GAP-analysis: a powerful tool in the marketer's assortment

Any business, regardless of its niche or size, strives for development. This is what will guarantee a stable and long-term presence in the market, good income, and bright prospects. And here a completely natural question arises: how to understand that the company is really developing successfully? Do the expectations and feelings of managers correspond to the real situation? It may well turn out that the successful development is only an appearance, and the real situation is far from ideal.

What to do in this case and understand that the expectations are quite in line with reality? The optimal solution is to conduct a GAP analysis. In this case, we are talking about a study that involves determining the current key characteristics of a business in its main areas of activity. After the specialists have the relevant figures, an additional check of the same indicators is carried out for truly successful competitors. As a result, the obtained data is compared, the gaps between them and their scale are analyzed. Only then is a final conclusion made about the success of a particular business, and ways to solve existing problems are selected. That is, a GAP analysis allows you to get the most objective picture of the company's development, based on the real situation on the market, and not on the feelings of managers.

In today's review, we will consider this technique in as much detail as possible. We will highlight the indicators that are used here as targets. We will point out what advantages a business will receive from the practical application of such an analysis and in which areas its use will be most appropriate. We will talk about the features of a GAP analysis and how to conduct it correctly, we will highlight the main types, tools and technologies that are used to perform it. Let's give an example of such an analysis, which will allow you to clearly assess its advantages, and also highlight the advantages and disadvantages. The information provided will help you navigate this issue and the specifics of conducting a GAP analysis. So, first things first.

What is a Gap analysis

Before moving on to a direct acquaintance with the features of the analysis itself, I would like to say that in translation from English the word "gap" sounds like a gap or a break. This is what the methodology itself is based on, which involves overcoming the gaps that exist between the current state of the business and the target results. In practice, it can be applied both at the level of individual processes or areas of activity, and to evaluate the work of the company as a whole. In most cases, different data can be used as target results here:

• calculated;
• planned;
• market leaders;
• closest competitors;
• by average market indicators.

In practice, when conducting a Gap analysis, specialists can also use other research methods. Here, everything depends on which indicators are most relevant for a particular business and the purposes for which the study is launched at a given time. Alternatively, web analytics tools and other online marketing solutions are widely used to check gaps in website traffic. If you need to understand the specifics of gaps in sales of goods or services, then it is important to rely on methods that allow you to analyze the product itself.

Why marketers should use gap analysis

Using gap analysis in the course of developing marketing strategies allows you to get the most visual picture of the state of the business. With the information received, specialists will be able to:

1. Conduct a comprehensive analysis of sales efficiency. Alternatively, it may turn out that the pace of product sales is lagging behind the planned ones. That is, during such an analysis, you will be able to see problem areas in your work and the main areas where you need to concentrate maximum effort and attention. It is quite possible that the problem may be hidden not only in the actions of marketers, but also be of an external nature, which may ultimately require the involvement of third-party specialists.
2. Check how your company matches the indicators that recognized market leaders have managed to achieve. In this case, we are talking about benchmarking. That is, your own Gap analysis is performed, as well as competitor analysis, and then it is determined by what criteria and to what extent your business lags behind the leaders, and ways to eliminate the problem are developed.
3. Understand how realistic the pre-made plans turned out to be. In this case, all the resources that the company has at its disposal, as well as the planned activities, are compared in advance. During such a comparison, it is possible to assess the prospects of the previously developed marketing strategy and its viability as a whole, and also select those methods that will allow for improvements.
4. Analyze the effectiveness of marketing strategies as a whole. If you analyze the work of many marketers, you will see that, unfortunately, the expected indicators in most cases turn out to be higher than the actual figures. And this happens even in cases where the work is carried out by experienced specialists, when preliminary market research is carried out, and competitor strategies are studied. With the help of Gap analysis, you can understand why reality did not meet expectations and even understand what measures will help improve the indicators.

As you can see, the benefits of using this technique are quite impressive. This means that every marketer should try it in practice.

In what areas will Gap analysis be indispensable?

By and large, the use of Gap analysis can simplify the work of many specialists from different business niches, but there are still a number of areas where this technique will be indispensable in principle. Here are just a few of these areas:

• Banking. Here, with the help of Gap analysis, it will be quite easy to maintain an ideal balance between the assets of a financial institution and its liabilities.
• Logistics. This solution will be especially relevant in the field of international cargo transportation.
• Manufacturing. Here, with the help of Gap analysis, it will be possible to maintain a fairly stable balance between the release of products and their sale on the market, minimize the accumulation of goods in warehouses, and reduce production costs.
• Information technology. Here, the so-called Fit/GAP analysis has found wide practical application. It is used to check the gaps between the established parameters.

This technique has also found wide application in economics, management, and many other areas of activity. It should be used where it is necessary to ensure a comprehensive search for ways to overcome significant gaps between the initially predicted data and the requirements of the environment in which the work is being carried out. Internal approvals are the most relevant in marketing, as they allow you to understand in which direction you should move and what actions to take in order to remain competitive in the market, and the result turned out to be as close as possible to the predicted one.

Quite often, Gap analysis is also called a search for gaps, since it is used to identify key problems that prevent you from achieving your goals.

Features of conducting a high-quality Gap analysis

Before launching a Gap analysis, you need to carry out preliminary work and make sure that you have enough materials and capabilities to carry it out. In particular:

1. You have all the information about the current state of the process or object that you plan to study.
2. You have managed to set precise target benchmarks. Most of them are set in the form of specific numbers. In exactly the same form, you should have indicators of the current state, which will be required to perform a comparison.
3. You will be able to involve people who have decision-making powers in the Gap analysis. Thanks to this, during the discussion of the causes of the gaps and the selection of optimal methods for eliminating the problem, they will be able to offer effective and affordable techniques for implementation, as well as directly carry out the upcoming work. Without an experienced manager who perfectly understands all the specifics of the business and a particular process, you will not be able to implement this analysis.

If all these conditions have already been met, you can proceed directly to the Gap analysis. How to do this, we will describe in detail below.

Conducting a Gap Analysis: Sequence of Actions

In order for the Gap analysis to be as accurate as possible and provide visual information about the effectiveness of a particular process or the business as a whole, you should approach its implementation professionally. Here you will need to implement the following steps:

• Specify the parameters of the desired state. That is, you should initially understand what results should be optimal for your business at a given point in time. You need to clearly understand what indicators you would like to see in a particular product or the company's work as a whole. Alternatively, you can set a goal for yourself to increase sales to certain figures, expand the range of products or improve their quality indicators.
• Measure the exact figures of the current state. At this stage, you perform a comprehensive analysis of the current state of your business or the features of a particular product. Launched marketing strategies, brand pricing policy, product quality, level of satisfaction from the target audience and many other parameters characteristic of business processes are necessarily taken into account.
• Identify the gaps between the planned and current indicators, and also assess their size. That is, it is important to understand how far you are in reality from the desired figures. Here you need to consider all the parameters separately, since in practice it may turn out that the quality of your products is good, but sales volumes are gradually decreasing relative to the planned ones. And here it may turn out that the level of customer service leaves much to be desired. That is, in such a situation, the weak link will be the managers themselves. That is, at this stage, it is also important for you to identify the shortcomings of your marketing strategy or directly the products, personnel.
• Develop a strategy to eliminate the identified gaps. Now that you clearly understand where exactly the reason for the unsatisfactory performance of the business is hidden, it is time to think about how to eliminate it. Perhaps it will be necessary to make adjustments to the company's development strategy itself, conduct additional training for personnel or replace an incompetent employee, take measures to improve the quality of the goods, etc.
• Implement the steps outlined above, reducing, and ideally eliminating the identified gaps. That is, initially, it is important for you to complete the previously agreed steps, and then monitor what effect this gives in practice. That is, you should see that your strategy turned out to be working and gives good results in practice. Subsequently, you will need to check the numbers from time to time to prevent deterioration in the indicators.

That is, Gap analysis is what will help business representatives identify their weaknesses, understand their cause, and also select the most effective ways to eliminate gaps and, accordingly, achieve their goals in Internet marketing.

Main types of GAP analysis

At the beginning of the review, we already talked about the fact that GAP analysis can be carried out in different areas and cited where it has received the widest distribution in practice today. This analytical study is classified depending on the area of use and purpose. In particular, the following types of GAP analysis are used in modern marketing:

1. Financial. This type of analysis is designed to determine the difference between the planned and current financial indicators of the organization, be it profit, income indicators, profitability. It is used in practice when it turns out that the target income is higher than the actual one, if the business needs to optimize expenses, if it is necessary to check the marginality of individual categories of goods or products.
2. Strategic. It is used to determine the gaps between the working strategy of the company's development and the goals that the business initially set for itself. Such analysis is recommended for businesses that plan to enter new markets, change the established business model, or are at the stage of modernization.
3. Product analysis. In this case, the conducted research will help to see the difference between the actual technical characteristics of the product, as well as the expectations that are observed among the target audience, and among representatives of the company as a whole. Such work should be carried out in cases where there is a decrease in sales figures, when more complaints are received from customers, when there is a desire to increase the competitiveness of products in the market.
4. Operational. Here, gaps are also determined between the actual processes occurring in the business and the performance indicators that the company would like to achieve. This may include product quality, delivery time, production deadlines and other related data. Such a GAP analysis is mostly carried out when a business manager would like to reduce costs, identify weaknesses in the technological processes of his production.
5. Marketing. During such a study, it is possible to show the difference between the target results and the position that the brand occupies in the market at a given time. The main indicators for the study here are such data as loyalty from the target audience, recognition indicators, percentage presence of products in the market. With the help of such a GAP analysis, it is possible to identify weaknesses in the promotion of the product and its positioning as a whole in the corresponding niche.
6. Personal. It is carried out in relation to a particular person, including brand employees. It is used to determine to what extent a person's real skills and professional knowledge correspond to those declared. It is necessary to perform these works when there is a desire to improve your skills and knowledge in this area, increase income indicators, and improve work efficiency.

By and large, you can simultaneously launch one type of research, or several if it is necessary to ensure the most comprehensive development of business strategies and the stability of its work.

Techniques and tools used in conducting GAP analysis

Today, there are quite a lot of tools and methods for conducting GAP analysis. But here it is important to understand the nuances of each option well in order to understand which of them should be used in a particular case. In particular:

• The so-called "5 why" method. Its purpose is to determine the root cause of the problem with the highest possible accuracy. It is assumed that when using this tool, a specialist will ask the question "why?" 5 times in a row. This way, you will be able to determine the cause of the gap with a fairly high degree of accuracy. Here you will be able to go much further, and not stop at a superficial, rather vague answer.
• PDCA. This technique is also called the Deming cycle. Its essence lies in the systematic improvement of business processes. If we decipher this abbreviation, we will get an abbreviated name from the following words: "Plan", "Do", "Check", and "Act" “Act”. It is assumed that initially what requires changes is determined, and then attempts are made to eliminate the identified problem. After that, the results are checked and only then the identified mistakes are corrected. That is, with this method, specialists will be able not only to see the existing gap, but also to eliminate it consistently, literally step by step.
• Nadler-Tushman Conformity Model. It involves the use of 4 key alimony during the analysis: work, people, structure and culture. From them, 6 pairs are formed, such as work and culture, people and work, culture and structure, etc. As a result, each of these groups is checked, which allows identifying weak links.
• SWOT analysis. This study is designed to assess the situation comprehensively, look at it from different angles, get the most visual picture, see the moments in which you are ahead of the planned indicators and those where, on the contrary, there is a noticeable lag. It will also be possible to identify potential threats and opportunities for their elimination. This GAP analysis method allows you to evaluate your own resources and understand whether you can eliminate the gaps with their help or what additional solutions will have to be used in practice.
• McKinsey 7S model. In this case, GAP analysis will help the business get a complete and clear picture of its own development and how effectively it is moving towards achieving the set goal. Here, 7 different indicators are taken into account: strategies, style, structures, systems, skills, values, personnel. All of them complement and reinforce each other. If it turns out that the problem is hidden in one link, then the harm it can cause to the business as a whole is assessed and optimal methods for eliminating it are selected.

If necessary, different tools and methods can be used within the framework of one GAP analysis. It all depends on what decisions need to be made in the end.

One example of GAP analysis

To make it clearer how GAP analysis works in practice, we will give one of the hypothetical examples. Let's assume that you are a manufacturer of household chemicals. You see that your marketing plan, written for six months, is not working, that is, you cannot achieve the figures specified in it. Both financial indicators and those that have nothing to do with economics are lower. These are website traffic, conversion rates, audience satisfaction level, etc.

Here, marketers come into play and check the current indicators:

1. The planned sales figure for six months was $100,000, but your actual figures were $70,000.
2. You wanted to increase profits by 5%, but now you see that the figures have decreased by 1%.
3. The planned website traffic was supposed to increase by 8%, but in reality it fell by 3%.
4. The desired conversion rate is 10%, but yours, on the contrary, has decreased from 8% to 6%.

That is, you see that there is a significant deterioration in all the main characteristics. Here, a large-scale brainstorming session is launched, in which not only marketers, but also financiers and sales managers take part. The size of such gaps is assessed and possible causes are determined. Let's assume that you have analyzed the sales dynamics, the behavior of your target audience, the quality of your products and found out that a significant decrease in sales figures was primarily due to the fact that your customers did not appreciate the new line of household chemicals that was released on the market a couple of months ago. As a result, real profits have significantly decreased, since production is working at maximum, and sales have noticeably decreased.

Analyzing why the site traffic has decreased, you come to the conclusion that the contextual advertising budget has been exhausted and you have not renewed paid promotion in a timely manner. In addition to everything, it turns out that conversion rates have gone into the "minus" due to incorrectly conducted A/B testing, as a result of which you simply worsened the usability of the site.

The next stage of the GAP analysis selects possible ways to eliminate such problems. As an option:

• rebrand the unsuccessful line, revise the unique technical offer, increase its effectiveness;
• relaunch contextual advertising, slightly updating it;
• restore the original appearance and functionality of the site, and then launch more professional and high-quality A/B testing.

The last stage here will be the appointment of persons who will be responsible for the implementation of each point, prescribing the sequence of actions and implementation deadlines. It will also be important to re-check all the characteristics that you used in the first analysis in about a month. But here you will need to pay attention not only to the predicted figures, but also to the real ones that were obtained as a result of the first analysis. This way you will be able to understand whether the main indicators have improved and how big the gap is between them and the planned ones. If there is a stable growth trend, it means that you have made the right decisions that have improved the situation on the market.

Advantages and disadvantages of GAP analysis

Finally, let's talk directly about the main advantages of GAP analysis and its disadvantages, because only after weighing all the pros and cons can you decide on the advisability of using such a technique in your practice.

This solution has more than enough advantages. Experts highlight good compatibility with other analysis methods, universality of application, improved communication between different departments of the same business, which will help improve the efficiency of the business as a whole. If we structure all these advantages, we get the following picture:

• GAP analysis involves using real numbers rather than hypothetical ones, that is, it takes into account the actual state of your business and all the processes that occur in it. That is, it is no longer an assumption or a hypothesis, but real data.
• The ability to use this study when working with different businesses. We have already discussed the areas in which its application will be truly indispensable. It is suitable not only for companies that specialize in selling goods, but also for those who provide services, such as various online courses, marketing agencies, language schools, etc.
• Providing high-quality problem coverage. That is, this analysis allows you not only to see the discrepancies in the actual and projected numbers, but also the reason why all this happened. You will understand what exactly is implemented incorrectly and interferes with the stable and effective promotion of the company on the market.
• Allows you to see an action plan to eliminate the identified problems. Thanks to the data obtained, you will be able to easily understand how to act in a given situation in order to eliminate the discrepancy between theory and reality.
• Providing assistance in setting priorities. You will understand what influences the final result, which of these indicators are more significant and, as a result, you will be able to pay maximum attention to them.

But, unfortunately, like any other technology, Gap analysis has both advantages and disadvantages. The first thing that experts note is the subjectivity of the results. In any case, they will depend on who conducts the research and takes part in it. It is impossible to exclude a conflict of interests, a conflict situation, which will lead to an incorrect definition of gaps and their causes. Also, additional research may be required to obtain a comprehensive and clear picture. Here, it is often necessary to involve focus groups or other research methods that allow you to get a clearer picture. But, unfortunately, this will in any case involve additional costs of time, effort and often money.

We would also like to draw attention to the fact that working with Gap analysis requires certain knowledge and practical skills. People who will perform it must clearly understand which parameters will be relevant for a particular business when performing a specific check. Otherwise, you risk simply wasting time and resources on processing incorrect data. And the implementation of the planned activities will also require a professional approach. This means that only experienced marketers and related specialists should be involved in performing Gap analysis.

Summing Up

Gap analysis is a fairly powerful and advanced tool at the disposal of any marketer who would like to see the most accurate and clear picture of the state of the business as a whole or individual processes, and assess the performance of a specific person. It helps determine the gaps between the actual situation and the planned figures. Compared to other methods of analysis, Gap is highly versatile and informative. It will improve communications within the company, identify problems that hinder the comprehensive development of the business and find the most effective ways to eliminate them.

Despite the fact that the Gap analysis technique itself is quite simple and easy to implement, it will still require certain knowledge, skills, and the use of specialized tools from the performers. Such tools that would help analyze the market and individual businesses in order to determine the key parameters for the study. Here, a solution such as mobile proxies from the MobileProxy.Space service will come to the rescue. With their help, you can ensure maximum privacy and security of your work on the Internet, as well as effectively bypass various regional blockings and access restrictions. You will be able to use various services, including for automatic collection of information, analysis of competitors, without fear of being banned by the system.

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