“Mirror, mirror, on the wall, who’s selling the best microwave bacon of all?”
If you’re in the microwaveable bacon business, then product benchmarking will be your mirror. You’ll discover all the ways in which your competitors might be outranking you (and no, the next step is NOT to send them a poisoned apple).
Thanks to streamlined testing platforms that harness the latest technologies, it’s easier than ever to benchmark products. No longer are companies in the dark ages when it comes to determining customer satisfaction, usage trends, loyalty, and more — and then using these insights to make game-changing innovations.
Let’s take a look at this vital market research process and how to make the most of it.
Product benchmarking is a market research process that compares your product’s performance against that of competing products. This can reveal ways to improve your offering, hone your strategy, and tailor your advertising to the groups of people most likely to buy.
Also known as “product performance benchmarking,” this process can look at things like usage trends, customer satisfaction, how well the packaging reflects what customers are seeking, and much more. If you collect this data and use it to continuously improve your product, you can gain greater market share and avoid losing it.
Every time a CPG or retail company prepares to go to market with a new product, they’re taking a gigantic risk. Think millions of dollars in product development and advertising on top of months of work. And it can all be wasted without sufficient market research.
This sad scenario has happened many times over, and it comes from not fully understanding customers. Imagine a company selling a new health-focused snack pack. If they don’t do enough sensory testing, the product might fail to catch on, and they’ll never recuperate the millions they invested into its development. (Even the most health-conscious consumers have a taste threshold!)
Understanding how customers experience your product is vital, but there’s still more to the story. You may have a product that gets stellar reviews from sensory testers, and yet your target customers keep choosing something else. This is why you need to know how you stack up against competitors. You can have a trillion data points about your own product, but if you don’t know how it compares to competitors selling similar things, you might be bleeding buyers and have no idea why.
Let’s go back to our microwaveable bacon example. Perhaps you’ve found (through your sneaky spy channels) that competitors are all getting docked satisfaction points for the way the grease-absorbent packs burn their fingers after microwaving. Instead of expecting buyers to wait for the packs to cool down (it’s BACON. Who can wait?), maybe you can improve upon this feature. And then you can tout the improvements to the people who care about it the most.
Product benchmarking is related to competitor analysis, which involves looking at the strengths and weaknesses of your competitors to understand their goals and strategies. The main difference is that benchmarking directly positions YOUR current offering against that of your rivals. This is known as “external benchmarking,” since you’re looking outwards.
External benchmarking might lead you to outrun your competition in certain elements of a shared strategy, or it could prompt you to develop an entirely new strategy altogether. You may see that the market is saturated and instead discover a completely new customer base to target. In this sense, your competitors are no longer your competitors exactly — you’re in a league of your own.
You can also benchmark against previous iterations of your own product (this has been dubbed “internal benchmarking”). If you’re considering a major change to your offering, then it’s important to make sure your customers aren’t dissuaded by the new taste, look, or feel. One of the more well-known internal product benchmarking examples — which is also an example of alienation testing — involves Oreo’s comprehensive sensory evaluation of its new stuffing formula that was free of pig lard.
Key performance indicators, or KPIs, are the specific, quantifiable data points that describe how your product is faring. The ones to pay most attention to vary depending on what you’re trying to figure out. Are you trying to broaden your market share? Or are you seeking to turn your product into a daily must-have for the people who are already enjoying it from time to time?
For external benchmarking, a few KPIs to focus on include:
For companies preparing their go-to-market launch, benchmarking KPIs can be selected to make sure the new product is in line with category pricing, packaging best practices, and the like.
Careful audience construction is the key to getting good data. Testing audiences need to be consistent, and they should be set up in a way that gives you accurate insights into your target customer base as well as the general population.
Recruiting an audience of testers can be quite difficult if you’re trying to go it alone. These days, many CPG companies turn to in-home usage testing (IHUT) platforms because of their ability to come up with a representative audience at the drop of a hat. With deep expertise in market research, IHUT service providers will make sure your audience yields high-quality data.
It’s also crucial to find a way to do a blind side-by-side test of your product with a competing product (or your current product with a previous version). Although one of the common IHUT myths is that you can’t blind-test against competitors, there are actually many new, technology-enhanced ways to do this quite easily.
Traditional DIY benchmarking requires tons of manual effort on the part of the company creating the products, and the CPG industry has long struggled to obtain and maintain accurate, transparent product benchmark data. Historically, brands have had little or no transparency as to what products their own products are being benchmarked against, or if those products used for benchmarking even successfully launched to market themselves. There was too much work and not enough useful data.
That’s all changed. In-home usage testing platforms are employing the latest technologies like streamlined logistics, targeted recruiting, and natural language processing to help their CPG clients get the insights they need. When you can hand over the logistics of packaging and blinding products, selecting the right target audience, and collecting the data to IHUT experts, you’ll be better positioned to let the data spark innovation and problem-solving.
Highlight’s Benchmark Builder is one such tool that offers transparent data collection with product benchmarks across CPG sectors. You can compare your product performance against brands with large market share, brands with consistent but lower market share, disruptive brands, and lower performers so you know exactly where your product stands.
With access to an audience of committed testers that Highlight recruits and manages, your data will come in hassle-free and ready to help you make decisions. Benchmark Builder tests with consistent audiences that reflect the general population as well as target consumers for your specific category. Highlight’s proprietary nationwide audience of product testers makes it possible for us to control for the highest quality audience building, both for benchmarking data and beyond.
The results are in. You’ve just done another test to see how your new-and-improved bacon grease-absorbent packs measure up against your rivals when it comes to customer satisfaction. Those competitors didn’t bother to do any testing, and they never made any improvements. Their customers still mutter “ouch” under their breath as they rip open the steamy packaging. But not YOUR customers! Your customer loyalty just got a huge boost.
In-depth, consumer-driven product benchmarking data is a treasure trove of insights into real-world product usage and preferences. When this data is collected in a reliable, transparent way, brands can make informed decisions about their product development and launch strategies. The millions of dollars spent on product development starts to seem less like a bet and more like a secure investment.