Benchmarking Competitors

Have you useful benchmarking information on competitors?
A. No. We know very little about our competitors.
B. We have a vague idea of what is happening in the marketplace, but we do not benchmark.
C. We informally benchmark ourselves against our main competitors every now and again.
D. We have up-to-date benchmarking information on our competitors on a number of relevant indicators.
E. We have detailed current information on competitors – on price, quality, availability, selection, functionality, reputation, relationship and service levels.
[Score:  A=0, B=1, C=2, D=3 and E=4]
Why is this question important?

The strategic rationale of competitor benchmarking is powerfully simple.

Superior knowledge of rivals offers a clear insight into where and how you can gain competitive advantage.

The basis of competitive advantage consists of offering superior customer value in your chosen market. The definitive characteristic of customer value is the word “superior”.

Benchmarking helps in three important ways.

  1. it can reveal strategic weaknesses in competitors that you may be able to exploit.
  2. it helps you to anticipate the strategic response of your competitors to your planned strategies, the strategies of other competing firms, and changes in the environment.
  3. benchmarking knowledge may provide you with ‘strategic agility’.

Comprehensive benchmarking capability has now become a core competence required for competing successfully. A simple technique is to create detailed profiles on each of your major competitors. These profiles give an in-depth description of the competitor’s background, finances, products, markets, facilities, personnel, and strategies.

This involves:

Background

  • location of offices, plants, and online presences
  • history – key personalities, dates, events, and trends
  • ownership, corporate governance, and organizational structure
  • Financials
  • profitability
  • liquidity and cash flow
  • profit performance profile

Products

  • products offered, depth and breadth of product line, and product portfolio balance
  • new products developed, new product success rate, and R&D strengths
  • brands, strength of brand portfolio, brand loyalty and brand awareness
  • patents and licenses
  • quality control systems

Marketing

  • segments served, market shares, customer base, growth rate, and customer loyalty
  • promotional mix, promotional budgets, advertising themes, sales force success rate, online promotional strategy
  • distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical coverage
  • pricing, discounts, and allowances

Facilities

  • capacity, capacity utilization rate, age of plant, plant efficiency, capital investment
  • location, shipping logistics, and product mix by plant

Personnel

  • number of employees, key employees, and skill sets
  • strength of management, and management style
  • compensation, benefits, and employee morale & retention rates

Corporate and marketing strategies

  • objectives
  • mission statement
  • growth plans
  • marketing strategies