The workflow is tied to the chapter sequence:

• Level 1 — Descriptive analysis
• Level 2 — Explanatory analysis:
• Level 3 — Evaluative analysis
• Level 4 — Predictive analysis
  
  

What is Competitive or Market Intelligence

Competitive/market intelligence (CI/MI) is defined as an analytical process that transforms disaggregated company, industry and market data into actionable strategic knowledge about the position, performance, capabilities and intentions of target companies. CI/MI is both a process (data collection, verification, analysis) and an output (insights for decision-makers). Although the high-level sequence is straightforward—collect, process, analyze, inform—the underlying work is complex and requires methodical approaches, reliable sources and professional judgement.

Why competitors matter 

Competitors shape strategy, business development, product management and sales. A competitor can be an established peer in the same market or a company from a different segment or geography that could enter the market. The relevant competitor set therefore includes current direct rivals and potential entrants with the capability to impact the company. Understanding competitors helps anticipate their moves and assess likely effects on one’s own plans and performance.

4 Levels of Competitor Analysis 

To structure what “knowing well” means, use a four-level model of competitor insight. Each level increases depth and analytical effort:

• Level 1 — Descriptive analysis: who, what, where, when and how (facts, data).
• Level 2 — Explanatory analysis: why (motives, root causes, perspective of the competitor).
• Level 3 — Evaluative analysis: assessment of positioning, strengths, weaknesses and causes of success.
• Level 4 — Predictive analysis: forecasts, scenarios and judgments about a competitor’s future success or failure.

This hierarchy is directional: Level 1 provides the necessary factual basis for Level 2; Level 2 supports credible Level 3 assessments; Level 3 and the preceding levels are prerequisites for legitimate Level 4 forecasting.

Level 1: Descriptive analysis 

Level 1 answers the five Ws plus how. It is a fact-based descriptive profile drawn from public and internal sources: company websites, product literature, job ads, published reports, registers and other verifiable information. Typical Level 1 items include locations, number of employees (when available), organizational responsibilities (who runs R&D, who is head of sales), product portfolios, pricing approach, channels and published performance claims. Use standardized templates—business model canvases, checklists or comparison tables—to ensure data comparability across competitors. Michaeli recommended an audit exercise: choose two competitors (one “easy” with abundant public information and one “hard” with sparse data) and try to compile Level 1 facts for both; this reveals realistic gaps and collection effort.

Level 2: Understanding the Competitors Perspective 

Level 2 addresses root causes and motives. Analysts must attempt to think from the competitor’s perspective and make explicit the assumptions underpinning any explanatory claim. Useful frameworks include Porter’s industry forces and an AMC approach:

• Awareness: Is the competitor aware of specific market signals? How visible are its actions (announcements versus stealth moves)?
• Motivation: What is the competitor trying to achieve and what do they consider worth fighting for?
• Capability: Does the competitor have the resources, skills and organizational capacity to pursue those goals? Level 2 also looks for patterns in past behavior and signs of strategic intent. When Level 2 is well developed, analysts can derive plausible tactical and strategic moves—bidding behavior, sales initiatives, international expansion, diversification or merger and acquisition activities—and present reasoned likelihoods rather than mere intuition.
  
  

Level 3: Assessment and evaluation 

Level 3 evaluates how well positioned the competitor is. This includes analysis of:

• Strengths and weaknesses (internal resources, capabilities, gaps).
• Strategic success positions: which combinations of resources and capabilities allow the competitor to earn returns above industry average for a sustained period.
• Customer perspective: what customers value and whether the competitor’s offering meets that perceived need (perceived added value). Michaeli stressed that Level 3 often requires broader industry context (peer comparisons, suppliers, key accounts) and cross‑functional input—salespeople, marketing, and customer-insight experts—to validate judgements. He acknowledged subjectivity but recommended using structured parameters and relative benchmarking (industry average or peer group) to make assessments transparent and reproducible.
  
  

Level 4: Forecasting and scenarios 

Level 4 projects competitors into the future. Questions addressed include: How will the competitor react to change? Is it likely to pursue M&A, internationalization, diversification or alliances? Is strategic repositioning on the horizon? Level 4 work draws on Levels 1–3 and benefits from scenario planning and simulation (wargaming) exercises. Michaeli warned against “crystal ball” predictions: forecasts should be grounded in documented assumptions and methodical reasoning. The primary objective is to produce forecasts that are systematically better than intuition—“less wrong”—by combining evidence, structured reasoning and strategic foresight techniques.

What level do you need to achieve? 

Complete knowledge is unattainable; instead, the standard is to know enough to inform decisions. Michaeli recommended a pragmatic audit approach: select two competitors (one information-rich, one information-poor), map which of the four levels can be achieved for each, then ask intelligence consumers (decision-makers) whether the insights are sufficient. The objective is actionable intelligence that enables good decisions; often “less wrong” or “sufficiently accurate” is acceptable. Analysts should prioritize tasks: start with the minimal necessary facts and extend analysis only where added depth meets user needs.

Quantifying subjective judgments 

Assessments about whether a competitor is “well positioned” are partly subjective. To improve rigour and repeatability, analysts should:

• Define assessment criteria and parameters up front.
• Use simple scoring or rating systems where appropriate.
• Document assumptions and the evidence supporting each judgement. Michaeli introduced the notion of strategic success positions—sustained combinations of capabilities and market fit that generate above-average returns—as a central concept for judging competitor strength.
  
  

Organizing CI/MI 

CI is a collaborative discipline and can be organized in different ways to fit company culture:

• Central CI function: appropriate for hierarchical organizations; a dedicated CI unit coordinates data collection, in-depth analysis and dissemination, and typically reports to senior management.
• Community of Practice (CoP): appropriate for less hierarchical, more cooperative organizations; a network of contributors (field operatives, salespeople, product teams, gatekeepers) gathers observations and performs ad hoc tasks while a central coordinator stores and synthesizes knowledge. Michaeli emphasized low-cost, high-impact organization: many organizations can achieve significant value without heavy overhead by training a CoP, centralizing knowledge storage, formalizing reporting templates and encouraging regular contribution. He recommended measuring “return on intelligence” by tracking the impact of intelligence on decisions rather than focusing solely on costs.
  
  

Embedding CI into corporate routines

Competitive intelligence works best when it is embedded into everyday processes. Staff who regularly interact with customers, suppliers or markets are primary sources of intelligence. Encourage a culture of give-and-take: contributors share observations and benefit from the aggregated insights. Keep knowledge centralized to preserve institutional memory and make analysis reusable. Train community members for ad-hoc assignments and align outputs with the needs of decision-makers.

Closing remarks and practical tips

Mastering all four levels makes an intelligence function credible and useful: factual Level 1 data, thoughtful Level 2 explanations, structured Level 3 assessments, and disciplined Level 4 forecasts produce insights that enable managers to “call the shots.”

Being occasionally wrong is inevitable; what matters is systematic analysis, transparency of assumptions and alignment of intelligence effort with stakeholder needs. He encouraged participants to run the recommended audit, solicit feedback from users, and build CI practices that fit their organizational culture.