Marketing Audit Resources
When building a strategic marketing plan for any business an in-depth marketing audit is vital. Without analysis effective planning is impossible.
A marketing audit is time-consuming. To simplify the process many tools and techniques have been developed over the years. We have summarised these tools and techniques below with links to resources to learn more.
It is important to account for both external factors and issues internal to the business. We start with the external audit:
and finish with the internal marketing audit.
What Is A Marketing Audit?
The basis of any strategic planning exercise is to plan a route from where we are now to where we want to be in a set timeframe. To plan that route we need to know what (resources) we have at our disposal, what barriers we are likely to face (environment and competition) and what skills can we utilise (strengths and weaknesses) to overcome those barriers. Analysis delivers the data upon which we base answers to those questions.
A marketing audit is the foundation on which the strategic planning process is built. If it is incomplete, or worse, inaccurate then the entire strategic planning process is likely to be a complete waste of time and effort.
Extracting the maximum benefit from a marketing audit requires an understanding of when to dig deep and when further analysis will simply lead down a blind alley. It is often best to get a superficial top view first to gain an understanding of where to look.
The Importance Of A Marketing Audit
A good strategy has a kernel of three elements – a diagnosis, a guiding policy and coherent action. Richard Rumelt (Good strategy, Bad Strategy). Diagnosis depends on analysis and without it strategy is useless.
When working through the audit process It’s all too easy to avoid the real issue. The nasty issue that everyone would rather gloss over rather than face head-on. Every business has them. It is vital to surface those issues so they can be dealt with
The importance of senior management’s full support for the analysis (and strategic) process cannot be overstated. If senior management is not prepared to consider the major points raised by analysis. If they are not prepared to deal with the key issues and deliver their full support to the strategy implementation process then there is little point proceeding with the audit.
Products, Customers and Markets
BCG Growth Matrix
The Boston Consulting Group Matrix was created in 1968 but it remains a useful tool to analyse the relative performance of product lines or business units. It can be used as an audit tool to compare product lines in a growth vs market share matrix. All measurements (placements) are made versus the largest competitor.
There are many problems with the model. It works best for larger businesses. It is only two dimensional and, most important, it is difficult to collect accurate data on both growth and market share. That said, it remains a useful tool to give a general indication of the relative importance of various product lines.
Learn more about how to use the tool HERE.
Porters 5 Forces
Porters 5 forces is a tool for understanding the forces at work in a market. It examines the threat of entry of new competitors, the threat of substitute products or services, the power of buyers and suppliers, and competitive rivalry.
The analysis tool does not rely on quantitative data and can only be used to gain an overall impression of the situation. It is generally only suitable for relatively simple markets.
Learn more about Porters 5 forces can shape strategy HERE.
Augmented Product Model
The Augmented Product Model was introduced by Philip Kotler, it describes the non-physical elements of the product. These are typically added value elements such as after-sales service. When performing a product audit it can be helpful to use the Augmented Product model to identify key elements of added value.
More information on the Augmented Product Concept HERE.
The purpose of an innovation audit is to understand how a business manages innovation and the barriers to innovation within an organisation.
More information on the Innovation audit HERE.
There are many variations of PESTLE. One variant includes geography as a consideration. Another, (PEST) leaves out environmental and Legal considerations.
PESTLE analysis is a tool to aid understanding of the larger macro-environment that may impact on a business. It covers Political, Economic, Social, Technological, Legal and Environmental issues.
For example, regulation and deregulation and preferred industry status may be political considerations. Artificial Intelligence and the adoption of technology could be technological issues.
A detailed overview of the PESTLE analysis tool can be found HERE.
DESTEP is another macro-environmental analysis tool. Businesses that are more concerned about demographic issues may use DESTEP instead of PESTLE. It is unlikely any business would use both.
The DESTEP acronym stands for Demographic, Economic, Social, Technological, Ecological and Political.
More information on DESTEP analysis can be found HERE.
Porters’ 5 forces analysis (mentioned above) is a good place to start as it presents a top level view of the market.
A market map has many potential uses but in marketing it is primarily used to map the positioning of competitors and to identify potential positions to exploit. The model uses only two-axis (for example price vs quality) so to generate an overall picture many market maps are needed.
More detail on how to use market maps is available HERE.
A development of the market map is the perceptual map. As the name suggests this audit tool focuses on customer perceptions of a product.
Read more on Perceptual Maps HERE.
Porter’s 4 corner analysis
One of Porter’s lesser-known market analysis tools is 4 corner analysis. It is focused on understanding the strategies and competencies of competitors. The four corners are Drivers, Strategies, Assumptions and Capabilities.
It is possible to use the analysis tool to project into the future to understand the direction a competitor may take.
More information on four corner analysis HERE.
The analysis tools VRIO, VRIN and value chain are closely linked. Use the VRIO tool to try to understand what it is about internal resources that make the business unique. What is it that gives the business a competitive advantage?
Is a business resource or capability Valuable, Rare, Costly to imitate, Organised to capture value?
More information on the VRIO analysis process can be found HERE.
The standard go-to resource on the subject is. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.
VRIN is the predecessor to VRIO. The only difference is the ‘N’ – Non-substitutable.
A Value Chain analysis may be performed to analyse what resources the business currently employs to deliver a competitive advantage. How can these resources be better utilized in future, what is currently weak/missing and what new resources may be required to take the business forward.
The value in resources can be in the linkages between them rather than in the resources themselves. This is where value chain analysis can be useful.
Developed by Michael Porter (him again!) the primary activities of a business are grouped into five main areas – Inbound logistics, Operations, Outbound logistics, Marketing and Sales, and Service.
More on value chain analysis can be found HERE.
Internal Marketing Audit
The purpose of the internal marketing audit is to review the existing marketing activities of the business.
There are 5 areas to consider:
Strategy – Was the existing strategy acted upon? If not, then why not? At a top-level what were the goals and objectives and what were the results.
Structure – How does the marketing department interact with the rest of the business, particularly the sales function? How effective are communication channels?
Productivity – A major area for analysis. What was tried, what were the objectives and what were the results? What changes would improve efficiency?
Systems – Are your systems followed and are they effective? What tools are used, how are they integrated and are they effective?
Product and Customers – Analyse historic data on key products and product groups including quantity and price trends. Current key customer analysis including establishing why they first became customers and what it is that stops them migrating to the competition.
The next step is to pull out from all the analysis the KEY elements to consider without glossing over any nasty issues that fundamentally need to be addressed. A SWOT analysis is one of many tools that can be used to summarize key issues.
The days of three to five-year planning are probably over. The world is too uncertain, too chaotic to have any level of certainty over what the future may bring. Building scenarios is one useful step as is building an early warning system to pick up the grey (and black) swans that could cripple a business. The following books may be useful.