Gap Analysis: What It Is and How to Use It

Gap analysis is a strategic planning tool used to determine how much the current state of a company, project, or process differs from its desired outcome. Simply put, it compares “where we are now” with “where we want to be” and identifies the points of divergence. This reveals the steps needed to close these gaps between actual and planned outcomes.

The methodology is universal: it is used across a wide variety of fields, from banking and logistics to marketing and general management. In marketing, gap analysis is especially valuable as a strategic management tool: it provides a clear picture of how effective current actions are and highlights areas for improvement in future plans.

Stages of gap analysis

Gap analysis is carried out step by step. First, all necessary information is collected and the current state of the company or project is assessed: key metrics, marketing campaign outcomes, internal processes, and available resources.

Next, the desired outcome is defined: for example, a sales plan, a target market share, or other marketing goals with specific deadlines. Then, the actual results are compared with the plan, and “gaps” — areas where performance falls significantly short of the target — are identified.

The next step is to understand the reasons behind these gaps. To do this, both internal and external causes are examined: from weaknesses in the marketing strategy to changes in the market or customer behavior patterns.

Once the causes are clear, a plan for closing the gaps is developed. This may involve changes in strategy, product or service improvements, price adjustments, campaign budget reallocation, and other actions. After that, the implementation phase begins.

Continuous monitoring is crucial here. If market conditions change, the gap analysis should be repeated.

Tools and methods used for gap analysis

Gap analysis is not a rigid set of rules, but rather a general framework that can be tailored to specific objectives and metrics. Depending on the goals, it can incorporate various methods and tools. In practice, this often means combining gap analysis with other types of analytics and approaches to obtain a more comprehensive picture:

SWOT analysis. This is one of the most well-known strategic analytics tools, assessing a company's strengths and weaknesses, as well as external opportunities and threats. In the context of gap analysis, it is used to understand what internally hinders the company from achieving its goals and what external opportunities can be leveraged to close the gap between the plan and current results.

How does SWOT analysis work and how to use it? Read here.

McKinsey 7S model. This approach examines a company through seven key elements: strategy, structure, systems, management style, team composition, employee skills, and shared values. If even one of them does not align with the established goals — for example, the structure hinders quick decision-making or the team lacks the necessary competencies — this is a sign of an internal problem that is slowing progress.
Key Performance Indicator (KPI) analysis. Gap analysis compares actual KPI values with planned ones. If there is a lag, more targeted methods are used, such as RFM analysis, cohort analysis in marketing, or ABC/XYZ analysis in sales.
Web analytics tools. In digital marketing, when it comes to understanding gaps in website metrics (for example, in traffic or conversion), web analytics data is used. If traffic or conversion rates are significantly lower than planned, specialists examine reports from Google Analytics and other platforms.
Other methods. Depending on the task, qualitative research can also be added to gap analysis. For example, surveys or focus groups are conducted to understand why there is a gap in brand perception or customer satisfaction.

Applying gap analysis in marketing

Gap analysis can be applied at various levels: from the entire company to individual processes, areas, or even specific marketing campaigns. In marketing, it is used to solve a wide range of problems, such as:

Planning and developing a marketing strategy. Gap analysis is often used when a company is formulating long-term marketing goals. Even at the strategy development stage, the desired achievements are compared with what is currently available: resources, capabilities, and market position. This helps understand the feasibility of plans and, if necessary, adjust them before they are put into practice. For example, if the goal is to increase market share from 15% to 25% within three years, the current market share and resources are first assessed, then the gaps — budget, team, promotion channels — are identified, and a plan is developed to close these gaps.
Evaluating and improving marketing and sales effectiveness. With the help of gap analysis, marketers analyze the effectiveness of their marketing activities. Often, the planned return on marketing investments turns out to be less than expected: for example, product sales do not reach the target numbers.
Benchmarking and competitive analysis. Gap analysis is often used in conjunction with benchmarking to understand how far a company lags behind market leaders in key metrics, such as audience reach, service quality, or advertising campaign effectiveness. Here, comparing with competitors clearly shows the extent of the gap and helps to understand the causes. For example, if a website's conversion rate is lower than that of a market leader, you can check whether this is due to a poorly designed interface, a less compelling offer, or a lack of brand trust.
Analysis of marketing campaign outcomes. Gap analysis can also be used to analyze individual campaigns (advertising, PR, or digital). Each has its own KPIs: number of leads, audience growth, and engagement rate. After the campaign is completed, the actual figures are compared with the plan. If the goal was not achieved, the method reveals where exactly the gap occurred. This could be a stage in the funnel where the audience began to drop off: for example, a high click rate but low conversion on the landing page indicates a problem with the offer or UX, or, conversely, the reach was too small, which then requires a more nuanced approach.

Example: increasing brand awareness. Imagine that a company sets a goal to increase brand awareness from 40% to 70% among its target audience. First, gap analysis records the current level and checks the related metrics: ad reach, media mentions, and traffic from branded queries. Then, a target level is set. Next, it needs to be determined why current efforts are only achieving 40%: perhaps the advertising budget is too small, the brand is not very noticeable online, or its positioning is not compelling. Based on this, specific steps are formulated: strengthening media advertising, updating the USP, launching a PR campaign, or conducting collaborations for broader reach.

Pros and cons of gap analysis

Advantages

Simplicity and clarity. The method boils down to a simple comparison: what you have now and what you need to achieve. The gap is immediately visible, and the results are easy to explain to your team or management.
Effective identification of problem areas. This approach quickly reveals where exactly the bottlenecks are — whether low conversion, limited reach, or missing items in your product range — and eliminates vague statements like "we need to improve something".
Practical and action-oriented. After a gap analysis, you get not just an understanding that something is wrong, but a list of specific steps to fix it.
Versatility and scalability. Gap analysis can be used in any area of business and at any level, from overall company strategy to setting up a specific marketing campaign. It can be easily combined with other methods, making it equally useful for marketers, product managers, and financial analysts.

Problems that may arise

Static nature. Gap analysis shows the situation as of a specific date and may not account for rapid changes in the market or within the company. It typically focuses on the most obvious causes of deviations, while secondary factors may be overlooked.
Subjectiveness of goal setting. The results of a gap analysis depend on the initial goal. If the goal is chosen incorrectly or is too hard to achieve, the entire analysis will be based on a weak foundation, and the conclusions will be invalid. Gap analysis itself does not verify the feasibility of goals: it assumes they have already been approved. Therefore, it is important to honestly check whether the goal is relevant and achievable on time with the available resources. If not, it is best to adjust it.
Time-consuming and data-intensive. A full-fledged gap analysis requires a lot of calculations: up-to-date, accurate data on the current situation and clearly defined target metrics are needed. If the information is insufficient or "noisy", the value of the conclusions will be diminished. On top of that, the process requires significant resources, such as time, manpower, and management attention; in large companies, this can easily turn into a separate project.
Ignoring strengths. Gap analysis essentially looks for gaps, making it easy to become fixated on weaknesses and bottlenecks. As a result, strengths and growth opportunities remain unnoticed. Maintain a balance: in addition to gaps, analyze what is already working, for example, strong products, effective channels, or sustainable processes.
Additional research may be required. When the cause of the gap is not immediately obvious, it is often necessary to go beyond the initial analysis: collecting feedback, conducting focus groups, surveys, and in-depth interviews, revising segmentation, reviewing website session recordings and additional data.

Conclusion

Gap analysis is a method in which current results, processes, and resources are compared with predetermined goals to identify the gap between "as is" and "as should be". The causes of this gap are then identified and specific steps are taken to close it, from adjusting strategy to changes in product, pricing, or distribution channels.