Pairing Up - Pharmaceutical Executive

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Pairing Up
More companies are folding Competitive Intelligence departments into Market Research. Here's why that strategy makes sense—and some hints on making the new relationship work.


Pharmaceutical Executive


In time, however, many companies found that the activities of the two functions routinely overlapped. Market-research and competitive-intelligence teams gathered data on market forces and competitors' products, analyzing market trends and highlighting potential opportunities to fill market gaps with new drugs. Rather than continue to duplicate efforts, companies began folding competitive-intelligence groups into their formal market-research departments.

Annual competitive-intelligence budget figures have since settled to between $500,000 and $1 million. Annual competitive-intelligence spending represents approximately six percent of the average annual budget for market-research teams. Cutting Edge Information's study found that 87 percent of market-research teams are involved in collecting and analyzing competitive intelligence. Indeed, some companies have dissolved their competitive-intelligence departments, despite great success.

Structure for Success

Many companies have made concerted efforts to form both strategic competitive-intelligence and strategic market-research teams. Some attempts have been met with success, while others have not. But for competitive intelligence to have an impact on corporate and individual product strategies, companies must structurally align their departments to maximize efficiency and avoid duplicated efforts—and they must emphasize communication between the two groups.

Take, for example, the case of one major pharmaceutical company at which formal competitive-intelligence gathering is a relatively new undertaking. In this company, all the market researchers have had to take on some competitive-intelligence responsibilities. The market-research group includes a competitive-intelligence manager who integrates all the market research collected on competitor products. He also contributes to brand strategy by introducing competitive analysis.

The competitive-intelligence manager formerly reported to the marketing organization, but now resides within market research. The structural change makes it possible for the entire organization to tap into its competitive-intelligence capabilities, thereby promoting a competitive-intelligence culture. Also, the company can incorporate it across the full product lifecycle.

Tight integration of market research and competitive intelligence makes sense for that company, but it isn't the right solution for every company, and there are some advantages to separating market research and competitive intelligence. In making the decision, companies should consider a few key factors:

Communication Communication between market research, competitive intelligence, and other organizational functions is key to optimizing the impact each has throughout the organization. One of the prevailing reasons companies give for combining the two functions is to ease communication. Market researchers often fail to realize that whenever they collect competitor information, they are in fact collecting competitive intelligence. The same is true in reverse—competitive-intelligence teams often collect information that can be very useful to market-research project teams.

Efficiency According to Cutting Edge Information's study, competitive-intelligence functions benefit when aligned with market research because they remain efficient and produce valuable analysis. Combining competitive intelligence with market research strengthens strategic planning as companies invest more in their data-gathering and analysis competencies.

Independence The growing concern among competitive-intelligence professionals within the pharmaceutical industry is that combining competitive-intelligence and market-research functions hampers the competitive-intelligence team's ability to present unbiased data. Competitive-intelligence groups need to analyze data and provide unbiased and sometimes unpopular options and recommendations. It is easier to go against party lines outside of marketing and market research. Being outside the marketing function allows analysts and their findings to be unpopular.

"You have to be a critic," says one market-research analyst at Sanofi-Aventis. "Not many people are willing to do that. It leaves them vulnerable and it's humbling. That's where the gold is. Without that, all the methodologies in the world won't yield the necessary results."

Culture Building recognition around competitive intelligence's strategic potential begins with developing a culture for competitive intelligence. Everybody involved in tracking market activities should understand competitive intelligence's importance and contribution. The competitive-intelligence group also requires a strong organizational voice to promote its successes and to continue affecting the company. Certain structures are more apt to generate a competitive-intelligence culture. Companies employing a centralized competitive-intelligence organization succeed at affecting overall corporate strategy.


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