Content
- What is Gap Analysis?
- Stages of Gap Analysis
- Why do marketers need Gap Analysis?
- Features of Gap Analysis
- Example of Gap Analysis usage
- Pros and Cons of Gap Analysis
What is Gap Analysis?
Gap analysis, which translates to "analysis of gaps," is a method that helps bridge the differences between the current state and desired outcomes. This approach can be applied at the organizational level as well as within specific processes or areas of activity. Various criteria can serve as target indicators, such as:
- planned indicators;
- calculated values;
- competitor indicators;
- market leaders;
- industry average data.
Gap analysis includes various research methods that are selected based on specific indicators. For example, web analytics tools are used for analyzing gaps in website traffic, while product analysis methods are used to study gaps in sales.
Stages of Gap Analysis
Gap analysis consists of four sequential stages that help top management understand how well their assessment of the company's success aligns with reality. In the first stage, the current state of key company indicators is determined, after which this data is compared with the indicators of successful competitors. Based on this comparison, gaps are identified, allowing top managers to see the scale of the problems and find their causes. Thus, gap analysis creates an objective picture of the company's state and helps formulate solutions to the identified problems.
Why do marketers need Gap Analysis?
Gap analysis is a valuable tool for marketers for several reasons:
- Sales performance analysis: If product sales results do not meet expectations, gap analysis can help identify bottlenecks and determine key areas for improvement.
- Assessment of plan feasibility: During brainstorming, comparing available resources with planned activities can clarify the viability of the plan.
- Benchmarking: By analyzing the company's compliance with market leader criteria, marketers can identify areas for improvement and outline paths to address them.
- Marketing effectiveness analysis: Gap analysis helps identify the reasons for discrepancies between planned and actual indicators, as well as determine measures to improve results.
Features of Gap Analysis
To successfully conduct gap analysis, several key conditions must be met:
- The availability of up-to-date data on the current state of the analyzed process or object.
- Clear definition of target benchmarks, usually in numerical format.
- Involvement of competent employees in the analysis who can make decisions, which is important for discussing the causes of gaps and developing recommendations.
Example of Gap Analysis usage
Consider an example where a cosmetics manufacturer faced the threat of failing to meet its annual marketing plan. The company's financial indicators began to stagnate, and key non-economic KPIs, such as website traffic and conversion rates, declined. During gap analysis, marketers discovered that:
- Sales increased by only 5 million rubles instead of the planned 20 million rubles;
- Profit decreased by 2%, whereas an increase had been planned;
- Website traffic fell by 5%, while an increase of 6% had been expected;
- Conversion rate dropped from 10% to 8% instead of the expected growth to 12%.
As a result of discussions with finance and sales specialists, the team identified the causes of the gaps and prepared a list of recommendations, including rebranding, cost optimization, and restoring cooperation with an influencer.
Pros and Cons of Gap Analysis
Gap analysis has several advantages:
- Universality and compatibility with other analysis methods;
- Improvement of communication between various departments;
- Increase in overall company efficiency.
However, there are also drawbacks:
- Subjectivity: results depend on the participants in the analysis, which can lead to conflicts and incorrect conclusions;
- The necessity for additional research, which can increase time and resource expenditure.
It is important to consider the features and limitations of gap analysis at the selection stage to avoid resource wastage and incorrect recommendations. After the analysis is completed, it is also necessary to implement the developed measures, establishing a KPI system and appointing responsible individuals for their execution.