Transcript (PPTX, 4.41MB) - International School of Advertising – ISA

Lesson 3- Marketing Audit
Lesson 3
Objectives
The purpose of this lesson is to learn how to undertake a basic
external and internal marketing audit.
Lesson 3
Topics
1. Macro-environmental factors (PESTEL)
2. Micro-environmental factors (Mendelow Matrix)
3. Internal factors (5Ms – Money, Men, Machines, Materials,
Minutes)
4. SWOT Analysis
The Marketing Environment
A marketing orientated firm looks outwards to the environment
in which it operates, adapting to take advantage of emerging
opportunities and to minimize potential threats. The marketing
environment consist of the actors and forces that affect a
company’s capability to operate effectively in providing products
and services to its customers.
A company’s marketing environment
Macro-Environmental Factors (PESTEL)
The macro-environment consists of forces that not only affect
not only the company but also the other actors in the microenvironment
(suppliers,
distributors,
customers,
and
competitors).
Macro-environmental
forces
include:
political/legal, economic, ecological/physical, social/cultural and
technological.
Political and Legal Forces
Political and legal forces influence marketing decisions by setting
the rules by which businesses can be conducted.
For example, smoking bans in public places can have dramatic
short term and long term effects on the demand for cigarettes.
These rules generally govern competition, collusions,price
setting, ethical production of goods and services, amongst others
to ensure the protection of consumers and the business
environment.
Political and Legal Forces
Recently, in Kenya, for example (December 2015), there was set a
ban on advertising of condoms during prime time viewing as a
result of complaints from parents concerned over the sexual
conduct of their adolescent children and the influence condom
ads were having on them.
Economic Forces
The economic environment can have a critical impact on the
success of companies through its effect on supply and demand.
Companies must choose those influences that are relevant to
them and monitor them.
The main economic influences on the marketing environment of
companies include: economic growth and unemployment,
interest and exchange rates, integration blocs, and the growth of
emerging economies such as the ‘BRIC’ countries.
Economic Forces
The recent increase in the dollar exchange rate in Kenya for
example has made it difficult for many businesses especially
those that import goods that they sell directly or as
manufacturing inputs. The current dollar exchange rate stands at
1 dollar = Ksh. 102.39 (5th January 2016).
Ecological/Physical Environmental Forces
Ecology is the study of living things within their environmental
context. In a marketing context it concerns the relationship
between people and the physical environment.
Environmentalists attempt to protect the physical environment
from the costs associated with producing and marketing
products. They are concerned with the environmental costs of
consumption; not just the cost to the consumer.
Ecological/Physical Environmental Forces
Five environmental issues are of particular concern. These are:
combating global warming,
pollution control,
conservation of energy and other scarce resources,
use of environmentally friendly ingredients and components,
and the use of recyclable and non-wasteful packaging.
Marketers too have to show concern for these things because
today more than ever consumers want only to be associated with
organizations that prove to be environmentally responsible.
Ecological/Physical Environmental Forces
In Kenya, for example, plastics have become quite a menace and
a threat to flora and fauna especially when dumped in water
bodies such as the Nairobi River. As such NEMA has in place
standards for making these plastics and a number of companies
have followed suit by making their plastics at least 30% out of
plant material (bio-degradable) such as Keringet bottles.
Keringet’s Bio-Degradable Bottles
Social/Cultural Forces
Three key social/cultural forces that have implications for
marketing are the changes in the demographic profile of the
population, cultural differences within and between nations, and
the influence of consumerism. Demographic changes concern
changes in populations in terms of their size and characteristics.
Demography is important to marketers because it helps to
predict the size and growth rates of markets, and the need for
products such as schools, one-person housing and homes for the
elderly.
Social/Cultural Forces
The Kenyan government for example, in response to the
predominant youth demographic has put in place programs and
funding to help Kenyan youth utilize various facilities to be selfsufficient rather than having an over-reliance on employment.
These include the National Youth Service (NYS), the Youth
Enterprise Development Fund, among others.
Initiatives by the Kenyan government to address its large youth
demographic
Social/Cultural Forces
Culture is the combination of traditions, taboos, values and
attitudes of the society in which individuals live. In predominantly Islamic areas for example, one is not allowed to show
depictions of any of the prophets mentioned in the Quran. This is
the reason for the very deadly reaction that happened last year
(2015) in France after Charlie Hebdo published cartoons that
mocked Muhammad.
Technological Forces
Technology can have substantial impact on peoples’ lives and
companies’ fortunes. Technological breakthroughs have
rendered some companies obsolete/outdated whereas also
giving underdog companies the opportunity to rise to great
heights. Technology also affects the way in which marketing is
conducted. Developments in information technology have
revolutionized marketing practices. The internet and mobile
phone technology have allowed companies to use new channels
of communication and distribution to reach consumers.
Technological Forces
Marketing led companies seek not only to monitor technological
trends but also to pioneer technological breakthroughs that can
transform markets and shift competitive advantage in their favor.
They also seek to use technology to improve the efficiency and
effectiveness of their marketing operations.
European Clothing Retail example
Micro-Environmental Factors (Mendelow Matrix)
The micro-environment consists of the actors in the firm’s
immediate environment that affects its capabilities to operate
effectively in its chosen markets. They consist of customers,
competitors, distributors, and suppliers.
Customers
Customers are at the center of the marketing philosophy and
effort and it is the task of marketing management to satisfy their
needs and expectations better than the competition. The starting
point is understanding them and this is normally conducted by
undertaking marketing research.
Customers
Furthermore is the grouping of consumers to form market
segments that can be targeted with specific marketing mix
offerings. Changing customer tastes, lifestyles, motivations and
expectations need to be monitored so that companies supply the
appropriate targeted marketing mix strategies that meet their
needs.
Competition
Competitors have a major bearing on the performance of
companies. Marketing orientated companies not only monitor
and seek to understand customers but also research companies
and their brands to understand their strengths, weaknesses,
strategies and response patterns. No longer is it sufficient to
meet customer needs and expectations – success is dependent
on doing it better than competitors.
Distributors
Some companies, such as those providing services, dispense
without the use of distributors, preferring to deal directly with
end-user customers. Others use the services of distributors such
as wholesalers and retailers to supply end users. Channel
intermediaries perform many valuable services, including
breaking bulk, making products available to customers where
and when they want them, and providing specialist services such
as maintenance and installation.
Suppliers
Increases in supply costs can push up prices, making other
alternatives more attractive. Powerful suppliers also have the
power to push up prices. Companies need to monitor supply
availability, such as shortages due to labor strikes or political
factors, as these can cause customer dissatisfaction and lost
sales.
Suppliers
They also need to be sensitive to alternative input materials that
can be substituted for those of existing suppliers if the latter’s
prices rise or availability diminishes significantly.
Internal Factors – 5Ms
1. Man - the first of the five M’s is the most important. The right
personnel for the right position is a sure bet for organizational
effectiveness and efficiency. People make sure materials,
machines, minutes and money are utilized in a productive
manner to achieve goals or aims and objectives of
organizations and enterprises.
Internal Factors – 5Ms
2. Materials - Without materials, human resource is made
redundant. Thus every right thinking and right planning
organization knows that materials needed for any business or
service must be in place before ‘man’ can be of use in any
business activity.
Internal Factors – 5Ms
3. Machines - The metal contraptions called machines have
made man fulfill almost effortlessly various dreams of
creating things that make our existence more worthwhile.
However, without man and materials, machines will be
useless. They need to be operated by man and fed with
materials.
Internal Factors – 5Ms
4. Minutes - Time management is one contemporary aspect of
business that has been employed in use by effective and
successful business ventures to optimize delivery. Poor time
management is as ineffectual as a broken down machine, an
indisposed employee or lack of adequate materials for
production of goods or services.
Internal Factors – 5Ms
5. Money - Without money, no venture or enterprise can
motivate workers, get quality and sufficient materials, get the
right machines and maintain them or even ensure that time is
properly managed. Money management, when not properly
organized has been the most known factor involved in
collapse of enterprises in history.
SWOT Analysis
The SWOT analysis plays an important role in an effective
marketing audit. It helps evaluate a company’s strengths,
weaknesses, opportunities and threats and develop a strategic
plan for each of them. When evaluating strengths and
weaknesses, only those resources or capabilities that would be
valued by the customer should be considered. Also,
opportunities and threats should be listed as anticipated events
or trends outside the business that have implications for
performance
SWOT Analysis
• Strengths – Positive tangible and intangible internal attributes
(within the company’s control).
• Weaknesses – Issues within the company’s control that detract
efforts towards success.
• Opportunities – External attractive factors
• Threats – External factors outside the company’s control which
pose risks to success.
SWOT Analysis
Diagrammatically, a SWOT chart is as below:
Strengths
Weaknesses
Opportunities
Threats
Coca-Cola SWOT Analysis
SWOT Analysis
Once a SWOT analysis has been completed, thought can be given
to how to turn weaknesses into strengths and threats into
opportunities. For example, a perceived weakness in customer
care might suggest the need for staff training to create a new
strength. A threat posed by a new entrant might call for a
strategic alliance to combine the strengths of both parties to
exploit a new opportunity. These strategies are known as
conversion strategies.
SWOT Analysis
Another way to use a SWOT analysis is to match strengths with
opportunities e.g. a telecom provider with a strong call center
network can utilize this to provide telemarketing services for
other companies. These strategies are known as matching
strategies.
SWOT Analysis
Diagrammatically, this is represented as below:
Strengths
Weaknesses
Conversion strategies
Matching
Strategies
Opportunities
Threats
Conversion strategies
Question
Undertake a basic internal and external marketing audit for an
FMCG company and a financial services company which you have
an understanding of.
End