Business Intelligence vs. Competitive Intelligence

Instructor: Joanna Corneanu
In this lesson, we will examine the differences between business intelligence and competitive intelligence and discover how we can leverage these concepts in real life.

Business Intelligence and Competitive Intelligence

When looking at today's business world, you will see an increased emphasis on technology. More specifically, you'll see how business owners or companies use the information derived from data to either increase their sales/customer base or improve their position in the market.

Business intelligence represents, in this sense, the use of technology to identify, analyze, and manage a company's internal data. This data includes, but is not limited to: sales figures, net and gross profit, numbers of total customers, customer retention rates, and customers' age groups and income levels.

Competitive intelligence, on the other hand, represents the use of technology to analyze other companies' information, primarily for benchmarking purposes. This information may include competitors' sales and profit margins, market shares, strategic mergers and acquisitions, and industry trends.

Real-Life Example

To explore the concepts of business intelligence and competitive intelligence, imagine you're the owner of a coffee shop. You have been in business for a couple of years now, so you have numerous repeat customers who absolutely love your coffee products. Your coffee shop is located in downtown Atlanta, which is a great area for business. However, due to the popular location, there are several other coffee shops that offer equally good products. Your objective for this year is to retain your existing customers while growing your business by at least 20% from last year.

You want to increase your sales and attract more customers while also retaining existing ones, so you need to constantly improve your business and products. Where should you start when you have a limited budget? Analyzing what works well in your current business is a logical first step: look at the coffee products that your customers love, look at the pricing model and sales trends, look at your loyal customers and their buying behaviors.

You can then analyze areas that may need improvements, such as products that do not sell well. Furthermore, you can also encourage your customers to provide candid feedback on how you can improve your business. Perhaps you can offer reduced prices during weekends and holidays, or change the menu selection to include more coffee flavors. All this internal data analysis represents what we defined earlier as business intelligence. You're using the data accumulated from your business to further improve your practices and grow your business.

As you grow into the market and expand your operations by opening new coffee shops in other popular locations, you need to pay careful attention to your competitors. What works well for them? Are they incentivizing their customers with a rewards program (e.g. buy five coffees and get one free)? Are they offering student discounts? Do they have a large selection of flavored lattes? Do they offer food options?

All this information relates to the concept of competitive intelligence, which is a powerful analysis that can help you to better understand your competitors' business models and strategies. By knowing industry trends and competitors' models, you can better position your business in the marketplace.

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