How to Prepare a Marketing Audit to Shape Your Marketing Strategy
Much of the success of any business is riding on its marketing strategy. It may have abundant resources, with a management team composed of brilliant and innovative minds, and teams of hardworking employees diligently and passionately performing their tasks. However, the business will never be able to grow, and succeed in achieving its organizational goals if it does not have a marketing strategy in place.
The growth of a business is closely linked to how its image is developed and presented to the market, and how it is able to establish a presence in that market. To accomplish that, there is a need to work on creating and increasing its brand awareness, which inevitably leads to increased profitability and accelerated growth.
In the process, this will also widen the reach of the business organization and aid in strengthening the bonds established between the business and its clients or customers.
The million dollar question is: what goes into the development of a marketing strategy? Businesses devote a lot of time and resources in crafting a strategy that will help propel the organization toward its goals. Several factors are considered, and more than one or two processes are undergone. One of these activities or processes is a marketing audit.
In this guide, we explore 1) what is a marketing audit, 2) the importance of marketing audits, 3) the different components and types of marketing audits, and 4) how to perform a marketing audit.
WHAT IS A MARKETING AUDIT?
In author Bruce Clark’s words, a marketing audit is “a comprehensive, systematic, independent and periodic examination of a company’s or a business unit’s marketing” and it is “designed to evaluate marketing assets and activities in the context of marketing conditions, and use the resulting analysis to aid the firm in planning.” The planning that is referred to in that statement points to the marketing strategy, which will be documented in detail in a marketing plan.
Through a marketing audit, data on the internal and external environment of a business is gathered and analyzed in a structured and systematic manner, and the results thereof are used to aid the formulation of a marketing strategy. In other words, a business cannot come up with a marketing strategy unless it has performed a marketing audit.
The marketing audit may be performed by members of the organization, aided by members of the marketing team, or management may go with the option of getting help from external marketing auditors or consultants. Since it is considered to be a prerequisite of a marketing plan, marketing audit is to be performed at the beginning, before the planning process starts.
However, it does not stop there. Marketing audit is actually conducted frequently and almost regularly, which means that it is also being performed alongside the implementation of the plans.
IMPORTANCE OF A MARKETING AUDIT
Aside from the obvious, which is the formulation of a marketing strategy, a marketing audit benefits a business in more ways than one.
- A marketing audit provides management an in-depth look and evaluation at the marketing of a business, paying particular attention at how its marketing activities are planned, implemented and managed.
- A marketing audit pinpoints the marketing efforts and practices that are working perfectly, those that are not, and those that need more work. This leads to the identification of marketing weaknesses and strengths of the company, as well as its marketing threats and opportunities. In fact, throughout the course of the audit, management may discover inefficiencies that it never knew existed.
- A marketing audit’s systematic and structured approach makes the whole process of developing a marketing strategy easier. You don’t know where to start when making a marketing plan? Refer to the findings and recommendations of the marketing audit.
- A marketing audit enables the company to make corrections, or catch errors or mistakes before they can cause serious damage. A marketing activity is being implemented poorly? Then the company can apply the necessary changes and adjustments.
Ultimately, performance of a marketing audit is in aid of the greater function of top management, which is decision-making, specifically on matters regarding marketing. Any major decisions that will be made with respect to the company’s marketing activities will be based on the results of the audit.
COMPONENTS AND TYPES OF MARKETING AUDIT
Marketing audit covers a very broad area, with the auditors required to look into. There are seven identified types of marketing audit, and they fall under three components or audit key headings: the external environment, the internal environment, and the current marketing strategy of the company.
- Macro-environment audit, which takes a look at the external factors that affect the marketing performance of the company.
- Demographic factors, where you will take into account the demography of the consumers in the market, such as their age, gender, employment status, and others.
- Economic factors, which includes assessment of taxation policies and a look at the prevailing economic indicators, such as interest rates and inflation levels.
- Cultural factors, which may also affect the marketing performance of the company, and they include the religions and beliefs of consumers, the lifestyle that they practice and how consumerism figures in that lifestyle.
- Environmental factors, which may include technologies and systems that are used and in place, and have a significant impact on marketing in general. Examples are the evolution of internet, the adoption of mobile technologies, and the development of new marketing and information systems.
- Political factors, which often have a tendency to affect the economy and overall environment of the markets, are also considered. Issues such as property laws, tariff regulations, and other labor legislation must be looked into. Political unrest and lack of stability in leadership in government are also taken into account.
- Task environment audit, which focuses on the factors that are outside the company, but are still closely associated with its marketing activities and operations.
- We take into account the size and other unique features of the markets and the industry that the company belongs to. Here, some of the things that are considered are the nature of segmentation, targeting and positioning, and whether the company adheres to it.
- The customers have great power over the success of a company’s marketing, so it’s just right to include them in the audit. This involves probing into the needs of the customers and how they seek to satisfy these needs, their consumer behavior and what influences their purchasing decisions. It is also important to find out how they perceive the company’s brand, and gauge the level of loyalty that they have to it.
- The audit goes beyond mere identification of the competitors, or determining their number or concentration in the market. When assessing the competitive landscape, the areas looked into also include the level of growth and profitability of the competitors, their strengths and weaknesses, and their marketing strategies.
- Distributors and Retailers. How is your relationship with distributors, retailers, and other third parties managed, and what is the extent of the impact of that relationship on the company’s marketing. This is simply one of the questions that must be answered during the audit.
- Marketing organization audit, where the staff or the labor force of the company is evaluated on their performance, with respect to their positions and functions, and the place they occupy in the organizational structure.
- Marketing function audit, which will review the core competencies of the company. It will have to review the company’s product, pricing policies, choice of distribution channels, means of marketing communication, and the role of the sales force. For example, with respect to the product, the audit will focus on identifying how it compares to the competition. It will also look into the price points of the product, and how they are compared to the price points of competitors.
- Marketing systems audit, or the audit of the marketing systems currently in use by the company. Examples are a Marketing Information System, Marketing Control System, and even a New Product Development System in many cases.
Current Marketing Strategy
- Marketing strategy audit, which will revisit the company’s mission and vision, its marketing goals and objectives, and the marketing strategies that are formulated with a view to improve the company’s overall marketing. One of the main questions that must be answered after the audit is whether the current strategies adopted and being implemented by the company in its marketing are proper and appropriate, with respect to the resources of the company.
- Marketing productivity audit, where the auditors will evaluate the effectiveness of the marketing activities that have been – or are being – performed or carried out. The most common benchmarks used are cost-effectiveness and profitability.
CHARACTERISTICS OF A MARKETING AUDIT
In the performance of a marketing audit, it is imperative to keep the following characteristics in mind.
- The audit must be comprehensive, encompassing all the marketing issues that the company is dealing with.
- The audit must be systematic, following a sequence of steps in collecting and analyzing data on the company’s external and internal marketing environment and the marketing activities currently being implemented. The results of the analysis will eventually lead to the crafting of an action plan aimed at improving the markets and the company’s position in it.
- The audit must be independent, in the sense that the auditors are able to demonstrate an acceptable level of independence from the marketing department. This is to ensure their objectivity and impartiality which, in turn, will command the trust of top management.
- The audit must be conducted on a periodic basis, making it a regular business activity, instead of a stop-gap measure to deal with a crisis or troubleshoot a problem only when it arises.
PERFORMING THE MARKETING AUDIT PROCESS
There are no fixed guidelines when it comes to the performance of a marketing audit. After all, companies are not all the same. They have different structures, and they have different goals and priorities, which means they are likely to have different reasons for conducting a marketing audit. However, the general approach in the performance of one is largely the same.
There are three phases or stages in the marketing audit process, and they are:
Phase 1: Pre-Audit
1. Determine the key persons who will conduct the audit.
The company has two options:
Management forms a marketing audit team, composed of employees of the organization. They could assign the head of Marketing to evaluate his own department, evaluating the effectiveness of the marketing activities it implemented, and identifying the department’s strengths and weaknesses.
If management is afraid that this will violate the principle of independence and will have issues on objectivity, the marketing audit team may be staffed with employees from another unit performing related activities or function, or he may also direct the executive with higher authority over the activity or department being audited to perform the marketing audit.
In some cases, the company forms its own task-force audit team, which is composed of executives or members of senior management. Large corporations even set up an independent auditing unit or office, which will be tasked exclusively to perform marketing audits for the company.
ii. Outside audit
This is simple and straightforward enough: the company hires the services of an outside auditor to perform the marketing audit. It could be an individual private practitioner, or an agency specializing in marketing audits.
Between the two, outside audit is seen as the more reliable, since it guarantees more objectivity and independence on the part of the auditors, thus ensuring a more effective audit.
When choosing people to perform marketing audit, picking the audit team members randomly is not a good idea. Each of the auditors must possess the required knowledge and experience in order to perform the marketing audit effectively. They should also be able to demonstrate objectivity, in order to avoid biases and pre-judgment from affecting the reliability of the results of the audit.
A point person, or the person who will oversee the marketing audit must be identified. Thus, it is important that the person who will be chosen to lead the marketing audit team have the necessary know-how and experience in the conduct of an audit.
2. Determine the timing of performance of audit.
Set the timetable for the audit: When will it start? How often will it be performed?
For marketing audit to be effective, it must be conducted regularly or periodically, not just at the beginning of the preparation of a marketing strategy. Take into account the volatile nature of the market. This is bound to have an effect on the marketing strategies. The company has to tweak its plan from time to time in order to make sure it is updated and relevant. That means that there is a need to perform periodic checks or evaluations, taking into account the changes applied or implemented.
3. Establish the scope and objectives of the audit.
There is a need to lay out the scope and objectives of the audit, in order for the members of the audit team to be guided accordingly.
The objectives have to be clear as to be understood by everyone, especially those who are going to be involved in the audit. The objective will be your starting point, since it will be your reference when identifying the next set of steps in the audit process.
It is also crucial to identify all the stakeholders that are going to be involved in the audit – whether directly or indirectly.
4. Determine and establish the methodology to be used.
The process that will be followed by the marketing audit team in the performance must be identified and established. This also includes the methods, techniques, and tools that will be used, particularly in data collection and data analysis.
Phase 2: Audit proper
Depending on the methodology established prior, the main body of the audit process may include varying numbers of steps and sub steps. However, the main steps may be summarized into three:
1. Data gathering and collection
This is deemed to be the most tedious and time-consuming part of the entire audit process. It can also be quite an expensive endeavor.
Research is, quite possibly, the most popular and tried-and-tested method of gathering data. Research sources include published data and other standardized sources of marketing data. Industry publications, for example, are a fount of information.
Historical internal records of the company are also considered as primary sources of information, which is why they are subjected for review during a marketing audit. Examples are business documents and marketing records such as the business plan, marketing plan, training plans, marketing budget and the organizational structure along with job descriptions. If the marketing department has systems and processes in place, these may also be used to collect data.
Surveys or questionnaires are often floated to chosen respondents. In several cases, the marketing audit team may also be required to conduct interviews to get more data. It is also common to see members of the audit team going on-site for firsthand observations and walk-throughs of the marketing processes.
Data collected will pertain to the three main components: the external environment, the internal environment, and the existing or current marketing strategy of the company.They will then be organized for analysis.
2. Data analysis
This is the core of the audit process, where the audit team will build a complete picture of the marketing program, or the strategies used by the company, through subjecting the data collected to analysis.
In brief, some of the tools used in data analysis are:
SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis
This audit tool is used for analysis of data on the three components. The strengths and weaknesses are geared towards the inter environment and the marketing strategy of the company, while the opportunities and threats pertain to the external environment.
Five Forces Analysis
This tool developed by Porter is used for analysis of the external environment, particularly the competitive environment of the company. Its points of focus are the five forces:
- Competition in the industry: This takes a look at the competition. How many competitors do you have? How do their offerings compare to yours?
- Threat of entry of new players in the industry: Is the industry or market the company belongs to vulnerable to the entry of new product or service providers? How vulnerable is it?
- Customer power: What are the chances that your customers will decide to buy from the competition? What would motivate them to do so?
- Supplier power: Look at the relationship of the company with its suppliers.What are the problems often encountered in your dealings?
- Threat of substitute products: Is there a chance that the customers may find other products or services that will substitute what you currently offer?
PEST stands for Political, Environmental, Socio-cultural and Technological analysis, which means it focuses on the macro-environment or the external factors. Examples of issues that the audit will include in its analysis are:
- Stability of the political environment
- Economic policy of the government
- Extent of influence of government policies and laws on business and tax regulation
- Prevailing interest and exchange rates
- Inflation levels
- Market perception of foreign products and services
- Effect of religion, language and gender issues on consumerism
- Impact of technologies in marketing, distribution and consumerism
Analysis should provide insight into the following:
- The performance of the marketing program of the company;
- The marketing team’s skills, knowledge and competencies, and their individual and collective performance;
- The alignment of the objectives of marketing to that of the goals of the organization; and
- The execution and communication of the marketing programs.
3. Preparation of recommendations
The final output of the audit process is documented in what is commonly known as a “marketing audit report”. The main concern of the recipients or beneficiaries of the audit, which is often the management and the marketing team, is the Recommendations section. The recommendations will be based on the results of the analysis of information.
When making recommendations, present them in a prioritized list, for easier comprehension by management and other stakeholders.
Phase 3: Post-Audit
The Marketing Audit Report must be presented to management, who will use it for decision-making on its marketing strategies. There are instances when the report will also be disseminated to other departments in the company, especially if they are indirectly involved in the marketing activities and their functions will have an impact on the company’s marketing efforts.
It is to be noted that the recommendations are not going to be accepted blindly or easily by management. It is likely that they will still undergo lengthy discussions until all parties are satisfied and comfortable enough to make major marketing strategy decisions.
It has often been said that marketing is the lifeblood of any business or organization. Therefore, to keep the organization alive, there is a need to keep the blood healthy and flowing. The regular conduct of a marketing audit is one way to make sure of that.
Within the five forces model, the factor of Threat of New Entrants analyzes how likely it is for a …