TOPIC:

MARKETING AUDIT

Introduction Marketing Audit is a technique of gathering the data needed to reveal the marketing activities of a company. Marketing audit can be carried out: periodically, as a part of marketing plans, when expansion of the company area is wanted, or the expansion of the product line but also in times of crisis when things just do not work. Kotler (1999) defined Market Audit as a very complex, systematic, independent and periodic examination of the environment, main objectives, marketing strategies and activities. The purpose of marketing audit is to identify opportunities and/or threats and to offer the company a viable plan of action to improve its performances, It is an effective tool in reviewing the competence of a marketing strategy, analyzing the objectives, policies and strategies of the company's marketing department as well as the manner and the means employed in attaining these goals. Because of the constantly varying business environment, marketing audit is frequently required, not only at the beginning of the planning process, but along with the implementation stage, providing also ground for evaluating possible future courses of action.

Focus of Marketing Audit

Marketing audit on a regular basis is a strong reference point, reflecting evolution in external business environment, internal experience and strategy development. The marketing audit focuses on two key headings:

The external marketing environment The internal marketing environment

External environment consists of economic, political and legal factors and concentrates on clients and competition. Marketing audit of the external surroundings analyses the customers, their needs and how to meet them, their behaviour and decisions, perception of products and brands,

segmentation, targeting and positioning on the market. The nature of competition is also studied, concerning its concentration, profitability, strengths and weaknesses, plans and strategies. New entrants on the market are also studied as well as the substitute products, the influence of supplier. The cultural nature of the external environment consists of education levels and standards, religion and beliefs, as well as lifestyle and customs. Demography plays a key role in marketing audit of the consumers, reflecting on growth distribution, age, evolution of technology and information systems as well as marketing communication and media. The external economic conditions consist of indicators as unemployment rates, inflation levels, interest rates, economic growth, taxation and average disposable income. Political and legal landscaping concerns laws, regulations, minimum levels of taxes or wages and maximum levels of prices or quotas. Internal environment focuses on the resources the company has at hand as labour, finance, equipment, time and other factors of production. It also analyses the marketing team concerning structure, efficiency, effectiveness, correlation with internal functions and other organizations. The internal marketing planning process, it's accuracy and actuality, the product portfolio, new products, pricing and distribution are areas the marketing internal audit is concerned in. It also focuses on market share, sales, profit margins, costs and effectiveness of marketing mix. The marketing audit studies also the current marketing plan, focused on objectives, strategies and the marketing mix used to achieve these goals. It also evaluates budgeting, staffing, training , developing, experience and learning. The current marketing plan concerns also the market share, financial targets as profit and margins, cash flow, debt and other indicators that need to be balanced.

How to Conduct a Marketing Audit

The marketing audit is a fundamental part of the marketing planning process. There are a number of tools and audits that can be used, for example SWOT analysis for the internal environment, as well as the external environment. Other examples include PEST ( A scan of the external macro-environment in which the firm operates can be expressed in terms of the Political, Economic, Social and Technological factors) and Five Forces Analyses (Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation which need to be analysed. These are: Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution, and Threat of New Entry), which focus solely on the external environment. In many ways the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary. Marketing Audit Process Marketing auditing follows three-step procedure

1.

Setting the Objectives and Scope

The first step calls for a meeting between the company officer(s) and a potential auditor to explore the nature of the marketing operations and the potential value of a marketing audit. If the company officers are convinced of the potential benefits of a marketing audit, they and the auditor have to work out an agreement on the objectives, coverage, depth, data sources, report format, and time period for the audit.

2.

Gathering the Data

The bulk of an auditor's time is spent in gathering data. Although we talk of a single auditor, an auditing team is usually involved when the project is large. A detailed plan as to who is to be interviewed by whom, the questions to be asked, the time and place of contact, and so on, have to be carefully prepared so that auditing time and cost are kept to a minimum. Daily reports of the interviews are to be written up and reviewed so that the individual or team can spot new areas requiring exploration while data is still being gathered.

3.

Preparing and Presenting the Report

When the data-gathering phase is over, the marketing auditor prepares notes for a visual and verbal presentation to the company officer or small group who hired him or her. The presentation consists of restating the objectives, showing the main findings, and presenting the major recommendations. Then the auditor is ready to write the final report, which is largely a matter of putting the visual and verbal material into a good written communication. The most valuable part of the marketing audit often lies not so much in the auditor's specific recommendations but in the process that managers begin to go through to assimilate, debate, and develop their own concept of the needed marketing action. Components of the Marketing Audit A major principle in marketing audits is to start with the marketplace first and explore the changes that are taking place and what they imply in the way of problems and opportunities. Then the auditor moves on to examine the company's marketing objectives and strategies, organization, and systems. Finally the auditor may move to examine one or two key functions that are central to the marketing performance of that company in more detail. Basically marketing audit as have six major components; each can be semiautonomous if a company wants less than a full marketing audit. The six components and their logical diagnostic sequence are discussed below.

Marketing Environment Audit :- By marketing environment, we mean

both the macroenvironment surrounding the industry and the task environment in which the organization intimately operates. The macro-environment consists of the largescale forces and factors influencing the company's future, over which the company has very little control. These forces are normally divided into economic-demographic factors, technological factors, political-legal factors, and social-cultural factors. The marketing auditor's task is to assess the key trends and their implications for company marketing action. However, if the company has a good long-range forecasting department, then there is less of a need for a macro-environment audit.

Marketing Strategy Audit :- The marketing auditor then proceeds to

consider whether the company's marketing strategy is well postured in the light of the opportunities and problems facing the company. The starting point for the marketing strategy audit is corporate goals and objectives, followed by marketing objectives. The auditor may find the objectives to be poorly stated, or well stated but inappropriate given the company's resources and opportunities. Even when a growth objective is warranted, the auditor will want to consider whether management has chosen the best strategy to achieve that growth.

Marketing Organization Audit :- A complete marketing audit would have

to cover the question of the effectiveness of the marketing and sales organization, as well as the quality of interaction between marketing and other key management functions such as manufacturing, finance, purchasing, and research and development.

Marketing Systems Audit:- A full marketing audit then examines the

various systems being used to gather information, plan, and control the marketing operation. The issue is not the company's marketing strategy or organization per se but rather the procedures used in some or all of the following systems: sales forecasting, sales goal and quota setting, marketing planning, marketing control, inventory control, order processing, physical distribution, new products development, and product pruning.

Marketing Productivity Audit:- A full marketing audit also includes an

effort to examine key accounting data to determine where the company is making its real profits and what, if any, marketing costs could be trimmed. A handful of firms have created the position of marketing controllers, who report to financial controllers and spend their time looking at the productivity and validity of various marketing costs. Where an organization is doing a good job of marketing cost analysis, it does not need a marketing auditor to study the same.

Marketing Function Audit:- The work done to this point might begin to
highlight certain key marketing functions that are performing poorly. The auditor might spot, for example, salesforce problems that go very deep. Or it might become clear that advertising budgets are prepared in an arbitrary fashion and such things as advertising themes, media, and timing are not evaluated for their effectiveness.

Conclusion The marketing audit is one important approach to evaluating the marketing performance of a company or one of its business units. Marketing audits are distinguished from other marketing exercises in being comprehensive, independent,

systematic, and periodic. A full marketing audit covers the company's (or division's)
external environment, objectives, strategies, organization, systems, and functions. If the audit covers only one function, such as sales management or advertising, it is best described as a marketing function audit rather than a marketing audit. If the exercise is to solve a current problem, such as entering a market, setting a price, or developing a package, then it is not an audit at all.