by Ricardo Lopez, Vice President, Lone Star Analysis
As a defense contractor, you require the most successful bidding strategy to secure high-value contracts in 2020. Competitive intelligence and price to win analyses are the proven strategies to understand competitor tactics, pricing trends, technical capabilities and customer requirements. These strategies identify growth opportunities and challenges, which help analysts and bidders create a plan for competitive differentiation.
Why competitive differentiation?
To stand out among your competitors, you must establish the points of differentiation for the bidding opportunity against the competition. To develop this differentiation strategy, you need to collect and analyze market and competitor activity data. Competitive intelligence – also known as CI) – gains actionable insights and a knowledge advantage to make smarter, more informed business decisions.
Getting started with competitive intelligence
The key to valuable competitive intelligence is knowing where to get information and how to get it quickly through primary sources like interpersonal contact and secondary sources such as intel available through open sources.
The first step is data extraction. You can complete this step through web searches, market analysis, database mining, face-to-face interaction and more. The amount of intelligence garnered from each option can range from high-level, company-approved information to in-depth, unbiased, third-party accounts. Regardless of the collection method, you will use this information to perform analyses as part of the development of the competitive differentiation strategy. Information alone does not equal intelligence; it needs to be actionable.
Understanding the importance of Price to Win
Once you develop your competitive intelligence insights, the next step is to develop a pricing strategy. Pricing is a crucial point of differentiation. Performing a price-to-win (PTW) analysis allows companies to understand the real value of their competitor’s offering and weigh it against their likely bid price.
This analysis examines how well your solution is priced compared to what the organization budgeted for the purchase. PTW also evaluates the relative pricing of the different competitors in comparison to one another by balancing what the customer can afford and what the market allows. Your goal is to optimize your offering against the criteria your customer cares about the most. The customer wants X, and your competitors offer Y, so your strategy is to meet the customer’s requirements while surpassing the value of your competition’s proposals. Although buyers do not always cite pricing as the reason for the final selection, it can often be a significant factor in the buyer’s final decision when comparing similar offers.
Analysts need actionable insights to inform the winning strategy. It would be best if you had a tool that can model multiple evaluation factor scenarios – a predictive analysis that will duplicate your offering and adjust the price, strategic reductions and competitor solutions. You need a prescriptive analysis that answers the numerous “what if” scenarios, allots for uncertainty and plans for the best course of action. These insights will help with planning for the impact that uncertainty can have on pricing. You will also capture new competitive intelligence or differing inputs/opinions.
Win more contracts
To resolve these issues, Lone Star Analysis, best known for its predictive and prescriptive analytics offerings, decided to launch TruPredict, its price-to-win software solution. TruPredict is software designed to build and analyze competitive pricing. TruPredict helps users win more federal contracts compared to traditional solutions. Using a Monte Carlo simulation, Lone Star’s trademarked software creates multiple “what-if” scenarios, accounting for different variables, uncertainty, competitor behavior and various inputs effectively to make a winning decision.
Understanding the need for a significant competitive differentiation solution, Lone Star created TruPredict to be comprehensive, quick, adaptable and accessible. Before TruPredict, bidders turned to multiple programs at each step in the pricing process. TruPredict can be used from beginning to the end to ensure a simplified and comprehensive process.
With the ability to rapidly change and test variables, users can instantly evaluate scenarios and focus on the ones that matter. This accelerated method creates a more efficient and repeatable structure while also producing more accurate and reliable insights. Decreasing the likelihood of human errors, users can feel more confident in their final bid and their probability of winning a contract.
Although this software is beneficial for those looking to win government contracts, it has a wide range of uses. TruPredict can be customized to meet a company’s pricing requirements. Whether the goal is to capture more leads, develop new business relationships, or win a bid, it can supply the necessary information.
Benefits for bidders
Because of its competitive pricing capabilities, TruPredict meets many other needs. By automating and integrating complex pricing processes, it increases the likelihood of winning a proposal. It also supplies three critical functions: a consistent method for strategic pricing, a digital container and actionable insights about the competitive space based on real-life factors and uncertainties.
Beneficial for both companies with mature pricing processes and those that run on an ad hoc basis, TruPredict ensures consistent, comprehensive steps. The uniformity of the process reduces the risk of omitting critical steps, allows for more confident bids and simplifies the process for those that may not routinely support the bidding team.
Another beneficial quality for pricing executives and other team members alike is that TruPredict acts as an insights container, collecting and storing all relevant information. Factoring in uncertainties about knowledge accuracy and bias, it helps weigh information to focus on targeted facts instead of opinions or beliefs. This storage unit can remember every piece of information inserted, from past competitor behaviors to potential competitor activity.
The built-in memory capability simplifies the insights gathering process and accelerates analysis, allowing users to gain accurate, actionable insights. Understanding each scenario that could take place given a set of variables provides a competitive edge by answering questions like “what if we lower our price by 5%?” Ultimately, TruPredict allows users to enter every price-to-win discussion, confident that their recommendation is accurate, and more likely to win the contract and maximize business success.
Differentiating a business from its competitors is not always an easy task. It is a continuous process that requires research, analysis and extensive strategizing. In the digital era, it is no longer necessary for pricing executives to spend days, weeks or months planning for a bid. TruPredict, an effective and efficient software, is a practical option for defense contractors looking to increase their competitive advantage and set themselves apart.