The Role of Competitive Benchmarking in Business Strategy: Why It Matters

You might have wondered that competition only existed in school and how it could creep into the business world. Well, life leaves no chance to put us through that competition. Competitive benchmarking analysis is one such competitive business strategy. This facilitates a company’s growth by determining its growth and position in the market. Remember how you used to compare your grades with those of your friends to improve those areas where you felt you lacked? Competitive benchmarking analysis works on that same principle. Here, it’s between companies. 

In competitive benchmarking analysis, a company’s performance is measured and analyzed against the performance of the “best-in-class companies,” i.e., competitors in the market. This helps delve deeper into the current market scenario and calls for immediate strategy planning to help achieve performance levels. The research methods involved in this process help understand and mitigate the problems of sustainable energy and financial market stability. This novel research method helps companies identify gaps in their performance metrics, such as product quality, consumer satisfaction, operational efficiency, and market share. The strategies born out of this analysis method help fill those gaps that will facilitate the company’s overall growth.

You all know that HS Brands Asia (providing the best competitive benchmarking services in India) is your one-stop solution to your company’s growth by providing their top-notch services in mystery shopping. You must also know that competitive benchmarking analysis is a crucial mystery shopping process. So, you know where you have to stop by the next time you’re planning to outperform your competitors in the market.

Benefits of Competitive Benchmarking

Companies may cater to Competitive Benchmarking Services in India. Still, at HS Brands Asia, we assure you of a multifold benefit. The benefits are as follows:

• You get to outperform your competitors in the market by understanding your competitors and your strengths and weaknesses. This will help you devise an effective strategy to overcome weaknesses and achieve optimal growth. This sounds convincing.
• Well, not only that. Meeting industry standards will consequently help you increase your company’s sales and profit margin.
• Additionally, it will help you improve the quality of your products or services and decide your product price based on market position. That is a realistic move!
• This analysis will reveal the amount invested in employees, which will consequently help devise plans for managing workforce costs. This competitive benchmarking analysis will help you anticipate potential threats and test your market shares.

Types of Competitive Benchmarking

Competitive Benchmarking Analysis can be reasonably classified into three major types, as follows-

1. Internal—This works on an intra-competitive level, where different units or teams are selected in the same organization based on some predetermined metrics. Their performances are compared, and the best-performing team(s) or unit(s) are identified. Accordingly, the other units are encouraged to adopt those strategies to improve their performances.
2. External—This works on an inter-competitive level, where the analysis is conducted between the target company and its competitors in the market based on some predetermined benchmarks. 
3. Functional—This works on specific functions to benchmark within an organization (for example, sales, logistics, customer support) and choose competitors who excel in those specific functions. Consequently, the Key Performance Indicators (KPIs) are determined based on the selected function. Furthermore, data are collected on the KPIs in the selected functions between the selected company and the competitors, based on which the analysis runs. 

Steps in Competitive Benchmarking

Competitive benchmarking analysis must be carried out in the following well-articulated steps:

• Setting clear, achievable goals– One must be sure of the objectives one wishes to achieve through this analysis: cost reduction, enhancing customer satisfaction or leveraging market share.
• Identify and select your competitors—Conduct thorough research to identify your competitors in the industry against which you wish to benchmark.
• Key Performance Indicators (KPIs)—These are the metrics that you must select in accordance with the goals and objectives set. They could include customer satisfaction, market shares, cost-cutting, operational efficiency, etc.
• Data Collection—This step involves gathering internal (own company) and external (competitor company) data. This data encapsulates the performance scores based on the selected KPIs. The mode of data collection can be customer surveys, market and industry research reports, and publications. 
• Analyzing and comparing—The data collected are thoroughly analyzed and compared, and the company’s loopholes are recognised. These loopholes will help you understand where your competitors outperformed your company’s performance.
• Developing and implementing a plan of action– Based on the analysis, actionable plans are developed and implemented. This would include a list of recommended changes, enlisting the timeline, responsibilities and essential resources. 
• Reviewing the results and consequent iteration—You must evaluate the outcomes after implementing the changes. This will help you check if the objectives are met. To gain continuous improvement, consider re-implementing the benchmarking process.
• Communication—It’s always better to communicate the analysis’s outcomes to the stakeholders, partners, and employees and seek feedback.

Real-World Examples

Some companies that have very successfully implemented competitive benchmarking analysis over the years to attain market competitiveness and improve results are-

• Apple took customer service and retail operations as its KPIs and worked on them. It identified luxury brands and high-end retailers outside of the tech industry as its competitors. This led them to build a top-notch customer experience, service, and strong brand identity.
• Toyota is known for extensively implementing competitive benchmarking strategies and operational excellence against other global automakers. Their production system facilitated the production of cars at lower costs with higher quality compared to its competitors.
• McDonald’s—This global fast-food giant utilized benchmarking to ensure consistency in service and product quality. McDonald’s emphasized improving customer service, supply chain, and food safety management. By benchmarking against hospitality companies and successful global franchises, McDonald’s has maintained global consistency and a promising brand reputation worldwide. 

Conclusion

Thus, we can see that Competitive Benchmarking Analysis in business strategy offers us many benefits, ranging from identifying one’s own company’s strengths and weaknesses to comparing it with those of the competitor to devising effective strategies for filling up the gaps once left. From increasing efficiency to understanding competition and improving product/service quality, competitive benchmarking analysis has done a commendable job by staying in tune with the current market changes.

Among all the top competitive benchmarking services in India, it is needless to say that HS Brand Asia has proved its efficiency time and again by serving so many companies to reach their desired market goals in no time!