Benchmarking and market analysis are administered to enhance the organizational operations, improve customer satisfaction, and increase value to stakeholders.
Benchmark studies are used to compare organizational practices against industry standards.
Industry best practices may be derived from competitor enterprises, the government, or industry connections.
The goal of benchmarking is to assess enterprise performance and make sure that the enterprise is operating efficiently.
Benchmarking may also need to executed by certain standards for regulatory and compliance purposes and the results from the benchmark study may prompt a change within an organization.
Market analysis requires studying customers in order to fulfill their needs, the elements that affect their decisions to buy, and the competitors that are already in the market.
The goal of market analysis is to get this information in order to assist with diverse decision-making processes within an organization such as when to leave a market and if associating, merging, or relieving are feasible alternatives for an enterprise.
Benchmarking examples include:
- Spotting the areas to be investigated.
- Identifying enterprises leaders in the industry this could include their competitors.
- Surveying selected enterprises to understand their practices.
- Using a Request for Information (RFI) document to collect information about capabilities.
- Organizing visits to industry leaders organizations.
- Identifying gaps between current and best practices.
- Creating a project proposal to implement best practices.
Market Analysis requires that business analysts:
- Recognize customers and understand their desires.
- Recognize opportunities that may stakeholder value.
- Recognize competitors and explore their operations.
- Search for trends in the market, predict growth rate, and approximate potential profitability.
- Outline suitable business strategies.
- Collect market data.
- Use existing resources such as company records, research studies, and books to answer any questions.
- Analyse data to determine trends and draw conclusions.
Benchmarking and market analysis have its strengths and weaknesses, which include:
Strengths
- Benchmarking provides organizations with information about new and different methods, ideas, and tools to enhance organizational performance.
- An organization can use benchmarking to spot best practices being used by its competitors in order to meet or surpass that competition.
- Benchmarking identifies why similar companies are successful and what processes they have used to become successful.
- Market analysis can select specific groups and can be adapted to answer specific questions.
- Market analysis may reveal weaknesses within a certain company or industry.
- Market analysis may spot differences in product offerings and services that are available from a competitor.
Limitations
- Benchmarking is tedious; organizations may not have the skills needed to conduct the analysis and interpret useful information.
- Benchmarking cannot produce innovative solutions or solutions that will give a maintainable competitive advantage because it involves evaluating solutions that have been shown to work elsewhere with the objective of reproducing them.
- Market analysis can be tedious and expensive, and the results may not be instantly available.
- Without market segmentation, market analysis may not supply the expected results or may provide incorrect data about a competitor’s products or services.