THE AUDITING PROCESS

The wider or macro-environment

Political/legal
1. What legal developments are likely, nationally and internationally, that may affect marketing strategy and
tactics?
2. Which governmental bodies (local, national and international) should be monitored?
3. What developments are likely to take place in areas such as product safety, product liability, labeling,
packaging, advertising and pricing control, pollution control and employment legislation that might affect
marketing planning?
4. What changes are likely in the levels of direct and indirect taxation?
5. Are levels of political risk likely to increase or decrease?
6. How are relations with other countries, regimes and trading blocs likely to develop, and what are their
probable implications for marketing?
7. How volatile are trade-union practices likely to be in the short, medium and long term?
8. Are policies regarding nationalization or privatization likely to change?

Economic/demographic
1. What is likely to happen in the short, medium and long term to levels of inflation, unemployment, the
availability of credit and savings?
2. Which economic growth rates and income levels must forecasted for an organization's existing and potential
markets?
3. What changes to the size, structure and regional distribution of population are likely to occur?

Social/cultural
1. What changes to consumer lifestyles and values are taking place?
2. What attitudinal changes towards businesses & products/services of an organization must occur?
3. What attitudinal changes are taking place towards such areas as government, the media, and pollution?
Technological/physical
1. What changes are taking place in the areas of product and process technology?
2. What generic substitutes might replace the organization's products?
3. How well placed is the organization to cope with and/or capitalize upon such changes?
4. What is likely to happen to the cost and availability of the natural resources and energy required by the
organization?
5. What contingency plans exist to cope with shortages or sudden price rises?
6. Has any concerns been expressed about the organization's role in conservation and pollution?
SPICC immediate or Microenvironment

Suppliers
1. What changes are taking place in the supplier network; and what affect will this have upon balance of
power?
2. What new sources of supply are emerging?
3. What are the objectives and strategies of the major suppliers?
4. What changes are taking place in suppliers' patterns of selling?
5. How many suppliers?
6. Quality, costs, timings of suppliers?
7. Relationships with suppliers?
8. How effective are the efforts of the organization's advertising and public relations agencies?
9. What trends in agency practice are emerging?
10. Value chain relationships?

Publics (stakeholders, media, local community, the city, politicians, pressure groups, interest groups?)
1. Who is public?
2. What is their potential for influence/ disruption?
Intermediaries/Distributors and dealers
1. What changes are taking place in the structure of the distribution network?
2. What are the efficiency levels and growth potentials of each channel?
3. Which channels are currently under-exploited?
4. What is the cost and availability outlook for warehousing and transportation facilities?

Customers and Markets
1. Who are the customers?
2. Market segments
3. What is happening to the size, growth rate and geographical distribution of the organization's markets?
4. Which major market segments exist? How they likely to grow and which are offer the greatest
opportunities?
5. Are new market segments emerging?
6. Are new or different market priorities emerging?
7. What scope exists for further market development?
8. What changes in usage patterns can be identified or are likely?
9. Are terms and conditions of sale changing?

Competitors
1. What changes are likely to take place in the structure, bases, and intensity of competition?
2. Who are the major competitors currently and in what ways might they change? Are there any likely new
entrants to the market? If so, what capabilities and objectives will they have and what are the probable
implications for competition?
3. What are the major strengths and weaknesses of each competitor?
4. What are the objectives, strategies and levels of profitability of each competitor?
5. What trends can be identified in the patterns of future competition and substitutes for the organization's
product/service?
6. What patterns of product and market development can be identified among competitors?
7. Are any major changes likely to take place in patterns of market share? Does any competitor appear likely to
pursue an aggressive share gaining strategy? If so, how well equipped to do this would they be, what are
the implications for the bases of competition, and what is the probability of success?
8. What is the extent of the diversification among each competitor? What international links does each have?
9. What are the patterns of ownership among competitors and what level of resources can each call upon.
10.What barriers to entry and exit exist currently? In what ways might this change?
11. Porter's five forces.

INTERNAL AUDIT

The eight s'
The strategy audit

The business mission
1. Is there one?
2. How clearly stated and realistic is the mission statement?
3. To what extent is it consistent and compatible with the corporate and marketing objectives?
4. Do the corporate and marketing objectives provide dear guidelines for marketing planning and control?
5. Are these objectives consistent with the organization's posjtion, capabiljties and opportunities?
6. Are the objectives for each business unit clearly stated, realistic and consistent with the overall marketing
objectives?


Marketing strategy
1. How clearly stated and appropriate is the marketing strategy?
2. Is the strategy convincing? Has it been properly communicated?
3. Does the strategy take full account of the state of the economy, the stage reached on the product life cycle,
and competitors' strategies?
4. Is the basis for market segmentation appropriate?
5. To what extent is there scope for developing and improving upon methods of segmentation?
6. How accurate are the profiles of each segment?
7. How well developed is the positioning strategy for each segment? Does scope exist for repositioning in
order to strengthen the competitive stance?
8. Are the available resources sufficient and suitably allocated to the various elements of the marketing mix?
9. Is there scope for reallocating resources to achieve a greater degree of cost-effectiveness?
10. Are there sufficient controls built in to the strategy?
11. Does a person with sufficient authority and responsibility lead the marketing function over those areas of
the organization's activities that affect customer satisfaction?
12. Are the marketing activities optimally structured along functional, product, end-user and geographical
lines?
13.What need and Scope exists for changing current patterns of authority and responsibility

The marketing systems/processes audit
Information systems
1. Is the MIS providing sufficiently accurate and timely information about market developments?
2. Is this information presented in the most appropriate format?
3. Is sufficient market research of the right sort being conducted and are the results being fully and properly
utilized?
4. What scope exists for improving upon methods of market and sales forecasting?
5. Is the information generated by the MIS communicated to the appropriate network of staff?

Planning systems
1. How efficient and well conceived are the planning systems?
2. What scope and plans exist for its further development?

Control systems
1. Do the control procedures provide the strategist with a sufficiently clear and accurate picture of absolute
and relative performance?
2. Is the performance of individual products, markets, and distribution channels monitored sufficiently
regularly?
3. How frequently are marketing costs examined and validated?
4. Is behavior modified in the light of feedback from the control systems?

New product/innovation/design systems
1. How well organized is the procedure for collecting, generating and evaluating new product ideas?
2. Is sufficient research and analysis conducted before proceeding with new product ideas?
3. Are the levels of product and market testing adequate?
4. Is the rate of new product development and product modification sufficient to achieve marketing
objectives?
5. Is the new product success rate satisfactory? Is it better or worse than those of the major competitors are?

Communication systems
1. Is the staff kept informed of events?
2. What systems are used?
3. Are the lines of communication and the working relationships between marketing and other areas of the
business effective?
4. What scope exists for improving and developing these relationships?

Customer systems
1. Are there any customer complaints systems?
2. Are there any customer tracking/ service systems?

Structures
1. What type of organizational structures exists?
2. Are the structures bureaucratic/ matrix/ spoke systems?
3. Are they tall or flat structures?
4. Do departments talk to one another?

Skills
1. Are their needed skills?
2. Can the staff be trained in the needed skills?
3. What needs exist for training, motivation, supervision, evaluation, and control?

Shared Values
1. Is there a 'blame culture' or a 'supportive culture'.
2. Are people allowed to fail?
3. Is there a culture of innovation?
4. Are people happy?
5. Is the culture customer centered?

Style
1. What is corporate/marketing image?
2. What is the reputation?
3. Conservative/liberal/old fashioned. modern? etc.

Staffing
1. Are the staffing levels adequate for the needs of marketing?
2. Are the staffing levels adequate for needed customer service?

Sustainable competitive advantage
The methods for developing a sustainable competitive advantage can be divided into three main groups:
1. Organizational advantage
Economies of scope/scale · flexibility · competitive stance · Size · Speed of response · Past performance ·
Financial strengths ·
Patterns of ownership · Reputation
2. Departmental and functional advantages
Marketing · Customer base · Customer knowledge · New product skills · Pricing · Communication and
advertising ·
Distribution · Sales force · Service support · Reputation
Research and development · Product technology · Patents
Production · Technology · Process efficiency · Economies of scale · Experience · Product quality ·
Manufacturing flexibility Personnel · Good management-worker relations · Workforce flexibility
3. Advantages based on relationships with external bodies
Customer loyalty · Channel control · Preferential political and legislative treatment · Government assistance ·
Beneficial tariff and non-tariff trade barriers · Cartels · Intra-organizational relationships · Access to
preferential and flexible financial resources
The marketing functions audit 8's
Products
4. What are the product/brand line objectives? What is the USPs?
5. How appropriate are these objectives?
6. How regularly are the objectives reassessed?
7. Is the current mix of products achieving the objectives?
8. Where are the products on the PLC?
9. Which products/brands should be deleted?
10.What product modifications should be made?
11.What products should be added to the line?
12. How well managed is the product line?
13.What are the product lines' particular strengths and weaknesses?
14. How does the product line compare with those of the organization's competitors?
15. To what extent is, the product line differentiated from those of the competitors?
16.What are the fixed and variable costs?
17. How important is the packaging?
18.What element of the product is servicing?

Price
1. What pricing objectives, strategies and procedures exist?
2. How appropriate are the pricing objectives?
3. How consistent is pricing throughout the product range?
4. Is full advantage taken of the profit opportunities when pricing product options?
5. Is the pricing stance proactive or reactive?
6. Is sufficient attention paid to competitive criteria when setting prices?
7. What knowledge exists of competitors' objectives, costs and price levels?
8. Are competitors' prices regularly monitored and reviewed?
9. Are the organization's prices in line with customers' and distributors' perceptions of product value?
10. Is sufficient use made of price promotion?
11. At what level within the organization are pricing decisions made?
12. Are pricing decisions fully integrated with other marketing decisions?
13. How responsive to sudden market changes are prices?

Place/ Channel of and Physical Distribution
1. What distribution objectives and strategies are pursued?
2. Are the levels of market coverage appropriate?
3. What need and scope exists for improvements in service levels?
4. How effectively are distributors and dealers operating?
5. What knowledge exists of competitors' distribution structures and costs?
6. Is there scope or need for changes to be made to the distribution channels being used currently?
7. Where does the balance of power lie within the channel? In what ways is this changing; and what are the
implications?
8. How well motivated is the distribution channel?
9. How important to the channel are the organization's products?
10. Do distributors have adequate product knowledge? What training needs exist?
11. What scope exists for greater short- and long4erm motivation of dealers?
12. What levels of dealer/distributor loyalty exist? Are they adequate? What scope exists for strengthening this
loyalty?

People/Sales force
1. What are the marketing/sales force's short- and long-term objectives?
2. Is the sales force large enough to achieve the objectives it is set?
3. Is the organization and structure of the marketing/sales force suited to the demands of the market?
4. Does the sales force give emphasis to volume or to profitability?
5. Is the sales force made fully aware of the profit associated with different parts of the product line?
6. Is the sales force kept fully informed of marketing objectives, marketing programs, and market
developments?
7. Is there sufficient marketing people/sales force training?
8. Is the sales force properly motivated? Is full use made of incentives?
9. Are the sales targets realistic?
10. Are the sales, profit performance measured, and the results fed back to sales staff?
11. Is the turnover of sales staff too high? If so, what might be done to reduce it?
12. How does the sales force compare with that of competitors?
13. How is the sales force perceived by customers?
14. Is full use made of the sales force as a means of monitoring market developments?

Promotion
1. What are the promotional objectives? Are they appropriate given the overall marketing objectives?
2. How is the budget set? Is sufficient attention paid to the expenditure levels and patterns of competitors?
3. What controls over advertising expenditure exist?
4. How effective is the creative appeal?
5. What advertising research is conducted? How well chosen are the media?
6. How regularly is the performance of the advertising agency reviewed?
7. How important is the account to the agency?
8. Are sales promotions used regularly? Are they effective?
9. How effective is the publicity program?
10. Is effective use made of sponsorship?
11.Who is responsible for publicity?
12.What measures of effectiveness are used for advertising, sales promotion and public relations?
13. How do the advertising and promotional campaigns compare with those of the competitors?
14. Is the Internet being used?
15. How well chosen are the media?
16. How regularly is the performance of the advertising agency reviewed?
17. How important is the account to the agency?
18. Are sales promotions used regularly? Are they effective?
19. How effective is the publicity programs?
20. Is effective use made of sponsorship?
21.Who is responsible for publicity?
22.What measures of effectiveness are used for advertising, sales promotion and public relations?
23. How do the advertising and promotional campaigns compare with those of the competitors?

Processes
See under systems
Profitability analyses
1. What is the profitability of each of the organization's products, markets, territories and distribution
channels?
2. Should the company enter or withdraw from any market segment?
3. Is there a need for expansion or contraction within any market?
4. How do the organization's levels of profitability compare with those of its principal competitors?
5. Use financial ratios - information to follow?

Cost-effectiveness analysis
1. Are there any areas of marketing which appear to be incurring unrealistic costs?
2. What scope exists for cost reduction?
3. Are costs monitored sufficiently, regularly and rigorously?
4. What scope exists for modifying approaches to budgeting and control to ensure better resource allocation?
5. Does any one person have direct responsibility for measuring cost effectiveness?

Physical evidence
1. In service industry customer, identify good service by physical evidence.
2. Is the image attractive, friendly, warm, and inviting?
3. Is it professional looking?