[an error occurred while processing this directive]
Go to previous section of document Link to chapter contents   Go to next section of document

Conduct Market Research and Benchmarking Analysis

Market Research

Market research is the continuous process of gathering data on product and service characteristics, suppliers' capabilities, and the business practices that surround the purchase and use of products and services. Market research is an essential component in the determination of whether to acquire or manufacture a product or service and can be used to:

Determine elements of requirements

Evaluate price realism and cost realism

Shape the commodity strategy

Develop the support strategy, the terms and conditions included in the contract, and the proposal evaluation factors used for source selection

Evaluate innovations/trends in the market that will offer savings or impact total cost of ownership (TCO)

Market research and benchmarking analysis differ from issuing and analyzing responses to a Request for Information (RFI), which is covered in the Develop, Issue, and Analyze Responses from Request for Information (RFI) topic in Process Step 1: Identify Needs. There are two types of market research: primary and secondary. Primary research attempts to collect original information, usually through focus groups, surveys, field tests, interviews, or observation, and provides a direct understanding of the target market. Secondary research leverages previously collected information, often in the form of demographic information, prior surveys completed by others, industry trade information, reports and studies, publications, and other preexisting media. Primary research allows the organization to customize the study, but is also more complex, time consuming, and expensive than secondary research. Secondary research requires fewer resources than primary research; however, it tends to produce generalized results. An accurate analysis of the target market often requires use of both methods. Figure 1.6 provides sample market research activities and their intended purpose.

Figure 1.6

Sample Market Research Activities

Activity Purpose
Hold industry briefings or presolicitation conferences (primary research) Discuss needs and obtain recommendations for request for proposals (RFP)
Attend conferences, and research commercially available products, industry trends, product availability, reliability, and prices (primary and secondary research) Assess whether commercial products and services meet (or are adaptable to) Postal Service needs
Test and evaluate commercially available products in a Postal Service operating environment, and collect reliable performance data (primary research) Determine whether modifications are necessary, and develop operational cost information
Analyze the purchase history of an item or service (secondary research) Determine the level of competition, prices, and performance results

Return to top of page

Benchmarking Analysis

Benchmarking Analysis is a specific type of market research that allows organizations to compare their existing performance against others and adopt improvements that fit their overall approach to continuous improvement and culture.

Many types of benchmarking exist; the most commonly recognized are:

Process - evaluates specific business processes (e.g., purchase planning, e-procurement, service delivery). Process maps are used to facilitate benchmarking.

Performance - compares product and service as a way to assess the organization's competitive position against same-sector peers. Focuses on costs, technical quality, ancillary service features, and performance characteristics (also called competitive benchmarking).

Strategic - seeks to evaluate the organization's strategic maturity against others across various sectors. Focuses on general approach to the development and management of core competencies, innovations, and change strategies.

Benchmarking analyses often rely on both quantitative and qualitative measures to generate meaningful results. Quantitative analysis can provide metric-based outcomes, while qualitative comparisons often reveal best practices. The benchmarking process usually encompasses four steps:

1. Planning

2. Analysis

3. Action

4. Review

Step 1: Planning

Determine the broad business process and tasks to benchmark

Identify the resources required for the study

Confirm the key activity performance measures or indicators

Document the existing process for conducting the activity

Identify appropriate reference models as a starting point for your assessment

Return to top of page

Step 2: Analysis

Collect information to identify the scope for improvement

Compare the existing process with that of appropriate reference models to identify differences and innovations

Agree on expected targets for improvement

Step 3: Action

Communicate the results of the study to key stakeholders

Develop an improvement plan to implement changes

Implement the improvement plan, monitoring progress and reviewing as necessary

Step 4: Review

Review performance when the changes have been implemented; identify and rectify bottlenecks

Communicate the results of the implemented changes

Schedule future benchmarking activities to continue the improvement process

Benchmarking Benefits

Organizations that successfully utilize benchmarking report that the associated costs are repaid at least tenfold. Benchmarking can be used to help identify not only which processes to improve but also the gaps between existing processes and the best practices of other organizations. It also supplements a number of performance improvement techniques, such as business analysis and the redesign of business processes.

Go to previous section of document Link to chapter contents   Go to next section of document