Value Based Benchmarking and Market Partitioning

The paper offers an analytical approach for an integrated treatment of market partitioning and benchmarking within a Data Envelopment Analysis (DEA) framework. Based on an empirical example from the automotive industry we measure product efficiency from the customer’s perspective. This is interpreted as customer value, i. e., as a ratio of outputs that customers obtain from a product (e. g., resale value, reliability) and inputs that customers have to invest (e. g., price, running costs). Products offering a maximum customer value relative to all other alternatives represent efficient peers, which constitute benchmarks for different sub-markets. All products benchmarked via the same efficient peer(s) constitute a sub-market including the benchmarks.