knowlege base

Knowledge Base

Articles

Conducting a Market Audit

Dr Jack Jacoby
DBA, MBA, BA, CMC, MIMC, AFAIM
Managing Director - Jacoby Consulting Group

1. Corporate Mission and Objectives

a. Does the mission statement offer a clear guide to the markets of interest?

b. Have objectives been established for the company?

c. Is information available for the review of progress toward objectives, and are the reviews conducted on a regular basis?

d. Have past strategies been successful in meeting objectives?

e. Are opportunities or problems pending that may require altering marketing strategy?

f. What are the responsibilities of the Chief Marketing Executive in corporate strategic planning?

 

2. Business Composition and Strategy

a. What are the current target markets?

b. Do all target markets satisfy the criteria of: identifiability, accessibility, quantifiability and stability?

c. Have business strengths and product-market attractiveness analyses been conducted

for each target market and what are the results of these assessments?

d. What is the corporate strategy for each target market?

e. What objectives are assigned to each target market?

f. Does each unit have a strategic plan?

g. For each target market, what objectives and responsibilities have been assigned to marketing?

 

3. Marketing Strategy for Each Target Market

3.A Strategic planning and marketing

a. Is marketing's role and responsibilities in corporate strategic planning clearly specified?

b. Are responsibility and authority for marketing strategy assigned to one person within

the company?

c. How well is the marketing strategy working?

d. Are changes likely to occur in the corporate/marketing environment that may affect

the company's marketing strategy?

e. Are there major contingencies that should be included in the strategic marketing plan?

3.B Marketing planning and organisational structure

a. Are annual and longer range marketing plans developed, and are they being used?

b. Are the responsibilities of the various elements within the company in relation to the marketing process clearly specified?

c. What are the strengths and limitations of the key members of the company in relation

to marketing? What is being done to develop people and marketing processes?

d. Is the organisational structure for marketing appropriate for implementing marketing plans?

3.C Target market strategy

a. Has each target market been clearly defined and its importance to the company established?

b. Have demand, industry and competition in each target market been analysed and key trends, opportunities and threats identified?

c. Has the proper target market strategy been adopted?

d. Should repositioning or exit from any product-market be considered?

3.D Objectives

a. Have objectives been established for each target market, and are these consistent with

planning unit objectives and the available resources? Are the objectives realistic?

b. Are fees, costs and other performance information available for monitoring the progress of planned against actual results?

c. Are regular appraisals made of marketing performance?

d. Where do gaps exist between planned and actual results? What are the probable causes of the performance gaps?

3.E Marketing program positioning strategy

a. Does the company have an integrated positioning strategy made up of service, channel, price, advertising and selling strategies? Is the role selected for each mix element consistent with the overall program objectives and does it properly complement other mix elements?

b. Are adequate resources available to carry out the marketing program? Are resources committed to target markets according to the importance of each?

c. Are allocations to the various marketing mix components too low, too high, or about right in terms of what each is expected to accomplish?

d. Is the effectiveness of the marketing program appraised on a regular basis?

 

4. Marketing Program Activities

4.A Product strategy

a. Is the product mix geared to the needs that the company wants to meet in each product market?

b. What "branding" strategy is being used?

c. Are products properly positioned against competing companies/products?

d. Does the company have a sound approach to planning and management, and is marketing involved in service decisions?

e. Are additions to, modifications of, or deletions from the product mix needed to make

the company more competitive in the market?

f. Is the performance of each product evaluated on a regular basis?

4.B Price strategy

a. How responsive is each target market to price variations?

b. What role and objectives does price have in the marketing mix?

c. Should price play an active or passive role in program positioning strategy?

d. How does the company's price strategy and tactics compare to those of the competition?

e. Is there a logical approach used to establish prices?

f. Are there indications that changes may be needed in price strategy or tactics?

g. Are pricing alternatives test marketed?

h. Is the degree of elasticity of the organisation's products known?

i. Is a product's position on its life cycle considered when setting price? Does the life cycle affect other aspects of the marketing mix? Is there an attempt to move a product from the decline stage to an earlier stage?

j. Is tight control established over variances from regular prices?

k. Is the organisation's pricing structure (with respect to discounts, rebates and credit period) comparable to that of the industry?

l. Is there an active awareness of the implications of the ACCC?

4.C Advertising and sales promotion strategies

a. Have a role and objectives been established for advertising and sales promotion in the marketing mix?

b. Is the creative strategy consistent with the positioning strategy that is being used?

c. Are advertising budgets developed?

d. Are the budgets used as a means of project control?

e. Is the budget adequate to carry out the objectives assigned to advertising and sales promotion?

f. Do the media and programming strategies represent the most cost-effective means of communicating with target markets?

g. Do advertising copy and content effectively communicate with target markets?

h. How well does the advertising program measure up in meeting its objectives?

i. Are advertising activities co-ordinated with other phases of the marketing mix and with production?

j. Does the organisation analyse the results of advertising activities by means of any type of advertising response model?

k. Are advertising expenditures decreased in "bad" years in order to balance income?

l. Are trade shows effectively used?

m. Have "pooled marketing" agreements with non-competing firms been considered? Are pooled marketing agreements audited to determine whether the organisation is receiving the benefits it is supposed to receive?

4.D Channel of distributionstrategy

a. Has the company selected the type (conventional or vertically co-ordinated) and intensity of distribution appropriate for each of its product markets?

b. How well does each channel access its target market? Is an effective channel

configuration being used?

c. Are channel organisations carrying out their assigned functions properly?

d. How is the channel of distribution being managed? What improvements are needed?

e. Are desired customer service levels being reached, and are the costs of doing this acceptable?

f. Are marketing costs known by channel of distribution?

g. Has an investigation been undertaken of the possibility of entering the foreign export market?

h. Are organisational products being marketed in the proper locations?

i. Are any types of transportation studies performed to insure delivery at the lowest cost? If so, what types?

j. Is the warehouse location periodically reviewed? Has the warehouse location been used to market the organisation's ability to make just-in-time deliveries?

4.E Sales strategy

a. Are the role and objectives of personal selling in the marketing program positioning strategy clearly specified and understood by the sales organisation?

b. Do the qualifications of salespeople correspond to their assigned roles?

c. Is the sales force of the proper size to carry out its function, and is it efficiently deployed?

d. Are sales force results in line with management's expectations?

e. Is each salesperson assigned performance targets and are incentives offered to reward performance?

f. Are compensation level and ranges competitive?

g. Is there any type of training program for new salespeople?

h. Are there refresher courses for veteran salespeople?

i. Are sales meetings held in which salespeople know enough about the product to do his or her job most effectively?

j. Are salespeople completely familiar with the entire product line?

k. If there are any type of dealer support programs, do they meet the needs of business owners?

l. Is sales literature adequate?

m. Are customers currently being adequately serviced?

n. Is the sales force or a customer service department used to determine customer needs and complaints?

o. Are salespeople's expense accounts periodically audited?

p. Is there any evaluation of warranty claims and programs?

q. Are salespeople provided with the names of customers whose accounts are delinquent or have a zero balance?

r. Has the use of independent sales representatives instead of, or in addition to, employing salespeople been considered?

s. Are deliveries always made on a timely basis?

t. Are salespeople given advance information concerning anticipated delays in delivery schedules?

u. Do salespeople provide feedback about fast or slow moving items?

v. Do salespeople know why growth accounts are improving and if so, has the knowledge been used on other customers?

w. Is the back-order information system adequate?

x. Are the dollar sales volumes and contribution margins known for each individual salesperson?

y. Is profitability by customer known?

z. Does the tenure of the sales staff seem balanced?

aa. Are trends of sales returns maintained?

ab. Is cost per sales call known?

ac. Are call reports prepared by salespeople?

ad. Do the incentives offered for salespeople recognise profitability rather than just dollar volume?

ae. Does the organisation send out information on successful sales approaches so that other salespeople can learn from them?

4.F Packaging

a. Does the design of product packaging contribute to sales?

b. Does the package attract buyers?

c. Do packages adequately protect the product inside?

d. Does the organisation perform any type of packaging research?

e. Is the package always cost effective?

4.G New Products

a. Is someone responsible for new-product developments?

b. Is there a new product policy manual?

c. Is market research conducted? If so, does marketing research make a contribution to the organisation's success?

d. Do salespeople provide feedback on what customers think they need in the way of new products or product design?

e. Are salespeople alert for novel applications of the organisation's products?

f. Are foreign trade shows used as sources of new ideas?

g. Are financial analyses made of new-product investments?

h. Is market share a consideration in new product decisions?

i. Have brand extensions been considered by new product managers?

j. Is product safety evaluated prior to introduction?

k. Is incremental costing used to evaluate new product decisions?

l. Are follow-up studies made of why new products failed?

m. Are salespeople properly informed in advance about new product introductions?

4.F Advertising Agency Relationships

a. Does the organisation use an advertising agency?

b. Are agency agreements covered in written contracts?

c. Are agency billings properly supported by company authorisations and proof of service?

d. Are insertions in magazines independently verified with an actual copy of the publication when tear sheets do not provide adequate proof?

e. Is communication with the agency adequate?

f. Are media charges independently checked on a period basis to assure propriety of the rates charged?

g. Is the advertising of subsidiaries and branches combined with that of the parent in order to qualify for quantity discount rates?

h. Are billings for creative and production work supported by the agency's suppliers' invoices?

i. Are audits or inspections ever conducted of the agency's records concerning the organisation?

j. Has management given consideration to establishing its own in-house advertising agency?

k. Does the agency pass along cash discounts to the organisation?

l. Has an attempt been made to negotiate rates with the agency?

 

5. Implementationand Management

a. Have the causes of all performance gaps been identified?

b. Is implementation of planned actions taking place as intended? Is implementation being hampered by marketing or other functional areas of the firm (operations, finance)?

c. Has the strategic audit revealed areas requiring additional study?

 

6. Policies and Procedures

a. Are overall corporate objectives well known to all personnel in the department?

b. Are marketing objectives and product strategies available in writing?

c. Are product marketing strategies periodically updated?

d. Are job descriptions available for all positions in the department?

e. Are sales forecasts (budgets) prepared after diligent research?

f. Does the organisation have a means of obtaining market intelligence?

g. Are competitor actions kept under surveillance?

h. Do you know your market share for every product the organisation produces?

i. Has growth in market share been explained by an economic analysis of any sort?

j. Are product instruction manuals adequate?

k. Do you know your marketing costs by product and by market segment?

l. Are complaints and returns periodically reviewed by senior management?

m. Are your marketing objectives both long and short term?

n. Are warranties and guarantees in line with those of competitors? Do you know your costs of providing warranties and guarantees? What proportion of the total product cost is composed of warranty costs?

 

7. Personnel

a. Are all departmental personnel qualified?

b. Are all records and reports useful and adequate for control of the work performed?

c. Are all marketing personnel encouraged to participate in professional organisations and continuing education programs? What type of encouragement is used?

d. Does the organisation pay for professional publications for employees?

e. Is supervision within the department adequate?

f. Is supervision within the department excessive?

g. Are organisational assignments clearly understood?

h. What is the annual turnover rate for department employees?

i. What is the annual turnover rate for salespeople?

 

8. Accounting

a. Is the accounting staff co-operative in providing the necessary cost information?

b. Is the type of information needed received from the accounting department?

c. Does the accountant provide internal reports that defer the costs of marketing programs that are expected to show long term results?

d. Are marketing costs reported by function?

e. Are promotional costs such as 'cents-off' coupons recorded as expenses instead of as a deduction from revenues?

f. Are warranty and service costs known by product?

g. Is short run profit emphasised as the sole objective of marketing activities?

 

9. Market Research

a. Are the people responsible for the conduct. Management or commissioning of market research experienced in market research?

b. What are the objectives of the research function, department or tasks undertaken?

c. Do the objectives as published, or as viewed by executive management, correspond to the objectives as viewed by marketing research personnel?

d. Does the marketing research conduct studies to determine what customers need or want?

e. Is marketing research used to determine the appropriate price to charge for a product?

f. Is market research used to determine the most appropriate distribution channels to use for each of the organisation's products and potential products?

g. Do the marketing research staff assist production management in developing products that are easier to manufacture?

h. Is marketing research used in the product development process?

i. Is marketing research used to assess market potentials and estimate sales?

j. Do employment contracts provide that all patents are the property of the organisation?

k. Are there prohibitions against employees immediately going to work for a competitor, or taking information to a competitor?

l. Does the department or function have an adequate number of personnel?

m. What proportion do research expenses compose of total sales?

n. How do time and cost budgets compare for specific products to actual time and costs?

o. After examination of several recent research reports, do they seem to meet the objectives of the department and the specific assignment? To what extent did these reports influence the decision making process?

 

10. ConsumerService

a. What are the goals and objectives of the customer service department or function?

b. What tasks have been implemented to meet customer service goals and objectives? Are policies and procedures documented in a customer service manual or another written document?

c. How is customer satisfaction evaluated?

d. How many customer and customer service representatives are there? Is the ratio periodically evaluated by the organisation's needs?

e. What type of complaints or problems does the department receive?

f. What procedures exist to handle customer complaints?

g. Is a log kept of customer complaints? How is the log maintained?

h. How are complaints fed into the marketing process?

i. Have salespeople been instructed to notify customer service of any problems reported to them? How is this done? Are customer service representatives kept informed on the progress in resolving these problems?

j. How does management determine that customer problems have been properly resolved? How is it determined whether customers are satisfied with the outcome? How is the timeliness of the resolution?

k. How does management rate customer satisfaction? How was this determined?

l. How often do customer service representatives visit or call a customer to ensure customer goodwill and satisfaction?

m. Does the organisation maintain a separate file on each customer? What kinds of information does this file contain?

n. How does the department identify problems which may be common to more than one customer, but may be reported to different customer service representatives?

o. Does the department hold regular meetings to discuss problems? Who is involved in these meeting?

p. What background and training qualifications do customer service department personnel have?

q. What type of training on new products is given to customer service representatives and to customers?

r. Do customer service representatives assist in marketing new or expanded services or applications?

Typical Market Intelligence Requirements

Competitors

Own Industry

Financial Performance

Non-financial performance

Structure

Changes in core business

Diversification opportunities

R & D orientations

Mergers and acquisitions

Ownership characteristics

Market shares

Distribution strategies

Marketing structures

Providers of principal services

Customer perceptions of companies

Customer perceptions of product

Pricing policies & strategies

Cost of materials

Cost of distribution

Cost of sales

Employee efficiency (sales, profit)

Senior management

Structure

Performance

Participants

Markets

Distribution Channels

Suppliers

Trends

Technology

Key sensitivities

Critical Success Factors

Forecasts

Government Policies

Legislation

Regulation

Consumer law

International standards

Economic Environment

Socio-demographic Environment

Performance of economy

Changing economic structures

Changing income & expenditure

Buying patters

Buying motivations

Influences on users/buyers

Changing work patterns

Changing lifestyles

Geographic demographic change

Disposable incomes

Discretionary incomes

Technology

Each Consumer Sector

Competitor R&D foci

International R&D and technology

developments in own industry

International R&D and technology

developments in related industry

Spin-off technologies

Process Technologies

Identify major technology players

Structure

Performance

Participants

Markets

Distribution Channels

Suppliers

Trends

Technology

Key sensitivities

Critical Success Factors

Forecasts

Government Policies

Legislation

Regulation

Consumer law

Legislative-politico Environment

 

Government motivations

Opposition motivations

Impending legislation

Pressure groups

Key individuals

 

 

References

Cravens, David W., 1982. Strategic Marketing, Irwin, pp 415 - 417

Flesher, Dale L., 1993. Internal Audit Tool Book: Auditing the Marketing Function, The Institute of Internal Auditors

Jacoby, Jack. (1997).  Conducting a Market Audit, 1997

 

< back

| top |