Editor's note: Kirk Tyson is president of Chicago-based Kirk Tyson International.

Business-to-business research in the age of time-based competition is taking on a new look. It's called business intelligence, and everyone is getting into the act.

Companies are now realizing that more timely and relevant information about competitors and other market players is necessary for making good strategic business decisions. Companies now know that a once-a-year analysis of their business environment is not enough. Markets are becoming increasingly global, and the information revolution is slashing the time available for effective decision making.

Business intelligence evolved in the 1980s as a hybrid function of strategic planning, marketing research, and systems activities. It is not a function that replaces these activities, but augments them with time-based methods. Most companies have been developing or fine-tuning their business intelligence function over the last several years.

In the 1970s companies were just starting to engage in strategic planning activities on a broad scale. Competitor analysis, customer analysis, and supplier analysis were important ingredients in that overall process. However, most companies were not organized to collect and analyze the information in a routine and systematic way. In addition, research and planning activities were separate functions with non interaction.

The emphasis in the 1970s was on developing strategies. Today's focus is on implementing them. Because of the new emphasis, strategic decisions must be made on an ongoing basis. Ongoing strategic decisions require a continuous stream of information. Business intelligence systems provide this continuous stream.

The number of companies developing intelligence groups has risen sharply. Most companies have focused on competitors and have chosen to develop a competitor intelligence function. It is not uncommon today to find the job title of Manager of Competitor Intelligence on a company's organization chart. The concept of business intelligence has been around a long time, but in the late 1980s it finally came of age. The intelligence group no longer consists of a secret file cabinet in the researcher's office. Companies are no longer bashful about their intelligence activities. In fact, there is now a Society of Competitor Intelligence Professionals with almost 2,000 members.

Business intelligence does not require the knowledge and use of sophisticated techniques or the development of new skills that are not currently available somewhere in most organizations. Rather, it is focusing existing skills and techniques in a direction and for a purpose that is new to many companies.

Four success stories

Let's move beyond the generalities and take a look at four examples that show how companies used intelligence to gain a competitive advantage.

Construction of a New Plant: Not One but Five

SITUATION: A large consumer products manufacturer discovered that a major competitor to several of its product lines was building a new plant. It was unknown whether the plant would produce directly competing products or, if so, what competitive advantage the competitor hoped to gain by constructing the new facility.

RESULT: Discussions with community leaders, architects, construction personnel, and plant management revealed the competitor's plant was slated to produce directly competing products. It was also learned that the new plant was being designed to significantly reduce manufacturing costs. It appeared that the competitor would begin competing on the basis of price rather than differentiation. The intelligence efforts also yielded the fact that the company was not building just one plant, but five! As a result, the company modified its sales approach to deflect the price issue and build on the strength of its product features.

New Product Strategies: Back to the Drawing Board

SITUATION: A medium-sized manufacturer of consumer electronics equipment was facing declining sales and market share because of the inroads of two privately held companies. Company management felt these two companies were gaining market share because of new product features being offered.

RESULT: Interviews were conducted with customers, securities analysts, suppliers, trade journal editors, and the competitors themselves to uncover the product strategies. As a result, the company determined how best to modify its own product design to avert further market share erosion.

R&D Activities: Development of a Revolutionary New Product

SITUATION: A health care equipment provider was interested in know ing the research and development projects of a key competitor.

RESULT: Interviews with competing R&D personnel revealed the competitor had several new products under development. One of these products had the potential of significantly altering a key part of the industry. As a result, the company redirected the priorities of its R&D group to develop a similar revolutionary product.

Acquisition: A Rock Thrown in the Pond

SITUATION: Employees of a large manufacturer had heard rumors of a significant competitor being acquired. If acquired, the competitor would have the additional resources it needed to become a national threat. It could expand its previously narrow product line and increase the size of its sales force.

RESULT: The rumor was confirmed in time for the company to prepare the needed marketing program to address the market changes.

These examples illustrate how business intelligence has many positive results for organizations, large and small, in almost every industry. What makes business intelligence different, however, is that these results were generated in hours and days instead of the weeks and months that would be required with more traditional research and planning methodologies.

Respondents were asked to evaluate them. However, special attention was paid to creative executions that mirrored the positive, upbeat attitudes and expectations of the target market. While the respondents thought they were evaluating substance and content, their responses also were used to confirm that the tone and feel of the creative message were on target.

The terms used by respondents to describe and evaluate the test materials were carefully monitored. When the terms matched up with those used to describe personal and business expectations, the moderator probed farther. In this way. it was possible to fine-tune the creative "climate" to match the respondents' expectations, and to couch the product offering in ideas the target market was predisposed to agree with.

"To reposition the product and generate leads, we tested a series of 'blitzes.' Previously, our Centrex advertising budget had been dispersed to major markets, maintenance style, over a full year. Now we reallocated the budget, investing about three-quarters of the year's dollars in selected markets for a compressed, eight-week period," says Indiana Bell's Bob Clark.

"This gave us freedom we had not enjoyed before," says Handley Miller's Scott Christie. "We could increase frequency, we could use color, and we could employ multi-media continuity over the entire eight-week advertising flight. We were able to 'tease' the campaign before revealing the full message. We developed two direct mailers, small and large newspaper ads, radio spots and a fulfillment kit."

Different approach tested

According to Clark, three separate markets were identified, and a different approach was tested in each. In the first test market, an agent calling program was used as a control. The agents were supported by a database that had been developed earlier. Likely prospects were identified by name so that the agent could call directly on the decision maker(s).

In the second test market, the agent calling program was preceded by a two-step direct mail program. Again using the previously-developed database, the direct mail campaign was able to personalize the mailings. In the third test market, measured media (newspaper and radio) was added to direct mail and the calling program, in a sustained eight-week campaign.
 
"We had a unique opportunity to measure results," says Clark. "We wanted to make certain we did so as thoroughly and effectively as we could. First, we measured customer attitudes using pre- and post-blitz survey research in the three markets."

Compared with the control market in which the agent calling program stood alone:

  • The market with direct mail showed a 2% increase in product awareness and an 8% increase in Centrex as the "system of choice."
  • The market with both direct mail and measured media showed a 24% increase in product awareness and a 25% increase in Centrex as the "system of choice."

"Because we invested time and resources in building a solid database, we were able to track inquiries, monitor lead activity, and measure actual sales generated by the program," says Indiana Bell's Jim Talhelm.

The control market, which relied exclusively on agent calling, produced a 15% response rate. This rate, standing alone, was about 4-5 times the response rate for past Centrex efforts, and well above the 2-3% rate often projected for direct response programs. The second test market, employing both direct mail and agent calling, produced a 23% response rate. The third test market, in which measured media was added, produced a still-higher 28% response rate.

"Finally, we analyzed our return on advertising dollars invested, and produced over a ten-to-one return in the test program," Talhelm says.

Based on this experience, Indiana Bell rolled the full program into other markets in late 1990 with equally impressive results. "Two of the state's largest markets produced $15.77 and $24.77 in revenue respectively for each advertising dollar invested. In one tri-city market, return has been $5.88 for each dollar invested in advertising. And the last market, in an isolated area of the state, showed a return of $49.01 for each ad dollar invested," Clark says.

What is responsible for producing these results? "Nothing we did was truly revolutionary, although we tried to be creative every step along the way. Indiana Bell was willing to commit the time, resources and investment necessary to do the proper job," Christie emphasizes. "Too often, marketers give lip service to an integrated marketing/advertising process, but aren't willing to invest in it or listen to what the results tell them," he says.

"Clearly, the return-on-investment results demonstrate that making a well-conceived investment which is properly pre-tested and evaluated will pay handsome dividends."