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OVERCOMING "NET DISEASE"
The Risks in Depending Solely on the Internet
for Competitive Intelligence Research
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| Net Disease is Catchy |
I recently spoke at a workshop attended by managers of non-American high tech companies who are focused
on the American market. When I asked the participants what type of information can be found on publicly
held US companies, the response was disturbing. Numerous high level managers responded that everything
you would want to know about a US public company can be found via the Internet or on-line data bases.
In other words, from their perspective, if the data is not on the Net or in data bases then it probably
can not be found at all.
This attitude represents a common symptom of what I call "Net disease", a condition which allows otherwise
rational business people to think that CI begins and ends with the World Wide Web. While this perspective
exists among many US managers as well, it is even more prevalent with non-American managers who see the
wealth of US business information on the Net and fail to understand its limitations.
While I am not trained in psychology, I concluded that part of this attitude is based on sub-conscious reasoning.
Non-American managers WANT the Internet to be the one and only information source because:
 It does not require them to speak - While most
non-American managers in high tech firms speak more languages than American managers, for most of them English
is not their mother language. Conducting interviews via telephone can be a scary thought so they prefer
other methods. Thus, the Net is non-threatening.
The Net does not require them to travel - Especially with small and
medium sized companies - even more so with start ups - managers are working with limited financial and time
resources. Net and data base information is low cost and can be gathered from almost anywhere on the globe
without paying travel expenses.
It reduces or eliminates the need for consultants - Why spend limited
budgets on outside consultants when, from the limited perspective of these managers, everything you need is
on the Net?
Despite their reliance on the Internet when discussing publicly traded American companies, participants agreed
that the Net and other secondary sources were clearly insufficient when investigating privately
held firms. They definitely had an interest in information sources on privately held US corporations although
they really had no idea how to start. We attempted to explain that for both public and private U.S. companies,
the information that will often be key in making strategy decisions - what we call the "juicy" information
- will usually come from human sources.
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| Their Information Needs |
When we asked these same managers - exporters and potential exporters to the USA - what information they
are seeking on their competitors, they began to realize that not everything they needed is available from
published, secondary sources. Their collective information "wish list" looked something like this:
Annual sales of the competitors
Sales and profitability for particular product lines
or in specific channels of distribution
The market sizes in the segments of interest (often small niche markets)
Trends in marketing, technology and distribution
Competitor pricing, including the lowest prices offered to the best customers
Competitor marketing strategy - present and future
Sales and technical literature on competing products
The number of people working on particular products
or in certain departments
Compensation levels
Customer opinions regarding competitor strengths
and weaknesses
Feedback on their own products or services
While one could add to the list, these were the key items the potential US marketers were seeking. We then
asked each participant, each with his own set of competitors, to consider where the specific information
they needed might be found and if was possible to find it on the Net or other on-line sources. Working together,
we came up with the following chart:
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Type of Information
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Likelihood of finding data on the Net if a Publicly held company
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Likelihood of finding data on the Net if a Privately held company
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Total annual sales of the targets
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Very high
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Very low
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Sales and profitability for particular product lines or in specific channels of distribution
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Very low.
Even publicly held companies refrain for releasing sales data per product line or channel
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Very low
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The market sizes in the segments of interest (often small niche markets)
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Depends on the market. For large, dynamic markets, the likelihood is high. For many other "niche"
markets, the likelihood is low
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Same as for a publicly held company
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Trends in marketing, technology and distribution
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Same as above
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Same as for a publicly held company
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Prices, including the lowest prices offered to the best customers
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Very Low
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Very Low
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Competitor marketing strategy - present and future
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Some information may be available from trade articles and analyst reports - likely to be incomplete
and not up to date
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Even less than for publicly held firms
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Sales and technical literature on competing products
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Strong likelihood to find at least some sales oriented information on company web sites. Less chance
for detailed technical information. Both may be incomplete
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Even less than for publicly held companies
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The number of people working on particular products or in certain departments
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Highly unlikely
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Highly unlikely
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Compensation levels
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SEC information will show compensation of top management. Others are highly unlikely to be found.
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Will not be found
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Customer opinions regarding competitor strengths and weaknesses
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Possible basic information from trade articles or industry reports. At best, likely to be incomplete
and out of date. At worse, may be non-existent.
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Less likely than for a publicly held company
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Feedback on their own products and services
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Will not be found
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Will not be found
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CI professionals reviewing the above chart could take issue with one point or another, based on their particular
experiences. Nonetheless, the big picture is clear: Many of the critical types of information needed by
these managers is not available, in most cases, from the Internet or other secondary information sources.
Once our seminar participants thought about these issues - point by point - they were convinced that additional
information search methods were needed beyond the Internet, even when targeting publicly held American companies.
Interviews with primary information sources such as industry experts, distributors, reps, dealers, suppliers
and the competitors themselves could all provide pieces of the puzzle needed to make strategic decisions.
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| A Brief Case Study |
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A non-American company recently asked us to find key business information on competitors and the
industry overall for a very specific consumer electronics product sold in the United States. The item,
which we will not reveal, is a real niche product, a sub-category of a sub-category in the US consumer
electronics field. We were asked to find the following information:
The size of
the market
The names of the key players
CI on these key players including their marketing
strategy for this niche market.
Typical profit margins
The location where competing products were manufactured
(offshore) and by whom
Key US distribution channels for the product ranked
in order of importance
The most popular model, among several that were on the market
Product and manufacturer strengths and weaknesses
Technology trends for related products
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| Secondary Sources |
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A variety of secondary information sources were used to try and find information or leads to information
sources. They included:
On-line data bases
Trade magazines
SEC reports and other US Government data
Investor meeting summaries
Packaged research
Trade association publications
Web company data bases and other sites
Net forums
Web retailers
Analyst reports
Company newsletters
USDOC statistics
Court records
A report from a state government that provided funding to one of the
targets
Despite a major effort at evaluating secondary sources, we found little useable information. We then
turned to primary sources.
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| Primary Sources - the place to find "Juicy
Information" |
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Recognizing that this is a very niche market, we began by asking ourselves "Who else needs or would
have this information". Interviews were conducted with: The former president of a major retail chain,
sales reps in the field of interest, a retail chain buyer (referred to us from the former president),
2 trade magazine writers, a stock analyst, a competitor product manager, a competitor's investment relations
department, the former president of one of the key competitors, the business editor in the town where
a major player is located and an independent consultant who specializes in the industry we were researching.
While finding respondents required some digging and powers of persuasion, many potential respondents
were ultimately located and those listed above were actually interviewed. Each contributed something and
several provided quite a bit of useful information and additional contacts. In the end, we found most
of the information we were seeking utilizing human sources. And in case a reader will think that getting
the information was a lengthy process, the entire investigation with both secondary and primary sources
was completed within 30 days.
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| CONCLUSION |
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The Internet is the ultimate secondary information resource and CI managers, as well as service providers,
should embrace it as a major tool in finding business information. However, managers who fail to recognize
its limitations will overlook opportunities to find outstanding vital data to aid in making key business
decisions, putting them at a clear disadvantage as compared to their competitors who utilize human information
sources. Executives suffering from "Net disease" should quickly seek out the antidote - a systematic
use of human information sources!
About the Author:
Chuck Klein is managing partner of Amcon Marketing Strategy International, which specializes in helping non-US
companies profit in the USA. Amcon provides tangible marketing and human resource services in the US including
market studies, competitive intelligence, strategic partner searches, rep searches and executive recruitment
serving clients worldwide.
Klein is considered an expert on US marketing for non-US manufacturers and international trade. He has published
over 100 articles and presented numerous seminars and lectures on marketing skills and strategy for non-US manufacturers
interested in the American market. His book Marketing to America: How non-US Companies can Profit by Selling
in the USA was published by the Financial Times/Prentice Hall. He can be contacted via e-mail at: info@amconmarketing.com
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