Marketing Audit

9 Key excerpts on "Marketing Audit"

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  eBook - ePub

  Cases and Select Readings in Health Care Marketing

  • William Winston, Robert L Berl *Deceased*, Robert Sweeney, Robert L Berl(Authors)
  • 2022(Publication Date)
  • Taylor & Francis

    (Publisher)

  John A. YankeyNancy KouryDiana Young

  Experts generally agree that auditing is the foundation to successful market planning. According to Kotler (1981), the market audit is “a comprehensive systematic, independent, and periodic examination of an organization’s marketing environment, objectives, strategies and activities with a view of determining problem areas and opportunities and recommending a plan of action to improve the organization’s marketing performance.” In brief, Bell (1972) writes that “a Marketing Audit is a systematic and thorough examination of a company’s marketing position.”

  The purpose of the market audit is to collect and analyze data toward the following objectives:

  • •  To identify problem areas to be corrected.
  • •  To evaluate the overall marketing performance.
  • •  To identify strengths and opportunities to be maximized.
  • •  To understand and anticipate key factors and trends in the marketplace.

  Clearly, there is no single “best” market audit method or tool. An audit may take several forms depending on an organization’s needs. Different types of non-profit agencies emphasize different areas of investigation. The market audit illustrated in this article contains four components: consumer analysis, internal audit, environmental analysis, and competition analysis. Through the use of a case example, this article will demonstrate how the market audit can be applied as part of the planning process in the development of a new service.

  CASE EXAMPLE

  Breckenridge Village is a full-service retirement community located in Lake County, Ohio. It is one of seven such retirement communities in the statewide organization of Ohio Presbyterian Homes. Established in 1922, Ohio Presbyterian Homes’ mission is

  …in response to the Lordship of Jesus Christ and consistent with His ministry, is to provide full-service, non-profit retirement communities and life enrichment outreach programs. Our communities are dedicated to the enhancement of spiritual, physical and mental well-being, independence, security, and the fullest possible potential for a high quality of life with an environment which promotes human dignity, purpose and self-esteem.

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  Marketing Management

  Text and Cases

  • Robert E Stevens, David L Loudon, Bruce Wrenn(Authors)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  6

  The audit is most effective when its philosophy is built on three attributes: comprehensive, systematic, and periodic. An audit should not be considered comprehensive unless all aspects of planning are analyzed. A sales force audit or promotional audit by itself provides depth but is not comprehensive enough to evaluate relationships among personnel, organizations, and procedures. The audit should contain an examination of six major components of the company’s marketing situation:7

  Marketing environment: Analyze the major macroenvironmental forces and trends that are key components of the company’s environment such as: markets, customers, competition, distributors, suppliers, and facilitators.

  Marketing strategy: Appraise how well the company’s marketing objectives and strategy are adapted to the current and forecasted marketing environment.

  Marketing organization: Evaluate the capability of the marketing organization to implement the necessary strategy for the forecasted environment.

  Marketing system: Examine the quality of the company’s system for analysis, planning, and control.

  Marketing productivity: Examine the profitability of different marketing entities and the cost effectiveness of different marketing expenditures.

  Marketing function: Conduct in-depth evaluations of the major marketing-mix components.

  A systematic audit follows logical, predetermined steps. The areas covered (based upon the major components of the marketing situation) and the types of questions asked provide the basis for analyzing a company’s procedures. Figure 8.4 provides one such approach to conducting an audit.

  Figure 8.4. The Marketing Audit Format

  This systematic approach should uncover a great deal of data about the planning process within a company. The continual questioning of why? about procedures, decisions, and controls is the key to uncovering who did what with what efficiency and provides input for answering, Are we doing the right things?

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  Digital Marketing in Practice

  Design, Implement and Measure Effective Campaigns

  • Hanne Knight, Lizette Vorster(Authors)
  • 2023(Publication Date)
  • Kogan Page

    (Publisher)

  Marketing Audits are control processes with four basic characteristics:

  • broad focus (including horizontal (comprehensive) and vertical (in-depth) audits)
  • independence (objectively conducted by internal or external auditors)
  • systematic (orderly and rigorous process)
  • periodic (occurring regularly, both in good and bad times)

  KEY TERM

  Marketing Audit

  A comprehensive, systematic, independent and periodic examination of a company’s – or business unit’s – marketing environment, objectives, strategies and activities, with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance.

  SOURCE Kotler et al, 1989

  Marketing Audit processes and approaches can differ between industries and teams, but each Marketing Audit essentially consists of a detailed list of questions answered in a systematic way to determine the ‘health’ of the marketing activities for the company.

  Marketing Audits should include considerations of both internal and external factors that may impact on the state of marketing activity within the company. For example, if there is a recession and subsequent marketing budget cuts, the budget for marketing spending would not be as good as the pre-recession budget, which may have a knock-on effect on the success of campaigns. Marketing Audits should also be done in good and bad times, to get a consistent overview of the performance (and growth vs decline) and efficacy of marketing activity for the company.

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  CIM Coursebook: The Marketing Planning Process

  • Ray Donnelly, Graham Harrison, Phil Megicks(Authors)
  • 2010(Publication Date)
  • Routledge

    (Publisher)

  What sort of business are we, in? is therefore a crucial question. Porter’s generic strategy model suggests an organisation has three positions it can take in the market; cost leadership, differentiation and stuck in the middle. Being stuck in the middle is the position to be avoided as customers find it difficult to understand exactly what they can expect from the organisation. Woolworths found itself ‘stuck in the middle’ and paid the ultimate price by going into administration and eventually closing down its stores in 2009.

  The Marketing Audit has three purposes (Wilson and Gilligan, 2005 ):

  1. Identifying the organisations current market position
  2. Understanding the environmental opportunities and threats it faces
  3. Clarifying the organisation’s ability to cope with environmental demands

  What is an Audit?

  A Marketing Audit is a systematic review and appraisal of the environment and the company’s operations.

  Kotler and Keller (2006 ) suggest an audit is:

  A comprehensive, systematic, independent and periodic examination of a company’s or business unit’s marketing environment, objectives, strategies and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s performance.

  Organisations do not operate in a vacuum but as part of a wider environment (Figure 5.1).

  Figure 5.1 Levels of the Marketing Environment

  The audit is central to the planning process and supports the corporate and marketing decision-making process; it helps the organisation understand where it is now, where it wants to be and how it will get there. It is the key to the marketing planning process, particularly from the point of view of formulating strategies.

  The Marketing Audit can be split into two parts: internal and external. According to Kotler and Keller (2006 ), it should comprise the following six components(Table 5.1

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  Business to Business Marketing Management

  A Global Perspective

  • Alan Zimmerman, Jim Blythe(Authors)
  • 2021(Publication Date)
  • Routledge

    (Publisher)

  It is, in effect, a snapshot of the firm’s marketing – but like a snapshot, it inevitably represents a past position, since matters will have progressed even while the situation is being analyzed. This means that audits should be carried out on a regular basis if the firm is to be able to see whether progress is being made. Roy (2016) claims that the Marketing Audit process is adopted most frequently by industrial firms in Western countries. This study shows that the “Marketing Audit is a key factor in the success of a company.” Frösén et al. (2016) determined that a market-oriented culture in an organization is a prerequisite for high performance, and that marketing performance measurement (MPM) can be an important contributor to that culture. Taghian and Shaw (2008) found that there is no single recognized method for conducting the Marketing Audit. Nevertheless, they conclude that implementing recommendations developed from the audit are positively associated with changes in market share. However, these benefits are realized only by firms conducting these audits periodically rather than on an ad hoc basis. Obviously, the frequency of the audit will depend on a number of factors such as the following. The amount of time that can be spared from actually carrying out marketing tasks. The cost of carrying out the audit, in both worker hours and resources generally. The nature of the market. In a volatile market, the audit may need to be carried out more frequently than would be the case in a stable, mature market. The nature of the corporate objectives. Some objectives need constant monitoring, and also, some objectives greatly impact other parts of the marketing effort. Taghian and Shaw also found no difference in the results based on the audit method used, indicating that using internal resources may be just as effective as contracting with outside consultants. The audit breaks down into seven main areas, with several sub-sections in each

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  Enterprise Planning and Development

  • David Butler(Author)
  • 2006(Publication Date)
  • Routledge

    (Publisher)

  Productivity Audit looks at the contributions made by the various products or services offered, their individual profit to cost ratios, and the cost-effectiveness of the various distribution channels and markets. Do you know which of your products or services (a) generate the biggest overall contribution towards profit and overheads for the business, (b) generate the best profit margins, (c) fail to cover their costs? Do you know which of your lines of distribution contribute the biggest profit to the business? Are any of the markets in which you operate, actually loosing you money? This analysis can provide useful data about products or markets on which to focus, and others to avoid or withdraw from in the future, and as an audit process it should be regarded as an aspect of basic good housekeeping, as most small businesses have the necessary data available to them to extract this information, but they don’t always make time or take the trouble to find the answers to these questions.
• The Marketing Functions Audit is a way of reviewing the marketing mix (product, price, place, and promotion, etc.), to investigate its on-going effectiveness. Are there any factors that have changed the relative significance of any of the components, e.g. an aggressive pricing policy or advertising campaign by a major rival? Has the demand for the product(s) changed at all? Most important of all, to link it with the strategic objectives of the business, what changes in the marketing mix are now needed? This last question will reflect the decisions made about the strategic options faced by the business (cost-leadership, diversification, market-focus, etc.), as it will tell you how far off the mark the business actually is.

Market Segmentation

In the previous section we mentioned the importance of comprehensive market research, and one of the key focal points of marker research should be to identify the individual market segments which constitute the market as a whole. People do not simply drive cars, they drive saloons, estates, coupes, convertibles, sports models, roadsters, off-roaders, even Chelsea tractors, etc. The sports car options start at the modest and very basic self-build Caterham kit-cars, through MGs, Morgans and Jaguars, through to more expensive Porches, to the top-of-range Lamborghinis, and customised Ferraris. Every type of car and every price-variant of each type constitutes a different market segment within which it is broadly possible to stereotype the potential customers according to certain common characteristics such as income, type of employment, social class, family composition, etc. The average engineer, social worker, salesman, school teacher or college lecturer might aspire to owning a three or four bedroom house and a fairly new middle-range saloon car, but short of a lottery win that person could not hope to achieve the lifestyle and associated expensive cars enjoyed by Premier League footballers.