Close or Distant Competitors

customer value analysis Analysis conducted to determine what benefits target customers value and how they rate the relative value of various competitors' offers.

Most companies will compete with those competitors who resemble them the most. Thus, Citroen/Peugeot competes more against Renault than against Porsche. At the same time, the company may want to avoid trying to 'destroy' a close competitor. Here is an example of a questionable 'victory';

Bausch & Lomb in the late 1970s moved aggressively against other soft lens manufacturers with great success. However, this led one after another competitor to sell out to larger firms such as Revlon, Schering-I'lough and Johnson & Johnson. The result was that Bausch & Lomb faced much larger competitors - and it suffered the consequences. For

How Benchmarking Helps Improve Competitive Performance







that deeply affect customer satisfaction and company costs, and for which substantially better performance is known to exist.

How can a company identify 'best-practice' companies? As a good starting point, it can ask customers, suppliers and distributors whom they rate as doing the best job. Alternatively, it can contact big consulting firms that have built large files of 'best practices'. An important point is that benchmarkers need to resort to industrial espionage. Japan's Canon and the United Kingdom's Lucas Industries encourage reciprocal visits from companies that they use as benchmarks. 'Industrial dating agencies', such as the Benchmarking Centre and the international Denchmarking Clearing House (IBC), now exist to help firms find partners.

After identifying the 'best practice' companies, the company needs to measure their performance regarding cost, time and quality. For example, a company studying its supply management process found that its buying cost was four times higher, its supplier selection time four times longer, and its delivery time sixteen times worse than world-clas s competitors.

Companies must be careful not to rely too much on benchmarking. Since benchmarking takes other companies' performance as a starting point, it might hamper real creativity. It might lead to an only marginally better product or practice when other companies are leapfrogging ahead. Too often, benchmarking studies take many months, so by the time they are completed.

better practices may have emerged elsewhere. Benchmarking might cause the company to focus too much on competitors while losing touch with consumers' changing needs. Finally, benchmarking might distract from making further improvements in die company's core competences.

When Roberto Schisano joined Alitalia, he found another way in which b en dim,-irking can go wrong: 'Our previous benchmarks were the soso bunch,' he said, 'the other European state airlines, not those seeking to be market leaders like BA or Southwest. And when one mentioned losses, the reply was "Oh, we're not as bad as Air France."'

Sources; Robert G, Gamp, Benchmarking: The search for induscry- best practices that lead to superior performance (White Plains, NY: Quality Resources, 1989); A. Steves Wälleck, David O'llalloran a/id Charles Leader, 'Benofrfedrking world class performance', McKinsey Quarterly, 1 (1990), pp. .>-24; 'First find your bench'. The Economist (11 May" 1991), p. 102; Robert Osterhoff, William Loeander and Gregory Bounds, Competitive Benchmarking at Xerox (Loudon: Quorum, 1991); Michael ,1. Spendolirii, The Benchmarking Hook (New York: AMACOM, 1992); Jeremy Main, 'Sow to steal the best ideas around', Fortune (19 October 1992); Betsy We i sen danger, 'Benchmarking for beginners', Haies and Marketing Management (November 1992), pp. 59-64; Robert Graham, 'Alitalia tries to fly higher'. Financial Times (1 August 1994), p. 12; John Griffin, 'Streets ahead', Financial Times (4 November 1994), p. 11; David Reed, 'Setting a new benchmark', Marketing Week (4 November 1994), pp. 55-8.

example, Johnson & Johnson acquired Vistakon, a small nicher that served the tiny portion of the contact-lens market for people with astigmatism. Racked by J & J's deep pockets, however, Vistakon proved a formidable opponent. When the small but nimble Vistakon unit introduced its innovative Acuvue disposable lenses, the much larger Bausch & Lomb had to take some of its own medicine. According to one analyst, 'The speed of the [AcuvueJ roll-out and the novelty of [J & J's] big-budget ads left giant Bausch & Lomb ... seeing stars.' By 1992, J & J's Vistakon was no. 1 in the fast-growing disposable contact-lens market.4

In this case, the company's success in hurting a close rival brought in tougher competitors.

• 1 Well-Behaved'or 1Disruptive * Competitors

^ company really needs and benefits from competitors. The existence of competitors results in several strategic benefits. Competitors may help increase total

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  • niklas
    How TO identify Close or Distant Competitors?
    6 years ago

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