Editor's note: Judi Hess is president of Customer Perspectives, Hooksett, N.H.

I first learned the importance of competitor intelligence in business graduate school. There, our professors emphasized that every business is duty-bound to understand not only who its competitors are but also their competitive strengths and weaknesses. Only then can you evaluate your own firm’s relative SWOTs (strengths, weaknesses, opportunities, threats). Knowing more about your competitors will thus help your business grow and succeed.

While traditional market research is a tactical, methods-driven discipline that measures beliefs and perceptions through surveys or focus groups, competitor intelligence uses both primary and secondary research and goes beyond answering existing questions to raising new ones and guiding action. A broad definition of competitive intelligence, or CI, is “the legal and ethical activity of systematically gathering, analyzing and managing (publicly available) information on competitors.” This is in sharp contrast to industrial espionage, which can be described as attempting to obtain trade secrets by dishonest means, as by telephone- or computer-tapping or infiltration of a competitor, etc.

Our firm first started offering competitive intelligence in 1992 by conducting product comparison mystery shops. These consisted of either visiting or telephoning key competitors to ascertain the pricing of various products. Since then we have been asked to shop the competition for a wide variety of reasons, primarily focusing on relative prices and customer service skills.

A supplier of furnishings and equipment for trade shows and events wanted to know what its key competitors charged for delivering and renting chairs, tables, bar stools, plants, wall hangings, etc., so it could review its prices and learn what was included in delivery and set-up fees as well as assess lead time needed by competi...