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The Marketing capability. To benchmark or not to benchmark?

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Benchmarking

Benchmarking is acknowledged as being a core component of the marketing performance improvement, and its main purpose is that of assessing an organization’s strategy, products, and processes, and comparing them with those of the world’s best-in-class organizations. Benchmarking can bring several benefits to the organization, including cultural change, improved performance, better trained employees, as well as more efficient and effective marketing activities.

Even if many companies have already started measuring their performance with Key Performance Indicators (KPIs), this should be just the first step in calibrating an organization’s business performance. Hence, benchmarking sets some standards that these Key Performance Indicators can be measured and compared against.

The idea of benchmarking is to retrieve the data that will show what can be achieved in a specific field, and also how that certain performance can be attained. Hence, benchmarking provides valuable insights into what drives performance and it can be performed for almost any business process, including marketing. Unfortunately, there are not so many companies that benchmark their marketing capabilities.

Especially when thinking about difficult economic times, such as financial crises, marketing is a key aspect in supporting the revenue generation. Now, to benchmark or not to benchmark becomes the question.

This decision should be made after thoroughly discovering what it consists of and what benefits it can bring. According to Marketing Insight, there are various marketing capabilities and processes to look at when conducting benchmarking:

  1. Product development: compare the processes and activities used by other companies to develop and manage the services and/or products that they offer;
  2. Pricing: compare the competence of excerpting an optimal revenue from the customers you serve;
  3. Channel management: compare the company’s capability to maintain and set up distribution channels that are effective and efficient in delivering the best output to the end consumers;
  4. Marketing communication: compare your organization’s ability to manage consumer perceptions in regards to product or service value;
  5. Market information management: compare the processes used by organizations in their learning process and the way other companies use market information;
  6. Marketing planning: compare data regarding the organization’s capability to design the best marketing strategies in a specific field;
  7. Marketing implementation: compare the processes of the organizational strategies expansion.

After choosing the process/activity to be benchmarked, a four steps benchmarking process has to be followed:

  1. Preparation phase: this includes the problem definition and the internal pre-analysis, as well as the analysis of critical success factors for the marketing capability. Moreover, the selection of the benchmarking partners is another important component of the preparation phase, as the partners need to be top-notch practitioners in the targeted field. Also, forming the benchmarking team is essential, as the team can make the difference between a project’s success and its failure.
  2. Comparison phase: this phase includes determining the processes to be improved, as well as establishing KPIs, for assessing performance according to the collected data. Moreover, the collection methods have to be established. When establishing the marketing process, it is important to correctly assess its performance drivers and the associated cost and time.

Example: if the targeted process is product development, you should probably focus on benchmarking processes that are associated with testing and/or launching new products and/or services. On the other side, if the targeted process is communication, you may want to benchmark aspects like skills, reputation management, training and development programs, as well as the time and costs associated with these processes.

  1. Analysis phase: in this phase, a complex analysis of the collected performance data is conducted, for the derivation of the “best practices”. After analyzing the data, the performance gaps can be identified.
  2. Improvement and implementation: this phase refers to the conception of improvement measures after the performance gaps identification, as well as to the implementation of the measures to be taken. More than this, the monitoring tools for progress and results control have to be established.

According to the Profit Impact of Market Strategy research, companies that are more active in investing in marketing activities during a down cycle recover in a faster way and increase their revenue, comparing to the other companies that do not invest in marketing, for cost reduction purposes.

All in all, a benchmarking study helps manufacturers obtain a competitive advantage and gain a higher market share.

References

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