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Competitive Benchmarking of E-Products

Aug 18, 2007
In the product world, benchmarking of competitive products is an important part of an overall product development process. The establishment and implementation of an effective benchmarking process helps to identify cost reduction opportunities, functional improvement areas, and help to identify the Voice Of the Customer (VOC) that will drive the development of new products. Product benchmarking activities consist primarily of the acquisition of competitive products, product tear down and review, component attribute analysis such as size, mass, and material type, and a rigid documentation process allowing further product and comparison analysis of multiple products to be conducted.

Unlike companies that produce and sell physical products, business that operate primarily online often fail to identify the need for such a benchmarking process. This is most common with businesses that are heavily dependent upon the development, sale, and distribution of electronic products (e-products). E-products are typically not physical products but rather consist of items such as programming scripts, e-books, websites, and web related services. These companies rarely identify the need for benchmarking of their non-physical product line.

This oversight by companies to develop and implement a benchmarking process for e-products is not surprising. A common belief is that the lack of a physical, tangible product prohibits a company from conducting typical benchmarking activities. This can be understood as it is difficult, if not impossible, to tear down an e-product. It is even more difficult to analyze the size, mass, or material type of an e-product. For these reasons, many online companies do not place emphasis in resource planning or in their development of a benchmarking process.

The reality is that a benchmarking process of e-products holds large, potential benefits to the companies that implement such processes. The most common approach for the benchmarking of e-products involves a detailed investigation of the process or industry shortfall that the e-product intends to address. Rather than tearing down a physical product and counting the number of Bill Of Material (BOM) items, e-products require an investigation into the process, information, or service that is being offered. By documenting the process that the script, website, or e-book implements, the process that is associated with the competitive product can be analyzed for applicability to current or future products to be developed.

Companies that allocate either full-time staff or at least part-time resources to conduct competitive benchmark activities hold a strong advantage over companies that choose otherwise. Online businesses that implement a benchmark process stand to benefit in areas such as product development, market segmentation, and in the pricing and strategic placement of products within a particular industry. In a competitive environment, these benefits can mean the difference between a profitable, successful business and another that may fade out of contention.

So how does a company implement a benchmarking process for e-products? The short answer is to develop and document a benchmark process for the organization. At a minimum, the following activities need to be part of a fully defined and systematic benchmark process:

1) Competitive product acquisition - this activity involves the identification and procurement of competitive products within your intended target market segment

2) Develop benchmark metrics - an important step is to identify and agree on the metrics of which each product will be measured

3) Competitive product review - all products must be reviewed to the agreed upon set of criteria and the findings documented in a consistent manner

4) Product assessment - the findings of the benchmark analysis must be reviewed by key members of the organizational team

5) Feedback - activities must be put into place for providing feedback to critical processes within the organization (sales, marketing, product development, support, etc)

A properly executed benchmark process for electronic products (e-products) can provide a myriad of important benefits to an online business. Such a process will lead an organization through the acquisition, review, and analysis of competitive e-products. Data from these activities can be fed back to influence internal business processes such as sales, marketing, product development, and others. If done correctly, the knowledge gained from benchmarking activities can steer an organization away from an overly competitive market or help to position a product in a less competitive niche. Overall, the existence of a benchmarking process is an important consideration for online businesses involved with e-products.
About the Author
Brad Semp uses his Cashmap techniques to lead entrepreneurs and business owners to higher revenues and profits. Join his popular Cashmap Success newsletter at http://www.CashmapProfits.com to obtain more information on setting up a benchmarking process for your business.
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