Competitive Benchmarking

In today's fiercely competitive marketplace, brand managers are continuously seeking strategies to not only sustain but also enhance their brand's market position. Competitive benchmarking is valuable tool, offering insights that are crucial for keeping brands ahead of the game.

This article  discusses the strategic significance of competitive benchmarking for UK brand managers, providing a comprehensive guide on its application for improved market performance.

An Introduction to Competitive Benchmarking

Competitive benchmarking involves a systematic comparison of your brand's key performance metrics against those of leading competitors within the industry. This technique is instrumental in uncovering performance gaps, identifying industry best practices and setting realistic performance targets. By understanding where your brand stands in relation to its competitors, you can make informed decisions that drive improvement and innovation.

For brand managers, the value of competitive benchmarking lies in its ability to offer a clear perspective on the brand's competitive landscape. It aids in recognising market trends, discerning areas of competitive advantage and vulnerability and pinpointing opportunities for growth and differentiation. In essence, it equips brand managers with the knowledge to make strategic decisions that propel the brand forward in the market.

A methodical approach to competitive benchmarking involves several pivotal steps:

1. Identifying Key Performance Indicators (KPIs): Determine the metrics that are most indicative of your brand's performance and align them with your strategic objectives.
2. Selecting Competitors for Benchmarking: Choose competitors that represent a broad spectrum of your market, from direct competitors to those that exemplify best practices.
3. Data Collection: Gather relevant data through industry reports, market surveys, text analytics and other research methods.
4. Analytical Evaluation: Analyse the collected data to understand your brand's performance relative to your competitors'.
5. Formulating Strategic Actions: Translate the insights gained into actionable strategies aimed at enhancing your brand's market position.

What metrics should you collect?

For comprehensive competitive benchmarking, brands need to collect a variety of metrics that cover different aspects of business performance, market presence and customer perception.

The actual metrics needed will be different for each business but here is a general set to get the ball rolling, along with the source for obtaining them:

1. Brand Awareness: Measures how familiar the target market is with a brand. Source: Surveys and polls targeting the general population or specific market segments, asking respondents if they are aware of the brand and its competitors. Brands can also use syndicated surveys such as YouGov's BrandIndex or use Google Trends as a proxy.
2. Market Share: Represents a brand's share of the total sales in its industry. Source: Industry reports, sales data, financial reports published by companies and market research firms.
3. Customer Satisfaction (CSAT): Indicates how satisfied customers are with a brand's products or services. Source: Customer surveys that ask respondents to rate their satisfaction levels post-purchase or post-interaction for the brand and competitor. Syndicated studies can also be used.
4. Net Promoter Score (NPS): Measures customer loyalty and the likelihood of customers to recommend a brand to others. Source: Customer surveys asking how likely they are to recommend the brand and a selection of competitors on a scale of 0 to 10. Some syndicated surveys contain measures approximating to NPS.
5. Likelihood to Purchase: Assesses the probability of consumers choosing a brand's product or service over its competitors. Source: Consumer surveys asking about their purchase intent regarding specific products or services.
6. Positive Sentiment: Assesses the positive perception and feelings towards a brand. Source: Social media analysis, customer reviews on websites, and sentiment analysis tools that evaluate the tone of online mentions and discussions.
7. Engagement Rate: Reflects the level of interaction and engagement consumers have with a brand's content on digital platforms. Source: Social media analytics for likes, shares, comments, and other engagement metrics on platforms like Facebook, Twitter, Instagram, and LinkedIn.
8. Website Traffic: Measures the volume of visitors and visits a website receives. Source: Web analytics tools like Google Analytics that track the number of visitors, page views, bounce rate, and other related metrics.
9. Conversion Rate: The percentage of website visitors who take a desired action, such as making a purchase or signing up for a newsletter. Source: Web analytics tools that track user actions and conversions against the total number of visitors.
10. Product Quality and Innovation: Assesses how a brand's products or services compare in terms of quality and innovation. Source: Product reviews and ratings on e-commerce platforms, expert reviews, patent filings (for innovation), and industry awards.

Collecting these metrics involves a mix of primary research (such as surveys and direct customer feedback) and secondary research (such as industry reports and online analytics)

Insightful Analysis

To facilitate a thorough and efficient analysis, brand managers can utilise a variety of tools and techniques. These range from SWOT analysis, which helps in assessing strengths, weaknesses, opportunities and threats, to advanced data analytics  that help derive deeper insights into market trends and consumer behaviour.

Advanced data analysis techniques have significantly expanded the capabilities of competitive benchmarking, enabling brand managers to gain deeper insights into market dynamics, competitor strategies and performance gaps. Here are several advanced techniques that we can apply in the context of competitive benchmarking:

1. Predictive Analytics: Utilises historical data to predict future trends, customer behaviours and potential market shifts. This can help brand managers anticipate competitor moves, market demands, and identify areas where the brand can innovate or improve.
2. Sentiment Analysis: By analysing customer reviews, social media conversations, and other text data, sentiment analysis provides insights into public perception of different brands. This technique allows brand managers to understand consumer sentiment towards competitors, identifying strengths to emulate or weaknesses to exploit.
3. Social Network Analysis (SNA): This technique analyses social networks to understand the relationships and influences among individuals or entities. In competitive benchmarking, SNA can identify key influencers and opinion leaders in the market, understand competitor relationship networks, and analyse the flow of information between competitors and customers.
4. Cluster Analysis: This statistical technique groups objects that are similar to each other but different from objects in other groups. It can be used to segment competitors into clusters based on various attributes, such as customer demographics, product offerings, or market positioning, to identify competition gaps and opportunities.
5. Text Mining: Involves extracting useful information from text sources. For competitive benchmarking, text mining can analyse competitors' marketing materials, press releases and product descriptions to identify focus areas, strategic priorities and product features.

Integrating these advanced data analysis techniques into competitive benchmarking processes can provide brand managers with a more nuanced understanding of the competitive landscape. By leveraging these insights, brands can make informed strategic decisions, identify innovative opportunities, and ultimately enhance their competitive position in the market.

Conclusion

In conclusion, competitive benchmarking is a critical tool for brand managers aiming to navigate their brands towards market leadership. By systematically comparing your brand against industry leaders and innovators, you can uncover valuable insights that inform strategic decision-making and drive continuous improvement. As brand managers in the UK strive to position their brands for success in an increasingly competitive environment, embracing competitive benchmarking is not merely an option but a strategic imperative.