|
F I N D I N G
H I D D E N P R O F I T S
USING A MARKETING AUDIT
How a marketing audit can help you find hidden profits, reach new
customers, and find new sales opportunities.
|
“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
|
 |
Quick quiz:
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.
What is a marketing audit? It is a comprehensive examination of a
company's marketing organization, strategies, tactics, objectives, and
activities. Running such a test will enable you 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 also:
- 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 operates in a dynamic environment
with an ever-increasing rate of change. 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 your product or service? What laws
are pending that may affect marketing strategy 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 one
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 Organization
- 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
morale? 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 planning 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 Analysis – What 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?
N O T E :
This is not a comprehensive audit checklist. It is sampling of 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.
Benefits
When the audit is
complete, it will provide a basis for developing comprehensive action
plans to improve your overall marketing effectiveness. A marketing
audit provides three major benefits to a company.
- Senior management will gain an independent, objective view of
their firm’s marketing performance.
- 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.
- 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.
Copyright ©2003 by Ken Wilson All
rights reserved.
Reprinted from Winter 2003 Minnesota Technology Magazine. |
