TOPIC 1

THE MARKETING AUDIT

1. MARKETING AUDIT WITHIN THE MARKETING PLANNING PROCESS

Most managers accept that some form of marketing planning procedure is necessary. Therefore, they
need a system that helps them think in a structured way and make their intuitive economic models
explicit to the company. Unfortunately, very few companies have planning systems that have these
characteristics. However, those that do tend to follow a similar pattern of steps.

Figure 1 illustrates the various phases that must be traversed in order to arrive at a marketing plan.

Stages 6 through 8 represent the reality of the planning process, as each will likely need to be carried
out more than once before final programs can be written.

Figure 1. The 10 Steps of the Marketing Planning Process - Marketing Accountability McDonald, M. &
Mouncey, P.

Step 1: Mission Statement

The figure above shows that a strategic marketing plan should begin with a vision and a mission or
purpose statement. This is perhaps the most difficult aspect of marketing planning for managers to
master, as it is largely philosophical and qualitative in nature. Many organizations find their different
departments pulling in different directions, often with disastrous results, simply because the
organization has not defined the boundaries of the company and how it wants to do business.

A vision is the path that the company will follow in the long term, which guides strategic decisions

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regarding growth and competitiveness, that is, it projects indicators for the future, what the business
will do.

A mission is the motive, purpose, end or reason for the existence of a company.

The following should appear in a mission or purpose statement, which is usually brief:

• Definition of the business, preferably in terms of the benefits provided or the needs satisfied
rather than what the business produces as a final product or service.

• Distinctive competencies, these are the essential resources, skills and/or capabilities that
support the success achieved to date. Competitions may consist of possession of a particular
item or possession of a set of skills compared to competitors.

Step 2: Establishing corporate objectives

Corporate objectives usually contain at least the following elements:

• The desired level of profitability.

• Business Boundaries: What type of products will be sold? What types of markets? What type
of facilities will be developed (operations, research and development, information systems,
distribution)? How many staff? How much will be invested?
• Other corporate objectives, such as social responsibility, corporate image, stock market
image, employer image, etc.

Step 3: The marketing audit

Any plan will only be as good as the information it is based on and the marketing audit is the means by
which planning information is organized. There is no reason why marketing cannot be audited in the
same way as accounts. A marketing audit is a systematic assessment of all external and internal factors
that have affected a company's business performance over a defined period.

Given the increasingly turbulent business environment and ever shorter product life cycles, no one can
deny the need to stop at least once a year at a particular point in the planning cycle to try to form a
reasoned view of how the many external and internal factors have influenced performance.

Sometimes, of course, a company will conduct a marketing audit because it is in financial trouble. At
times like these, management often attempts to treat the wrong symptoms, most often by reorganizing
the company. But these measures are unlikely to be effective if there are underlying problems that
have not been identified. Of course, if the company survived long enough, it might eventually solve its
problems through a process of elimination. Essentially, however, the argument is that problems first
have to be properly defined. Auditing is a means to help define them.
Any company carrying out an audit faces two types of variables. There are those variables over which
the company has no direct control, for example, economic and market factors. Secondly, there are
those over which the company has total control, such as operational variables, which are generally the
company's internal resources.
This division suggests that the best way to structure an audit is in two parts, external and internal.

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Table 1 shows the areas that should be investigated for both concepts. Each one must be examined
with a view to building an information base relevant to the company's performance.

Table 1. Types of variables-Marketing Accountability McDonald, M. & Mouncey, P.

Many people mistakenly believe that a marketing audit should be some sort of final attempt to define a
company's marketing problems or, at most, something that is done by an independent body from time
to time to make sure that a company is on the right track. However, many highly successful companies,
as well as using normal reporting, monitoring and market research procedures throughout the year,
also conduct their annual planning cycle with a formal audit process of everything that has had a
significant influence on their marketing activities. Indeed, in many leading consumer goods companies,
the annual self-audit approach is a tried and tested discipline.

In this case, the marketing audit should assess the life cycles of the main products and market
segments, for which the form of their future configuration is considered using the audit information. In
addition, major products and markets should be plotted in a matrix to show their current competitive
position.

The next question is: What about the audit results? There are companies that consume valuable
resources performing audits that produce very little in the way of results. Auditing is not just about a
database, the task is to convert it into intelligence, that is, essential information for decision-making.

A market overview, which appears in the strategic marketing plan, should clearly explain the following:
what the market is, how it works, what the key decision-making points are, what the segments are.

Step 4: SWOT Analysis

Since the purpose of the audit is to indicate what a company's marketing objectives and strategies
should be, it follows that some format for organizing the key findings would be helpful. A useful way to

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do this is through SWOT analysis.

“A SWOT analysis is a summary of the audit under the headings of internal strengths and weaknesses
as they relate to external opportunities and threats.”

Step 5: Assumptions

There are certain success factors in every business about which assumptions must be made before the
planning process can proceed.

Step 6: Marketing objectives and strategies

The next step in marketing planning is writing marketing objectives and strategies, which are the key to
the entire process.

“Goals are what you want to achieve. A strategy is how you plan to achieve it”

Therefore, there can be objectives and strategies at all levels in marketing. For example, advertising or
pricing objectives and strategies.

However, the most important point to remember about marketing objectives is that they are product
and market-specific.
Common sense tells us that it is only by selling something to someone that the financial objectives of
the company can be achieved, and that advertising, prices, service levels and so on are the means by
which we can succeed in doing this. Therefore, pricing objectives, sales promotion objectives,
advertising objectives and the like should not be confused with marketing objectives.
Marketing objectives are simply one or more of the following:

• Existing products for existing markets,

• new products for existing markets,
• existing products for new markets,
• new products for new markets.

They must be stated in such a way that they can be measured, otherwise they are not objective, for
example: sales volume, sales value, market share, profits and percentage of penetration of points of
sale.

Marketing strategies are the means by which marketing objectives can be achieved and generally deal
with the four Ps, as follows:

• Product: General policies for product removal, modifications, additions,

design, branding, positioning, packaging, etc.
• Price: the general pricing policies that product groups in market segments should follow.
• Plaza: General policies for channels and levels of customer service.
• Promotion: general policies for communication with customers under the headings
relevant, such as advertising, sales force, sales promotion, public relations, exhibitions, direct
mail, etc.

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Steps 7 and 8: Estimating expected results - Identifying alternative plans and mixes

Once the previous step, a major and important planning task, has been completed, it is normal to use
judgment, analogous experience, field tests, and so on at this stage to test the viability of objectives
and strategies in terms of market share, costs, benefits, and so on. It is also normal at this stage for
alternative plans and mixes to be considered, if necessary.

Step 9: The budget

In a strategic marketing plan, strategies will normally be quantified in monetary terms, that is, the
budget is consolidated.

In most cases, a budget is set for three years of the strategic marketing plan, but a detailed budget for
the first year of the plan is also necessary and should be included in the annual operating plan.

Step 10: Detailed program for the first year of implementation

It is a one-year tactical plan, where general marketing strategies are developed into specific sub-
objectives, each supported by more detailed strategy and action statements.

2. WHY DO WE STUDY MARKETING AUDIT?

Because the different company managers have found in the marketing audit an invaluable work tool
that allows them to analyze and evaluate the programs and actions implemented, as well as their
adaptation to the environment and the current situation.

Therefore, the justification for the marketing audit is that senior management wants to both review
commercial actions and marketing plans and evaluate the quality and effectiveness of the dashboard.
Audits examine all areas that affect marketing effectiveness to determine future opportunities and
problems as a basis for improvement plans. These analyses will result in the recommendation or not of
an action plan that will improve the company's profitability. This type of analysis is called a marketing
audit, and must have the following characteristics:

• Be systematic.- Since it must follow an ordered sequence in the phases that must necessarily
occur to make the diagnosis.
• Be detailed.- Since each of the factors that influence each and every one of the marketing
variables and their effectiveness must be analyzed.
• Be independent.- That is, it guarantees us an objective analysis without any doubts that
personal interests on the part of certain sectors of the company come into play. For this
purpose, it is advisable that the audit be carried out by specialized auditors external to the
company.
• Be periodic.- Since it must be scheduled regularly, although the periodicity is subject to the
size of the company.

However, this type of control, as indicated, must be carried out regularly since we must be proactive at
the prevention level; let us remember that when a company is at its maximum level of "capacity" it is in
perfect condition to respond to the permanent challenge of the market.

Therefore, we define marketing auditing as the analysis and assessment that is systematically,
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objectively, periodically and dependently carried out on the objectives, strategies, actions and
commercial organization of the company in order to control the degree of compliance with the
marketing plan.

3. REASONS FOR USING MARKETING AUDITS

As explained in the characteristics that this type of analysis must have, audits can be carried out by staff
or by collaborators outside the company and hired for this purpose. In the first case, it is more of an
internal control that, despite its economic advantages, may not be very objective in its diagnosis.

All companies have an environment that not only contains current or potential consumers and their
competitors, but, as already mentioned, contains many other factors that are either beyond the
company's control or that it wants to understand from another perspective, such as:

• Entry of new or growing competitors.

• Decline in sales.
• Changes in consumer habits.
• Desire to enhance online presence.
• Optimizing marketing expenses.
• Growth below the sector average.

The changes that occur in the environment, due to changes in consumer habits, fashion, the
appearance of new technologies, changes in legislation, a certain economic situation, the appearance
of environmental concerns, etc., often escape the attention of people who are immersed in the day-to-
day work within their own company.

Maintaining a deep and detailed knowledge of these changes is a fundamental factor for detecting
opportunities and threats and, therefore, for ensuring successful management. For this reason, it is
advisable that the marketing audit be carried out by professional experts independent of the company.

4. DESIRABLE QUALITIES OF THE MARKETING AUDITOR

I. Extensive experience in companies and sectors.

II. Ability to make diagnoses.
III. Objectivity and independence in your work.
IV. Strong doses of observation and image.
V. Ability to assess where problems exist.
VI. Great capacity for analysis and synthesis.
VII. Good communicator and receiver of ideas.
VIII. Personal and professional flexibility.
IX. Ability to evaluate results.
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 X. Decision and character.
Therefore, we can say that a true marketing audit is one that is carried out by professionals outside the
company and has the following advantages:

XI. The professionalism and experience of auditors in different companies, both in terms of
their activity and their size and, consequently, in different sectors.
XII. The guarantee of objectivity in the diagnosis offered.
XIII. Total dedication to carrying out the work, which represents a professional guarantee
and certainty regarding the knowledge of the changes that are taking place in the
environment and how these affect the company.
As indicated above, marketing auditing is an ideal instrument for measuring the company's capacity
and degree of adaptation to its environment. To this end, every auditor must carry out his or her work
both within the company and in the market.

5. GENERAL CONTENT IN A MARKETING AUDIT

Marketing auditing requires a study of both the interior of the company (micro environment) and the
market and its external environment (macro environment).

When the external auditor comes to the company to carry out his work, he must first have basic
information about the company and the sector, as well as his track record, in order to outline and
structure the work, to plan the number of people and levels of responsibility that he must take into
account when obtaining data.

Once the sources of information have been defined, you will prepare a questionnaire with the data you
wish to have answered and which will not only refer to the commercial and marketing fields but also to
other areas of activity that affect your daily work.

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Figure 2. Marketing Audit Project Planning

Once the project and the team have been defined, an analysis of the company's environment, both
external and internal, must be initiated. Obtaining information at this stage is essential and will give a
clear idea of where the company is and what it has in order to take advantage of all the opportunities
presented to it in the market and overcome the weaknesses it presents in terms of its own structure.

Subsequently, an analysis of the main commercial activities and marketing variables must be carried
out, studying each variable one by one and seeing what function it fulfils with respect to the company's
commercial activity, delving into everything that represents any type of anomaly or that is susceptible
to improvement.

Another fundamental aspect to study is the company's commercial planning and organization, as well
as the company's general policy, the marketing plan and its degree of compliance with objectives,
checking the strategies and tactics implemented, as well as the allocation of means and resources for
their implementation.

Once the company's overall information is available, it is important to conduct a contrast of opinions
with senior management before preparing the final report.

The audit is the document that shows the scope of the work carried out by the auditing group, as well
as its professional opinion on the commercial situation and marketing of the company. The report must
be structured according to the different areas of work that were specified by the team at the start of
the service.

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6. MARKETING AUDIT PROCESS SEQUENCE

The marketing audit process has five stages (Figure 3):

• First stage: selection, compilation and validation of internal and external information sources,
to obtain descriptive elements of the different fields covered by its objectives.
• Second stage: analysis of the information collected for his assessment objective,
systematic and well-founded.
• Third stage: situational diagnoses with a view to diagnosing strategies, management and
results of marketing activity, indicating trends in terms of positive, neutral or negative
conditions for the progress of market activities.
• Fourth stage: proposals for the preparation of corrections in the short term, with the aim of
aiming to achieve more effective results and greater competitiveness.
• Fifth stage: recommendations for achieving continuous improvement in the medium and long
term
long term. Suggestions on support bases for innovation, diversification and generation of
competitive advantages processes.

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 STAGE I STAGE II STAGE II STAGE IV STAGE V

Selection Report
of Reports analysis Short-term Long-term
proposal proposal

Support for innovation processes, diversification and competitive advantages.

Figure 3. Marketing Audit Process

As we can clearly see, obtaining information is an indispensable element, since without it we cannot
make any valid decision, hence the importance of marketing information systems.

7. KEY BASES OF THE MARKETING AUDIT PROCESS

As previously analyzed, the marketing audit covers internal and external factors of companies and
organizations. These exist based on contextual variables, but internally they manage their operations to
generate offers aimed at providing solutions, benefits, advantages and customer satisfaction. That is to
say, externally its scope operates with the scenarios of the environment, clients, competition,
opportunities and risks of the market. Internally, it deals with each of the links in the value chain, that
is: infrastructure, human resources, technologies, supply, input logistics, output logistics, marketing and
customer services. Measures management and results.

In summary, the key bases of its application are:

• Cover all internal and external factors of the business.

• It involves an ordered sequence of steps for a comprehensive diagnosis of the methods and
strategic and operational management.
• Evaluate the organization and its value chain.
• Analyze the strategic and competitive posture.
• It deals with the degree of customer satisfaction.
• Measure the loyalty of your customer portfolio.
• It measures the total quality process of market performance and its evolution over time.
• Evaluates obsolescence and commercial innovation processes.
• Measures economic and financial results.

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8. COMPONENTS OF THE MARKETING AUDIT PROCESS

The process consists of targeting segments, which include the following areas of activity of the
company or organization:

I. Marketing ENVIRONMENT Audit

II. Audit of marketing functions
III. Marketing Organization Audit
IV. Audit of marketing systems
V. Marketing Productivity Audit
VI. Marketing STRATEGY Audit

Marketing auditing uses specially adapted processes to evaluate each of these segments, which are
detailed in an audit management guide developed in the following topics.
MARKETING AUDIT COMPONENTS
PART I. MARKETING ENVIRONMENT AUDIT
MACROENVIRONMENT MICROENVIRONMENT-ENVIRONMENT OF THE
ACTIVITY
PESTEL: Political-Economic-Sociocultural
Market-Customers-Competitors-
(Demographic)-Technological-Environmental
Distributors and intermediaries-Suppliers-
Facilitators and marketing companies-publics.
PORTER'S 5 FORCES
MPC
STRATEGIC GROUPS
POSITIONING MAP

EXTERNAL FACTOR EVALUATION MATRIX (EFE)

PART II. MARKETING STRATEGY AUDIT
Business Mission
Marketing objectives and goals
Strategy
PART III. MARKETING ORGANIZATION AUDIT
Formal structure
Functional efficiency
Contact efficiency
PART IV. AUDIT OF MARKETING SYSTEMS
Marketing information system
Marketing planning system
Marketing control system
New product development system
PART V. MARKETING PRODUCTIVITY AUDIT
Profitability analysis
Cost-effectiveness analysis
PART VI. AUDIT OF MARKETING FUNCTIONS
Product
Price

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Distribution
Communication
Sales Force

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