The Marketing Audit

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The Concept of the Marketing Audit

The marketing audit allows a planner to gather all the necessary information they need to plan successfully.

Features of audits

A comprehensive marketing audit should cover all the main marketing activities of an organisation

The marketing audit is systematic investigation of the organisations macro and micro environments. It should reveal where improvements need to be made and lead to appropriate action plans to secure these improvements

The audit should cover the marketing environment as well as the strategy, organisation, systems, productivity and functions of marketing

The audit should be completed by a seperate auditing function to aviod bias

Information, data and opinions should be obtained from sources such as customers and agents outside the organisation

The internal/external environment

Macro (external)

Political- political power determines the law and government policy determines public sector spending and taxation- VAT, import and excise duties together with laws related to business management e.g. labour laws, advertising and competition policies

Economic- issues outside direct government control e.g. inflation, unemployment and raw material prices and availability

Social and Cultural- includes demographic trends

Technological- particularly those affecting production processes, computers, materials and information

Legal- many large companies have internal legal departments to advise management when deciding strategy

Environmental- including rules and regulations concerning the manufacturing of products to the current trends within the market

Market trends and size- The more organisations there are and the more equal their size the more competitive the market is likely to be

Competitive conditions- including the existence of rival products, the ease of market entry and exit and the relative power of the main players.

Trends in customer behaviour- changes to income and buying patterns, changes to brand loyalties

Changes in distribution channels- could effect the power structure within the market including changes in distributors location and changes to relative bargaining strengths

The supply market- affects most organisations since input costs has to be reflected in output prices

Micro (internal)

Sales and marketing trends- constant watch should be made over market share and further investigation made if there is a decline.

The marketing mix- Each of the four P's should be investigated and views gained from sources both within and outside the firm

Financial aspects- profits, margins and costs are all clear areas of concern but cashflow needs to be examined as profits can quickly erode by lax financial management. The financing of equipment and other assets should be examined and the marketing systems need to be considered:

Planning systems- a review of information and data gathering is desirable including the effectiveness of market research procedures as well as the relevance of strategic and marketing objectives, strategies and the control, budgeting and planning systems

Marketing within the company structure- The relationship between marketing and the other functions has an important bearing on the effectiveness of marketing plans.

Porters 5 competitive forces:

Bargaining power of suppliers

Threat of substitute products or services

Bargaining power of buyers

Threat of new entrants

The degree of rivalry among existing competitors

Managerial Factors

Corporate image

Response to change

Flexibility

Ability to attract and retain staff

Response to competition

Awareness of PLC's

Investment in R&D

Market entry barriers

Competitive Factors

Product strengths

Customer views

Market share

Willingness to test market opportunities

Selling and distribution costs

Financial Factors

Access to capital

Ease of market exit

Liquidity

Ability to compete on prices

Finance to meet demand on production

Cost stability

Ability to cope with demand cycles Product demand elasticities

Technical Factors

Technical skills

Use of skill resources

Strength of patents and processes

Value added to the product

Labour and capital intensities

Economies of scale

Whether the plans are out of date

Use of new technology

Extent of co-ordination and integration

Appraising the processes and techniques of auditing the marketing environment

It is generally recognised that the audit should be:

Comprehensive: Identifying only problem areas does not lead to an effective audit. If the problem area is just part of the total and comprehensive audit the atomsphere should be less confrontational and it should be possible to obtain sounder information.

Systematic: An orderly, systematic and comprehensive examination of all aspects of the macro environment will reveal relationships between various problem areas and helps to indicate trends and possible future changes.

Independent: Staff might not be willing to provide information for a range of reasons so an audit by an outside specialist firm should have the advantage of being independent and unbiased. Specialist staff may also have had experience of other organisations and may be able to recommend courses of action that have been effective elsewhere.

Periodic: The audit itself becomes part of the commitment to to continuous improvements that are made by many companies who are leaders in their field.

Organisational SWOT

Tips of performing a successful SWOT

Start the SWOT by listing everything you can think of that fits under each heading.

In an internal SWOT it may be worth doing several SWOTS

Use the phrase which means as this will help determine what the element actually means for the organisation.

SWOT can be used for all elements of the business and is a useful tool in any regard.

Organisational competencies and capabilities

It is essential not to over estimate the organisations capabilities as this can lead to not being able to deliver in the long term.

Managerial capability: including individual and team capability

Financial capability: the availability of money and how its being used going forward

Operational capability: the levels of day to day efficiency and effectiveness

Distribution capability: The geographic reach and coverage, penetration and the quality of distributors

Human resource capability: the nature and experience of staff throughout the business

Intangible factors: such as brand

Organisation resource versus an organisations capacity to deliver

How can these resources best be used as a means of gaining and maintaining competitive advantage?

Porter suggests that an organisations activity can be categorized in terms of whether they are primary activities or support activities:

Inbound logistics: which are the activities concerned with the reception, storing and internal distribution of the raw materials or components for assembly

Operations: which turn these into final products

Outbound logistics: which distribute the product or service to the customer

Marketing and sales: which make sure the customers are aware of the product or services activities

Each of these primary activities are in turn linked to the support activities which are grouped under four headings:

The procurement of various inputs

Technological developments including research and development, process improvements and raw material improvements

Human resource management including the recruitment, training, development and rewarding of staff

The organisations infrastructure and the approach to organisation, including the systems, structures, managerial cultures and ways of doing business

Competitor analysis

The framework for industry and competitive analysis focus attention on the following areas:

What are the principle economic characteristics of the economy?

What factors are driving changes in the industry?

What competitive forces are at work in the industry?

How strong are these forces?

Which companies are in the strongest/weakest competitive position?

Who will likely make which competitive moves next?

What key factors will determine competitive success or failure?

How attractive is the industry in terms of its prospects for above average profitability?

What features define an organisations competitive advantage?

Porters 5 competitive forces:

The threat of new entrants into the market place

The bargaining power of the firms suppliers

The bargaining power of the firms customers

The threat of substitute products

The intensity of rivalry among competing firms

Supplementary questions are:

What are the key forces in the competitive environment?

What is the likelihood that these forces will change over time?

How do different competitors in an industry stand in relation to these forces?

What can be done to influence these forces?

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