Overcoming "NET DISEASE"
The Risks in Depending Solely on the Internet for Competitive Intelligence Research

Article on US marketing by Chuck Klein

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.


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:


Type of Information


Likelihood of finding data on the Net if a Publicly held company


Likelihood of finding data on the Net if a Privately held company


Total annual sales of the targets


Very high


Very low


Sales and profitability for particular product lines or in specific channels of distribution


Very low.

Even publicly held companies refrain for releasing sales data per product line or channel


Very low


The market sizes in the segments of interest (often small niche markets)


Depends on the market. For large, dynamic markets, the likelihood is high. For many other "niche" markets, the likelihood is low


Same as for a publicly held company


Trends in marketing, technology and distribution

Same as above


Same as for a publicly held company


Prices, including the lowest prices offered to the best customers


Very Low


Very Low


Competitor marketing strategy - present and future


Some information may be available from trade articles and analyst reports - likely to be incomplete and not up to date


Even less than for publicly held firms


Sales and technical literature on competing products


Strong likelihood to find at least some sales oriented information on company web sites. Less chance for detailed technical information. Both may be incomplete


Even less than for publicly held companies


The number of people working on particular products or in certain departments


Highly unlikely


Highly unlikely


Compensation levels


SEC information will show compensation of top management. Others are highly unlikely to be found.


Will not be found


Customer opinions regarding competitor strengths and weaknesses


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.


Less likely than for a publicly held company


Feedback on their own products and services


Will not be found


Will not be found


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.


A Brief Case Study

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

Secondary Sources

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.

 

Primary Sources - the place to find "Juicy Information"

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.



CONCLUSION

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.

Amcon's web site is: www.amconmarketing.com

e-mail: info@amconmarketing.com

Executive Recruitment Part-Time Sales Manager Recruitment Rep Searches
Marketing Intelligence Strategic Partner Searches Business Plans
Seminars and Workshops