Strategic Marketing - How Does the Audit Process Fit into Marketing Management - Assignment Example

Running Head: STRATEGIC MARKETING Strategic Marketing of Strategic Marketing How Does the Audit Process Fit into Marketing Management It takes groundwork to produce a marketing planning manuscript (strategic or tactical) and to manage the actions and results profiled in that document. In the world of marketing, groundwork interprets into attainment accurate and timely data to make wise decisions. A marketing audit, like an accounting audit, is a gadget to measure the value, risks, and usefulness of one's marketing efforts. (Parmerlee, 2000) How Does a Marketing Management Audit Work A marketing management audit consists of reviewing three fundamental elements that are how one views and approaches the markets one serves; the value of the products one offers and the effectiveness of the actions used to market those products (Mazur, 2001) These three elements form the basis of a marketing management audit. The following sections will explain how one can use the marketing audit to uncover the information one will need to shape one's eventual marketing activities. Comparison of Marketing Audits Against Financial Audits First point of comparison between the two is that marketing audit is a comprehensive, systematic and periodic examination of a firm's environment, objectives, strategies and activities to find problem areas and opportunities to recommend a plan of action to improve the performance of marketing strategies of the firm. Whereas an audit of financial statements is defined as the assessment by an autonomous third party of the financial statements of an organization or a company or other, ensuing in the publication of a sovereign view on whether or not those financial statements are appropriate, correct and comprehensive. Financial audits are characteristically carried out by firms of practicing accountants, due to the expert financial reporting information they need. The financial audit is one of many declaration or evidence of tasks provided by accountancy firms, whereby the firm offers an independent view on published data. Financial audits also help investors deciding whether to invest in a firm or not. Marketing audits are also performed by independent third party with the purpose of defining the shortcomings of the present strategies of the firm. The Market Audit Element A market audit is an attempt to define the structure of the environment in which a company operates-the marketplace. Its function is to collect information and organize it in a fashion that alerts one to marketing needs, problems, and opportunities. This information becomes a document that provides a detailed, accurate, and unbiased view of the marketplace. Why Perform a Market Audit The purpose of performing a market audit is to find out what to expect from the marketplace one are currently in or are considering entering. It provides one with data on any barriers or limitations one might encounter in entering or expanding into a market so that one can determine what it will cost to exist or compete. It also tells one what the possible return will be; in other words, what the market is worth to one (market value) or what one can expect in terms of revenue generation (sales volume/ earning potential). The market audit is the base from which one will develop tactic to get these returns. A market audit builds the foundation for future marketing decisions. The golden rule in performing a market audit is that one must be objective and read the market as it actually is. This means the audit must not be structured around one's product, service, or business. Though these may be mentioned as reference points, don't make them central to the audit. To do so could result in conclusions slanted toward one's business, giving one an inaccurate picture of the market and defeating the purpose of the exercise. The audit is based on market research activities and must be completely independent from research on the performance of one's product, service, or business. The Product Audit Element A product audit is an attempt to isolate and assess the worth of a particular thing one sells to generate income. Its function is to collect and analyse data in an accurate and unbiased manner to determine the value of one's products to one's company. The product audit gives one a clearer understanding of one's product line dynamics in a set format. It establishes why one's products exist, how they contribute to the success of one's company, and their impact on the marketplace. The Marketing Actions Element A marketing actions audit is an attempt to evaluate the mechanism of the internal management of one's marketing activities. Like its relatives, the market audit and the product audit, the marketing actions audit collects and analyses data to arrive at results that are detailed, accurate, and unbiased. The marketing actions audit gives one a clearer understanding of one's marketing department in a set format. It assesses how effective one has been at setting and achieving sales, revenue, market share, and profitability goals. It examines one's level of efficiency in marketing one's products by the activities one have used, the cost of marketing, and the control procedures used in one's marketing operations and organization. As with the other two audits, one needs to perform the marketing actions audit as objectively as possible, examining how one's marketing operations are performed, with little or no interpretation. The audit should mention the market and products or services only as reference points; to do otherwise could result in conclusions slanted toward one's marketing actions, thus giving one an inaccurate picture of one's marketing management and defeating the purpose of the exercise. The market audit (where one will be marketing) and the product audit (what one will be marketing) should have already been completed. The marketing actions audit (how one will be marketing one's products to the market) will link the market audit and the product audit together to give one a total picture of where one stand. The Role of the Marketing Audit The marketing audit tells a story about the marketing of one's product offerings to the marketplace. It explains what, why, how, when, and where events and activities happen. The marketing audit tells one if one's sales and revenue forecasting have been accurate and whether they have produced sufficient growth to cover one's costs and generate suitable financial earnings. It also measures how one are approaching one's marketing efforts. A marketing audit should be performed every three to five years on the average. If one's products have a short life span (e. g., high-tech products) and one are constantly introducing and terminating products, one should probably perform a marketing audit each year. (Egan, 2000) The marketing audit is the first section in a strategic marketing plan, which is performed every three to five years, compared with a marketing plan, which is performed every year. A marketing audit would not be appropriate for a new business; a business plan would be a better alternative. Insights of Marketing Audit Process Marketing audit, sometimes known as the SWOT analysis, is a continuous process. It keeps under review the total environment in which the company must establish the platform of survival that will become the launch pad to achieve its overall goals. The Strategic Background This examines the total environment with which the company must deal. This is done using the checklist acronym P. L. E. E. S. T in order firstly to: identify opportunities and threats and from these to distil which of these are the 'key result areas' (KRAs.) Market Audit This section again seeks to identify opportunities and threats (and those which are KRAs), this time via the examination of the total market customer base so as to enable the marketer to segment the market - (the so-called) 'target group' of 'specific customers'. Under this heading the marketer will also analyse the various layers of lifecycle, (product market/diffusion of innovation etc.). Again so as to identify the opportunities, threats and KRAs with which the company must deal in pursuit of its goals. (Too, et. al, 2001) Companies and Product Audit Under this heading, the marketer examines the competition in as much depth as possible. The moment a marketer identifies a customer set, s/he most probably also identifies another company who considers these customers their property, and no one else's. This group is designed to identify the strengths and weaknesses of the main competition and their assets and their liabilities. Because strengths and weaknesses are relative to what the company is up against, the competition is used as the yardstick via which the marketer measures their own company. Under this heading the marketer will examine the competitor's products and their 'positioning'. Again as a yardstick with which the marketers can measure themselves. (Kenyon, 2001) The marketer will classify the competition as being strong or weak, bad or good. The worst situation is being confronted with a 'strong bad' competitor. The Action Plan Addressing processes 2-4 is a continuing process that produces a voluminous database of the market, too large and detailed to be included in the action plan. Thus the action plan will start with a distillation of the pertinent issues generated by the marketing audit above. Reconciliation The actual planning document that is submitted for the purposes of action and budget approval starts here. The document will list the KRAs succinctly and in the order in which it stimulates the strategy. A key issue is the result of the Ansoff Analysis, whether the strategy to come will recommend is staying with the same product, and staying in the same market, or to take it into a new market, and staying with the same market, and develop new products, or move to new markets and new products. The strategy to be adopted will be detailed as a game plan to take advantage of the KRAs that are opportunities and to defend the company against the threats prevalent in the market. It will be designed to ensure that the company can play to its strengths and assets, and to ensure that the weaknesses and liabilities of the company are not presented as targets for the competition, and are addressed so that they are eventually eradicated. The basic strategic analysis that is necessary for any marketer to identify what issues must to be addressed in order to succeed, be they opportunities that can be taken advantage of, or be they threats against which the company needs to protect itself. It examines the four stages of analysis necessary to enable the identification of what are known as key result areas (KRA) and also to identify what competitive differential advantages may be required in the market. It examines the macro analysis, the microanalysis consisting of what are sometimes called porters five forces. (Sekaran, 2000) It goes on to look at the company analysis to identify strengths and weaknesses and concludes with a brief examination of competitor analysis to identify which competitor needs to be watched carefully or may be even attacked, and which may be a good competitor, that can be tolerated. According to Coviello (1998) analysis of the environment will reveal what key success factors (KRAs) must be addressed. The strategy will also require a fit between the structure of the organisation and the strategy it intends to adopt. In the computer markets, large companies like IBM cannot take decisions quickly or react to events by sharp change of direction, but they do have deep pockets while relatively small companies like Gateway do not have the muscle, range of products, or market coverage to fight a war of attrition against IBM. But they are fleet of foot and can 'turn on a sixpence'. (Pels, 2000) The ability of a company to handle its environment will depend on its strengths or weaknesses. The logical order of analysis is first to examine what is known as the 'macro forces' at work, and then proceed to analyse the 'micro forces', this identifies the types and characteristics of competition to be faced. The marketer then uses this competition as a yardstick against which to evaluate their company and from this comparison starts to generate the strategies necessary to pursue the company's overall goals. References Coviello, N.E., Brodie, R.J. (1998), "From transaction marketing to relationship marketing: an investigation of managerial perceptions and practices", Journal of Strategic Marketing, Vol. 6 No.3, pp.171-86. Egan, J. (2000), "Drivers to relational strategies in retailing", International Journal of Retail & Distribution Management, Vol. 28 No.8, pp.379-86. Egan, J. (2001), Relationship Marketing: Exploring Relational Strategies in Marketing, Prentice Hall, Harlow. Elg, U. (2003), "Retail market orientation: a preliminary framework", International Journal of Retail & Distribution Management, Vol. 31 No.2, pp.107-17. Kenyon, J., Vakola, M. (2001), "Evolving the customer relationship management paradigm in the retail industry", International Journal of Customer Relationship Management, No.March/April, pp.313-32. Mazur, L. (2001), "The only way to compete now is with an alliance", Marketing, No.15 February, pp.20. Parmerlee David, (2000), Auditing Markets, Products, and Marketing Plans, McGraw-Hill, ISBN: 0071392033. Pels, J., Coviello, N., Brodie, R. (2000), "Integrating transactional and relational marketing exchange: a pluralistic perspective", Journal of Marketing Theory and Practice, Vol. 8 No.3, pp.11-21. Sekaran, U. (2000), in Sheth, J., Parvatyar, A. (Eds), Handbook of Relationship Marketing, Sage, London. Too, L.H., Souchon, A.L., Thirkell, P.C. (2001), "Relationship marketing and customer loyalty in a retail setting: a dydadic exploration", Journal of Marketing Management, Vol. 17 pp.287-319. Read More