Even more wide ranging than a marketing effectiveness rating is a full marketing audit. The major purpose of a marketing audit is to examine and evaluate periodically, in the light of current circumstances, the marketing objectives and policies that have been guiding the company. A marketing audit is essentially a systematic, critical and impartial review and appraisal of the total marketing operation – of the basic objectives and policies of the operation and the assumptions which underlie them, as well as of the procedures, personnel and organization employed to implement these policies and achieve the objectives.
The audit should also include a careful analysis of the company’s marketing environment. Recommendations for improving marketing performance should be a major outcome from the audit process.
Any company carrying out an audit will be faced with two kinds of variable. First, there are variables over which the company has not direct control. These usually take the form of environmental variables. Second, there are variables over which the company has complete control that are called operational variables.
The process of auditing is usually associated with the financial side of the business and is conducted according to a defined set of accounting standards, which are well documented and easily understood. The total business, moreover, can also be audited, although this process is more complicated and demands considerable powers of judgement. A marketing audit is part of this larger audit and is concerned with the collection and analysis of information and data essential to effective problem solving. As Lancaster and Massingham2 point out, the marketing audit should be concerned not only with marketing performance, but with the overall marketing philosophy in the company. For it to be beneficial an audit should be carried out on a regular basis and the company should not wait until things start to go wrong.
Carrying out the audit
We have now come full circle in the marketing planning process. The text began by discussing the importance of analysing the environment, followed by an internal appraisal of the company itself. We stressed the importance of both customers and competitors and can now remind ourselves of some of these factors by looking at how they form part of the marketing audit.
Auditing the environment
Three distinct elements of the environment are relevant to the marketing audit:
In the context of the marketing audit, we describe some of the factors that will need to be assessed under each category of environmental factors.
Business/economic and market factors
The following elements should be examined during a marketing audit:
As a first step in auditing its competitive environment, a company must find out who are its direct and indirect competitors, their objectives, strengths and weaknesses. The industry structure, its growth and the number of competitors in the industry help determine the degree of rivalry between the different firms. The determination of a threat of entry of new firms and the threat of substitute products provides a basis for analysing indirect and possible future competition. However, barriers such as economies of scale tend to deter new entrants. The bargaining power of suppliers refers to the ability of the industry’s raw material suppliers to demand higher prices or better terms, and the bargaining power of buyers refers to the ability of the industry’s customers to effect price reductions using their combined strength. These are important factors that can instigate competition. The interaction of these forces determines the intensity of competition within the industry, and should be audited on a regular basis.
Customer needs and wants
we emphasized that to achieve a profitable and durable penetration of a market, a company must base its marketing strategy upon a thorough understanding of customer needs and wants. It must also make itself familiar with the buying processes utilized by the customer and factors that influence customer choice. This requirement holds for all companies no matter what their products or the markets to which their efforts are directed. We should remember that industrial or organizational customers will not be buying on their own behalf, but on behalf of an organization, and will respond to a different set of circumstances from an individual. It is always the needs of the ultimate user that must be recognized and satisfied with the product/service. Monitoring of needs in an attempt to identify opportunities and any unsatisfied needs is also required.
The internal audit
The internal part of the marketing audit should be a comprehensive and detailed look at how effectively marketing is currently responding to the environment and its potential to do so in the future. The audit should encompass:
There is no definitive checklist for a marketing audit. Each company must determine for itself what constitutes the detail of an appropriate audit. However, to illustrate in more detail the scope of an audit, we give an illustrative checklist for a marketing audit.
1 Business and economic environmentEconomic Inflation
2 The marketTotal market Size Growth (value/volume)
3 CompetitionIndustry structure Companies in the industry
4 Internal auditSalesTotal(value/volume)
We can see from this list that the marketing audit is far reaching and potentially complex. It encompasses not only marketing performance but also the underpinning objectives and strategies of the company. It is important to ensure that the elements of the audit match the elements of the marketing strategies that underpin it. The implication here is that the precise nature of the marketing audit and the elements contained therein should be company specific, reflecting the individual strategy of the company. We must be careful though in the application of audit ‘checklists’ which are useful but should be used with care and discretion in selecting those elements that are appropriate to a particular company and its situation.
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Marketing Management Tutorial
Development Of A Strategic Approach To Marketing: Its Culture; Internal Macro- And External Micro-environmental Issues
Markets And Customers: Consumer And Organizational Buyer Behaviour And Marketing Strategy
Markets And Customers: Market Boundaries; Target Marketing
Product And Innovation Strategies
Channels Of Distribution And Logistics
Customer Care And Relationship Marketing
Marketing Information Systems And Research
Analysing The Environment: (opportunities And Threats) And Appraising Resources (strengths And Weaknesses)
Evaluating And Controlling Strategic Marketing
Strategic Marketing Planning Tools
Services Marketing And Not-for-profit Marketing
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