The marketing audit

The marketing audit is one of the primary methods by which the organization identifies its current position with respect to its external and internal environment. It acts as a checking system for the marketing planning systems already in place. It should regularly (usually annually) measure the success of the current plan before the company makes adjustments or enters the next planning phase.

The marketing audit analyses the company’s performance in terms of products and customers. To be of value, this information must be set against the company's environment, and take account of how competitors perform against the same criteria (market trends, innovations, and wider issues such as political and economic trends).

The internal audit analyses the ability of the organization to meet the needs of current and potential customers.

The internal audit

All the issues examined during the internal marketing audit and the planning that follows have implications for the capability of the organization. Capability is based on four fundamental elements:

1. Resources – their quantity, quality and appropriateness for marketing

2. Systems capable of delivering value to customers (sales, service, logistics communication etc.)

3. A structure that provides for appropriate accountability and authority to deliver customer value

4. A culture in which everyone has a customer focus and will exhibit appropriate behavior.

The internal audit should allow the company to evaluate its performance in marketing – that is, how well the investment in the marketing effort (the mix variables) has succeeded in producing the appropriate output in terms of results (sales, profit, customer satisfaction etc.)

Financial results – sales (value/volume) and profit by: •customer, product, industry/market segment Non-financial results: • customer satisfaction, loyalty Market share by: • total market • industry/market segment Marketing organization: • organization structure • marketing control systems and data Marketing procedures: • current marketing planning system • marketing information systems • measurement and control procedures • marketing data analysis • action planning and results feedback • marketing HR responsibilities • inter-fu notional responsibilities

Marketing mix variables • Product range/quality/development • Pricing • Discounts and credits • Stockholding policy • Unit of sale • Distribution • Sales channels • Sales support: • advertising and promotion • point of sale • public relations • packaging • sampling • exhibitions • training and development

To put this internal audit analysis in context, the organization should benchmark itself against each major competitor, where possible. The purpose of the marketing information about the organization's resource strengths and competitive weaknesses is to determine the best strategic fit between the organization and its environment. The main areas are:

• financial resources (present assets, their sources and uses; liabilities; financial ratios for comparison with industry ratios; level of risk; basic sales and cost analyses)

• physical resources (current short – and long–term facilities, such as property, plant, equipment, and inventory)

• human resources (the talents and abilities of managers and all other human resources, including outside specialists, key suppliers and customers)

• technological resources (IT facilities and processes, including production, databases and intellectual property)

• organizational resources (the organization’s structure, systems and procedures that support implementation of the strategic plan).

The external audit

To see the company’s internal audit in perspective, the directors should place it in the context of the wider environment. Whereas the internal audit examines factors over which the company has some control, the external audit looks at factors in the external market that the company may be able to influence but cannot control.

These include:

1. The operating or narrow external picture, covering elements such as the total size of each of the markets or segments, competition, paths to market, and the trends in these elements.

2. The broader picture, covering all the social, economic, political, legal, environmental and cultural factors that can have an impact on the company.

The external audit should give a clearer view of the markets as a precursor to identifying where the best opportunities are and where the most likely threats to the company’s market position might lie.

This information should help to determine the strength of the company’s position, compared with that of competitors, in supplying the benefits sought by the target customers.

Exercise 9. Read the text once again and express the contents of every passage in one sentence.

Exercise 10. Fill in the gaps in this passage with the words under the line; learn all the new words to expand your vocabulary on the topic.