What is competitive intelligence? Why every online business studies the competition

Definition: Competitive intelligence, or “CI," is the gathering and analysis of information to predict competitive activity and inform future business operations & strategy. Competitive Intelligence helps online business gauge the marketplace and identify areas to compete against other ecommerce stores within an industry or niche.

Why competitive intelligence matters

CI is a critical means of forming new business strategies, presenting valuable insight into marketplace happenings. After research and structured analysis are performed, the information and insight gleaned often proves critically important to a business's strategies and operations. CI allows for the development and shaping of such strategies to better compete with other businesses. It also helps a business prepare for the launch of a new product, enter a new market or make any other type of strategic move.

It must be noted that most organizations use CI as a benchmark that helps determine where they stand in relation to other competing businesses. It can even be used to better understand the efficacy of competitors' product messaging and general market positioning. Ultimately, competitive intelligence is a means of explaining why certain companies win while others fail.

How to study the competition

Competitive intelligence helps an online business evaluate what their competition is doing — both positive and negative. Up-to-date CI reveals market trends before they're formally identified by industry news publications, helping companies to stay ahead of the competition. Though CI efforts require an extensive collection of data, the work can be integrated into existing analyses without an abundance of effort or time.

Competitive intelligence often focuses on some or all of the following areas:

• Pricing: Knowing how your product pricing compares to others in the industry is a great place to start with competitive intelligence. This is an arduous task to complete manually, so consider using an automated service to do this for you.
• Search Marketing: A major competitor may have a leg up on you simply due to a couple SEO or SEM techniques. From content strategy to title tag format, you can find a variety of quick wins by auditing competitors.
• Product Selection: If a competitor prominently displays a product you don't currently offer, it may be a sign of opportunity.
• Website Design: As Steve Jobs liked to say — Good artist borrow; great artists steal. While you want to make sure you maintain a unique identity, some of the best website optimizations can be informed by the competition. Just make sure you don't make an outright clone of another website and always employ a change in the spirit of your company's brand.

Learn more about how to perform a thorough competitive analysis for online businesses.