Competitive benchmarking
Competitive benchmarking is a type of benchmarking that compares a company's performance and practices to those of its direct competitors. The goal of competitive benchmarking is to identify areas where the company can improve its performance and gain a competitive advantage. This can be done by analyzing various aspects of the competitor's business such as their products, services, marketing strategies, and operations. The process usually involves the collection and analysis of data, such as financial performance and customer feedback, in order to identify strengths and weaknesses. The information gathered can then be used to develop strategies to improve the company's performance and gain a competitive edge in the market.
Benchmarking is a method of diagnosis, design and improvement of the various areas of the company by comparing the current state with the chosen standard. Model processes adopted in other companies (leaders of the industry) are the sources of their success.
In the field of knowledge management benchmarking is a competitive method of "learning" from others and includes methods and techniques supporting the identification and creation of new knowledge.
Software solutions can help in the collection of benchmarking data for comparisons and for reporting or presentation of the results of comparisons.
Application
It is used as a tool for comparison of marketing strategies, production methods and other activities of competitors.
Advantages and limitations
Advantages of competitive benchmarking:
- Helps identify areas for improvement: By comparing a company's performance and practices to those of its competitors, it is easier to identify areas where the company can improve its performance.
- Facilitates the development of new strategies: The information gathered through competitive benchmarking can be used to develop new strategies to gain a competitive edge in the market.
- Increases competitiveness: By identifying and addressing areas of weakness, a company can improve its overall competitiveness in the market.
- Helps to prioritize resources: By identifying the most important areas for improvement, a company can prioritize resources and focus on the most impactful changes.
Limitations of competitive benchmarking:
- Reliance on external data: Benchmarking relies on external data, which may not be accurate or reliable.
- Limited scope: Competitive benchmarking only compares a company to its direct competitors and may not take into account other companies or industries that could provide valuable insights.
- Time-consuming and costly: Collecting and analyzing data can be time-consuming and costly.
- Limited to specific areas: Competitive benchmarking is limited to specific areas and may not take into account overall company performance.
- May lead to imitation: Benchmarking can lead to imitation of competitors' strategies and products, rather than innovation and differentiation.
See also:
Examples of Competitive benchmarking
- Product/Service Quality: Companies can compare the quality of their products and services to those of their competitors, such as the features offered, the customer service provided, and the overall customer experience.
- Pricing Strategies: Companies can analyze their competitors’ pricing strategies, such as discounts and promotions, to determine the best pricing for their own products and services.
- Marketing Strategies: Companies can evaluate their competitors’ marketing strategies, such as advertising campaigns, public relations efforts, and social media presence, to determine the best methods for reaching their target audiences.
- Operations Efficiency: Companies can examine their competitors’ operational efficiency, such as inventory management, customer service processes, and production schedules, to identify ways to improve their own operations.
- Supply Chain Management: Companies can analyze their competitors’ supply chain management processes, such as procurement, sourcing, and logistics, to identify areas of improvement in their own supply chain.
- Process Benchmarking: Process benchmarking involves analyzing and comparing the processes and methods used by the company and its competitors. This helps to identify areas where the company can improve its processes and make them more efficient.
- Cost Benchmarking: Cost benchmarking involves comparing the costs of a company's products and services to those of its competitors. This helps to identify areas where the company can reduce costs and make its products and services more affordable.
- Innovation Benchmarking: Innovation benchmarking involves comparing the innovation strategies of a company and its competitors. This helps to identify areas where the company can improve its innovation efforts and develop more innovative products and services.
In summary, competitive benchmarking is a process of comparing a company's performance and practices to those of its direct competitors. Other related approaches include process benchmarking, cost benchmarking, and innovation benchmarking, which each focus on different aspects of the company and its competitors. By analyzing and comparing these metrics, companies can identify areas where they can improve their performance and gain a competitive edge in the market.
| Competitive benchmarking — recommended articles |
| Benchmarking - Sources of information — Internal processes perspective — Technology scouting — Strategic management tools — ASTRA analysis — Internal analysis — Competitor — Value added statement — Map of strategic groups |
References
- Monkhouse, E. (1995). The role of competitive benchmarking in small-to medium-sized enterprises. Benchmarking for Quality Management & Technology, 2(4), 41-50.
Author: Krzysztof Wozniak
