The Marketing Audit

The marketing audit has certain similarities to a financial audit in that it is a review or appraisal of your existing marketing activities. Carrying out the marketing audit provides the opportunity to review and appraise your whole marketing activity, enabling you to assess past and present performance as well as to provide the basis for evaluating possible future courses of action. Because the business environment is constantly changing, the marketing audit should be used as a reference tool, with constant updates reflecting changes in the external environment and your own internal business experiences.

1. External Audit
External factors can be split broadly into three groups, the economic environment, the competitive environment and your own market environment. Consider these areas from your own business's point of view - will any changes have an impact on your business, will they affect your competitors, will they allow you to compete where you could not, or inhibit your ability to compete. If the answer is yes, then the factors should be included in the audit. With the advent of the internet, there are now many sources of information on your competitors and your environment. You may also be surprised how much business information is available from your nearest city library. And remember, Company Reports are a good source of competitive information and can be found at www.companies-house.gov.uk.

1.1 The Economic Environment

Political Economic Social and Cultural Technological Legal Environmental Government actions, tax levels, privatisation, schools policy etc Income levels, employment levels, rate of inflation, rate of economic growth Demographics (population growth/distribution, age), lifestyles and cultural values (changing beliefs, skills, family values) IT, internet, home shopping UK Law (health & safety, employment law, store opening etc), EU Law Affect of your business on environment, 'green' credentials

1.2 Competitive Environment

How competitive is your market? What are your competitors doing, likely to be doing? Evaluate the following:

The threat of new entrants to your industry The threat of substitute products The bargaining power of customers The bargaining power of suppliers The rivalry amongst current competitors Who are your competitors? Who are your major competitors, how big are they, what is their market share? What reputation do they have? How do they distribute their products, what are their production capabilities? What is their marketing like - do they diversify? What are their key strengths and weaknesses? Total market size growth and trends Market characteristics, growth and trends Products, prices Physical distribution channels Customers/consumers Industry practices

1.3 The Market Environment

2. Internal Audit
This is your opportunity to put your own business under the microscope - do you know as much about your own situation as you should?

Sales (total, split by geography, industry, customer, product) Market shares Profit margins Costs Marketing information research Effectiveness of marketing mix

Key outcomes from this audit can then be summarised in the Current Market Position and Market Overview sections of your marketing plan.

Current Market Position

This information summary can be extracted from the marketing audit. Whilst some of this information is used in the SWOT analysis in the next section, it is extremely useful to have a clear understanding of the current position of your business, in terms of marketing activity. It is suggested that you use the following sub headings:

Product - what products are you selling, what is their market position, what are their competitors. Place - where are you currently selling your product, how does this compare to competition. Price - what pricing policy do you have? Do you discount? How does this compare to competition? Promotion - what types of activities are you currently carrying out?

If you are running a business that provides a service, you should also consider your activities regarding:

People - quality, recruitment, training. Processes - written procedures you have in place to ensure consistency of service. Physical Evidence - what message does the appearance of your premises or your people send out to your customers.

Product
BusinessBooks produces a range of titles aimed at providing a complete business information service for the medium to small business. The books are written by experienced business people, who have a good grounding in the principles of business. Some titles sell well, other titles do not cover costs but are kept for historical reasons and to maintain an attractive range for library customers. The books are published in a traditional, hardback format with black typeface with illustrations. Two main competitors: Oldco - a well established company producing a range of high quality products by academically renowned authors. The books tend to focus on topics of interest to the student, the professional marketer or the businessman who wishes to explore the latest techniques. The books are published in hardback format.

Newco - an internet startup operation, selling cheap, paperback books covering a range of titles from 'give me the money - a guide to getting funding' to 'how to beat the taxman'. The books are also downloadable in pdf format off the web.

Place
BusinessBooks currently sell their books through direct mail, and via two major bookshops. Packaged ranges are sold direct to libraries on a five-year cycle.
Ytd Revenue Distribution

(000) Direct Sales Libraries Bookshops

Competition

(%) 30 50 20

x y z

Oldco sells direct to libraries and via academic and specialist bookshops. Newco sells direct via the internet and via other internet partner sites.

Price

High margin Priced for traditional/existing customers Competitively priced against competition Flexible packages for library market to keep costs low Uncertain of correct price point for new markets

Price Vs Competition

Promotion

Little brand building No integrated campaigns Product specific direct mail

Low brand awareness outside traditional markets High brand awareness within traditional markets

Market Overview
Your business does not operate in isolation. You are affected by your competitors. You, your competitors and your customers are affected by external influences beyond your control. This section of your plan needs to present an overview that summarises where you see your key markets and what you consider to be the key changes in those markets. The marketing audit you carried out previously should enable you to answer the following questions:

What are the major products and markets that are likely to be able to provide the kind of business opportunities suitable for the organisation?

How are these changing?

Worked Example: Business Books

Market Overview
BusinessBooks' market is changing rapidly. New profitable sectors are emerging, as are new ways of reaching them. The number of people going into business for themselves is increasing. This growth is generated not only by traditional business start-ups, but also by internet start-ups, and by people who are now freelancing in response to new flexible working practices. Their current core library market is stagnating, with increasing competition for static budgets. Customer expectations are changing, People now demand easy to read information with relevant and sometimes humorous illustrations. New technologies have meant that they are used to receiving quality print and covers for little more than paperback prices.