Shape Your Marketing Strategy With A Marketing Audit

Shape Your Marketing Strategy With A Marketing Audit

A very important step in shaping marketing strategy is to audit the marketing function and related strategy. Such auditing practices are not common to many organisations that decide on a marketing plan and budget without measuring the performance of their previous and current activities.

Marketing accountability demands from marketers to be able to effectively measure the performance of their marketing department.  It is also essential to assist the Board in decision making and thus provide direction in shaping future strategy.

This is the first of a series of articles that will discuss what is a Marketing Audit and its importance; but also:

  • Analysing the external environment
  • Examining the internal business environment
  • Investigating the performance of the marketing department and processes
  • How to integrate the results of a Marketing Audit into Marketing Strategy and Plan

[ Editors Note – Links to the additional articles in this Marketing Audit series: Marketing Audit Tools: External EnvironmentMarketing Audit Tools: The Internal Environment and Marketing Audit: Analyzing The Internal Environment ]

What Is A Marketing Audit?

A marketing audit is a structured approach to the collection and analysis of information and data on the internal and external environment, including information on the business and economic climate, the market, competition, major competitors and the company’s operating performance. The audit is an essential prerequisite to marketing strategy formulation

A marketing audit is a structured survey of an organisation’s Marketing efforts. It looks at the way Marketing is planned and managed. It asks what has been done and what else should be done. In other words:

  • what has worked?
  • and what has failed?

The purpose of a marketing audit is not to criticise particular activities, but rather to identify whether there are any working practices that could be more effective. The marketing team within a business are fully involved in the marketing audit. They may carry out the audit themselves, or with the support of an outside consultant.

A market audit builds the foundation for future marketing decisions. The golden rule in performing a market audit is that you must be objective and read the market as it actually is. This means the audit must not be structured around your 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 your business, giving you 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 your product, service, or business.

Characteristics Of The Marketing Audit

A valuable and successful marketing audit must have the following characteristics:

  • Comprehensive – The marketing audit covers all the major marketing issues facing an organisation, and not only one or a few marketing trouble spots. The latter would be called a functional audit if it covered only the sales force, or pricing, or some other marketing activity.
  • Systematic – The marketing audit involves an orderly sequence of diagnostic steps covering the organization’s marketing environment, internal marketing system, and specific marketing activities. The diagnosis is followed by a corrective action plan involving both short-run and long-run proposals to improve the markets.
  • Independent – The marketing audit is normally conducted by an inside or outside party who has sufficient independence from the marketing department to attain top management’s confidence and the needed objectivity.
  • Periodic – The marketing audit should normally be carried out periodically instead of only when there is a crisis. It promises benefits for the organization that is seemingly successful, as  well as the one that is in deep trouble.

How Often A Marketing Audit Should Be Performed

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.

Some companies will perform a complete audit every year. Others will conduct an audit every four years, with modified versions used in between. Depending on the complexity of a given industry and the amount of growth or change it is experiencing, the timing of a marketing audit will differ. The key is to perform a complete audit (to form a solid baseline) in establishing your marketing approach, and then update that information as you feel it is warranted.

Marketing audits many times are ordered only after the control charts indicate that the marketing situation is no longer under control. The marketing crisis has occurred and there is panic scrambling to discover the reasons why sales are in a steep decline. A marketing audit can be a useful measure at such times providing it has not arrived too late for recommendations to effect a turn around. A better procedure, therefore, would be to have had a regular audit when things appeared to be going well in the same way an apparently healthy individual might take a regular medical exam. An audit during “good times” which would examine areas outside the scope of the normal control procedures may well discover the beginning of strategy obsolescence. How often a firm should conduct a marketing audit will vary with the firm.

The Marketing Audit Process

The complete marketing audit process involves three major steps. These include:

  1. Pre-Audit Activities. Pre-audit activities involve determining who will conduct the audit and when it will be performed. It also involves establishing the scope, objectives and methodology.
  2. The Audit Process. The audit process itself involves a number of substeps:
    • Data Collection. Assembling the information about the macro-environment, the industry, the company as well as the marketing mix is the most expensive and
      time consuming aspect of the marketing audit.
    • Information Analysis. This involves evaluating the data collected in an attempt to provide an all inclusive picture of the company’s marketing program: How well it meets the requirements of the marketing concept in providing for customer needs as well as corporate profitability, facing the competition, adapting itself to changes in the macroenvironment, and how efficient it is in doing this.
    • Preparing Recommendations. An audit report is prepared based on the strengths and weaknesses identified.
  3. Post-Audit Activities. After the audit report is prepared it must be presented to management and perhaps other groups within the company. The findings and recommendations should be debated. Plans to implement recommendations complete with time table should be drawn up.

The Marketing Audit Team

Selection of the appropriate people to perform the marketing audit is also crucial to its success. The auditor(s) must have experience, know-how, and creative imagination if they are going to be able to discover the problems and foresee opportunities.

Objectivity is also important. An auditor who is drawn from the business unit that is to undergo the audit is unlikely to be able to examine dispassionately the policies and procedures he or his superior helped to create and/or have been responsible for implementing. In such a case the auditor may simply be too close to the system to see it clearly or may be reluctant for political reasons to find fault with co-worker’s or superior’s policies or their efficiency in implementing them.

There are commonly six alternative sources of auditors and, by implication, as many methods of conducting marketing audits:

  1. Self-audit. A company can ask the executive who is directly in charge of an activity to appraise its strengths and weaknesses.
  2. Audit from across. A company can assign persons in a related activity on the same function level to prepare an audit of the neighbouring activity.
  3. Audit from above. The audit can be conducted by the executive to whom the manager reports.
  4. Company auditing office. The company can establish an office with the responsibility for conducting all company marketing audits.
  5. Company task-force audit. The company can appoint a team of company executives with varied backgrounds and experience to conduct the audit.
  6. Outside audit. The company can hire an outside individual or agency to conduct the marketing audit.

It has been suggested by a number of authorities that the least effective of these methods is the self-audit while the most effective is the outside audit. Outside consultants provide the needed impartiality and generally are able to bring a broader range of experience as well as the most up to date audit methodologies into play. It is however recommended the use of a combination approach whereby the experience and objectivity of the outside consultant be coupled with the perspective of the internal personnel in a joint audit team.

In the next article we will discuss the role of the external environment when auditing a marketing strategy and department.