What Is the Definition of Gap Analysis?

Written by isobel washington
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A gap analysis is a business tool used to study the intricacies of the path between the present position of a business and its goals.

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Purpose

The ultimate purpose of a gap analysis is to identify which steps and procedures should be taken to achieve business objective(s). For example, if the desired market share is 50 per cent, while the actual market share is 25 per cent, the analysis identifies the cause (and tactics) of "gaps" between the actual and the desired.

Features

The focus of a gap analysis varies, as it can be used to study one marketing aspect of a business or a broader scope of marketing position. For example, a gap analysis can focus on service quality, citing the gap between actual customer service and the potential level of service, and the tactical planning required to reach the desired level. Or, from a broader perspective, the analysis could study the company's market share position, present to future.

Strategic Vs. Tactical

Strategic planning involves forming objectives, such as a market leadership, product development and brand positioning. For example, achieving 60 per cent of the market share is a strategic goal. Tactical planning involves specifying the steps required to achieve such goals. A gap analysis is a tool of tactical planning.

Uses and Users

This analysis is a management tool. The study is used by decision makers to identify business strengths and weaknesses, opportunities and obstacles along the path toward the desired standard of business, so that these decision makers can implement tactics. The analysis is not for public (shareholder) use, nor for company employees outside of management.

Marketing Scope

Unlike other analysis tools, such as a SWOT analysis--which incorporates aspects of finance, operations and human resources, in addition to sales and marketing--gap analysis lies within the scope of marketing. Marketing includes product, promotion, price and distribution, and its subcategories include branding, advertising, and competitive advantage.

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