This is a diagramming tool for benchmarking or comparing competitiveness among various external market factors. The tool can be used to compare yourself against a single competitor or the whole market sector. Information about sectors can be found from most market research companies. Being better than the competitors in each category should deliver a competitive advantage. It is more normal to be ahead in some areas while being behind in others; unless of course you are the market leader. Remember, your competitors can also do this analysis and try to close the gaps where you are ahead, or ensure that you cannot catch up with them..
The features shown are the more usual ones, but you can substitute for others where necessary. To use the web, allocate 100 points to each category, depending on their importance to the industry. This allocation can be carried out by consensus or scientifically. As it is just a rough tool, a consensus between industry experts is best / quickest/ cheapest. Next determine whether your company is better or worse than the industry in that category. Your strongest gains should be achievable from your largest shortfall. Alternatively, keep an eye on those areas where you are ahead of the competition, as this is where you will be gaining your competitive advantage and they will be seeking to play catch up.
In the example shown I have examined a product using the factors shown below. You can substitute for any appropriate factor when using the tool, and can add additional factors such as business forms if required.
Features: Primary (basic purpose and function); Secondary (performance and substitutability); Tertiary (customer experience of the product and purchasing experience)
Grade: Quality, conformance to spec and the tightness of the spec.
Price: Reflect on the whole life costs, not just the purchase price.
Lead time: Product development time. Branding: Marketing and advertising, competitiveness and reputation.
Flexibility: Can you quickly adapt the product to changes in the market need?
The web shows us that the company is matching the sector in terms of features. They have a very good advantage in terms of lead time, but are behind in terms of flexibility. These two factors tend to be related. In order to provide good lead times, the company may hold large amounts of finished stock. This can usually be expensive and should drive up costs and hence price. We can see that the company is lagging behind in terms of price, so these costs may explain why that is. On the other hand, the strong brand may help the organisation to drive the market, rather than follow. Branding is also expensive, but it appears that they are able to demand a premium price for their product possibly because of the good branding. Overall, the features appear to be average for the market, but quality is perceived to be higher. This may be because of the branding or it may be that good lead times are of high concern to the customers. Because of these they are able to charge a higher price. This does not necessarily mean that they will be more profitable however, because of the extra costs involved in marketing and stock holdings.