Using competitive gap analysis to rapidly identify business strengths and weaknesses in key target markets

Competitive gap analysis is a tool that has may applications, including:

• Internal business development workshops;
• Sales and marketing training;
• 'Getting to know you' sessions with key customers and
• Analysing prospective acquisitions and investments.

It helps 'cut out noise' to get to a solid understanding of how well positioned a business is with respect to prospective key customers or customer segments.

Example

 
The above is taken from an actual workshop a few years ago, for XXX, a national distributor of door locks and related items. This particular analysis showed what was understood with regard to their offering of door locks to large building contractors and building maintenance companies.

The collection of lines trace the relative performances of different players within the market relative to what are understood to be the targeted customer's key decision-making criteria leading to a purchase.

The conclusion from this analysis was that if XXX could resolve its sales order processing and logistics, and reduce the over-engineering of their door-locks, to reduce prices slightly, they would be the most competitive distributor in this most important sector of the overall door lock market.

Practical issues and tips to using such analysis

• It is most practical to use this tool with 3 to 8 'Key Success Factors'.
• Sometimes a lot of value can be gained by determining what people in the business see as the key success factors for key sectors and customers first, before going into the key sectors and customers to get first-hand insight. - The differences can be quite revealing.
• In large businesses, this is a good exercise to do with sales managers on a fairly frequent basis, cycling each time through the different key sectors or customers.
• Remember that different segments will choose and rank KSF’s differently. Other segments for our example door lock distributor include: Large building and maintenance contractors; Door-set manufacturers; Interior design specialists & The ‘retail shed’/DIY market.
• If you are unsure of where to start with KSFs, particularly with services, use the Extended Marketing Mix framework as a prompt
• The customer comes first, but try also to capture business priorities in the KSFs, putting the most important first.
• If KSF's are not ranked by customers you see immediately where money can be saved.
• If you have an opportunity, check your performance with respect to different ways of cutting/segmenting your addressable markets - you may find you are actually using the wrong approach to segmenting the market and missing out on some easy additional business.
• If relevant, factor in ‘substitute’ products and services when checking competition.
• Like any other analytical tool this is best not used in isolation, but instead applied as part of a wider market study.

Conclusion

Competitive Gap Analysis offers a powerful visual on the competitive strengths and weaknesses of a product or service for different target markets. It is an extremely useful tool for:

• Educating sales teams;
• Understanding markets and how to segment them;
• Getting closer to customers, and
• Getting people to commit to swift, appropriate action.

Click here to get back to the main innovation page

Click here to get back to the 'more' page