Gap Analysis1
Helen Strong
Gap Analysis: Purpose
When looking for opportunities in the marketplace, it is always sensible to start with areas in the market that have few or no competitors. Gap analysis, based on consumer buying or preference criteria, will help you find areas where consumer needs are not being satisfied. It can also help you define the distance between your product offering and the consumers’ ideal product.
Gap Analysis: Structure and Description
No matter what area of a business process that you are in, there is almost always room for a gap analysis. Essentially, this process looks at the ideal or objective state, establishes the current state, and using appropriate indicators decides how far the current state is from the ideal. To complete the transition, one then decides on an action plan to move from the current state to the ideal.
Gap analysis (Figure 17.1) takes place in the context of the needs of the people or companies involved together with business infrastructure, processes, and strategies. Hence to develop the action plan, in addition to the current needs and definition of the ideal state, one also needs to establish environmental factors such as strategic intent; to choose indicators for the variables included in the gap analysis and consider policies that affect possible gap solutions.
Figure 17.1 Gap analysis
Gap Analysis: Strategic Implications
It is not always obvious where the vulnerable areas are between market reality and company performance. Gap analysis should be conducted on a continuous basis, identifying trends in the market and being alert to changes that occur especially with respect to key performance indicators.
Within a marketing framework, gap analysis is a useful check to measure how well sales and marketing strategies are delivering against objectives. The technique is particularly useful when considering new product development and conducting competitive comparisons.
Gap Analysis: Implementation
The process relies on availability of information. Hence researchers need to be able to extract figures from within the database or conduct research to define the current state or even the desirable state.
If you are evaluating a marketing campaign, you may have particular objectives regarding awareness, or website visits, market share, and purchase. For example, the gap analysis conducted on the target market would establish the differences in the variables and suggest the actions or investigations listed in Table 17.1.
The action plans are then developed taking into account the overall business objectives, policies, and systems. Sometimes the solutions lie in an overhaul of the business processes. For example, the researcher may find that competitors have an edge because they have a more efficient delivery system. Then the solution lies in solving supply chain issues, and not marketing problems.
Table 17.1 Gap analysis
Applying the process to product design, research may establish that:
- There are needs that are not being met by the product
- Or a feature is irrelevant to the target market (and therefore not used)
- Or there is an indication that the same functionality can be achieved at a lesser price
At the same time as the research is being conducted, the researcher would ask the target market to specify the ideal product. Following the survey, the table would be set up as above, and an evaluation and action project set up involving marketing, production, and sales.
Parnitzke (2013) provides an interesting perspective on using gap analysis in the development of a road map for system, database, and software development. One factor that emerges in his discussion is that in an IT environment it could be important to implement the action plan components in a particular sequence for optimal functioning of the final product.
Applied to HR management, one would conduct a skills audit, evaluate needs given the business plan of the organization, assess the gaps, and then formulate a skills acquisition plan. Here one would need to look at the potential of internal candidates for training or decide that recruitment is necessary to provide the required skills within a defined time period.
Customer complaints can be dealt with in a similar manner.
Gap Analysis: Conclusions
This technique can be applied to exploring the dynamics of both problems and opportunities. The effectiveness of the analysis lies in accurate measurement of the variables, and then alignment of the solutions with business objectives. Action plans would need to take account of facilitators and barriers to implementation. The questions that need to be asked are whether the company has the capacity and the will to make the changes. If not, will it survive without change?
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