A companyâ€™s marketing effectiveness is reflected in the degree to which it exhibits the five major attributes of a marketing orientation: customer philosophy, integrated marketing organization, adequate marketing information, strategic orientation, and operational efficiency. Most companies and divisions receive scores in the fair to good range.
The marketing audit: The average US Corporation loses half of its customers in five years, half of its employees in four years, and half of its investors in less than one year. Clearly, this points to some weaknesses. Companies that discover weaknesses should under take a thorough study known as a marketing audit. A marketing audit is a comprehensive, systematic, independent, and periodic examination of a companyâ€™s or business unitâ€™s marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the companyâ€™s marketing performance.
Let us examine the marketing auditâ€™s four characteristics:
Comprehensive: The marketing audit covers all the major marketing activities of a business, not just a few trouble spots. It would be called a functional audit if it covered only the sales force, pricing, or some other marketing activity. Although functional audits are useful, they sometimes mislead management. Excessive sales force turnover, for example, could be a symptom not of poor sales force training or compensation but of weak company products and promotion. A comprehensive marketing audit usually is more effective in locating the real source of problems.
Systematic: The marketing audit is an orderly examination of the organizationâ€™s macro and micromarketing environments, marketing objectives and strategies, marketing systems, and specific activities. The audit indicates the most-needed improvements, which are then incorporated into a corrective action plan involving both short-run and long-run steps to improve overall effectiveness.
Independent: A marketing audit can be conducted in six ways: self-audit, audit from across, audit from above, company auditing office, company task force audit, and outsider audit. Self audits in which managers use a checklist to rate their own operations lack objectivity and independence. The 3M Company has made good use of a corporate auditing office, which provides marketing audit services to divisions on request. Generally speaking, however, the best audits come from outside consultants who have the necessary objectivity, broad experience in a number of industries, some familiarity with the industry being, and the undivided time and attention give to the audit.
Periodic: Typically marketing audits are initiated only after sales have turned down, sales force morale has fallen, and other problems have occurred. Companies are thrown into a crisis partly because they failed to review their marketing operations during good times. A periodic marketing audit can benefit companies in good health as well as those in trouble.
A marketing audit starts with a meeting between the company officer(s) and the marketing auditor(s) to work out an agreement on the auditâ€™s objectives, coverage, depth, data sources, report format, and time frame. A detailed plan regarding who is to be interviewed, questions to be asked, the time and place of contact and so on is prepared so that auditing time and cost are kept to a minimum. The cardinal rule in marketing auditing is: Do not rely solely on company managers for data and opinions. Customers, dealers, and other outside groups must also be interviewed. Many companies do not really know how their customers and dealers see them, nor do they fully understand customer needs.
The marketing audit examines six major components of the companyâ€™s marketing situation.
Marketing Excellence Review: Companies can use another instrument to rate their performance in relation to the best practice of high performing businesses. The three columns distinguish among poor, good, and excellent business and marketing practices. Management can place a checkmark to indicate its perception of where the business stands. The resulting profile exposes weaknesses and strengths, highlighting where the company might make changes to become a truly outstanding player in the marketplace.