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.