The Marketing Audit

    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 FactorsProduct strengthsCustomer viewsMarket shareWillingness to test market opportunitiesSelling 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 environmentIt 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 SWOTTips of performing a successful SWOTStart the SWOT by listing everything you can think of that fits under each heading. In an internal SWOT it may be worth doing several SWOTSUse 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 capabilitiesIt 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 capabilityFinancial capability: the availability of money and how its being used going forwardOperational capability: the levels of day to day efficiency and effectivenessDistribution capability: The geographic reach and coverage, penetration and the quality of distributorsHuman resource capability: the nature and experience of staff throughout the businessIntangible factors: such as brandOrganisation resource versus an organisations capacity to deliverHow 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 assemblyOperations: which turn these into final productsOutbound logistics: which distribute the product or service to the customerMarketing and sales: which make sure the customers are aware of the product or services activitiesEach of these primary activities are in turn linked to the support activities which are grouped under four headings:The procurement of various inputsTechnological developments including research and development, process improvements and raw material improvementsHuman resource management including the recruitment, training, development and rewarding of staffThe 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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