The Marketing Audit: A Comprehensive Guide
Marketing Audit
1. Marketing Concept
It is a management philosophy based on the idea that an organization should try to meet customer needs through a coordinated series of activities that also allow the organization to achieve its objectives. Customer satisfaction is the main objective of marketing, obtaining benefits in exchange.
The Marketing Audit
A comprehensive, systematic, independent, and periodic review of the marketing environment, objectives, strategies, organization, unit performance marketing, and customer service. It aims to determine weaknesses, strengths, threats, and opportunities and recommend a plan of action to improve marketing performance.
Characteristics of the Audit:
- Consistent: Follows an orderly sequence in the stages required for diagnosis.
- Complete: Analyzes each factor influencing every marketing variable and its effectiveness.
- Independent: Guarantees an objective analysis without personal interests in any business sector.
- Regular: Scheduled regularly, although the timing depends on company size and needs.
2. Scope of the Marketing Audit
2.1. Marketing Environment Audit
Analyzes major trends and forces in the microenvironment, as well as key environmental factors: markets, customers, competitors, distributors, suppliers, and other stakeholders. Its main purpose is to identify weaknesses and threats, planning improvements and opportunities. It includes:
A) Demographic-Economic Environment
Economic: Analyzes a company’s expectations regarding inflation, exchange rate, interest rate, unemployment, and credit availability for the short and long term.
Demographic: Examines the effect of forecasted trends in size, land area of distributors and customers, age distribution, and regional population distribution on the company.
Technology: Assesses major technological changes affecting products or services and identifies the main substitutes that could replace the product.
Political-Legal: Evaluates policies or rules that could affect the company, positively or negatively, such as international agreements.
Cultural: Analyzes public attitudes toward the company’s business, changes in lifestyle and values related to the target market.
B) Marketing Working Environment
Market: Examines market size, growth, and geographical distribution, main market segments and their expected growth rates, and segments with high and low opportunity.
Clients: Assesses what clients value in the company’s goods or services and how different customer classes make buying decisions.
Competitors: Identifies competitors, their strengths and weaknesses, sizes and trends in market share, and anticipates future competition and product substitutes.
Distribution: Analyzes the main distribution channels and their growth.
Providers: Examines trends related to suppliers.
Enablers and Marketing Companies: Evaluates the performance of advertising agencies and other marketing companies.
2.2. Marketing Strategies Audit
Marketing Strategy: Focuses on selecting and analyzing a target market, creating and maintaining an appropriate marketing mix for the company. The marketing strategy must be aligned and consistent with the company strategy. It involves reviewing objectives and marketing strategies to evaluate their adaptation to the current environment.
Considerations:
A) Corporate Mission: Is it clearly established, current, and known to staff?
B) Marketing Objectives and Goals: Are they clearly established in writing, current, and known to those responsible for achieving them? Do they logically lead to the marketing objectives? Are they appropriate given the company’s competitive position, resources, and opportunities?
C) Marketing Plan: What is the essence of the marketing strategy to achieve the objectives? Are sufficient funds budgeted for marketing? Are marketing resources optimally distributed among the main market segments, territories, products, and marketing mix (product quality, service, sales force, promotion, and distribution)?
2.3. Marketing Organization Audit
Assesses the marketing organization’s ability to create and implement strategies to achieve desired objectives.
A) Formal Structure: Is the organization structured properly, with appropriate degrees of centralization and decentralization, and flexibility of the marketing unit? Are marketing responsibilities optimally structured along functional lines, product, end-user, and territories?
B) Functional Efficiency: Are there good communications and working relationships within the marketing staff? Do marketers have the required skills? Are marketing staff trained, motivated, and evaluated?
C) Intradepartmental Efficiency: Are there good relationships between Research and Development, Finance, Production, Management, etc.?
2.4. Marketing Systems Audit
Reviews the quality of systems analysis, planning, and control in marketing, the information system, and new product development.
A) Marketing Information Systems: How is information technology applied to marketing? Do company decision-makers properly use marketing research?
B) Marketing Planning Systems: Is it effective and are its bases appropriate? Are sales forecasting and market potential measurements conducted? Are sales quotas established on a sound basis?
C) Marketing Control Systems: What type of systematic control and periods (monthly) are used? What indicators are used? Are measures taken to periodically review and validate various marketing costs?
2.5. Marketing Productivity Audit
Examines returns from different marketing components and the cost-effectiveness of different expenditures in this area.
A) Performance Analysis: Is analysis carried out by product, market, territory, distribution channels, and ratios to assess marketing profitability?
B) Marketing Costs Effectiveness Analysis: Are they appropriate in relation to the expected and obtained benefits (indicators)?
2.6. Review of the Role of Marketing
A) Products: Are product lines appropriate? Are new products currently in effect? Is it feasible to improve existing products, innovate, or discontinue them? Is the quality adequate?
B) Price: Are prices competitive? Does the company effectively use price promotions?
C) Distribution: What are the strategies, alliances, and distribution channels?
D) Promotion: Are sales promotion and advertising appropriate?
E) Sales Force: Is it properly trained, adequate, efficient, and effective?
2.7. Customer Service Review
A) Identify marketing service activities.
B) Review the standard procedures for each activity (manual).
C) Identify performance targets for each customer service activity.
D) Specify performance measures for each customer service activity.
E) Review and evaluate customer service personnel (selection, retention, training, etc.).
F) Identify and evaluate customer service support systems (instruction manuals, brochures, letters, corporate image, records, after-sales services, technology support services).
G) Evaluate aftermarket services.
3. Reasons for Using Marketing Audits
- Entry of new or growing competitors.
- Declining sales.
- Changes in consumer habits.
- Desire to successfully enter a new product or territory.
- Optimizing marketing spend.
- Growth below the industry average.
4. Desirable Qualities of a Marketing Auditor
- Wide experience in companies and sectors.
- Skills for diagnosis.
- Objectivity and independence in their work.
- Strong observation and image skills.
- Ability to assess where problems arise.
- Huge capacity for analysis and synthesis.
- Good communicator and recipient of ideas.
- Personal and professional flexibility.
- Ability to evaluate results.
- Decision-making ability and strong character.
6. Expected Results of a Marketing Audit
Implementing a Marketing Audit provides a clear view of operational and strategic deficiencies. It’s an active management element, as new information technologies and market complexity make the marketing audit a necessary tool in the 21st century.
Today, the term “marketing” is still widely used but often incorrectly. It has been criticized for only disguising things, but reality suggests otherwise. Companies must base their success on customer satisfaction, which is only achievable with ethics and social responsibility implicit in marketing strategies. Hence, the audit also assesses the degree of compliance and commitment to the market.
While implementing a marketing audit may not solve all problems, it provides a solid base of information and action. An executive report should indicate the areas of activity that require attention to enhance competitiveness, as well as establish a monitoring plan and related follow-up.
Some Actions to Improve Performance or Remain Competitive:
- Improve geographical coverage by seller.
- Enhance the company’s positioning in search engines.
- Abandon unprofitable products from our portfolio.
- Create a pricing strategy.
- Increase customer loyalty.
- Strengthen our online presence.
- Segment customers rationally.
- Enhance distributor work in areas where we don’t want to be directly involved.
- Assign a business-minded person to the complaints department.
- Know our customer better.
- Adapt deliveries to market requirements.
- Reduce time in receivables management.
- Produce as much as possible on request.
- Pay vendors based on fixed commissions and incentives.
- Analyze costs per order.
- Enhance customer service.
- Enhance the corporate image.
- Offer a broader range of products.
- Etcetera.
The Marketing Audit is not a marketing plan and cannot replace one. Companies that want to thrive in the ever-changing business world must permanently revise their marketing strategies. The management audit is a valid tool for this purpose.