There is one unifying characteristic throughout the most common methods of performing competitive business intelligence: They are all inexpensive. Information is often free in the digital age, except for the time it takes to dig it up. Every time a business makes it easier for a customer to learn something about its products or process, it simultaneously makes it easier for competitors to find out as well.
Competitive intelligence (CI) is the practice of discovering and analyzing useful information about a competitor business. In a sense, CI is akin to scouting an opponent in sports; the goal is to find out what the competition does well, what it doesn't, and determine how to use information to your advantage.
Competitive intelligence can be gathered by going through business ads or visiting the competitor's website. A company can learn which business practices consumers like best by searching through business reviews. None of these information-gathering techniques carry direct financial costs.
Businesses can also learn a significant amount by acting like a customer of their competitor. This can mean reviewing publicly available information, signing up for products or services, or taking tours of a facility. This is sometimes called industrial espionage.
Once a competitor's information has been collected, it should be critically reviewed. One method of doing this is known as SWOT analysis, since it considers the strengths, weaknesses, opportunities and threats. SWOT analysis is designed to make logical deductions about the useful aspects of an organization.
The end product of a competitive intelligence gathering process is called an intelligence digest. A good intelligence digest delivers actionable information specific to the industry and nature of the competitive relationship.
(For related reading, see "Business Plan: Analyzing Your Industry.")