It essentially involves sharing information and adopting best practices to bring about modifications in performance. At its simplest, benchmarking may be taken as a continuous process of measuring products, services and practices against the toughest competitors (the best class i mean).It may be a product, a company etc.
For software testing ,an instance of benchmarking a particular web-page can be taken . Lets assume that currently the page gets downloaded in 3 seconds. Now developers modify the code for some reason and you as a tester would need to check that the modification doesnt play hard on the performance of that page.It shouldnt happen that modifying the code served its objective but increased the download time so much that effectiveness of the application gets deprived of its usage.These benchmarking results when compared with the results of pre-modified code will decide if you are willing to accept the affect.
Benchmarking, As it name suggest to everyone that Bench Marking means something is showing you a level so that you can not go below so that your work will always be in improvement process. In same way we use bench marking for Quality. This helps a company to grow always with a better quality. And benchmarking always keeps changing as per the company rules and policy. It varies with company to company...