‘Intelligent’ Companies Scout Rivals

Nutrasweet’s patent on the artificial sweetener aspartame was due to expire in 1982, and the company faced possible disaster as chemical and sugar companies planned moves on the market.

So Nutrasweet Co. began analyzing competitors’ prices, customer relations, expansion plans and advertising campaigns. The company used the information - called competitive intelligence - to cut costs, improve service and preserve most of its market.

“We maintained over 80 percent of our market,” Chairman Robert E. Flynn said.

With increasingly tough global competition and helter-skelter advances in information technology, many companies are forming their own competitive intelligence units. They’re also turning to consultants and “information vendors” for help.

“There’s much less room for mistakes than there was in the past,” said John E. Prescott, a professor of business administration at the University of Pittsburgh.

Flynn said competitive intelligence practices are worth $50 million a year to Nutrasweet.

But for something so valuable, competitive intelligence is a nebulous commodity.

Competitive intelligence combines strategic planning and marketing studies. Much of the raw material is readily available from press clippings, government records, trade shows and industry experts, Prescott said.

Other sources of information can be touchier. Observation of competitors’ activities and interviews with suppliers, customers and former employees are used, but raise ethical questions.

The field is growing. The Society of Competitive Intelligence Professionals, which Prescott helped found in 1986, now has about 2,800 members compared with 1,800 only a year ago, spokesman Charles Eaton said. The members include professionals in companies as large as AT&T and General Motors and as small as two-person consultant firms.

David Harkleroad of the Connecticut-based Futures Group, a business forecaster, said the battlefield of the marketplace has become so tough that competitive intelligence is a necessity.

“The smart companies are realizing they can’t afford not to do competitor intelligence,” Harkleroad said.

It’s more than just knowing the enemy. Good intelligence can help pinpoint narrow markets and keep a company from moving into overcrowded areas and from wasting research and development money on projects competitors have abandoned, Prescott said.

Prescott said an intelligence unit also can find strong and weak points in a company’s own operations.

Although competitive intelligence professionals take pains to play down the James Bond image, many companies are as tight-lipped about their work as any espionage agent.

“Sure, we have an activity, and it’s important, and it has value, but it’s something we really don’t get into,” said PPG Industries Inc. spokesman John Ruch. “We don’t talk about competitive intelligence for a variety of competitive reasons.”