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Automotive Competitive Intelligence 101: A Beginner's Guide

#JohnsonControls #TRW #Motorola


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The phrase "competitive intelligence" refers to the monitoring of a competitor's products and market activities through the use of an intelligence gathering process. In the automotive industry, vehicle manufacturers have whole departments and teams dedicated to product clinics, vehicle teardowns, vehicle cost analysis, and future product program monitoring.

Why do these companies expend tremendous resources and manpower on competitive intelligence (CI)? In a word: advantage. The smarter companies are able to filter this competitive data directly into their product planning processes, product design teams and purchasing departments. The old adage of "knowledge equals power" holds true for smart vehicle manufacturers.

Several large suppliers—like Lear, Johnson Controls, TRW and Motorola—also place a high value on CI. Many of these companies have large product teardown rooms, competitor product databases, and perform part performance analyses. But this is not always the case.

According to our recent research, only 23% of automotive suppliers have dedicated resources for CI activities. Most of the supplier-related CI activities are product analysis related with very little emphasis placed upon active competitor research. Without a view of the real competitive landscape, suppliers are in danger of being blind-sided by an innovative new technology or an emerging new player. Expending funds for CI research is an insurance policy to guarantee market competitiveness and long-term viability.

Here are "real-world" examples of companies employing good and bad CI fundamentals:

  • Recently, a European brake producer developed a new 4WD technology that offered superior performance to existing systems. After conducting extensive competitive intelligence, plotting a solid marketing strategy and deploying some of its key resources, this European supplier has won several contracts with major European car and truck producers for this new 4WD technology.
  • In the early 1990's, a major airbag producer determined that a new competing airbag inflator technology was not viable within the global airbag market. It stayed with its own existing sodium azide technology, and poured millions of R&D dollars into refining its existing technology. Within two years, new organic-based non-azide technology developed by two of its major competitors was introduced into the marketplace. This critical decision cost the company its perch atop the airbag inflator industry and allowed foreign competitors to capture significant contracts at this company's best customers. To prevent missed opportunities and decision-making gaffs, each company should possess:
  • Complete in-depth profiles for each competitor, including potential short-term and long-term market activity predictions.
  • Complete listings of each competitor's contracts, including length, product specifications, terms and estimated pricing.
  • Organization charts with name, titles and area of responsibility for each competitor.
  • Listings of each competitor's strategic alliances, joint ventures and affiliations. If your company lacks this critical market intelligence, how do you go about setting up an internal CI activity?

By coordinating your company's current resources—sales, engineering, purchasing and marketing department—suppliers can collect important competitive intelligence data and route that information to a central coordinator for compilation, analysis and distribution to your company's top strategists:

Sales. By interacting with your company's customer base on a daily basis, sales personnel are the most valuable intelligence gathering organization within your company. By interacting with buyers, engineers and advanced product planning executives, sales representatives have access to a treasure trove of valuable data that can provide your company with a competitive advantage.

Engineering. By evaluating a competing product, engineers can determine the parts advantages/dis-advantages, manufacturability, technology level and strengths/weaknesses versus your company's current product portfolio. By interacting with OEM engineering teams, supplier engineers can collect information on future competitor products and systems.

Purchasing. Through existing relationships with Tier II/III suppliers, your purchasing organization can collect important data on your competitor's pricing structures, materials and supply bases. In addition, purchasing organizations can assist engineers in performing cost breakdown analyses on competing products.

Marketing. By synthesizing market intelligence for your company's sales, engineering and purchasing organizations, the marketing department can compile complete in-depth profiles of all major competitors and customers, supplier contract sourcing matrices (who has what business on what vehicle platforms) and product pricing/technology forecasts.

By working together, these departments can utilize existing staff and infrastructure to provide a higher level of competitive visibility to senior executives. Experience has shown that top CEOs and corporate officers rely on valuable market intelligence to plan mergers & acquisitions, new product development initiatives and corporate expansion into new markets.

Without it, your company could be one of the automotive industry's latest casualties.

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