What Is A Marketing Audit?

A marketing audit is a comprehensive, systematic,independent and periodic evaluation of a company's marketing assets. It is a effective tool in reviewing the competence of a marketing strategy, analyzing the objectives, policies and strategies of the company's marketing department as well as the manner and the means employed in attaining these goals. Because of the constantly varying business environment, marketing audit is frequently required, not only at the beginning of the planning process, but along with the implementation stage, providing also ground for evaluating possible future courses of action. Marketing audit on a regular basis is a strong reference point, reflecting evolution in external business environment, internal experience and strategy development. The marketing audit focuses on three key headings:    The external marketing environment The internal marketing environment Evaluation on the current marketing plan

External environment consists of economic, political and legal factors and concentrates on clients and competition. Marketing audit of the external surroundings analyses the customers, their needs and how to meet them, their behavior and decisions, perception of products and brands, segmentation, targeting and positioning on the market. The nature of competition is also studied, concerning its concentration, profitability, strengths and weaknesses, plans and strategies. New entrants on the market are also studied as well as the substitute products, the influence of supplier. The cultural nature of the external environment consists of education levels and standards, religion and beliefs, as well as lifestyle and customs. Demography plays a key role in marketing audit of the consumers, reflecting on growth distribution, age, evolution of technology and information systems as well as marketing communication and media. The external economic conditions consist of indicators as unemployment rates, inflation levels, interest rates, economic growth, taxation and average disposable income. Political and legal landscaping concern laws, regulations, minimum levels of taxes or wages and maximum levels of prices or quotas. Internal environment focuses on the resources the company has at hand as labor, finance, equipment, time and other factors of production. It also analyses the marketing team concerning structure, efficiency, effectiveness, correlation with internal functions and other organizations. The internal marketing planning process, it's accuracy and actuality, the product portfolio, new products, pricing and distribution are areas the marketing internal audit is concerned in. It also focuses on market share, sales, profit margins, costs and effectiveness of marketing mix. The marketing audit studies also the current marketing plan, focused on objectives, strategies and the marketing mix used to achieve these goals. It also evaluates budgeting, staffing, training , developing, experience and learning. The current marketing plan concerns also the market share, financial targets as profit and margins, cash flow, debt and other indicators that need to be balanced.

There are several approaches that can be used, for example SW OT analysis for the internal environment, as well as the external environment. Other examples include PEST(political-economic-social-technological) and Five Forces Analyses, which focus solely on the external environment. Using SWOT a company lists its advantages and disadvantages, strengths and weaknesses compared to its competitors or similar products providers. It also includes an analysis of the external factors that could help or hinder company's chance of success, as well as an evaluation of internal practices and operations. A five force analysis is similar to SWOT, but is used to evaluate an individual product or business rather than an entire marketing strategy. Using this approach, the study reviews similar subjects covered in a SWOT analysis, eventually dividing the results in five groups labeled as following :      Power of buyer Threat of entry Competitive rivalry Power of suppliers Threat of substitutes.

Political-economic-social-technological (PEST) is another audit study also known as a STEP (change in the order of letters) study. This audit focuses mainly on the factors influencing the external environment, usually factors out of company's internal control. This study analyses political climate, economic growth, social environment and technological evolution in the area where the product will be delivered. Its similarity to SWOT consists of dividing these results in opportunity and threats. In conclusion, a marketing audit does not necessarily audit the current activity of the business, but reviews all the areas that are crucial to the success of the company ,both internal and external and tries to align these. Only considering these results and using them in planning the next marketing strategy, a business can grow and become stronger.

The Marketing Audit
The marketing audit has certain similarities to a financial audit in that it is a review or appraisal of your existing marketing activities. Carrying out the marketing audit provides the opportunity to review and appraise your whole marketing activity, enabling you to assess past and present performance as well as to provide the basis for evaluating possible future courses of action. Because the business environment is constantly changing, the marketing audit should be used as a reference tool, with constant updates reflecting changes in the external environment and your own internal business experiences.

1. External Audit
External factors can be split broadly into three groups, the economic environment, the competitive environment and your own market environment. Consider these

areas from your own business's point of view - will any changes have an impact on your business, will they affect your competitors, will they allow you to compete where you could not, or inhibit your ability to compete. If the answer is yes, then the factors should be included in the audit. With the advent of the internet, there are now many sources of information on your competitors and your environment. You may also be surprised how much business information is available from your nearest city library. And remember, Company Reports are a good source of competitive information and can be found at www.companies-house.gov.uk. 1.1 The Economic Environment
Political Economic Government actions, tax levels, privatisation, schools policy etc Income levels, employment levels, rate of inflation, rate of economic growth Demographics (population growth/distribution, age), lifestyles and cultural values (changing beliefs, skills, family values) IT, internet, home shopping UK Law (health & safety, employment law, store opening etc), EU Law Affect of your business on environment, 'green' credentials

Social and Cultural Technological Legal

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1.2 Competitive Environment How competitive is your market? What are your competitors doing, likely to be doing? Evaluate the following:
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The threat of new entrants to your industry The threat of substitute products The bargaining power of customers The bargaining power of suppliers The rivalry amongst current competitors Who are your competitors? Who are your major competitors, how big are they, what is their market share? What reputation do they have? How do they distribute their products, what are their production capabilities?

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What is their marketing like - do they diversify? What are their key strengths and weaknesses? 1.3 The Market Environment Total market size growth and trends Market characteristics, growth and trends Products, prices Physical distribution channels Customers/consumers Industry practices

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2. Internal Audit
This is your opportunity to put your own business under the microscope - do you know as much about your own situation as you should?
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Sales (total, split by geography, industry, customer, product) Market shares Profit margins Costs Marketing information research Effectiveness of marketing mix

The marketing audit is to the marketing department what a financial audit is to the accounting department. A comprehensive review of a company's marketing environment, objectives, strategies, and activities compared to world class standards, the marketing audit identifies operational strengths and weaknesses and recommends changes to the company's marketing plans and programs. Here are some key dimensions a marketing audit should assess: 1. Key factors that impacted the business for good or for bad during the past year. Including an evaluation of marketing "surprises"²the unanticipated competitive actions or changes in the marketing climate that affected the performance of the marketing programs. 2. The extent to which each decision in the marketing plan²e.g. targeting, positioning, pricing, advertising, etc.²was made after evaluating many alternatives in terms of profit-related criteria. 3. Marketing knowledge, attitudes, and satisfaction of all executives involved in the marketing function.

4. The extent to which the marketing program was marketed internally and bought into by top management and non-marketing executives. 5. Customer, distributor, vendor, and intermediary satisfaction based on research among key target groups. 6. The performance of advertising, promotion, sales force, and marketing research programs in terms of ROI. 7. The performance of non-traditional programs, particularly digital offerings, in terms of ROI. 8. Whether the marketing plan achieved its stated financial and non-financial goals and objectives. 9. Which aspects of the plan that failed to meet objectives with specific recommendations for improving next year's performance. 10. The current value of brand and customer equity for each brand in the product portfolio.

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