CIP: Competition Intelligence Programme.

A classical economics theory treats competition as a force influencing market players and making them develop new products, services and technologies which would provide consumers with a wider choice and better products. A wider choice in terms of a classical theory leads to lower prices for products as compared to prices under the conditions of lack of competition (monopoly) or under low competition (oligopoly).

In fact, competition is a contest or rivalry between market players.
The term itself, derived from latin (lat. concurrentia, from lat. concurro — concurrence), means fight for preferences in a certain sphere of relationships. The term came into use as early as the ancient world, and it was exactly then that the basics of economics competition came into being.

Early economics research was focused on a difference between price and nonprice competition. Later economics theory studies the concept of competition from the point of view of a Walrasian theory of markets — the general equilibrium theory.

When formulating a competitive strategy, the Company is closely analyzing its ecosystem — carries out competitive comparison and analysis.
Despite the fact that forces effecting a company are very different and include both economic and social ones, a key element to the external environment is a branch of industry or industries where one is competing. A structure of the industry defines to a great degree the rules of competition, as well as a company behaviour and development strategy variations in a particular market. Those forces working outside the industry are to a greater degree rather relative. As far as outside factors as a rule effect all the participants of the market, a key to the problem solution lies in various capabilities of companies to interact with the forces.

The intensity of competition in a particular industry is not a random circumstantial coincidence. On the contrary, competition in one industry or the other stems from its fundamental economic structure and reaches far beyond the frames of active competitors.

A status of competition in a given industry depends on the five main competing forces:

Information is a substantial competitive advantage, and getting it — is a special marketing task.

Competitive intelligence is, first of all, a marketing instrument for studying the competitive environment. An instrument, which is focused on a target data collection about competition to enable management decisions on further company strategy and tactics.
Based on the understanding of a real competitors’ strategy, their self-assessment, available opportunities, it is possible to generate answers to key questions allowing to create a picture of a possible competitors’ reaction to various situations.

Correctly defined goals and a clear plan of work are well known to mean 50% of success.

The idea to structure and develop the existing practice at the time — competition intelligence — was put on the table early 2017. The programme is still «young» and is just getting momentum.

As noted above, the main task of the Competition intelligence programme is in the first place to provide for the professional advancement of the team. It is not so much commercial specifics of business practices of competing companies that we are focusing on; a substantive understanding of technical solutions by competing manufacturers along the VSP businesses is the foundation of the programme.

At the present stage of the Programme realization we have focused on two blocks / themes of it — Intrinsically safe solutions and Instrumentation products. The Programme leader manages the work of two groups in the Company, in which marketing specialists, accounts managers, and sales specialists participate.

All the activities of the Programme follow the main cycle — (1) data collection, (2) information analysis and conclusions, (3) implementation.

A product, its unique characteristics, marketing and commerce, logistics, general factors of operation (company culture), special marketing programmes, infrastructure, warehouse, number of employees…, financial indices — to get a comprehensive understanding of a competitor’s operation some maximum amount of information is required.

According to the theory, nearly 80% of all the required information, allowing to create a holistic insight into the object under research (in our case — a company), is publicly accessible.

We would like to give some examples of practices, which we are keeping in line with in terms of the Competition intelligence programme.


A detailed study of products and expert examination.
We practice purchasing competitors’ equipment and its detailed examination. For example, last year we purchased some instrumentation products (fittings and manifolds) from one of the suppliers in Russia, and our partner-manufacturer at a Parker Hannifin site in England carried out a range of tests on the received samples. Based on testing, a comprehensive report was generated which results we had an opportunity to present to one of our key customers in Russia. Such an approach provided for additional strengthening of a VSP position, of Parker instrumentation products as the main technical solution for oil refineries.
This year we purchased intrinsically safe barriers from one of the alternative, the so-called ‘grey’ suppliers. At present our company employees are working on the report on the received barrier samples, which we plan to discuss in detail with our partner-manufacturer Eaton Electric (former MTL Instruments).

A detailed analysis and technical characteristics comparison are undertaken by our specialists in terms of an Educational Programme — InPO (Individual educational programme). Summing up each stage of their research, the employees generate a detailed report and presentation for colleagues; the discussion covers special features of competitor’s equipment, and some preliminary suggestions are made as to a better way to present technical advantages of our solutions to a company customer.


Site, social activities, news generation activities study.
A company site constitutes the main marketing asset of a company. Each company has its own vision of the corporate internet-resource potential and is developing it in a unique way. Product focus, news activity, company information, marketing events, annual exhibition plans, vacancies information, customers and partnerships,… — practically all the necessary information on a company activities could be picked up from site.

Visiting regularly internet-resources and analysing social activity of competitors represent one of the key tools of PKR.

Exhibition activities.
It is common knowledge that there is nothing to substitute «live» communication. Interaction within a peer group at the venue of an exhibition, when VSP acts as an exhibitor or a competitor presents solutions at his stand, represents an important element of PKR. During exhibitions companies are demonstrating their latest developments, they try to make customers interested in new opportunities, special offers etc. The last, but not least, is that an exhibition format intrinsically implies communication opportunities. It is exactly at an exhibition venue that one may learn about the latest engineering achievements in process control, and discuss latest news. No doubt, exhibition activity as such is one of the efficient tools in a PKR set.

Price query.
It is probably the most basic, straightforward tool in the programme, but nevertheless efficient. On the one hand, prices to some extent for the same product group are more or less similar. On the other hand, all is in the detail. Understanding real pricing capabilities of a competitor while tendering, price generation policy for partners and engineering companies, for strategic customers, at the start of a new product sales campaign — all these constitute information one needs to navigate in well for successful development of a business line, for confident communication with customers.

Studying financial reports.
Financial statements by most of the companies in Russia are publicly accessible. Basic statements could be made available practically with no effort; in case more detailed official information is required, some minor additional fee would provide for it. Only impartial data allows objective evaluation of a business.

A tool set and opportunities for application under the frames of PKR for market research and understanding new engineering solutions are extremely wide, with the only limitation being participants’ imagination. In terms of a market research, company competitors investigation, we think it is fundamentally important to comply with unwritten ethical principles when communicating with participants within an eco system, and not to cross the line separating a healthy competition practice from an unfair activity.

Information lacking proper analysis is undoubtly without value. In terms of PKR, we have structured our activities in the following way. Two teams following PKR lines — intrinsically safe solutions and instrumentation products — are working on-line in the market applying practices as described as well. Once per month employees get together to discuss data collected and prepared suggestions. Once in half a year we make a detailed summing-up report, which covers conclusions and suggestions aiming at further optimization of the company operation.

Thus, based on results of PKR activities in 2018, we (1) have introduced a special marketing focus on one of the unique MTL solutions for Fieldbus — a unique twelve channel barrier 9391-FB2 MTL; (2) have launched a programme supporting an extended warranty for Parker Hannifin instrumentation products — a warranty period goes up to 24 months; (3) have accelerated a company warehouse programme, allocating some additional budget for its realisation during 2018; …