Market Intelligence, does your company have an employee or department involved?

The ISM Glossary defines market intelligence as the process and the results of gathering and analyzing information about the aggregate forces (including economics) at work in trade and commerce in a specific service or commodity.

Not many organizations have this function today. Maybe it is time to check in to this.

Organizations spend on average 40-60% of their cost of goods sold on external materials and services. These organizations should devote at least as much time to supply market intelligence as they do to consumer market intelligence, as supply and demand must be balanced in the supply chain equation.

Types of information that should be collected and distributed in developing a supply market intelligence report include:

• Industry category overview
• Description of the category
• Total market value
• Major applications
• Product segmentation
• Cost management practices
• Industry efforts and initiatives
• Breakdown by major supplier/product/service
• Industry structure and global reach

How do you do this? As you know, we don’t use paper and pencil anymore. There are numerous tools to help structure this information in a useful format. Supplier analysis, SWOT, Value Chain, Risk Analysis and Porter’s Five Forces are only a few of the available choices. 

We hear more each day on Porter’s 5 forces analysis, which according to Wikipedia is defined as a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developed in industrial organization economics to derive 5 forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability.

Porter’s Five Forces include three forces from “horizontal” competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from “vertical” competition: the bargaining power of suppliers, bargaining power of customers.

This overview is just the icing on the cake. If you are really interested in market intelligence, you can find information on the web, bookstores and from many professional organizations.