audit of marketing function

7/28/2019 Audit of Marketing Function

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AUDIT OF MARKETING

FUNCTION

A MAKAMURE

BACC(UZ) MBA(UZ) ACIS. CIA


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Presentation Outline

Definition of marketing audit

The importance of marketing audit

Marketing audit Procedure

Marketing environment risk assessment

Marketing Objectives and strategies audit

Marketing organisation audit

Marketing systems audit

Marketing functions audit

Audit Checklist of a marketing audit

CONCLUSION


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Definition of a marketing audit

Marketing audit is a comprehensive,

systematic, independent, and periodic

examination of a companys marketing

environment, objectives, strategies, and

activities with a view to determining problem

areas and opportunities and recommending a

plan of action to improve the companysmarketing performance Philip Kotler


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Definition of marketing audit

Can be viewed as a structured survey of an organisation's marketing efforts

which looks at the way marketing is planned and managed. It asks what

has been done and what else should be done. In other words:

what has worked?

and what has failed? Can also be seen as a systematic examination of each element of the firm's

current marketing activity and achievements to determine how well and

cost-effectively each element helps the firm meet its overall goals.

Marketing itself is the whole business seen from the point of view of its

final result; that is, from the customers point of view Business success isnot determined by the producer but by the customer.

marketing comes first because marketing integrates all the functions of

a business and speaks directly to your customer through the marketing mix

(Philip Kotler).


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Importance of a marketing audit

As a comprehensive review of a companys

market environment, the marketing auditidentifies any inadequacies in overall marketing

structures. identifies operational strengths and weaknesses

and recommends the necessary changes to thecompanys marketing strategies.

provide management with a useful and analyticaltool for evaluating, measuring, motivating andrevising management actions (Mylonakis, 2003


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Importance of a marketing audit

A source of useful information to deal with competition

Know your enemy, know yourself, and your victory will not be

threatened. Know the terrain, know the weather, and your

victory will be complete. Sun Tze on Strategy.

To secure and maintain a sustainable competitive advantage

Competitive advantage is a companys ability to perform in

one or more ways that competitors cannot or will not match.

Phil ip Kotler

If you dont have a competitive advantage, dont compete.

Jack Welch, GE

marketing audit is the answer to evaluating marketing

practice just as the financial audit is the tool for evaluating

company financial practice.


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Audit shortcomings

Normally confused as towhat to audit inmarketing dept.

More inclined toassurance thanconsulting assignments.

No proper risk

assessments for theorganisationaldepartments.


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Marketing audit procedure

Marketing environment audit

Marketing objectives and strategy audit

Marketing organization audit Marketing system audit

Marketing productivity audit

Marketing function audit


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What is Marketing Environment Audit?

This is both the macro-environment surrounding the industry and the

task environment in which the organization intimately operates.

The macro-environment consists of the large scale forces and factors

influencing the company's future, over which the company has very little

control.

These forces are normally divided into economic-demographic factors,

technological factors, political-legal factors, and social-cultural factors. The

marketing auditor's task is to assess the key trends and their implications

for company marketing action.

The task environment consists of markets, customers, competitors,distributors and dealers, suppliers, and marketing facilitators.

The auditor can sometimes make a contribution by going out into the

field and interviewing various parties to assess their current thinking and

attitudes and bringing them to the attention of management.


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What is Marketing Strategy Audit?

consider whether the company's marketing strategy iswell postured in the light of the opportunities andproblems facing the company.

The starting point for the marketing strategy audit is

corporate goals and objectives, followed by marketingobjectives.

The auditor may find the objectives to be poorlystated, or well stated but inappropriate given thecompany's resources and opportunities. E.G. a

company sets a sales growth objective for 15 % whenmarket showed no growth in the last five years andcompetition is still tense.


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What is Marketing Organization

Audit?

A complete marketing audit would have to

cover the question of the effectiveness of the

marketing and sales organization, as well as

the quality of interaction between marketing

and other key management functions such as

manufacturing, finance, purchasing, and

research and development.


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What is Marketing systems audit?

A full marketing audit then examines the varioussystems being used to gather information, plan, andcontrol the marketing operation.

The issue is not the company's marketing strategy or

organization per se but rather the procedures used insome or all of the following systems:

sales forecasting, sales goal and quota setting,

Marketing planning, marketing control,

inventory control, order processing, physicaldistribution,

new products development, and product pruning.


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What are Marketing Productivity and

Functions Audits?

A marketing Productivity audit includes aneffort to examine key accounting data todetermine where the company is making its

real profits and what, if any, marketing costscould be trimmed.

Marketing function audit looks at themarketing mix, i.e. Price, Place, Promotion andProduct and identifies problems associatedwith these and recommends corrective action.


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Macro Environment Audit issues-

Risk Assessment Checklist

Economic-Demographic

What does the company expect in the way of

inflation, material shortages, unemployment,

and credit availability in the short run,

intermediate run, and long run?

What effect will forecasted trends in the size,

distribution, and regional distribution of

population have on the business?


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Macro Environment- Risk Assessment

Political-legal

What laws are being proposed that may affect marketing strategy andtactics?

What state, and local agency actions should be watched? What ishappening in the areas of pollution control, equal employmentopportunity, product safety, advertising, price control, etc., that is relevantto marketing planning?

Technology

What major changes are occurring in product technology?. In processtechnology? What are the major generic substitutes that might replacethis product?

Markets What is happening to market size, growth, geographical distribution, and

profits?

What are the major market segments? What are their expected rates ofgrowth? Which are high opportunity and low opportunity segments?


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Macro- Environment- Risk Assessment

Social-Cultural

What attitudes is the public taking toward business and towardproducts such as those produced by the company?

What changes are occurring in consumer lifestyles and values thathave a bearing on the company's target markets and marketing

methods.Customers

How do current customers and prospects rate the company and itscompetitors, particularly with respect to reputation, productquality, service, salesforce, and price?

How do different classes of customers make their buyingdecisions?

What are the evolving needs and satisfactions being sought by thebuyers in this market?


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Macro- Environment Assessment

Competitors

Who are the major competitors? What are theobjectives and strategy of each majorcompetitor?

What are their strengths and weaknesses? Whatare the sizes and trends in market shares?

What trends can be foreseen in futurecompetition and substitutes for this product?

Facilitators

How effectively is the advertising agencyperforming? What trends are occurring in

advertising agency services


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Marketing Strategy Audit Checklist

Marketing Objectives

Are the marketing objectives clearly stated, and do they lead logically tothe company objectives?

Are objectives stated in a clear form to guide marketing planning andsubsequent performance measurement?

Are the marketing objectives appropriate, given the company'scompetitive position, resources, and opportunities?

Is the appropriate strategic objective to build, hold, harvest, or terminatethis business?

Strategy

What is the core marketing strategy for achieving the objectives? Is it a

sound marketing strategy?. Are enough resources (or too many resources) budgeted to accomplish

the marketing objectives?

Are the marketing resources allocated optimally to prime marketsegments, territories, and products of the organization?


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Marketing Organization Audit

ChecklistFormal Structure

Is there a high-level marketing officer with adequate authority andresponsibility over those company activities that affect thecustomer's satisfaction?

Are the marketing responsibilities optimally structured along

functional, product, end-user, and territorial lines?Functional Efficiency

Are there good communication and working relations betweenmarketing , sales and public relations?

Is the product management system working effectively; Are the

product managers able to plan profits or only sales volume? Are there any groups in marketing that need more training,

motivation, supervision, or evaluation?


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Marketing Systems Audit Checklist

Marketing Information System

Is the marketing intelligence system producingaccurate, sufficient, and timely information aboutdevelopments in the marketplace?

Is marketing research being adequately used bycompany decision makers?

Marketing Planning System

Is the marketing planning system well conceived and

effective? Is sales forecasting and market potential measurement

soundly carried out? Are sales quotas set on a properbasis?


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Marketing Systems Audit Checklist

Marketing Control System

Are the control procedures (monthly, quarterly, etc.) adequate toensure that the annual plan objectives are being achieved?

Is provision made to periodically analyze the profitability ofdifferent products, markets, territories, and channels of

distribution? Is provision made to periodically examine and validate various

marketing costs?

Profitability Analysis

What is the profitability of the company's different products, served

markets, territories, and channels of distribution?Cost-Effectiveness Analysis

Do any marketing activities seem to have excessive costs? Are thesecosts valid? Can cost-reducing steps be taken?


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Marketing Function Audits Checklist

Products

What are the product line objectives? Are these objectives sound?Is the current product line meeting these objectives?

Are there particular products that should be phased out? Arethere new products that are worth adding? Are any products able

to benefit from quality, feature, or style improvementsPrice

What are the pricing objectives, policies, strategies, andprocedures?

To what extent are prices set on sound cost, demand, and

competitive criteria.) Do the customers see the company's prices as being in line or out

of line with the perceived value of its offer?

Does the company use price promotions effectively?


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Distribution

What are the distribution objectives and

strategies?

Is there adequate market coverage and

service?

Should the company consider changing its

degree of reliance on distributors, sales reps,

and direct selling?


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Sales-force

What are the organization's salesforce objectives?

Is the salesforce large enough to accomplish the company'sobjectives?

Is the salesforce organized along the proper principle(s) of

specialization (territory, market product?

Does the salesforce show high morale, ability, and effort?Are they sufficiently trained and motivated?

Are the procedures adequate for setting quotas and

evaluating performance? How is the company's salesforce perceived in relation to

competitors' salesforces?


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Advertising, Promotion, and Publicity

What are the organization's advertising objectives?

Are they sound?

Is the right amount being spent on advertising? How is the budget determined?

Are the advert themes effective? What do customersand the public think about the advertising?

Are the advertising media well chosen? Is sales promotion used effectively?

Is there a well-conceived publicity program?


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TOTAL COMPANY

MARKETING

"Marketing is far too important toleave to the marketingdepartment.David Packard

all employees and departments

must think and act in the interests ofcustomers

all departments must be pointed tothe same goal of producingcustomer satisfaction at a profit.

Therefore, marketing audits need tobe expanded to include an appraisalof organization-wide attitudestoward customer participation andresponsibility or The extent to which

the marketing program wasmarketed internally and bought intoby top management and non-marketing executives.

TEAMWORK


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As internal auditors , we demonstrate value by concentrating on thoseareas, LIKE MARKETING, that ensure success of our organisations

TATENDA

THANK YOU

audit of marketing function

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