The Marketing Audit

The marketing audit has certain similarities to a financial audit in that it is a review or appraisal of your existing marketing activities. Carrying out the marketing audit provides the opportunity to review and appraise your whole marketing activity, enabling you to assess past and present performance as well as to provide the basis for evaluating possible future courses of action.

Because the business environment is constantly changing, the marketing audit should be used as a reference tool, with constant updates reflecting changes in the external environment and your own internal business experiences.

1. External Audit

External factors can be split broadly into three groups, the economic environment, the competitive environment and your own market environment. Consider these areas from your own business's point of view - will any changes have an impact on your business, will they affect your competitors, will they allow you to compete where you could not, or inhibit your ability to compete. If the answer is yes, then the factors should be included in the audit.

With the advent of the internet, there are now many sources of information on your competitors and your environment. You may also be surprised how much business information is available from your nearest city library. And remember, Company Reports are a good source of competitive information and can be found at www.companies-house.gov.uk.

1.1 The Economic Environment

	Political	Government actions, tax levels, privatisation, schools policy etc
	Economic	Income levels, employment levels, rate of inflation, rate of economic growth
	Social and Cultural	Demographics (population growth/distribution, age), lifestyles and cultural values (changing beliefs, skills, family values)
	Technological	IT, internet, home shopping
	Legal	UK Law (health & safety, employment law, store opening etc), EU Law
	Environmental	Affect of your business on environment, 'green' credentials

1.2 Competitive Environment

How competitive is your market? What are your competitors doing, likely to be doing? Evaluate the following:

• The threat of new entrants to your industry
• The threat of substitute products
• The bargaining power of customers
• The bargaining power of suppliers
• The rivalry amongst current competitors
• Who are your competitors?
• Who are your major competitors, how big are they, what is their market share?
• What reputation do they have?
• How do they distribute their products, what are their production capabilities?
• What is their marketing like - do they diversify?
• What are their key strengths and weaknesses?

1.3 The Market Environment

• Total market size growth and trends
• Market characteristics, growth and trends
• Products, prices
• Physical distribution channels
• Customers/consumers
• Industry practices

2. Internal Audit

This is your opportunity to put your own business under the microscope - do you know as much about your own situation as you should?

• Sales (total, split by geography, industry, customer, product)
• Market shares
• Profit margins
• Costs
• Marketing information research
• Effectiveness of marketing mix

Key outcomes from this audit can then be summarised in the Current Market Position and Market Overview sections of your marketing plan.