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COMPETITOR ANALYSIS AND BENCHMARKING
By
Kastuv Ray
The business world is extremely competitive today and therefore every organization lives by the “Solo el sondeo mas fuerte” rule (Only the Strong Survive). The Strategic Internal Audit Plan should focus on Competitor Analysis at some point in its life cycle. This is particularly useful prior to the launch of a new product or service because if for example a product is designed which is not attuned to customer preferences, it may not have a positive impact in the market place.
Typical Competitor Risks
· New competitors entering the market providing cheaper products and/or services
· Existing competitors providing new/better quality products or services
· Dwindling customer loyalty
The Internal Audit Department should be used as a management tool to ascertain the effectiveness of the system of competitor analysis within the organization. The audit needs to focus on 4 key areas:
· Competition
· Business Intelligence
· Benchmarking of Products
· Customer Preferences
To be successful and be ahead of the rest of the organizations in the sector, an astute company should undertake the following activities with respect to the four areas listed above:
Competition
· Conduct market surveys to identify competitors
· Maintain a database of competitors ranked in order of threat and listing their strengths, weaknesses and market niches. Names of key employees could also be listed in this register
· Conduct company search information on key competitors
Business Intelligence
· Monitor sales and profits with current and key clients/customers
· Maintain a register of new competitors entering the market
· Review media such as trade directories and magazines
· Obtain copies of competitors publicity material
Benchmarking
· Benchmark products and services against other competitors regularly
This should be undertaken by comparing price, quality, service and judging whether the product/service represents value for money.
· Benchmark the organization’s customer service and care practices with that of competitors
Customers’ Preferences
· Contact customers to discuss satisfaction level. This can also be addressed by designing customer satisfaction questionnaires (both hard copy versions and forms available on the web.)
· Analyse customers spending habits and ascertain why certain customers may spend more than others. This may help when targeting a specific audience for a new product.
· Nurture relationships with clients/customers
· Maintain up-to-date information on customers/clients such as personal and contact information. It may also be beneficial to keep a list of their interests.
Conclusion
The above is suggested as a guide only. How an organization proposes to stay ahead in the market place rests with management. Internal Audit has a key role to play in auditing any strategy that the organization proposes to pursue. Conducting a competitor analysis audit may be one way in which Internal Audit can ascertain if the organization is meeting its strategic/corporate objectives listed within the Strategic/Corporate Plan. Competitor analysis is also a useful tool for outsourced internal providers to provide to either their clients by benchmarking existing internal audit services/practices within the client organization or to undertake on themselves.
Contributed by Kastuv
Ray 12/01/04
kastuv@kastuv.fsnet.co.uk
