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Gap analysis models help businesses identify the difference between their current performance and maximum potential. Different templates include usage, market potential, and product gaps. These models can help businesses determine why gaps exist and how to correct them, such as by expanding into new markets or changing product positioning.
Gap analysis models help a business determine the difference or distance between what they currently do and maximum potential. Different analysis templates include usage, market potential, and product gaps. Businesses often look at this process in terms of efficiency or where the business fails to reach its peak levels of opportunity. Owners and managers tend to be responsible for gap analysis models, although outside help may be needed. The different types of model can dictate how the company completes the process.
A usage gap can be determined with a basic formula: market potential minus existing usage equals usage gap. For example, the potential demand for widgets in the current market is 40,000 units. The leading widget maker, however, only produces 35,000 units; therefore, the usage gap is 5,000 units. Gap analysis models can help a company define why a gap exists and what are the main factors in terms of correcting this gap. Price, quality, or regional consumer demand can all be reasons for the usage gap problem.
Market potential represents the maximum number of consumers available in a specific market. Highly successful businesses in a small region often find their sales outdated. Gap analysis models can help confirm the fact that the business lacks new consumers, which is limiting or driving down sales. In this case, a business must start looking elsewhere to increase sales and potential profits. Domestic companies may find this problem, with the only solution to sell goods in international markets.
Product gap analysis models tend to consider the company’s segment or positioning gap in a market. The segments represent the individual points where the company chooses to sell its goods or services. Fewer market segments means fewer opportunities to maximize sales and profits. In some cases, a company may not even sell products in the most profitable market segment. Gap analysis templates can help define which of these issues are of greatest concern.
Position gaps in terms of products occur when accompaniment fails to place products in the right position in a market. For example, a company may choose to be the low-price leader for a certain type of good or service. The result, however, is low profits and high sales that can outstrip production. The reverse may also be true; high-quality products sold at high prices may not stimulate demand. The company must therefore try to change the product positioning to be successful.
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