Gap Analysis
by Clement LoFinding the gap
Have you ever used market research to measure how close you are to or how far you are from a competitor's product or service? If research identifies any difference between what a competitor is offering and what you are offering, that difference is a gap. Once the gap is pinpointed, you have excellent information to take action.
Gap Analysis does not require fancy techniques. You can do it very well with a few simple questions. Let's assume that you are using a survey to collect data.
What to measure
First, you should choose what to measure. Find out the key service attributes or product features that you want to examine. If you conduct market research regularly, you would know the critical elements of your service or product. On the other hand, if this is your first effort, you have to go through the process of defining them.
For convenience, you might want to get a consensus on what to measure from your sales, marketing and customer service personnel. Or, if you have a rich research budget, it is a good idea to run a few focus groups of consumers or customers. Results of focus groups would clarify the critical variables for you.
Product features
Let's say that your product is a mechanical device. You wish to examine product features such as (i) ease of use, (ii) state of the art and (iii) consistency of performance.
To measure customers' evaluation of a competitor's product, try the following question:
On a five-point scale, 1 for "poor" and 5 for "excellent," how would you rate Company A's device on the following three features:
Ease of use 5 4 3 2 1
State of the art 5 4 3 2 1
Performance consistency 5 4 3 2 1
You can use the same question to get customers' responses to Company B's and your own products.
You can continue to use the same question to get customers' responses to other competitors' products. Please limit yourself to three competitors. If you ask customers to respond to the same question on more than three competitors, it may become tedious.
Two ways to analyze
There are two ways to analyze the results. A common technique is to calculate the averages. If you are using any survey tabulation software, the program would automatically give you averages. For instance, you might get results, on a computer printout, resembling the following:
Ease of use:
Company A 4.2
Your product 3.5 -0.7
Company B 2.6 -1.6
Results show that for ease of use, Company A's device has the highest average rating at 4.2, higher than yours and Company B's by 0.7 and 1.6 respectively. On the other hand, your average rating is higher than Company B's by 0.9 (3.5 - 2.6 = 0.9.)
The differences in average ratings point out the gaps. Data clearly show how far or how close you are from and to your competitors' products.
Saying "excellent" and "poor"
A second method is to analyze how the averages are derived at. You can get valuable information by examining the percentages of those saying "excellent" and "poor."
For instance, you may see results as follows:
Ease of use -
Those saying "excellent":
Company A 55%
Your product 40%
Company B 20%
Those saying "poor":
Company A 10%
Your product 20%
Company B 45%
The percentage figures tell you why Company A gets the highest average rating: over half (55%) say "excellent." In contrast, Company B receives the lowest average because 45% say "poor."
These data also tell you more about your own position. While fully 40% say "excellent," one-fifth (20%) say "poor." This information is more revealing than simply knowing that your average is 3.5.
For the technically inclined, you might wish to test the data for statistical significance. In plain language, you might wish to know if the research results are actually telling you what you think they are saying.
Bridging the gap
In short, you can find out much about how to bridge the competitive gap by asking a few questions and carrying out simple number crunching. Try it. It works.
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