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

SETTING OBJECTIVES AND SCOPE OF THE AUDIT The first step of an audit is a meeting between company executives and the auditor to agree on objectives, coverage,depth, data sources, report format, and time period for the audit. GATHERING DATA:--One of the major tasks in conducting an audit is data collection. A detailed plan of interviews, secondary research, review of internal documents, and so forth is required. This effort usually involves an auditing team. A basic rule in data collection is not to rely solely on the opinion of people being audited for data. In auditing a sales organization, it is absolutely essential to talk to field sales personnel as well as sales management, and of course, no audit is complete without direct contact with customers and suppliers PREPARING AND PRESENTING THE REPORT:--After data collection and analysis, the next step is the preparation and presentation of the audit report. This presentation should restate the objectives and scope of the audit, present the main findings, and present major recommendations and conclusions as well as major heandings for further study and investigation. COMPONENTS OF THE MARKETING AUDIT:--There are six major components of a full global marketing audit. They are : (1) Marketing environment audit. (2) Marketing strategy audit. (3) Marketing organization audit. (4) Marketing systems audit. (5) Marketing productivity audit. (6) Marketing function audit. The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process, but also at a series of points during the implementation

of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself. There are a number of tools and audits that can be used, for example SWOT analysis for the internal environment, as well as the external environment. Other examples include PEST and Five Forces Analyses, which focus solely on the external environment. In many ways the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary. This lesson considers the basics of the marketing audit, and introduces a marketing audit checklist. The checklist is designed to answer the question, what is the current marketing situation? Lets consider the marketing audit under three key headings:

The Internal Marketing Environment. The External Marketing Environment. A Review of Our Current Marketing Plan.

1. The Internal Marketing Environment. What resources do we have at hand? (i.e. The FIVE 'M's):

MEN (Labor/Labour). MONEY (Finances). MACHINERY (Equipment). MINUTES (Time). MATERIALS (Factors of Production). How is our marketing team organised? How efficient is our marketing team? How effective is our marketing team? How does our marketing team interface with other organisations and internal functions? How effective are we at Customer Relationship Management (CRM)? What is the state of our marketing planning process? Is our marketing planning information current and accurate? What is the current state of New Product Development? (Product) How profitable is our product portfolio? (Product) Are we pricing in the right way? (Price) How effective and efficient is distribution? (Place) Are we getting our marketing communications right? (Promotion) Do we have the right people facing our customers? (People) How effective are our customer facing processes? (Process) What is the state of our business's physical evidence? (Physical Evidence)

2. The External Marketing Environment.

As a market orientated organisation, we must start by asking - What is the nature of our 'customer?' Such as:

Their needs and how we satisfy them. Their buyer decision process and consumer behaviour. Their perception of our brand, and loyalty to it. The nature of segmentation, targeting and positioning in our markets. What customers 'value' and how we provide that 'value?.'

What is the nature of competition in our target markets?

Our competitors' level of profitability. Their number/concentration. The relative strengths and weaknesses of competition. The marketing plans and strategies of our competition.

What is the cultural nature of the environment(s)?

Beliefs and religions. The standards and average levels of education. The evolving lifestyles of our target consumers. The nature of consumerism in our target markets.

What is the demography of our consumers? Such as average age, levels of population, gender make up, and so on. How does technology play a part?

The level of adoption of mobile and Internet technologies. The way in which goods are manufactured. Information systems. Marketing communications uses of technology and media.

What is the economic condition of our markets?

Levels of average disposable income. Taxation policy in the target market. Economic indicators such as inflation levels, interest rates, exchange rates and unemployment.

Is the political and legal landscape changing in any way?

Laws, for example, copyright and patents. Levels of regulation such as quotas or tariffs. Labour/labor laws such as minimum wage legislation.

3. A Review of Our Current Marketing Plan

What are our current objectives for marketing? What are our current marketing strategies? How do we apply the marketing mix? (Including factors covered above in (a)) Is the marketing process being controlled effectively? Are we achieving our marketing budget? Are we realising our SMART objectives? Are our marketing team implementing the marketing plan effectively? Levels of staffing. Staff training and development. Experience and learning.

What is our market share? (total sales/trends/sales by product or customer or channel) Are we achieving financial targets? (profit and margins/ liquidity and cash flow/ debt: equity ratio/ using financial ratio analysis)

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

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

Social and Cultural Technological Legal Environmental

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.