marketing audit

MARKETING AUDIT – notes and audit questions D L Clewes MKTM028, MKTM040 Module Leader

Many companies today are finding that their current strategic marketing is growing obsolete in the face of a rapidly changing environment. This is happening to company giants as well as smaller firms that have not provided a mechanism for reviewing their marketing strategy. The audit offers one major mechanism for pursuing this necessary task.

The marketing audit is one important answer to the problem of evaluating the marketing performance of a company, a business unit or product. Marketing audits are distinguished from other marketing exercises in being comprehensive, independent, systematic, and periodic. A full marketing audit would cover the company’s (or product’s) external environment (Macro and Micro/task), and internal environment; strategies, organization, systems, productivity and functions. If the audit covers only one function, such as marketing communications (promotion), it is best described as a marketing function audit rather than a marketing audit. Marketing audits can be more or less detailed dependant upon the scope of the marketing planning activity.

A SWOT analysis can summarise the Audit findings with opportunities and threats coming from external analysis and strengths and weaknesses coming from internal analysis. Key strategic challenges arising from this can be stated to demonstrate syntheisis and encourage focus on key success factors. A TOWS matrix allows the matching of these factors to generate original insights for strategic alternatives - possible future strategic initiatives/projects that should maintain or improve the performance of the organisation or product under analysis.

The findings of an audit should be summarised in a 1 page SWOT or TOWS matrix with key strategic challenges identified, with each point rank ordered.

The marketing audit is carried out in three steps: developing an agreement as to objectives and scope; collecting the data; and presenting the report.

COMPONENTS OF A MARKETING AUDIT

Source: adapted from Kotler, P., Gregor, W.T. & Rodgers, W.H. (1989) The Marketing Audit Comes of Age, Sloan management review, vol. 30, no. 2, pp. 49 – 62.

N.B. Questions to consider – not an exhaustive list. Also Audits can be limited in scope so not all areas would then be considered. Refer to the Audit Brief for objectives and scope.

The Marketing Environment Audit

I. Macro-Environment

Political-Legal 1. What laws are being proposed that may affect marketing strategy and

tactics? 2. What federal, state, and local agency actions should be watched?

What is happening in the areas of pollution control, equal employment opportunity, product safety, advertising, price control etc., that is relevant to marketing planning?

Economic-Demographic 1. What does the company expect in the way of inflation, material

shortages, unemployment, and credit availability in the short run, intermediate run, and long run?

2. What effect will forecasted trends in the size, age distribution, and regional distribution of population have on the business?

Environmental 1. What is the outlook for the cost and availability of natural resources

and energy needed by the company? 2. What concerns have been expressed about the company’s role in

pollution and conservation, and what steps has the company taken?

Socio-Cultural 1. What attitudes is the public taking toward business and toward

products such as those produced by the company? 2. What changes are occurring in consumer life-styles and values that

have a bearing on the company’s target markets and marketing methods?

Technology 1. What major changes are occurring in product technology? In process

technology? 2. What are the major generic substitutes that might replace this product?

II. Micro (Task) Environment

Markets 1. What is happening to market size, growth, geographical distribution,

and profits? 2. What are the market segments? What are their expected rates of

growth? Which are high opportunity and low opportunity segments?

Customers 1. How do current customers and prospects rate the company and its

competitors, particularly with respect to reputation, product quality, service, sales force, and price?

2. How do different classes of customers make their buying decisions?

3. What are the evolving needs and satisfactions being sought by the buyers in this market?

Competitors 1. Who are the major competitors? What are the objectives and strategies

of each major competitor? What are their strengths and weaknesses? What are the sizes and trends in market shares?

2. What trends can be foreseen in future competition and substitutes for the company’s products?

Distributions and Dealers 1. What are the main trade channels bringing products to customers? 2. What are the efficiency levels and growth potentials of the different

trade channels?

Suppliers 1. What is the outlook for the availability of different key resources used in

the supply chain? 2. What trends are occurring among suppliers in their pattern of selling?

III. Internal Audit (five sections)

Marketing Strategy Audit

Marketing Objectives 1. Are the corporate objectives clearly stated and do they lead logically to

the marketing objectives? 2. Are the marketing objectives stated in clear form to guide marketing

planning and subsequent performance measurement? 3. Are the marketing objectives appropriate, given the company’s

competitive position, resources, and opportunities? Is the appropriate strategic objective to build, hold, harvest, or terminate this business?

Strategy 1. What is the core marketing strategy for achieving the objectives?

(Target market(s), value proposition, brand positioning) Is it a sound marketing strategy?

2. Are enough resources (or too much resources) budgeted to accomplish the marketing objectives?

3. Are the marketing resources allocated optimally to prime market segments, territories, and products of the organization?

4. Are the marketing resources allocated optimally to the major elements of the marketing mix, i.e. product quality, service, on/off line promotion, distribution, pricing?

Marketing Organisation Audit

Formal Structure 1. Is there a high-level marketing manager with adequate authority and

responsibility over those company activities that affect the customer’s satisfaction?

2. Are the marketing responsibilities optimally structured along functional product, end user, and territorial lines?

Functional Efficiency 1. Are there good communication and working relations between

marketing and sales? 2. Is the product management system working effectively? Are the

product managers able to plan profits or only sales volume? 3. Are there any groups in marketing that need more training, motivation,

supervision, or evaluation?

Interface Efficiency 1. Are there any problems between marketing and other businbess areas

that need attention?

Marketing System Audit

Marketing Information System 1. Is the marketing intelligence system producing accurate, sufficient, and

timely information about developments in the marketplace? 2. Is marketing research being adequately used by company decision

makers?

Marketing Planning System 1. Is the marketing planning system well conceived and effective? 2. Is sales forecasting and market potential measurement soundly carried

out? 3. Are sales quotas set on a proper basis?

Marketing Control System 1. Are the control procedures (monthly, quarterly, etc.) adequate to insure

that the annual plan objectives are being achieved? 2. Is provision made to analyze periodically the profitability of different

products, markets, territories, and channels of distribution? 3. Is provision made to examine and validate periodically various

marketing costs?

New Product Development System 1. Is the company well-organized to gather, generate, and screen new

product ideas? 2. Does the company do adequate concept research and business

analysis before investing heavily in a new idea? 3. Does the company carry out adequate product and market testing

before launching a new product?

Marketing Productivity Audit

Profitability Analysis 1. What is the profitability of the company’s different products, served

markets, territories, and channels of distribution? 2. Should the company enter, expand, contract, or withdraw from any

business segments and what would be the short and long-run profit consequences?

Cost-Effective Analysis 1. Do any marketing activities seem to have excessive cost? Are these

costs valid? Can cost-reducing steps be taken?

Marketing Function Audit

Products 1. What are the product line objectives? Are these objectives sound? Is

the current product line meeting these objectives? 2. Are there particular products that should be phased out? 3. Are there new products that are worth adding? 4. Are any products able to benefit from quality, feature, or style

improvements? Price 1. What are the pricing objectives, policies, strategies, and procedures?

To what extent are prices set on sound cost, demand, and competitive criteria?

2. Do the customers see the company’s price as being in line or out of line with the perceived value of its offer?

3. Does the company use price promotions effectively? Distribution 1. What are the distribution objectives and strategies? 2. Is there adequate market coverage and services? 3. Should the company consider changing its degree of reliance on

distributors, sales, reps, and direct selling? Promotion (Advertising, Sales Promotion, Publicity, Sales and Direct Marketing – audit both off line and on line) 1. What are the organization’s advertising objectives? Are they sound? 2. Is the right amount being spent in advertising? How is the budget

determined? 3. Are the ad theme and copy effective? What do customers and the

public think about the advertising? 4. Are the advertising media well chosen? 5. Is the sales promotion used effectively? 6. Is there a well-conceived publicity program? 7. Is the sales force used effectively? 8. Is the company making enough and effective use of direct marketing?

N.B. For service organisations then People/Process/Physical Evidence should aslo be reviewed for effectiveness:

1. Do we have the right people facing our customers? 2. How effective are our customer facing processes? 3. How effective is our organisation’s physical evidence?

NOTES 1. Adapted from: Kotler,P. and Keller, K. (2016) Marketing management. 15th edition. New Jersey, Pearson Prentice Hall.

2. Marketing Audit originally developed by Kotler, P., Gregor, W. and Rodgers, W.– see Kotler, P., Gregor, W.T. & Rodgers, W.H. (1989) The Marketing Audit Comes of Age, Sloan management review, vol. 30, no. 2, pp. 49 – 62.

3. Many marketing plan templates can be downloaded from the internet; an example which contains tables to complete and which might be useful for reference is: https://www.thinkbusiness.ie/articles/free-marketing-plan-template/