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Introducing B-COP: A Methodology to Benchmark Competitive Online Performance - page 3 / 21

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WHAT ARE THEY DOING ONLINE?

Benchmarking competitive performance is an established business practice.

Understanding who one’s competitors are and tracking one’s performance vis-à-vis these players

is vital to the financial health of every corporation. Benchmarking lets companies track new

entrants into the market and track surges or dips in performance of established players. As such,

benchmarking oneself against competitors is a robust method to ensure a long-term, sustainable,

and substantial competitive advantage (Porter, 1998).

Maintaining a strong presence over the Internet has become an indispensable aspect of

conducting business in today’s global economy (Hoffman, Novak and Chatterjee, 1995). By

reducing the barriers to entry, the Internet has made it possible for companies to compete online,

regardless of firm size. At the same time, competition for traffic is intense on the Web. Traffic

on the Web exhibits a “winner-take-all” nature with only a few large players garnering high

levels of traffic while most languish with low levels of consumer interest (Adamic and

Huberman 2000, Huberman 2003). Therefore, understanding one’s relative position in the

marketplace takes on a greater sense of urgency.

Benchmarking in the online environment poses unique challenges. Unlike the physical

environment where physical cues (e.g. size of buildings, traffic in a physical store, working

hours, and size of parking lot) help one understand the size of competition, online one is left

guessing about the extent and nature of competition.

Managers who are interested in assessing the traffic to a particular site and benchmarking

it against key competitors run into many difficulties. First, analysis of the traffic to one’s own

web sites may provide some insight into the competitive picture. However, this analysis does

not provide a comparative perspective. Second, measuring traffic on the Internet and selling

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