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"BUSINESS INSIGHTS”

 

                                                                           An Occasional Newsletter

 to our Clients, Readers, and Friends 

 

FINDING HIDDEN PROFITS USING A MARKETING AUDIT

 

Lever

“Half the money you spend on marketing is wasted       

The trouble is: you don't know which half."

William Lever founder of Lever Brothers (1885) now Unilever PLC

Are you getting all the sales you should?

Are you prepared for a possible economic downturn?

Are you getting the biggest bang for your marketing dollar?

Are you taking advantage of available international opportunities?

Are you taking advantage of new methods of reaching your markets?

Are your marketing objectives in tune with fast changing markets and customers?

If you cannot answer yes to all six questions, you are not receiving a satisfactory return on your investment in marketing. Most companies wait until they see their sales and profits decline before they launch an examination of their marketing efforts and, by this time, they are scrambling for solutions. The best time to prepare for a potential downturn in sales is before it happens, while you can still act to maintain you’re hard won gains.

A marketing audit is a comprehensive, systematic examination of a company’s marketing organization, strategies, tactics, objectives, and activities. A marketing audit enables senior management to discover your organization’s strengths and weaknesses in relation to opportunities and threats you face in the marketplace, and pinpoint more effective uses for your marketing resources. A good marketing audit is:

  • Systematic. It follows a logical, predetermined framework - an orderly sequence of diagnostic steps. The marketing audit will indicate improvements needed to accomplish your company’s goals. An audit results in a comprehensive action plan to address short and long term marketing needs of the company.

  • Comprehensive. It considers all factors affecting marketing performance, not just obvious trouble spots. Marketers can be fooled into addressing symptoms rather than underlying problems. A comprehensive audit identifies the real sources of problems.

  • Independent. Audits where managers complete a checklist lack objectivity and independence; the best audits come from outside consultants who are objective, have broad exposure in a number of industries, and some familiarity with your industry.

  • Periodic.  Marketing audits are typically done in a crisis, after sales have fallen and morale is low.  Periodic audits can benefit companies in both good and bad times

A marketing audit begins with a meeting between the company’s senior management and the individual conducting the audit. They decide on the audit’s objectives, report format, timing, and other matters. The individual performing the audit then reviews business plans, company financials, organization charts; interviews management, tours facilities, visits/interviews customers and competitors; analyzes marketing budgets, product costs and sales. The following is a sampling of topics treated in a marketing audit:

Marketing Environment

  • Economic – What does the company expect in the way of inflation, raw material availability, labor, unemployment, credit, etc. What effect will forecasted trends have on existing and planned strategies, both domestically and globally?

  • Macro Environment – What major changes are occurring in product and process technologies? What are the major generic substitutes that could replace you product or service? What laws are pending that may affect marketing strategies and tactics? What is the public's attitude towards your industry, your products and your firm? What changes in consumer lifestyles and values could influence your target markets and/or marketing methods?

  • Markets What is happening to your market size, growth and profits? What are your major market segments, their expected growth rates and which segments provide you with the greatest opportunity to meet your objectives? What is the global potential for your product?

  • Competitors Who are your major competitors (domestic and international) and what are their objectives and strategies? What are their trends in market share and size? What are the trends for your product's substitutes and your future competition?

  • Distribution - Which channels are the most efficient and have growth potential?

  • Supplier - What is the outlook for key resources needed for production? What are the trends occurring among your suppliers?  

 Marketing Strategy

  • Objectives – Are corporate objectives and marketing objectives clearly stated?  Are marketing objectives consistent with overall company objectives?  Are they appropriate for the company's competitive position, resources and opportunities?

  • Strategy – are strategic objectives consistent with on another?  Is it a sound marketing strategy?  Are resources sufficient to implement the strategies?  Are marketing resources allocated optimally?  Is the marketing mix properly funded?  Does the strategy build upon the company's strengths and address the weaknesses?  Does it effectively address global markets?

Marketing Organizations

  • Formal Structure Does the highest-level marketing officer have adequate authority and responsibility?  Are marketing responsibilities optimally structured along functional, product and geographic lines?

  • Functional Efficiency – Is there a good working relationship between marketing and sales?  Is the product/brand management system working effectively?  Are there individuals or groups that need more training or motivation?  What is the state of moral?  Are replacements for personnel for key positions being groomed?

  • Inter-company Communications – Are there any problems between marketing and manufacturing?  R&D?  Finance?  Purchasing? International units?

Marketing Systems

  • Marketing Information - Is the marketing intelligence system procuring accurate, timely, and sufficient information? Do decision makers use marketing research information?  Is customer satisfaction effectively measured?  Are the results used? Is a global information system in place?

  • Marketing Planning - Is the marketing intelligence system well-conceived and effective?  Are the forecasts soundly based?  Are sales quotas effectively set?

  • Marketing Control - Are control procedures adequate to insure that the annual plan objectives are being met?  Are product profitability, markets, and distribution channels periodically analyzed?  Are marketing costs reviewed?  Are marketing dollars effectively allocated across the marketing mix?

  • New Product/Service Development – Is the company organized to identify, screen, and develop new product/service ideas?  Does the company do adequate market research before investing in a new product/service?  Does the company do adequate market and product/service testing before product launch?

Market Productivity

  • Profitability AnalysisWhat is the profitability of the company’s products, services, markets, sales territories, and distribution channels?  Should the company expand, enter or withdraw from any business segment? How do you compare to your competition?

  • Cost Effectiveness Analysis – Do any marketing activities seem to have excessive costs? 

  • Products/Services – What are the product/service line objectives? Are they sound? Are current product/service lines meeting their objectives?  Should any be phased out, added to, or improved?

  • Price What are the pricing objectives, policies, and strategies? Are prices set on sound costing, customer demand, and competitive criteria?  Are the company’s prices in line with the product’s perceived value in the market? Is the international pricing competitive in each country?

  • Distribution – What are the distribution objectives and strategies?  Is there adequate market coverage?

  • Sales Force – What are the sales force’s objectives?  Are they realistic?  Is the sales force large enough, well motivated, properly trained? Do they have high morale?  Are the procedures for setting quotas and evaluating performance adequate?  How is the sales force perceived in relation to the competition?

  • Advertising, Promotion and Publicity What are the advertising objectives?  Are they adequate?  Is the right amount of money being spent on advertising?  Is your ad agency effective? Are the ads effective and in the proper media? Is sales promotion used effectively?  Is the publicity program effective?  Are you using the Internet effectively? 

NOTE: This is not a comprehensive audit checklist. It is a sample of the topics typically treated in a marketing audit.

When the marketing audit is completed, it will be the basis for developing comprehensive corrective action plans to improve your overall marketing effectiveness. 

 A marketing audit provides three major benefits to a company:

  1. Senior management will gain an independent, objective view of their firm’s marketing performance.

  2. The assessment of the firm may lead to an entire reevaluation of the company’s direction, not just a fine-tuning of current marketing efforts.

  3. The marketing audit will help management set priorities for the marketing programs. The auditor can help management focus on important changes, while avoiding the political struggles that hinder change.

The best time to prepare for the future is now.

"Today's smart marketers don't sell products: they sell benefit packages. They don't sell purchase value only: they sell use value.                                                                                 Phillip Kotler

About the Author: Ken Wilson: Strategist, marketing guru, educator, facilitator, author, university lecturer and consultant, he can be reached at ken@wmg-mn.com  or 763-476-2216

Copyright ©2013 by Ken Wilson All rights reserved.

Candle Man