Professional Documents
Culture Documents
Topic:
Marketing Audit
Subject/Paper: Marketing
Program: Executive MBA Batch 2014-15
Submitted By:
Dhrutiman Mishra (Roll# 14005)
Contents
Introduction.......................................................................................................................................... 3
1.
1.1.
2.
3.
1.2.
1.3.
2.2.
2.3.
2.4.
2.5.
2.6.
References ................................................................................................................................................ 12
Appendix
Case Study: Marketing Audit for Levi Strauss & co.
1. Introduction
The marketing audit is the most common method of evaluation and control mechanism
of marketing performance. It is an important solution to the problem of evaluating the
marketing performance of a company (or one of its business units) and is distinguished
from other marketing exercises by being comprehensive, independent, systematic, and
periodic. After evaluation, it identifies various defects, vulnerabilities, deficiencies,
problems, and other weaknesses encountered in the company's marketing activities. It
suggests measures and/or recommendations to overcome, solve or remove these
limitations. It also seeks out new marketing opportunities for a company. Some of the
possible findings of an audit are like detecting unclear or inappropriate marketing
objectives, inappropriate strategies, inappropriate levels of marketing expenditures,
needed improvements in systems for marketing information, planning, and control.
During the 1960s, marketing audit received increasing mention in the lists of marketing
services of management consultant firms. In 1967, Kotler dedicated a full chapter of
Marketing Management: Analysis, Planning, and Control to the marketing audit and
identified it as something different from the other control efforts of the firm. Ten years
later, the publication, The Marketing Audit comes of Age (Kotler, Gregor and Rodgers,
1977), was a turning point in the development of the marketing audit. It provided a
definition that still remains current. This work has become a major source of reference
for many authors who contributed to the further development of the marketing audit.
A marketing audit should be done at the beginning of the marketing planning process. It
takes a close look at the current business landscape internally and externally. The
managers have to decide on which environment they want to focus. But if they want to
get the overall picture and feedback of the marketing environment then it is necessary
to do both the audits Internal and External.
The marketing audit can be also be viewed as the central intelligence activity
responsible for collection, synthesis, analysis, interpretation, and recommendation on all
major marketing decisions. The system utilizes all the existing information sources and
combines them with marketing auditing procedures and processes in order to draw a
complete picture including recommendations, rationale, and anticipated outcomes. The
below figure provides a flow of information from all external macro and micro
environments as well as internal sources to the marketing audit function for the
processing. The marketing audit, in addition to contributing to the strategic and tactical
planning process, will continually monitor the implementation of the marketing
programs, and will advise on significant deviations from the planned expectation with
recommendations to allow for changes for realigning activities.
Marketing audit evaluates the following three main (key) responsible areas:
1.2.
According to the definition given by Kotler, we can deduce the four basic characteristics
of marketing audit.
The first and most important feature is that its focus is broad and comprehensive
rather than being narrow
A vertical (or in depth) audit occurs when management decides to take a deep look
into some key marketing function, such as sales force management. It should
properly be called by the function that is being audited, such as a sales force audit,
an advertising audit, or a pricing audit. Marketing audit should always refer to a
horizontal (or comprehensive) audit covering the companys marketing environment,
objectives, strategies, organization, and systems.
Another feature of a marketing audit is that it is conducted by someone who is
independent of the operation that is being evaluated
Self-audit, while it is always a useful step that a manager should take, does not
constitute a bona fide audit because it lacks objectivity and independence.
Independence can be achieved in two ways. The audit could be an inside audit
5
conducted by a person or group inside the company but outside of the operation
being evaluated. Or it could be an outside audit conducted by a management
consulting firm or practitioner.
Next characteristic of a marketing audit is that it is a systematic process
Effectiveness of the marketing audit will depend on the extent to which it
incorporates an orderly sequence of diagnostic steps. And if followed in sincerity
very useful findings and recommendations can emerge out of a marketing audit
process.
Final characteristic is that the marketing audit is a periodic event
Typically, evaluations of company marketing efforts are done when sales have
turned down sharply, sales force morale has fallen, or other problems have occurred
at the company. A marketing audit should also be conducted when things are going
well and that can often help make a good situation even better and also indicate
changes needed to prevent things from turning bad.
1.3.
The marketing audit is carried out in three steps - Its a simple three-step procedure
shown
in below figure:
he and the auditor have to work out an agreement on the objectives, coverage, depth,
data sources, report format, and the time period for the audit.
environment audit, and if satisfied, then ask for a marketing strategy audit. Or it might
ask for a marketing organization audit first, and later ask for a marketing environment
audit.
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.
Example: Auditor wants to find out the effect that the forecasted trends in the size, age
distribution, and regional distribution of population will have on the business
2.2.
2.3.
2.4.
Marketing Systems Audit finds out the company's ability of collecting and analyzing
data. It looks for the company's ability to plan and control the marketing activities. It also
studies the company's marketing information system, planning and control system, etc.
The marketing auditor then tries to examine the various systems being used by
marketing management to gather information, plan, and control the marketing operation.
The issue is not the companys marketing strategy or organization per se but rather the
procedures used in some or all of the following systems: sales forecasting, sales goal
and quota setting, marketing planning, marketing control, inventory control, order
processing, physical distribution, new products development, and product pruning.
Example: Decisions about which products to carry and which to eliminate being made
by the head of the division on the basis of his intuitive feeling with little information to
guide the decisions and without adequate systems of planning, implementation, and
control.
2.5.
Marketing Productivity Audit finds out the profitability of the company's products. It
examines the markets. It also examines the measure to improve cost-effectiveness.
Here, the marketing auditor examines key accounting data to determine where the
company is making its real profits and which, if any, marketing costs could be trimmed.
Its done by looking at the accounting figures on sales and associated costs of sales.
Then using marketing cost accounting principles, it seeks to measure the marginal profit
contribution of different products, end user segments, marketing channels, and sales
territories.
Example: Auditor wants to find out if the company enters, expand, contract, or withdraw
from any business segments and what would be the short and long-run profit
consequences
2.6.
A marketing function audit identifies certain key marketing functions which might be
performing poorly. It is a complete study of marketing functions in relation to the
product, price, promotion and place of distribution. So, it is an audit of the marketing mix
(4 P's) of the company.
Example: Advertising budgets being prepared in an arbitrary fashion and such things as
advertising themes, media, and timing are not evaluated for their effectiveness.
10
3.2
Data Collection
Some managers in the affected business who will feel threatened by the auditor
even if reassurances are given by the auditor and the executive who brought him in.
The auditor must expect this, and realize that an individuals fears and biases may
influence his statements in an interview.
The auditor must question interviewees in a highly professional manner to build their
confidence in him, or else they will not be entirely honest in their statements. The
auditor must guarantee and maintain confidentiality of each individuals comments.
When the auditor and the company executive do not have open and frequent lines of
communication during the audit, it is possible that the auditor may place more
emphasis on some areas and less on others than the executive might have desired.
11
Therefore, it is the responsibility of both the auditor and the executive who brought
him in to communicate frequently during the audit.
References
1. Slovak University Of Technology In Bratislava, The Marketing Audit As A Method
Of The Evaluation Of The Marketing Plan, 2012
2. Kotler, P., Gregor, W., and Rogers, W., The Marketing Audit Comes
of Age, Sloan Management Review Winter, 1977
3. MacDonald, C. R, The Marketing Audit Workbook, Prentice Hall, Englewood
Cliffs, NJ, 1982.
4. Douglas Brownlie, The Conduct of Marketing Audits, Journal of Industrial
Marketing Management, 1996
12