Market Intelligence … is there any term commonly used in business more elusive than this? Generically defined by Wikipedia as the information relevant to a company’s markets, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining market opportunity, market penetration strategy, and market development metrics, it is often used as a catch-all phrase these days for conducting various types of market research, justifying various half-cocked go-to-market strategies, and ramrodding “best-practices” down the throats of an unsuspecting workforce.

Generating about 2.75M hits from a Google search, we see that it is supposed to lead to “insight”, “strategy”, “competitive domination”, “better business decisions”, and a “trip to Britain“. Some firms (predominantly dominated by stats wonks) seem to define it as metric-driven benchmarking while others (predominantly dominated by industrially-focussed behavioral psychologists) define it as customer-driven case-studies. Some benchmark using production data while others use sales data, some benchmark using forecast data while others follow the whim of the stock market. Which leads me to conclude that no one really has a good handle on what market intelligence is, yet alone how to go about it.

Thus, even though I defined it as the information you need to make the right buy from the right supplier at the right time, which I still maintain to be the best definition you’re going to find anywhere, and even though I gave you some great questions to ask when seeking out a firm to undertake market intelligence research on your behalf (in my X-emplification series), I think we need to step back and try to figure out what the informational components of market intelligence are, so that you will, upon completion of your project, be in position to make the right buy from the right supplier at the right time.

Although it’s hard to come up with a complete list, since the requirements seem to change by the day, the market, and the whim of the economists trying to steer the market (in utter futility, I may add), I really liked Robert Hanfield’s starting checklist, which, amaziningly enough, I found on the ISM Site. Robert Handfield is the Bank of America Distinguished University Professor of Supply Chain Management at NCSU and Director of the Supply Chain Resource Cooperative, which, if you undertake your own “market research”, you will discover to be one of the few academic-driven sites that actually has meaningful materials in its resource center from an industrial perspective.

Rob’s list is the following:

• Forecasts and Price History
  You can’t negotiate a good deal without good insight into the size of the buy, the price history, and the relationship of the price to market conditions. For insight into good forecasting methodology, check out the posts in the Forecasting category.
• Supply Base Market Share
  How much of the market does your supply base command. If they are power players, they are in a position to negotiate good prices on their raw materials and their costs may be less than market average. If they are minor players, their costs are probably higher and to get value from the buy you’ll likely have to focus on value-add.
• Specific Supplier Analyses
  Focus on the suppliers you will be inviting to the bid and suppliers who dominate the market. What are they producing, where are their inputs coming from, where are they going (market-wise), and how are they doing financially?
• Capacity
  Do they have excess capacity or are they almost at their capacity? Can they grow with you, or will you have to look elsewhere?
• Buyers
  Who else is buying in your industry, and, more importantly, who’s buying outside of your industry? The appearance of a new market or player can often drain excess capacity rapidly, which could quickly shift the balance of power from the buyer to the supplier.
• M&A Activity
  What’s happening, why, and will it affect your supply base?
• Value Chain Analysis
  What are the key cost drivers in the lower tiers of the supply chain, and, just as important, what are the value adds that you can provide to increase the price you can ultimately charge?
• Cost-Drivers and Should-Cost Driver Identification
  What’s driving your cost – and what should your cost be. Before you source a part, know if the starting point of the negotiation should be $5 or $1. For example, in a recent project for a large customer, Apriori determined that if a different fabrication process were used, the cost for a very simple part could be reduced 80%!
• Emerging Technologies
  Are any new technologies on the horizon which could reshape the market and your potential place in it?
• Porter’s Five Forces Analysis
  It’s important to understand the power balance, or inbalance, that exists between your company and its competitors, and this is what Porter’s Five Forces, done properly, will capture. (For my high-level analysis of what the forces were going to mean, in general, for Supply Chains in 2008, see this post.
• Ultra-In-Depth Risk Analysis
  What could stop you dead in your tracks? If you don’t know, you haven’t even begun a thorough market intelligence research project. Identifying risks, and then the precautions you can take to prevent them, or at least minimize their impact, is a fundamental key to success.
• Currency Projections
  What happens if the US Dollar sinks again? Or the Yen goes on the rise? Don’t know? Then you shouldn’t be negotiating that contract yet!
• Government, Regulatory, & Socioeconomic forecasts
  Is the country you are thinking of doing business in run by a Hugh Chavez in training? If so, better think twice before investing hundreds of millions into setting up a new operation there (unless, of course, you like having your assets seized by the state).