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

Government actions, tax levels, privatisation, schools policy etc

Economic

Income levels, employment levels, rate of inflation, rate of economic growth

Social and
Cultural

Demographics (population growth/distribution, age), lifestyles and cultural values

(changing beliefs, skills, family values)

Technological

IT, internet, home shopping

Legal

UK Law (health & safety, employment law, store opening etc), EU Law

Environmental

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?

1.3 The Market Environment

Total market size growth and trends

Market characteristics, growth and trends

Products, prices

Physical distribution channels

Customers/consumers

Industry practices

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.
Definition of Marketing Audit
The definition of marketing audit as stated by Abe Schuchman is as follows:
Marketing audit is a systematic, critical and impartial review and appraisal of the total marketing operation: of the basic objectives and
polices and the assumptions which underlie them as well as the methods, procedures, personnel and organization employed to
implement the policies and achieve the objectives.
Abe Schuchman gave this definition of marketing audit in his writings on its first extended discussions. He wrote this discussion for the
American Marketing Association (AMA) in 1951.

Meaning of Marketing Audit

The meaning of marketing audit is depicted in the following chart.

Marketing audit is an analysis, examination, review or evaluation of marketing activities of a company. It evaluates marketing
environment, objectives, plans, policies and strategies of a company. After evaluation, it identifies various defects, vulnerabilities,
deficiencies, problems, and other weaknesses encountered in the company's marketing activities. It suggests measures and/or
recommendations to overcome, solve or remove these limitations. It also seeks out new marketing opportunities for a company.
Overall, it tries to enhance (improve) the marketing performance of a company.
Marketing audit is an extensive, systematic, independent and regular examination process of a company's marketing activities.
1.

It is an extensive or comprehensive process because it covers all (entire) marketing activities of a company.

2.

It is a systematic or methodical process since it strictly follows all involved steps or procedures properly.

3.

It is an independent or autonomous process conducted by an external person. This person is not from the marketing department of a
company.

4.

It is a periodic process because it is conducted continuously after some fixed interval of time.

Marketing audit is very beneficial for the success of a company. It examines, How well the marketing department of a company works
or functions. It compares the marketing plans of a company with its actual marketing performance. It finds out the strengths and
weaknesses of a company's product. It suggests measures to remove the product's weaknesses. It guides a company to adapt its
marketing strategies with the changing marketing environment. It helps a company to update its marketing strategies and control its
marketing expenses. In short, a company cannot survive without conducting a proper marketing audit.
Additional topics on marketing audit are continued in the following articles:
1.

Characteristics of marketing audit.

2.

Types of marketing audit.

3.

Methods of conducting a marketing audit.

Marketing audit evaluates the following three main (key) responsible areas:
1.

External marketing environment : Here, the marketing audit mainly focuses on customers and competition in the business.

2.

Internal marketing environment : Here, the marketing audit studies the structure of company's marketing team and its effectiveness.

3.

Evaluation of current marketing strategy : Here, the marketing audit continuously reviews current marketing strategy of a company. It
also takes help of lessons learned from its past marketing plans.

______________________________________________________________________________________

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-economicsocial-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.

Explain the Characteristics of Marketing Audit

The eight important characteristics of marketing audit are depicted below.
The salient features or characteristics of marketing audit are as follows:
1.

Marketing audit is a comprehensive study of all marketing activities.

2.

It is a systematic-process that follows a step-by-step procedure.

3.

It is a periodic activity and must be conducted regularly.

4.

It is conducted by an independent person who is not from company.

5.

It is a critical review of marketing activities of company.

6.

It is an evaluation of marketing activities of company.

7.

It finds out marketing opportunities and weaknesses of company.

8.

It is a preventative and curative marketing medicine.

Now let's briefly discuss or explain each characteristic of marketing audit.

1. Comprehensive study
Marketing audit is a comprehensive or complete study of all the marketing activities of company. It studies the marketing environment,
marketing objective, marketing plans, policies and strategies, etc.

2. Systematic process
Marketing audit is a systematic process. It follows a step-by-step procedure.
1.

It studies marketing environment.

2.

It studies the internal marketing system.

3.

It examines the marketing activities.

4.

It finds out the problems.

5.

It makes an action plan to remove the problems.

The main aim of marketing audit is to improve the effectiveness of marketing.

3. Periodic activity
A company must conduct a marketing audit regularly or periodically. It must conduct the marketing audit even if it has no problems. This
is because it helps the company to analyze the post performance and to make future marketing strategies.
A company must not conduct a marketing audit only if it has problems or when it suffers a loss. It must be a compulsory and not an
optional activity.

Marketing audit is like a postmortem of failure.

4. Independently conducted
Marketing audit is independent. That is, it is conducted by an autonomous person. It is not conducted by a person who is working in the
marketing department. Mostly, it is conducted by an outside agency.

5. Critical review of marketing activities

Marketing audit is a critical review of marketing activities of the company. It finds out the defects, deficiencies, problems and weakness
in company's marketing activities. It also gives suggestions about how to remove these defects or deficiencies.

6. Evaluates marketing activities

Marketing audit is an explanation or evaluation of marketing activities of company. It evaluates company's objective, plans, policies,
programs, etc.

7. Finds out opportunities and weaknesses

Marketing audit finds out the marketing opportunities and weakness of the company. It helps the company to take advantage of the
marketing objectives. It also helps the company to remove all its weakness.

8. Preventative and curative marketing medicine

Marketing audit is a preventative and curative marketing medicine. It prevents marketing problems. It also cures (solves) marketing
problems.