by Gautam Banerjee

Created on: October 13, 2009

Over the years the term 'audit' has moved away from the narrow confinement of finance to encompass many critical areas of business and management. Broadly the term denotes the process of thorough evaluation and assessment of key areas of business including marketing.

Thus it is a structured review of the current marketing activities of an organization by a process enabled by a comparison with the objectives and targets. The assessment of marketing activities is not only in terms of sales but also on parameters such as the ratio of advertising to sales, percentage of awareness , percentage of household penetration, performance of the sales force and promotional programs.

The objectives of the marketing audit is to ensure that the marketing department is in sync with the internal and external environment so as to provide the best possible benefits to the business. The major components of marketing audit, namely external audit and internal audit, are done in sequence.

The external audit assesses the three different environments which can impact marketing.

The economic environment is assessed in terms political, economic scenario, changes in social and cultural factors. Changes in legal systems and major movements in technology and environment.

The competitive environment in terms of SWOT ( Strength, Weakness, Opportunity and Threat analysis) in relation to competitor activities which can impact the organization's market share.

Own market environment is assessed, based on internal data over time periods which may indicate how it's own market is changing to enable the company decision makers to formulate suitable strategy.

The internal marketing audit looks closely at the organization's own business and tries to assess the profitability and each element of the marketing mix. The internal audit can include niche areas.

Most important is product portfolio audit, which assesses the correctness of the product in range, so as to decide on modifications to it. It is also essential to do pricing audit to monitor its impact on sales, market share and profits and to check if products are available at appropriate price points.

The next is a detailed audit of the communication strategy. This is important as large sums of money will be wasted if the communication strategy is not cost effective. It may cover the whole communication-mix including advertising, personal selling, public relations, sales promotion, perception, relationship, direct and event marketing.

A detailed market audit covering all relevant other areas such as customer service, distribution sales, marketing research, people and processes can help in measuring the health of the brand.

It is crucial to summarize the findings and bring about the most value-added contribution during the marketing audit process. If need be, at the interpretation stage of the findings, an objective analysis can correct the course of marketing activities.

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