Benchmarking relies upon a comparison between the activities of your own organization and those of another. Originally benchmarking was used in manufacturing operations where one process could be compared and contrasted with another.
When applying benchmarking techniques to an organization’s marketing activities you are essentially comparing one or a number of your company’s marketing activities to those of another part of the business, a competitor or a business that operates in another industry. Vorhies and Morgan (2005) used the following marketing benchmarks in their research:
Essentially they focus upon the marketing mix, marketing information, planning and operations. Each of these could be sub-divided and new factors introduced e.g. Customer Relationship Management (CRM) – to suit your own organization’s marketing strategy.
Camp, R.C. (1995) Business Process Benchmarking: Finding and Implementing Best Practises. Milwaukee: ASQC Quality Press, p18.
Camp, R.C. (1989 Benchmarking: The Search for Best Practises that Lead to Superior Performance. Milwaukee: ASQC Quality Press, p12.
Gift, R.G. (1996) Today’s Management Methods, P245 – 261.
Prasnikar, J., Debeljak Z. and Ahcan, A. (2005) Benchmarking as a Tool for Strategic Management, Total Quality Management, Vol.16, No. 2, 257 – 275, March 2005.
Vorhies, D.W. Morgan, N. A. (2005) Benchmarking Marketing Capabilities for Sustainable Competitive Advantage, Journal of Marketing, Vol. 69, Issue 1, p80-94.
Think about it in basic terms – you measure a piece of wood along your bench. You keep one end of the wood level/flush with the end of the bench and cut a notch in the bench itself with your chisel at the other end. Then you place other pieces of wood in the same location – the shorter ones you reject and the longer ones you cut down. A benchmark is a measurement tool.
Xerox is commonly cited as the original proponent. More recently the definition has broadened to include all business processes, competitive advantages, performance and strategies (Prasnikar et al 2005)
Competitive or Industry/sector benchmarking enables an organization to compare its performance with competitors trading in the same industry or sector.
Best-in-class benchmarking is similar to industry or sector benchmarking. However managers would compare their organization to the market or sector leader i.e. the best-in-class.
Internal or historical benchmarking is the internal procedure for comparing results from past performance to current or forecasted performance.
Functional or external benchmarking involves comparing your business activities with those of companies from other industries/sectors with similar processes.
Collaborative benchmarking involves two phases; firstly between two voluntary collaborators within a sector, then secondly between the two collaborators and a party outside the current sphere of competition. Of course this is better suited to the public sector e.g. hospitals, police services since commercial rivals are unlikely to collaborate in this manner.
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