Friday, August 29, 2008

Strategic Control of Marketing

Each company has to periodically assess its marketing strategy or strategic approach to the market. Market effectiveness review and then a more detailed marketing audit are the tools available to help in strategic control of marketing.

Marketing Effectiveness

A company’s or a division’s marketing effectiveness is evaluated based on the degree to which it exhibits the five major attributes of marketing orientation of the company or division. The attributes are:

1. Customer philosophy
2. Integrated marketing organization
3. Adequate marketing information
4. Strategic orientation
5. Operational efficiency

Philip Kotler gave a questionnaire to assess marketing effectiveness in his book Marketing Management.

The questions employed in the instrument are:

1. Does management recognize the importance of designing the company to serve the needs and wants of chose markets?
2. Does management develop different offerings and marketing plans for different segments of the market?
3. Does management take a whole marketing system view (suppliers, channels, competitors, customers, and environment) in planning its business?
4. Is there high-level marketing integration and control of the major marketing functions?
5. Does marketing management work well with management in research, manufacturing, purchasing, logistics, and finance?
6. How well organized is the new-product development process?
7. When were the latest marketing research studies of customers, buying influences, channels and competitors conducted?
8. How well does management know the sales potential and profitability of different market segments, customers, territories, products, channels and order sizes?
9. What effort is expended to measure and improve the cost effectiveness of different marketing expenditures?
10. What is the extent of formal market planning?
11. How impressive is the current marketing strategy?
12. What is the extent of contingency thinking and planning?
13. How well is the marketing strategy communicated and implemented?
14. Is management doing an effective job with its marketing resources?
15. Does management show a good capacity to react quickly and effectively to on-the-spot developments?

In his instrument, Kotler gave a 3 point scale from 0 to 2. This gives maximum of 30 points for a company or division. Score above 16 is rated as good.

Marketing audit

Marketing audit is a more detailed review which is undertaken periodically and is a supplement to the effectiveness review.

Marketing review is a comprehensive, systematic, independent and periodic examination of a company’s or division’s marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending plan of action to improve the company’s marketing performance.

Comprehensiveness indicates that all activities of marketing are audited and not trouble spots. Kotler defines auditing of specific activities as functional audit. Systematic audit indicates that well laid out audit plan is followed and the process is not done in an ad hoc manner. Independent auditor is carried out by persons from internal audit department with marketing expertise or external auditors with marketing expertise. Periodic auditing implies that it is done routinely and periodically and not in response to a problem. Management should not wail till the problem to set things in proper shape.

Marketing auditors have to meet customers, dealers and other outside groups also to find their assessment of the company and its marketing activities. The audit covers six major areas:

1. Marketing Environment
Task environment

2. Marketing Strategy Audit
Marketing objectives and goals

3. Marketing Organization Audit
Formal structure
Functional efficiency
Interface mechanism

4. Marketing Systems Audit
Marketing information system
Marketing planning system
Marketing control system
New product development system
Sales system

5. Marketing Productivity Audit
Profitability analysis
Cost effectiveness analysis

6. Marketing Function Audits
Advertising and Other communications
Sales promotion
Sales force

For further reading

Philip Kotler, "From Sales obsession to Marketing Effectiveness," Harvard Business Review, November-December 1977, pp.67-75.

No comments: