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3.2_v2.qxdUsing Business Intelligence to Discover New Market Opportunities Using Business Intelligenceto Discover New MarketOpportunitiesJanice FratesCalifornia State University Long Beach Many companies have customers of which they Business Intelligence, Marketing, Competition, are only minimally aware, people who started using a given product while seeking a solution for an appar- ently unrelated need. These atypical customers repre- Janice Frates teaches health policy, management sent an untapped opportunity to grow the business in a new direction at minimal risk and cost, thereby Administration Program at California State University achieving competitive advantage. This paper discusses Long Beach. Prior experience includes: Business discover who these atypical customers are; Analysis Consultant for Kaiser Permanente HealthPlan (southern California region); Director (VP) of Planning and Government Relations for a Community Health Group, a Medicaid HMO and the San Ysidro adopt a continuing customer discovery process Health Center; Health Economist for the San Diego- into the firm’s business intelligence activities.
Imperial Counties Health Systems Agency; VP of a Organizational resistance to less readily apparent healthcare marketing and consulting firm specializing and more intuitive uses of business intelligence fre- in hospital-sponsored physician networks where she quently constrains the effective use of this application conducted demographic and market research studies of business intelligence. The authors discuss the prin- for physicians and hospitals throughout the nation; cipal reasons for this type of corporate myopia and and futures research management consultant for the suggest some arguments to counter it.
Lutheran Hospital Society of Southern California Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities during its transition to become the UniHealth system Seena holds a Master's degree in mathematics and the PacifiCare HMO conversion to a for-profit from New York University, and serves on several boards, including the Association for Strategic Frates received her Ph.D. from USC, with a con- centration in Health Services Administration. Her recent research and publications focus on Medicaid managed care, state health policy options to expandhealth insurance coverage for the uninsured, health Business Intelligence (BI) is most often about services for Limited English Proficient patients, and avoiding surprises and minimizing exposure to risk.
consumer directed health care. Her consulting proj- This important and necessary defensive strategic pur- ects encompass program evaluation, proposal writing, pose is the most common and easily understood ben- business development and market research.
efit of a firm’s business intelligence program, with the Seena Sharp established Sharp Market Intelligence highest perceived value for executives (Sawka 2002).
in Los Angeles in 1979 following a successful corpo- Earnings shortfalls, regulatory agency investigations, rate career in New York City. The firm’s innovative negative publicity, CEO firings and other adverse and comprehensive approach uncovers opportunities events often result from being caught off guard, not and potential threats, unknown customers, substitute anticipating, looking for, nor heeding, problem indi- competitors, alternative distribution channels, market cators that in hindsight were quite clear. Thus, many drivers, barriers to entry, trends and changing cus- BI tools and techniques are designed to seek out, interpret and explain early warning signals of danger The company is known for their ability to identify from unexpected sources (Gilad 2004, Rafii and early signs of market change, examples of which are published monthly in SharpInsights. Clients include In marketing however, the unexpected can be a Fortune 500 and emerging companies, in the US, good thing because it can lead to the discovery of new Europe and Asia, primarily when they are involved in customers and, through them, new market opportu- new market entry, line extensions, business develop- nities. In the pharmaceutical industry, it is not uncommon for physicians and patients to find that a Seena is a popular speaker at professional confer- drug prescribed for one condition has a beneficial side ences and associations throughout the US and effect on another. Viagra, the leading drug for erectile Europe, including Harvard Business School’s dysfunction, was initially developed as a hypertension Entrepreneurial Conference, and the European medication and Rogaine’s effect on hair growth was Business Information Conference. She has been discovered as a side effect of clinical trials for a quoted frequently, including the premier issue of prostate enlargement treatment (Croghan and Pittman Peter Drucker’s "Leader to Leader," "Competitive 2004). Another more recent example of a serendipi- Intelligence" by Larry Kahaner, The Conference tous product function is the use of mobile text mes- Board’s “Global Finance 2000," and The Los Angeles saging by deaf and hard of hearing people, a new and Times. Bylined articles include the Journal of unlikely group of cell phone customers.
Business Strategy, Boardroom Reports, Chief Information Officer, World Trade, Competitive What to call competitive intelligence is one of the enduring controversies in the field (Fleisher 2003).
We prefer and use the term “Business Intelligence” Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities (BI) to “Competitive Intelligence” (CI) in this paper are becoming substitute products or services in for two principal reasons. First, BI reflects a broader another market venue. Business intelligence enables strategic orientation and use for information than the firm to recognize and preempt substitutes early; to does the more narrow definition of CI. Business intel- spot opportunities for its own products to become ligence reflects what we consider the best meaning of substitutes for another industry segment (Sharp the term “competitive intelligence,” targeting any 1998); and to develop creative partnerships to pursue information in the business universe that affects a firm’s ability to compete (Sharp 2000).
A second reason for BI as our preferred termi- nology is that competitive intelligence is too fre-quently limited to competitor intelligence, which Why doesn’t every company already know about focuses on identifying, monitoring and understanding and apply this simple concept? Barriers to the use of specific current competitors. While an important BI include traditional marketing and management subset of competitive intelligence, competitor intelli- conventions as well as psychological, organizational- gence is insufficient, and potentially misleading. If all a company does is track known competitors within its own industry, it is likely to suffer from marketing Business intelligence is new knowledge, often myopia (Levitt 1960). The general business and CI lit- counterintuitive, that confronts long-held assump- erature is replete with examples of industries and cor- tions and threatens executives’ perceptions of their porations that were blindsided when unrecognized own expertise. A key marketing practice is to focus on competitors developed products or services which the heavy users, following the Pareto principle com- better met their customers’ needs. Classic examples monly known as the 80/20 rule. The Italian econo- mist’s work in the early 1900s demonstrating that a Railroads’ failure to recognize they were com- small percentage of causes produces a disproportion- peting with other modes of transportation, not just ately large effect has been widely adopted in mar- keting and management (Eisenberg 2002), because IBM and Apple’s struggle to dominate the personal typically 20% of customers account for 80% of rev- computer hardware market while Microsoft soft- enues. Quality guru Dr. Joseph Juran found that 20% of defects caused 80% of problems, and adapted the Microsoft’s original dismissal of the potential of Pareto principle in his characterization of the “vital the Internet (Gates, Myhrvold and Rinearson few and trivial many” (Reh 2002). Customer segmen- tation is one of the key principles of strategic mar- Business intelligence, with its broader perspective, keting, and customer segmentation analysis is a targets developments beyond the current competitors standard element in a firm’s external analysis. Its pur- and the immediate industry to anticipate significant pose is to identify and develop strategies to retain marketplace changes that affect both a given industry profitable customers (Fleisher and Bensoussan 2002).
and a particular competitive market arena. When BI Busy managers interpret the Pareto principle in prac- seeks to uncover threats from unlikely sources, the tice as an admonition not to waste time on customers competitive playing field becomes bigger, and its who fall below the 20% “vital few” cutoff point.
boundaries more fluid. The opportunity horizon like- However, the 80/20 rule focuses on past and current wise expands when companies use business intelli- customers, and is not useful for identifying customers gence to discover how their products have become or who represent emerging market segments. Future Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities growth opportunities are more likely to come from retrospective analyses of business surprise upsets typi- the atypical customers who are in the 20% revenue cally find that early warning signals were present, but ignored, and that highly placed and powerful execu-tives are particularly prone to hold fast to their internal convictions (Gilad 2004). As Harold Geneen Because BI focuses on the future, it is largely com- noted, “The worst disease which can afflict executives posed of soundings and signals that lack intrinsic rel- in their work is not, as popularly supposed, alco- evance or easily perceived applicability. They are not holism; it’s egotism” (TPCN Quotation Center 2004).
supported by quantitative data or even readily verifi- Johnson & Johnson (J&J) was one of the first able evidence, and are subject to a variety of interpre- companies to develop a cardiac stent, a device that tations. They are fragmented, and sometimes props open clogged arteries to facilitate coronary contradictory, and may require extensive cross- blood flow, and by 1997 dominated the market.
checking for coherence. These weak signals are hard Competitors with better and cheaper products moved to prove, and easy to ignore, so are often discarded into first and second place in the late 1990s, but in and may be irretrievable when managers belatedly April 2003 J&J appeared poised to recapture the lead recognize their value (Blanco, Caron-Fasan and Lesca with its new Cypher drug coated stent. The product 2003). By the time the information can be formally launch followed a strong campaign publicizing clin- verified, it is pretty much public knowledge and the ical trial results: In about 20% of patients who under- opportunity to respond to the early warning signal or went angioplasty with bare metal stents, the body’s to gain competitive advantage from it is lost (Raffi and natural immune responses produced scar tissue that re-blocked the vessel within six months but this occurred in only 7-8% of patients who received Powerful, charismatic leaders take great pride in being visionary and communicating their vision This breakthrough product generated a demand of widely, to the point where it becomes a mantra. But over 100,000 patients whose physicians were waiting corporate visions, and the strategies that flow from to use Cypher for their angioplasties. However, J&J them, can become obsolete and turn into blindspots had only 40,000 stents available because of two unex- (Gilad 2004). This happens so often that blindspot analysis has become a standard technique in strategic Administration (FDA). The first required shipment of and competitive analysis to identify potentially fatal the stents within six months of production and the flaws in the organization’s strategic decision making second established stricter standards for the coating capacity (Fleisher and Bensoussan 2002).
dosage. J&J believed that the FDA would, like European regulators, allow inventory shipmentswithin one year of production, and that it was com- plying with FDA dosage requirements. The FDA’s Surprise is inherent in business. An overwhelming actions forced J&J to remove tens of thousands of majority (92%) of middle managers working mostly stents from inventory and to refine its manufacturing in Fortune 500 companies reported in 2002 that process to demonstrate that it met the new higher within the past five years their company had been coating dosage consistency standards. J&J further surprised at least once by an unexpected event that antagonized its end user customers’ gatekeepers, the could have significantly impacted their firm’s long- physicians who select and the hospitals that purchase term market position (Gilad 2004). As academicresearch into surprise military attacks has revealed, Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities cardiac stents, with its high pricing and limited dis- The martial arts provide additional insights for Leveraging surprise for competitive advantage corporate strategists and business intelligence practi- requires using business intelligence more creatively.
tioners. Yoffie and Kwak (2001) argue that small firms For external environmental assessment, it is impor- or new market entrants can succeed against much tant to scan for signals of market change outside the larger and stronger opponents by employing judo known competitive arena and traditional industry strategy. Among the tactical elements of this approach boundaries. For internal strategic development, it is is leveraging the opponent’s strength so that it works vital to examine the firm’s customer base to identify against him. Boston Scientific exploited the antago- non-typical users with potential to become or lead the nism J&J had created with its inventory shortages and rigid pricing to capture 70% of the market for drugcoated cardiac stents within seven weeks of launching its competing product in March 2004 (Tully 2004).
While a company needs to pay attention to and Looking for and leveraging surprising findings nurture relationships with the 20% of heavy users provides another type of competitive advantage.
who generate most of its business, it should not When competitors are focusing their energies and ignore the remaining 80% of customers, who can add resources on increasing their market share of known value that goes beyond the limited sales revenue they profitable competitors, a company can use these find- currently bring to the company. Examples include but ings to develop new markets. Reebok’s parent com- pany had produced premier athletic shoes for men in Entrée to Other Markets - Closed caption TV is an the United Kingdom since 1890, and entered the U.S.
example of this type of market expansion. Originally market in 1979 with the most expensive shoes then developed for hard of hearing customers, it is now on the market. Noticing the growing participation of primarily used by people studying English as a second women in sports and exercise, in 1982 Reebok intro- language and in places where there is a lot of back- duced the first women’s athletic shoe for the bur- ground noise such as gyms, bars and airports. The geoning ranks of aerobic dancers. Reebok also noticed discovery of this expanded product usage opened up that women urban office workers were wearing run- new opportunities in both the business-to-business ning shoes to walk around the city, for lunch hour sector (noisy public gathering places) and the busi- shopping and between their offices and public trans- ness-to-consumer sector (limited English proficient portation. This discovery led to a new product line of women’s athletic shoes designed for street and casual Prestige and Influence - A celebrity or super- wear. After learning about a fitness instructor’s step affluent user enhances the visibility of any product. A training program to recover from a knee injury, product placement can inspire many fans and Reebok sponsored research on this new form of exer- wannabes to purchase. The “Operation Gadget” cise and used the results to launch Step Reebok in weblog typically focuses on product news and reviews 1989, then grew it into an international fitness craze of electronic gadgets. When the weblog editor noticed through partnerships with health clubs (Reebok Tour de France champion Lance Armstrong’s use of a 2004a). In 2000, the company further expanded its Blackberry handheld device on a television feature fitness product line with Core Board and Core about the cyclist, he posted an item speculating on Training strength and conditioning programs (Reebok which model the superstar athlete was using (Aiello 2004). In every market segment there are people andorganizations recognized as “leading edge” whom Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities others emulate. These people and organizations have the market leader. The follower position offers the the potential to create “buzz” for a product or service opportunity to learn from first-movers’ experience, that can become a trend (Gladwell 2000). Scrutiny of and come up with a version that is better, cheaper, or the customer data base to discover celebrities, opinion leaders and innovators allows a company to capitalize The French hotel chain Accor studied customer on the influence these users can exert on the larger value preferences to launch its Formule 1 line ofbudget hotels, and used what it learned to bridge two previously distinct market segments: Low price and high-cost, high quality. What customers Customers are looking for solutions to their prob- wanted was both affordability and a clean, quietplace to sleep. Accor eliminated high cost features lems, regardless of who provides them. By focusing of limited value, such as restaurants, lounges and on what customers value and what they are missing 24-hour receptionists, and cut the average cost of instead of beating the competition, companies can building a room in half by offering smaller rooms find opportunities to become true value innovators with minimal equipment and using modular pre- fabricated blocks with strong sound insulationproperties. This new approach made Formule 1 the new French hotel industry giant, with a market A superb example of a company that has grown share larger than the total of the next five largest and prospered by noticing and responding to what competitors (Kim and Mauborgne 2004b).
customers want to do is eBay, which has taken less Plano Molding Company has manufactured out- than a decade to become the world’s most popular door and tool storage products and organizing sys- Internet shopping site. When eBay created person-to- tems since 1952, selling its tackle, tool and small person online auction transactions, its original focus item boxes in sporting goods and hardware stores was on collectors (eBay.com 1998). When its cus- throughout the United States. Plano learned fromits retail distributors that a growing number of tomers began to start buying and selling used cars, tackle and tool box purchasers were not fish- eBay teamed with AutoTrader.com to launch eBay ermen, not tool users, and not men—but other Motors in April 2000. By December 2001, eBay people looking for a convenient, portable storage Motors was the most heavily visited automotive web and organizing system for a variety of small items.
site. In January 2002 the eBay Assurance Program was Conference and meeting organizers used the launched to provide warranty, purchase insurance, boxes to carry all the items needed for an offsite payment protection and inspection services to com- event; women purchased them for sewing andcraft items, and teenage girls bought them for plement the physical product purchase transaction cosmetic storage (Drug Store News 1992).
Rather than dismiss these anomalistic users, Plano started to offer its tackle boxes in bright colors in Looking at the product from the customer’s per- addition to the standard plain grey, and found that spective can reveal the total solution buyers seek in a sales skyrocketed. Plano launched its Caboodles divi- product or service by identifying new market niches sion in 1987 as a separate product line that grew rap- and additional product enhancement opportunities.
idly to become a new retail segment with sales Companies want to be innovative, but most new estimated at $150 million five years later, of which products are actually variations or enhancements of 80% went to market leader Caboodles (Drug Store something already on the market that the “innovator” News 1992). In 1998 Plano expanded the Caboodles does in a way that the customer perceives as adding line to include cosmetics, bath and body products more value. It is not always the smartest strategy to be (Brookman 1998), based on recommendations from Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities its 120-member teenager research panel. In early LeapFrog jumped over its traditional competitors 2004, Plano sold the Caboodles cosmetics line to a in the educational toy market when it forged a former company executive and a private investment partnership with the United States Department ofHealth and Human Services to purchase 20,000 firm. (Hoover’s Online 2004), and the current LeapPad electronic touch screen “talking books” Caboodles web site positioning statement describes for distribution to women in rural Afghanistan.
the company as “the complete teen brand.” LeapFrog worked with an Afghani physician to By listening to its distributors and expanding adapt its signature product, a preschool reading its product line to accommodate these atypical cus- readiness toy, for use as a public health educa- tomers, Plano was able to: 1) increase overall sales at tional tool targeted to a mostly illiterate adult pop- minimal cost; 2) place the adapted products in dif- ulation. The firm thereby leveraged its expertise ininteractive learning technology to move into a ferent departments of the same stores where its other related but new market arena of publicly funded products were distributed; 3) gain new distribution channels (office supply, fabric and craft stores); 4)enter an entirely new market, teenagers; 5) develop a Convert Problem Customers into New Market new brand, Caboodles; and 6) expand the Caboodles brand to develop another new product line, cos- Customers who demand more from a product or metics, for its growing teenage customer cohort.
service than the company had intended to deliver are difficult, but their demands offer opportunities for Examining the customer base from a new perspec- product enhancement or new product development.
In the early 1980s, staff at the East County YMCA tive and looking beyond the traditional competitive (San Diego, California) were concerned and irri- boundaries can lead to opportunities to enter a dif- tated because so many youngsters who attended ferent market territory or, even better, create new the center’s after school youth activity programs market space (Kim and Mauborgne 2004a). To cite were “hanging around” until or after closing time waiting for their parents to pick them up. The In Germany, female shoppers pay US $11 for the center staff originally viewed the de facto use of privilege of dropping off cranky husbands at a their organization and facility for child care as a “kindergarten” for men, where they are treated to problem. It raised some liability issues for the televised sports, snacks and beer (SharpInsights board of directors and the staff identified them- selves as recreation specialists, not child careproviders. The agency executive and board of Videogames are no longer just for entertainment; directors carefully considered the situation, and they have become a hot new advertising medium, recognized that the center’s customers were used to promote products virtually and interac- asking, by their behavior, for the YMCA to expand tively. To promote its new, super-rugged Jeep its traditional programs to include child care.
Rubicon model, Chrysler-Daimler AG’s Jeep divi- Today, YMCAs throughout the nation proudly pro- sion commissioned a game entitled “Jeep 4x4: vide affordable high quality child care, mostly in Trail of Life.” By offering it free online, Jeep col- collaboration with local public schools (YMCA of lected the names of 250,000 people within six months and attributes several hundred sales tothe game giveaway. U.S. Army recruiters found Traditionally, bookstores have tolerated, and that awareness ratings among young adults were subtly discouraged, browsers; customers were higher for its “America’s Army” virtual boot camp expected to purchase books in the store and read videogame than any of its other marketing com- them somewhere else. Barnes and Noble and Borders turned this tradition upside down byreconfiguring the physical space and altering the Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities ambience of their book superstores—adding Are there product or service enhancements that music, greeting cards and stationery to their product offerings and opening cafes with Internetaccess. These companies redefined their cus- tomers as readers, not just book buyers and them- Distributors, suppliers, salespeople, customer selves as providers of a delightful reading service representatives, and repair personnel all gain experience, not just booksellers. Longer store information from their interactions with customers.
hours, knowledgeable staff, reading tables andarmchairs throughout the store are all attributes Interviewing them about customers’ comments, ques- designed to encourage customers to browse and tions and complaints yields a wealth of information enjoy the literary oases these megabookstores on what customers are looking for; what problems have created. The market entry of either one of they are trying to solve; how they are using the com- these companies, with their unique approach to pany’s products; and what they like and dislike about retailing, often increases book sales by over 50% the company’s and competitors’ products.
The proprietor of a high fashion clothing store for large size women developed another highly prof- Customers who take the time to tell a company itable niche within a niche market when she real- what they need offer the firm an opportunity to con- ized, at first with dismay, that male transvestites tinue to serve them. The majority of customers do not and cross-dressers were surreptitiously pur- bother to register their dissatisfaction (Kotler and chasing her clothes for themselves. She capital- Clarke 1987); they just walk away and find another ized on this discovery by establishing a personal solution. The company thus loses both that customer shopper service for these customers, offering pri-vate evening appointments and special showings and an opportunity to improve its service quality. A in the store and in clients’ homes. As public atti- few companies have developed “service recovery” pro- tudes toward homosexuality have relaxed, the gay grams that not only train staff to listen and respond and lesbian market has gained recognition as an empathetically to complaints but empower them to attractive niche market segment—the median authorize reimbursements to correct a mistake or to household income for gay men is 25% above the resolve a customer’s problem (Economist 2004).
U.S. national figure (Chain Store Age 1998); how-ever, accommodating these customers calls for The repair and technical assistance functions offer a variety of opportunities for product enhancement and risk reduction. Service technicians’ anecdotal, often amusing stories about how a product got broken Atypical customers that already use a company’s yield information about customers’ solution seeking products or services comprise a ready-made test behaviors. Repair product distributors can also market. It is well worth taking the time to contact become channels for the company to learn about them to learn how they discovered the company’s potential product malfunctions when customers product/service. Typical questions might be: attempt to use the product in ways the company never imagined. The company needs to: 1) Make it both easy and worthwhile for customers or repair per- How did they find the company’s product or sonnel to report problems at the point of service with both a web site forum and a toll-free telephonenumber; 2) acknowledge their report, with thanks; 3) How did they decide to accept it as the best avail-able solution? tell them what action the company will take; 4) share Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities information with other repair/technical support toward consumers and collectors, as well as all those providers; 5) check to see if they have experienced organized by demographic and geographic segments similar problems; and 6) report back on how the (Maclaran and Caterall 2002). Amazon.com and problem was solved or the potential risk reduced.
Netflix.com invite customers to write book and moviereviews, respectively (SharpInsights 2004a).
Motherproof.com reviews cars in terms of how they In addition to eliciting and measuring explicit accommodate mothers with young children (Neubert expressions of customer satisfaction, a company can study implicit communications from consumers that thecomplaintstation.com teach consumers to com- it receives in the form of inquiries, return and refund plain effectively, providing instructions, templates and requests. To be even more proactive, a firm can create follow up tools. Planet Feedback also publishes com- incentives for customers to use its products in novel panies’ responses and customers’ compliments (Intelliseek 2001). Marketing Sherpa (2004) claims that up to 70% of complaining customers will air The Pillsbury Bakeoff cooking contest is a very their dissatisfaction in a public online forum.
creative application of this tactic. For many years, the Some communities are specifically organized as contest rules called for the use of Pillsbury flour in an virtual brand communities, with both positive and original recipe using all fresh ingredients. Today, the negative aspects. Microsoft, Linux and Oracle all only requirement is the use of a Pillsbury product, sponsor user groups for their software customers. The and many entries include canned, frozen, packaged or New England Palm Users Group (2002) web site processed foods. This highly popular event attracts directory lists Palm Pilot user groups in almost every thousands of home cook applicants every year who U.S. state (13 within California alone) and over 30 hope to be among the 100 finalists competing for over countries. Labor and human rights activists have $1 million in prizes and 15 minutes of fame. The established a number of sites to boycott Nike prod- prize winning recipes are featured in recipe books, web sites, newspapers across the country, thus further leveraging the results (Pillsbury Bakeoff 2004).
To find more atypical customers and expand the The Internet provides new opportunities for com- market segment, the company needs to learn what panies to learn more about consumers’ needs, values these customers have in common at the wholesale and preferences from the communications they have and retail levels, and what media channels will reach with each other in online discussion groups. Many of these virtual communities are market-oriented in thatthey serve as vehicles for customers to search for solu- tions and information. Health related web sites pro- Other organizations that serve a business’s target vide information on new treatments and medications, customers can open the door to new customers and results of clinical trials and report cards that assess the become new distribution channels. A payroll services quality of hospitals, nursing homes and medical firm that had traditionally grown by sales to indi- groups. Operation Gadget (2004) features informa- vidual businesses wanted to expand their marketing tion on all types of electronic equipment and periph- to include gatekeepers. Accountancy firms had in the eral products, including books and software. Yahoo! past carried out payroll services for smaller busi- chat room categories include many topics oriented nesses, but many dropped this service when they rec- Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities ognized that those businesses could now handle this Physicians are also the primary contact for function themselves using more sophisticated com- patients to report both adverse and unexpected posi- puter technology that evolved during the past decade.
tive side effects of prescription drugs, and pharmaceu- Business intelligence research conducted for the pay- tical companies expend considerable resources roll services firm revealed that many businesses pre- tracking these reports for risk mitigation and product ferred their accountants to handle payroll as part of a expansion purposes, respectively. But in recent years, consolidated financial management service. However, patients have also begun sharing much information accounting firms did not consider providing payroll about drugs through over 3,000 online patient advo- services to be a core accountancy activity nor a prof- cacy groups organized around specific conditions.
These groups have become a new strategic vehicle for The payroll services firm used this business intelli- pharmaceutical companies to lobby for FDA approval gence to develop a co-marketing strategy targeting and insurance coverage (Carpenter 2004).
accounting firms as gatekeepers for small to medium The FDA strictly prohibits pharmaceutical firms size businesses. To implement this strategy, the payroll from encouraging physicians to prescribe drugs for service firm needed to inform the accounting firms off-label uses, but imposes no restrictions upon physi- that their customers were interested in having them cians. Thus, physicians willing to prescribe off-label, provide more comprehensive financial services, and their patients, are preliminary test markets for including payroll. After expanding the accounting new uses of existing drugs. What physicians and their firms’ view of their business to encompass a broader patients are saying about off-label use, especially to set of financial management activities, the payroll and through advocacy groups, are signals that can service firm was able to present a strong business case become actionable business intelligence for pharma- for doing so through a collaborative relationship.
ceutical companies. They still have to go through clin- Adding payroll services offered an opportunity for ical trials to prove the drug is both safe and effective both the accounting firms and the payroll service firm for the new condition. However, the FDA does allow pharmaceutical firms to release findings from off-label Current gatekeepers and distributors remain an clinical trials that are published in scientific journals.
important information channel for identifying atypical Thus, pharmaceutical firms can indirectly promote customers and potential new uses for a product.
the off-label product use to both physicians and However, each industry presents its own set of chal- patients before obtaining regulatory approval, as well lenges for the company to make this business intelli- as build patient and physician support for FDA pharmaceutical industry, there are actually three gate- Internet auctioneer eBay pays close attention both keepers: physicians, regulators and payers. Physicians to its customers and to the vast range of potential are the principal gatekeepers of prescription drugs competitors in its external environment. It has grown because of their prescribing authority. The Food and largely through developing partnerships with other Drug Administration (FDA) serves as regulatory gate- companies that also serve its customers as competi- keeper because it must approve new drugs and new tors or gatekeepers. By providing these companies an uses for currently approved drugs. Insurers are finan- opportunity to grow their businesses through affilia- cial gatekeepers because they typically resist paying tion, eBay co-opts them as competitors and offers for a new drug for which a cheaper product already them an alternative to going public or pursuing the exists or for one not approved for treatment of the increasingly attractive option of being acquired by a Journal of Competitive Intelligence and Management • Volume 3 • Number 3 • Fall 2005 Using Business Intelligence to Discover New Market Opportunities able. However, the changes are still occurring and Reaching more atypical customers directly may these signals are often recognized belatedly as the require shifts in the company’s marketing mix and the first signs of danger or opportunity.
use of new advertising strategies, messages and Proactively Communicate with Customer Service venues. To do this, the company’s marketing function Agents of All Types. Study complaint and service needs to know what sources of information these cus- records for clues about what customers areseeking but not finding from the company’s prod- tomers regularly receive—and, more importantly, ucts or services. Invite employees from all depart- which they respect and pay attention to. The firm can ments to share information and acknowledge their then allocate resources to grow this market niche in the most cost-effective manner. Online forums, Identify Gatekeepers as Potential Partners. The videogames, and text messaging are just a few of the exploratory path to find more atypical customers new channels for reaching out to a defined group of will also lead to the identification of gatekeepers customers (Delaney 2004, Cho 2004, Lawson 2004).
that are potential distribution channels for a com-pany’s products or services. Develop a mutual ben- efit business case for these firms to facilitate access to a broader pool of customers as a first step in changing them from gatekeepers to distrib-utors.
To continually discover new customers requires both attitudinal and behavioral changes in a com- Expanding the use of business intelligence and pany’s business intelligence function and in the way it applying it more creatively enables companies to obtains information from and about its customers.
leverage a key asset, their customer base, to identify, Expect the Unexpected. Scan the entire business explore and expand new markets at minimal cost.
environment to expand the company’s strategicperspective for both defensive and offensive pur- poses. Suppliers, distributors and regulators all The authors appreciate the thoughtful peer review may have a significant effect upon the company.
and insightful comments by Babette Bensoussan and Think about Substitutes. Use business intelligence Dr. Judith Connell on a draft of this paper.
to look beyond a company’s known direct competi-tors to recognize threats and spot opportunities.
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