process to spot and share best practices;
 These discussions are an ideal opportunity to collect and aggregate more
anecdotal information, such as specific marketing actions or discount
behavior of competitors in specific market segments. If such actions are
spotted in a majority of countries, you will have a solid basis to draw general
conclusions about your competitor;
 If the reasons and the outcome of this validation process are communicated
effectively, sales people will be grateful for the chance of providing input
instead of having unrealistic market figures imposed on them. Many of them
will therefore be very candid about their feedback on their market, and this
will enrich the ultimate outcome of this exercise.
Once you organized this feedback process you are confronted with a small problem:
you now have two market views to work with, and they sometimes tell a completely
different story. Which one should you use for your planning and competitive strategy

48

purpose? There are different options at hand: you could chose to use the external
market view anyhow (which will obviously frustrate your sales teams), or you could
calculate the average of both views (after all the truth must be somewhere in the
middle, no?), or you could use the sales view only to eliminate the aberrations of the
external view, keeping the external view for all other data points. The ultimate
decision should be made taking into account internal sensibilities and fair judgment,
but what is certain is that you will end up with a market view that makes more sense
–and is more broadly accepted- than when you would have used only one set of data.
But how should you organize such a validation process? Or better: how should you
make sure you organize this process without putting too much strain on your sales
people? The important factor here is to construct a simple and clear overview of the
information you need to validate.
Using a spreadsheet program (which is to be preferred since it offers numerous
possibilities to consolidate the figures in numerous ways), and assuming your sales
managers cover specific segments with one or more products and services, a
feedback template could look like this:


49

3
Se
rv
ice

2
Se
rv
ice

1
Se
rv
ice

Pr
od
uc
t3

Pr
od
uc
t2

Pr
od
uc
t1

Market Segment 1

….

Addressable Market (external view):
current
year 2
year 3
Addressable Market growth % (external view):
year 2
year 3
Turnover (internal view)
current
Resulting Market Share (calculated)
current
FIELD FEEDBACK:
Addressable Market (internal view):
current
year 2
year 3
Addressable Market growth % internal view):
year 2
year 3
Market shares (internal view):
current
year 2
year 3

These templates should be pre-populated with as much existing information as
possible or with automatic calculations. The point obviously is to reduce the amount


50

of datapoints the sales teams need to validate. Some additional fields could serve to
collect anecdotal information as well.
We will dig deeper into this subject in the chapter about account planning, which is
also a form of field feedback.

Despite the value of such a validation exercise, chances are you will experience some
reluctance –from either your sales force to provide you feedback, or from decision
takers to take the view of your sales force into account. There is no simple way to
deal with this. To increase the level of collaboration with the sales force in obtaining
their feedback, you need to communicate extensively on how the results will be used
exactly. Also, you will not ensure their buy-in if you just send a template like the one
above, for them to fill out. Rather -if possible at all- you will need to organize oneon-one meetings with them, and eventually fill out the template yourself while
discussing the market figures in the meeting.
You will have noticed by now that I am a strong advocate of such a field validation
process. However, I do realize that such a process is not fit for all types of corporate
cultures. So what do you do when implementing such a process is not feasible in
your company? You would still need to validate the market share figures and base
your decisions on a market view that makes sense to your employees.
One thing you could do to validate and check market share figures is to put them in a
system and integrate it with internal data, basically merging market and business
intelligence data into one single dashboard. You could then build a ‘logic’ in the
system in order to systematically track if and where market share losses or gains
make sense or not. Such a logic could for instance look like this:


51

The exact logic of this validation process will of course depend on the nature of the
business you serve, and the structure of your organization. But what the picture
above really tries to show is the power of combining external market data with
internal data, in this case to track where exactly we have gained or lost business in
‘unnatural’ ways, and whether this justifies the gain or loss in market share such as
reported by external agencies. Admittedly, the exact conclusions from this work still
requires some qualitative input from your sales teams, but at least it forms a solid
basis to conduct these discussions.


52

As a decision maker you should obviously not be involved in the gritty details of
building such a tool, but it is important to stay involved at a high level, or at least to
thoroughly understand the logic behind the dashboard, in order to make sure it
answers all the potential questions that might arise when assessing your competitive
situation. After all, such a dashboard will also serve to produce early warning signals
for weaknesses in your business.
At this point you have some solid -validated- insights in your competitive situation,
to base your planning exercise, your strategic priorities and your competitive actions
on. But are there other ways to assess your competitive situation and the potential
threats that arise from it? There are plenty of them, and chances are that you already
have some form of competitive watch in place.
You probably even benchmark your company to that of your competitors on a
regular basis. But what I have often observed is that such benchmarks are limited to
comparing product features, price points and financial performance. But what about
less obvious, perhaps softer aspects of your business? Can you learn something from
benchmarking these?
You probably would, and the exercise does not have to be difficult at all. Just select a
number of metrics that are relevant and easy to check. You obviously would need to
base yourself on publicly available information, and much of this benchmark would
have to be based on ‘judgment’, rather than facts. Also, you will have to choose your
benchmarking metrics carefully, since some might not at all be relevant for such a
competitive benchmarking. If you are in the sustainable energy industry, choosing a
metric like ‘sustainability image of the company’ would most probably not lead to
revealing insights, since most of your competitors would score high on this metric.
Finding and selecting such benchmarking metrics is obviously not an exact science,
and I am sure you can define the most relevant ones for your business by yourself.
But let me just highlight the categories of metrics I most often use myself, and that
are resulting from doing this type of work for customers in very different industries:

53

-

Attractiveness as employer: in this category you might include metrics
that indicate how well prepared you and your competitors are to attract and
retain talented employees. You could refine these metrics based on whether
your company is highly dependent on certain types of profiles, like Generation
Y employees or scientific profiles. Typical metrics would include:
o Focus on diversity on the workplace;
o Focus on work-life balance;
o Fun working environment.

-

Brand image attractiveness: this category includes metrics that show your
attractiveness to the external world, your stakeholders. For instance:
o How do you compare with your competitors in terms of use of social
media?
o Is the mission and vision statement of the companies future oriented
and appealing to stakeholders?
o Are you –or your competitors- using gamification to raise your brand
awareness?

-

Sustainability: if you find yourself in an industry that is sensible to
sustainability issues (either through regulatory pressure or because of high
expectations on this issue from customers, for instance), you could include
metrics like these:
o Availability and level of detail of publicly available corporate
sustainability report;
o Publicized hard targets to improve corporate sustainability;
o Communication of sustainability efforts on the homepage of the
company.

-

Go-to-market strategy: the metrics in this category could compare your
company to competitors in terms of how you go to market, for instance:
o The diversity of sales channels for your products or services;
o Complexity/ simplicity of the product or services offering;


54

o Whether the sales channels add value on top of the core products sold
through them.
-

Adaptability: in an increasing number of industries companies need to
constantly adapt to the changing environment in order to survive. In this
category you could include metrics that indicate the propensity of
organizations to change, albeit because they have proven to be able to do so in
the past:
o Have organizations shift business focus radically and successfully in the
past?
o

Did you or your competitors address a totally new market segment in
recent years?

o How many (successful) merger and acquisitions did the companies
conduct in the recent past?
-

Strategy: this category contains indications on whether companies have a
clear vision and a solid strategy to realize this vision:
o Do the companies have a clear and consistently communicated global
(and local) strategy?
o How much do these companies spend on R&D?
o How many different areas do they spend their R&D budget on?

Much of the information you will have to base your judgment on can be found
through publicly available sources. For instance, for the metrics contained in the
‘Attractiveness as an employer’ category we can easily check the emphasis we or our
competitors put on these items on their internal or external jobsite. The strategic
metrics can be checked on websites or financial reports.
Once you determined the metrics you can start comparing how well you score
compared to your competitors. This is easier said than done, however, since in most
cases (not all of them) there are no objective measures to compare performance on.
This will have to be based on judgment, but one way to make this activity easier to

55

perform, is to select the undisputable ‘best in class’ for each metric, which by the way
might be your own company, and to compare other companies with how well they
perform compared to it. By using the heatmap functionality in a spreadsheet, you

Co
m

Yo
ur
c

om

pa
ny
pe
tit
or
Co
1
m
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tit
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Co
2
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3
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can start to build a very revealing competitive comparison, for instance:

Internal attractiveness
Programs for work-life balance
Programs to increase Male-Female balance
Programs to integrate disabled people
Programs to integrate/hold elderly people
Focus on training & development
Average

In this example you would see that for the category of ‘attractiveness as employer’
you score average, especially compared to the best-in-class, Competitor 2. This is
mainly due to the lack of specific programs for the integration of disabled and elderly
people, so the question might arise whether designing such programs would
generate a competitive advantage (at least compared to your other competitors).
If you do this for over twenty metrics across multiple categories, you will end up with
quite an interesting view of where your strengths and weaknesses are. Sure, the
point is not necessarily to copy the ‘best-in-class’ competitor on each metric, but
nevertheless it will provide a good view about the areas in which you absolutely need
to improve in order to maintain or enhance your competitive position.
Sure, I do realize that many decision makers, again, will be uncomfortable about
conducting such an exercise. After all, the scores are merely based on personal
judgment (although you could ask different people in your organization to make the
judgment, which will level out eccentric judgments). Furthermore, the judgment is
solely made based on publicly available information, so how can we be sure not to
miss out on important strategic information that is not communicated publicly?


56

These are fair points, but they miss the whole point of this exercise, which is to make
a comparison of how stakeholders (who have only publicly available information to
base their own judgment about a company on) might view your company and your
competitors, and based on this make choice that are important to you, such as where
to apply for a job, or which brand to stay loyal to. Of course this is not exact science,
and neither is it designed to be. It is an exercise to generate new ideas and inspire
fruitful internal discussions.
Did these examples debunk the myths about market intelligence?
MI is expensive
MI is complex
MI is cumbersome
MI is unambiguous

Most activities explained in this chapter will not require any investment, except perhaps the
business intelligence dashboard to explain the moves in market shares.
As explained in this chapter, most market share and competitive information will not be 100%
accurate, but the value of the insights resides in qualitative rather than quantitative insights.
Most of the insights we have built in these examples are simple, with the exception of designing
the logic behind the business intelligence tool.
In most cases we will have to rely on market share data from external agencies, at least to have a
basis for further investigation.
Finding and collecting competitive information will be time consuming in most cases, but the
reporting of the insights should not require lengthy documents.
The methodology for competitive analysis can be prone to discussions, but once agreement has
been reached it should lead to unambiguous conclusions.
The insights and the conclusions drawn from competitive positioning should, in most cases, be
easy to understand.

4. Innovation based on megatrend assessments
Very few companies take into account long-term trends or trends that have no direct
impact on their core business in their (strategic) planning. Nevertheless, big
political, societal or environmental changes do have a direct or indirect impact on
virtually all businesses. Analyzing these trends and their effect on one’s business can
reveal innovation opportunities, as well as potential threats to your business.
In my previous book “The impact of megatrends on your business” I explained in
depth how these type of trends can affect industries and how corporations can use
these trends to improve the success of their business. For the ones that haven’t read
the book I hereby give a short summary, since this exercise also provides an example


57

of how, with relatively few resources, we can build a market view that enhances our
decision making process.
There are in fact numerous ways in which companies already prepare for the
opportunities linked to long-term trends. We previously discussed the introduction
of the Nano, the cheapest car on earth developed by Tata Cars, specially designed to
serve the rising middle class in India. A more sophisticated example is technology
giant Cisco’s ‘Health Telepresence center’, a small mobile room in which people can
consult doctors from a distance, as a response to the challenges linked to the ageing
population as well as the increasing ‘war for talent’ (an indication for the fact that
there will be less doctors per patient in the future) .
There are examples of how companies can be threatened if they do not take longterm trends into account as well. Take Ford, who almost went out of business early
in its existence, for sticking to its standard models while consumers were
increasingly desiring custom made models. Coca Cola was boycotted for many years
throughout India, losing millions of dollars in lost turnover, for its spoilage of water
in one of its plants in Kerala, a region that is increasingly challenged by water
shortage (this lead Coca Cola to review its manufacturing process in order to more
efficient with its usage of water –it since even won sustainability awards with its
newly designed practices).
Other companies like Siemens reorganized in a way in which each business unit is
focusing on resolving challenges linked to megatrends.
What these examples demonstrate is that megatrends ultimately affect all
businesses, and lead to opportunities to innovate, or to prepare for new threats. But
how exactly do you take these megatrends into account in your strategy? There is
surely not just one single, optimal way of doing this. But let me just explain the most
easy one here.
The most easy way to start is to organize internal brainstorm sessions around a
number of (mega)trends. Take about ten people in your team or your organization,

58

preferable with a mix of gender and level of seniority, and have them select a number
of trends they believe would have the biggest impact on your business. You could for
instance use post-its to let people make this selection:

In a second phase you ask the participants to discuss their choices and select three
trends that form the biggest opportunity for your company, as well as the three that
form the biggest threat:

In the last stage you ask the participants to brainstorm on ideas of how the company
should react to the opportunity or threat, and make a selection of the best or most
impactful idea:

59

The exercise above is a brainstorm exercise in its most simple form, but it can
already lead to some revealing ideas and conclusions. This will particularly be the
case if you break down the participants in smaller groups of four to five people and
let them do the exercise autonomously. Comparing and discussing the end result is
very often an enlightening experience!
This exercise can also take more sophisticated forms. For instance, in the second
phase of the exercise above you could ask the participants to look for relationships
between the trends they selected, and build a true story explaining how these relate
to your business environment. Or you could take Alexander Osterwalders’ business
model canvas as a starting point, designing the processes of your industry and
subsequently map the trends that are affecting the different components of your
business model:


60

To determine which trends to take into account initially, you could organize a survey
amongst the participants prior to the brainstorming session, or you could check the
list of megatrends that I currently monitor, which you can freely download on my
blog (fredericdemeyer.com).
Such a megatrend assessment will lead to ideas for innovation, but it can also
become a good indication of where your business is heading in the long run. By
analyzing and mapping how your client segments would be impacted by megatrend
you can have a sound view of how healthy your prospects are –especially if you map
the weight of these clients in your overall business as well, like in the example here
under:


61

Trend 1
client segment 1
client segment 2
client segment 3
client segment 4

Trend 2

Trend 3

Trend 4

-5

-5

-3

-2

0

2

-2

-3

2

-1

3

3

4

2

5

5

weight of
turnover:
60%
20%
10%
10%

In this simplified example one can see that the biggest client segment is threatened
by a number of trends. This would naturally lead to a number of questions: how will
this affect our business? Is there any way we can help our clients in segment 1
preparing or countering the threats emerging from these trends? Should we try to be
less reliant on these clients, and focus on developing clients in segment 4?
You see that developing such a view will make you understand your clients even
better, which in turn might lead to more meaningful discussions with them, and
eventually reposition your sales messages and your products or services to serve
them better and increase your future performance.
To assess the impact of megatrends on your business and determine how (or if) you
should react to them, you can map them according to how impactful they are on your
core business –for instance on the X-axis- and the level at which you (or your
industry) have some kind of impact on these trends, for instance on the Y axis. The
resulting picture will bring the trends in four segments, each leading to different
conclusions as to how to react to each trend:


62

Aware
Trends in the bottom left segment have no direct impact on your core business, and
you don’t have any type of impact on them. You can afford to neglect them, although
it might be worthwhile to keep monitoring their evolution. For instance: a retail
chain specialized in local food might not evidently be impacted by the globalization
trend. However, it needs to monitor this trend since it might lead to new forms of
competition in the future.
Monitor
Trends in the bottom-right segment will affect your core business, but there is very
little you can do to influence them. You should however monitor them closely to
prepare your business to their effects. The most obvious examples of trends in this
segment are the ones that are likely leading to changes in regulations in your
industry, like the ones that will result from climate change.
Action


63

Trends in the top-right segment will affect your core activities and you can actively
influence them. These trends require immediate action or preparation (dependent
on the timeframe of these trends), but chances are high that you –as well as your
competitors- are already doing something with them, since they form obvious
opportunities in your industry. A good example is how pharmaceutical companies
prepare for the ageing population trend.
Influence
The trends contained in the upper-left segment undoubtedly offer the biggest
opportunities for your company. These are trends that are not directly affecting your
core business, but on which you exercise some kind of influence. Since these trends
will most probably affect other companies or industries in their core business, the
influence you have on them will give you the chance to position your company
favorably, or to develop new products and services for these companies. As an
example, look at the way the scarcity of natural resources might relate to mobile
telecommunication operators. The core business of these operators is to offer
connectivity, so even if mobile telephones are full of components made of materials
that are getting scarcer, this is not directly affecting their core business (they could
still offer connectivity using old phones, for instance). However, they could build a
new business for green phones, or phones designed on a cradle-to-cradle principle,
hereby countering the threat resource scarcity poses, uncovering and serving a
completely new client base, and build a completely new ecosystem of mobile phone
providers.
There are of course many other ways to map megatrends as a way to draw
conclusions from them. One such way would have a timeline of the development of
these trends, showing the urgency with which you need to respond (or not) to the
effects of these trends.
Regardless of how you organize this exercise or the way you map the trends, the
most important thing to keep in mind in order to make this exercise successful is to

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Market intelligence for decision makers - ideas on how to make corporate decision making more data driven with minimal efforts and costs

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