Business firms use several tools and techniques for marketing control. The important ones among them are listed above.
1. Marketing audit
2. Market share analysis
3. Marketing cost analysis
4. Credit control
5. Budgetary control
6. Ratio analysis
7. Contribution margin analysis
8. Marketing Information inputs and warning signals
9. MBO (management by objectives)
Marketing audit is a systematic and objective study of the total marketing efficiency of the firm. It critically evaluates the marketing policies and activities of the firm, and measures the extent and direction of its growth. It is concerned with the long term business interests and challenges of the firm rather than short term achievements.
No firm can ever take the stand that everything is fine with its marketing. It is essential for the firm to assess whether the marketing policies, programs, systems and methods established in the distant past are valid for today and would be valid for the future. Marketing audit ensures such assessments.
Wide ranging scope of Marketing Audit:
The strength of marketing audit lies in the fact that while other control techniques aim at a piecemeal evaluation of the various marketing functions, marketing audit aims at a total evaluation of the marketing system/ process as a whole. It also measures and evaluates the effectiveness of the other marketing control techniques employed by the firm. In this sense, marketing audit can be described as a control of controls.
Several aspects of business are investigated by marketing audit. In order to tackle these aspects, marketing audit raises some basic questions and tries to answer them correctly. Some of these question are:
* What business are we in? Do we understand our business correctly?
* What business are we heading for?
* What is the business that we should be doing tomorrow?
* What change do we need in our current direction of growth?
* What are our marketing strategies and plans?
* Are they right ones? Will they ensure the achievement of the objectives?
* What are the emerging trends in competition and the general business environment?
* Do the marketing activities lend themselves for measurement? Are they measured and reviewed periodically?
We may recall from our discussions on marketing strategy that a firm is supposed to raise the same questions at the time of formulating its marketing strategy. Marketing audit thus seeks to review even the assumptions that go into strategy formulation. From the nature of the questions, it will also be evident that marketing audit as a control technique is different from budgetary control, ratio analysis etc. While the latter are essentially financial and quantitative techniques marketing audit has a much wider scope. For the major part, marketing audit is qualitative and strategic in character.
Benefits of marketing Cost Analysis:
* Helps control marketing costs and thereby helps augment savings and surpluses.
* Helps identify costs of performing specific marketing functions/activities; throws up alternative ways of performing these functions/activities; and provides an evaluation of cost Vs benefit of the various alternatives.
* Helps improve the competitive position of the products of the firm in the market. If costs are reduced, process can be kept lower and marketing mix can be strengthened
* Helps drop unprofitable products, customers, channels and markets and enable the firm to concentrate on profitable products, customers, channels and markets.
* Helps appraise the true cost and value of each marketing service provided by the firm, such as delivery, after sales service, credit facilities, etc.
* Helps set responsibility for individual executives in controlling costs and ensures cost-related performance.