Transcript The Marketing Audit

Marketing Metrics & Audits
Hifni Alifahmi
Email: [email protected] & [email protected]
The Marketing Control Process
Goal Setting
Performance
Measurement
What do
we want to
achieve?
What is
happening?
Performance
Diagnosis
Corrective
Action
Why is it
happening?
What
should we
do about it?
Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan,
Marketing Management: An Asian Perspective, 1996: 941.
Marketing
Metrics
Marketing
Research
Marketing Audit
Types of Marketing Control
Type of
Control
Prime
Responsibility
Purpose of Control
Annual Plan
Control
Top Management
Middle Management
To examine whether the
planned results are being
achieved
Sales analysis
Market-share analysis
Sales-to-expense ratio
Financial analysis
Profitability
Control
Marketing Controller
To examine where the
company is making &
losing money
Profitability by: product, territory,
customer, segment, trade
channel, order size
Efficiency
Control
Line & Staff
Management
Marketing Controller
To evaluate & improve
the spending efficiency
and impact of marketing
expenditures
Efficiency of: salesforce,
advertising, sales promotion,
distribution
Strategic
Control
Top Management
Marketing Auditor
To examine whether the
company is pursuing its
best opportunities with
respect to markets,
products, and channels
Marketing-effectiveness rating
instrument
Marketing audit
Marketing excellence review
Company ethical and social
responsibility review
Approaches
Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan,
Marketing Management: An Asian Perspective, 1996: 942.
Financial Model of RONW
Profit margin
1.5%
Return on
assets
Net profits
-----------------Net sales
=
3.2%
4.8%
Net profits
-----------------Total assets
Return on
net worth
(RONW)
Financial
leverage
x
2.6
Total assets
-----------------Net worth
=
12.5%
Profits
-----------------Net worth
Net sales
-----------------Total assets
Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan,
Marketing Management: An Asian Perspective, 1996: 948.
Marketing Metrics
Mertics is a measuring system that quantifies a
trend, dynamic, or characteristic. In virtually all
disciplines, practitioners use metrics to explain
phenomena, diagnose causes, share findings,
and project the results of the events.
Illustrations: Share of Hearts, Minds, and Markets
- Market Share
- Relative Market Share
- Awareness
- Top of Mind
Source: Paul W. Farris, et.al. Marketing Metrics, 2006:1, 8.
Marketing Metrics:
Marketing at the Core of the Organization
Operations
Product and
Portfolio
Management
Logistics
Customer
Profitability
Sales Force
Channel
Management and
Sales Force
Margin and
Profits
Share of Hearts, Minds,
and Markets
Marketing
and Finance
Pricing Strategy
Finance
Advertising
Media and Web
Metrics
Promotions
Advertising
Agency
Source: Marketing Metrics, 2006: 5.
The Trade
The Marketing Audit
A Marketing Audit is a comprehensive, systematic,
independent, and periodic examination of a company’s
–or business unit’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 company’s marketing
performance.
Four characteristic of marketing audit:
Comprehensive, Systematic, Independent, Periodic.
Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan,
Marketing Management: An Asian Perspective, 1996: 960-961.
Components of a Marketing Audit
Components
Aspects
Marketing
Environment Audit
Macro Environment: Demographic, Economic,
Ecological, Technological, Political, Cultural
Task Environment: Markets, Customers, Competitors,
Distribution and Dealers, Suppliers, Facilitators &
Marketing Firms, Publics
Marketing Strategy
Audit
Business Mission, Marketing Objectives and Goals,
Marketing Strategy (clear, convincing, appropriate)
Marketing
Organization Audit
Formal Structure, Functional Efficiency, Interface
Efficiency (Marketing & Manufacturing, R&D, Finance,
Purchasing, Accounting, Legal, etc.)
Marketing System
Audit
Marketing Information System, Marketing Planning
System, Marketing Control, New Product Development
System
Marketing
Productivity Audit
Profitability Analysis (competitor’s products, markets,
channels; should the company enter, expand, contract,
or withdraw from any business segments?)
Cost-Effectiveness Analysis (excessive/reducing cost)
Marketing Function
Audit
Products, Price, Distribution, Advertising, Sales
Promotion, Public Relations, and Sales Force
Source: Philip Kotler, Siew Meng Leong, Swee Hoon Ang, Chin Tiong Tan,
Marketing Management: An Asian Perspective, 1996: 962-964.
Marketing & Promotion
Process Model
Marketing
Strategy and
analysis
Opportunity
analysis
Competitive
analysis
Target
marketing
process
Identifying
Markets
Market
Segmentation
Marketing Planning
program
development
Product
Decisions
Pricing
decisions
Selecting
a Target
Market
Target
Marketing
Positioning
through
Marketing
Strategic
Belch & Belch, 2007:39
Promotional
Decisions
- Advertising
- Direct
marketing
- Interactive
Marketing
- Sales
Promotions
Channel of
Distributions
Decisions
- Publicity and
Public
Relations
- Personal
Selling
Target
market
Promotions
to final buyer
Internet/
Interactive
Ultimate
Consumer
-Consumer
-Business
Promotions
to trade
Resellers
Purchase
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Product-Life Cycle:
Characteristics & Objectives
Introduction
Growth
Maturity
Decline
Sales
Low sales
Rapidly rising sales
Peak sales
Declining sales
Costs
High cost per
customer
Average cost per
customer
Low cost per
customer
Low cost per
customer
Profits
Negative
Rising profits
High profits
Declining profits
Customers
innovators
Early adopters
Middle majority
Laggards
Competitors
Few
Growing number
Stable number
beginning to decline
Declining number
Marketing
Create product
awareness & trial
Maximize market
share
Stable number
beginning to decline
Declining number
Objectives
Source: Philip Kotler & Kevin Lane Keller, Marketing Management, 12e, 2006: 310.
Product-Life Cycle Strategies
Introduction
Growth
Maturity
Decline
Product
Offer a basic
product
Offer product
extensions,
service, warranty
Diversity brands and
items models
Phase out weak
Price
Charge cost-plus
Price to penetrate
market
Price to match or
best competitors’
Cut price
Distribution
Build selective
distribution
Build intensive
distribution
Build more intensive
distribution
Get selective: phase
out unprofitable outlets
Advertising
Build product
awareness among
early adopters and
dealers
Build awareness
and interest in the
mass market
Stress brand
differences and
benefits
Reduce to level
needed to retain
hard-core loyals
Sales
Use heavy sales
promotion to
entice trial
Reduce to take
advantage of
heavy consumer
demand
Increase to
encourage brand
switching
Reduce to minimal
level
promotion
Source: Philip Kotler & Kevin Lane Keller, Marketing Management, 12e, 2006: 310.
Product Portfolio
Trajectory Analysis
New Product
Introduction
Stars
A
Question Marks
Market Growth Rate
20%
High
16%
Divestment
F
B
D
10%
E
8%
C
Low
4%
Cash Cows
10x
Divestment
G
High
1x
Dogs
Low
.1x
Relative Market Share
Present
Position
Source: Roger P. Kerin, Vijay Mahajan, P. Rajan Varadarajan,
Contemporary Perspectives on Strategic Market Planning, 1990: 55.
Forecast
Position of SBU
Momentum Emas BCA
Corporate Ad
SWA, No 02/2007
SWA, No 05/2007
Success & Disaster Trajectory
Success Trajectories
Stars
Question Marks
Cash Cows
Dogs
Market Growth Rate
20%
High
16%
10%
8%
Low
4%
10x
High
1x
Low
.1x
Relative Market Share
Source: Roger P. Kerin, Vijay Mahajan, P. Rajan Varadarajan,
Contemporary Perspectives on Strategic Market Planning, 1990: 55.
Success & Disaster Trajectory
Disaster Trajectories
Stars
Question Marks
Cash Cows
Dogs
Market Growth Rate
20%
High
16%
10%
8%
Low
4%
10x
High
1x
Low
.1x
Relative Market Share
Source: Roger P. Kerin, Vijay Mahajan, P. Rajan Varadarajan,
Contemporary Perspectives on Strategic Market Planning, 1990: 55.