The marketing audit - Jacqui Malpass MBA

The marketing audit

Page 2 of 83 pages :: © jacquimalpass :: 2005 - 2011

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mechanical or electric, including photocopying and recording, or by any information storage and

retrieval system, without permission in writing from the authors.

Please do ask if you want to use this for your own courses or conducting your own customer audits.

Requests for permission or for more information should be sent to: Jacqui Malpass

[email protected]

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The purpose of this book is to educate, entertain and provide information on the subject matter

covered. All attempts have been made to verify information at the time of this publication and the

author does not assume any responsibility for errors, omissions or other interpretations of the

subject matter. This book results from the experience of the author. The purchaser or reader of this

book assumes responsibility for the use of these materials and information. The author assumes no

responsibility or liability on the behalf of any purchaser or reader of this book.


TABLE OF CONTENTS

What is a marketing review? .............................................................................................................. 4

How to use this workbook ................................................................................................................. 4

Before you start .................................................................................................................................. 6

Where am I review ............................................................................................................................ 8

SWOT Analysis .................................................................................................................................. 9

Market Trends .................................................................................................................................. 14

Market Environment ........................................................................................................................ 15

Who are your customers? ................................................................................................................ 24

Just for fun ........................................................................................................................................ 27

List your top 20 customers ............................................................................................................... 29

Working with your customers .......................................................................................................... 32

Competitors ..................................................................................................................................... 37

Products ........................................................................................................................................... 41

Prices ............................................................................................................................................... 49

Distribution ...................................................................................................................................... 56

Promotion ........................................................................................................................................ 59

Technology ...................................................................................................................................... 71

Action Planning ............................................................................................................................... 72

Marketing Controls .......................................................................................................................... 76

Where am I going? ........................................................................................................................... 80

Goals and Objectives ...................................................................................................................... 80

From theory to reality ...................................................................................................................... 82

Market Research .............................................................................................................................. 83

Copyright jacquimalpass.com :: Marketing Audit :: Page 4 of 83 Pages :: December 2010 v2.0 :: [email protected]

What is a marketing review?

A marketing review helps a business identify its most urgent marketing communications challenge. It can be a time consuming operation but the information gained can be invaluable to your business. It is your discovery stage.

First steps Simplicity is the key. Treat each section like a mini assignment, put it in your diary, assemble the

team, brief them and assign parts of the audit to each member. As you do each section you will feel a

sense of achievement which will motivate you to complete all of the other stages.

How to use this workbook The book is set up in sections with a set of questions designed to ignite your thought processes, there

will be other questions that you will come up and in each section there is a space in the workbook to

write your answers.

Your answer


Mind mapping

Another way to get your ideas down is to use mind mapping software like Buzan iMindmap. This is a

really useful way to get thoughts and ideas down electronically.

Find a way of capturing information that works for you and your team.


Before you start Have the following items (either previous or current) ready for review:

General Marketing and advertising budget

Strategic plans

Research reports

Trade information

Staff experiences / stories

Branding

Corporate philosophy and mission

statement

Key words and phrases to describe your

business

Strap line

Use of colours

Collateral Corporate folder

Brochures / flyers

Catalogues

Exhibition Stand (picture of)

Website

Direct mailers / eshots

Letterheads, compliment slips, business

cards

Letter and fax templates

Sales proposals and tenders

Case studies / whitepapers

Annual report

Promotions Samples of all past promotions and

advertising (last two years minimum).

Amount, quantities and timing of co-op

programs/funds.

PR PR plan

Copies of PR for last 2 years

Campaigns List of campaigns

Cost

Responses

Which promotional mediums have given

you the best returns?

Customer relationship

management system (CRM) Number of companies

Number ready to be marketed to

Other analyses to include, numbers by

market sector, targeted, in the sales

funnel

Marketing expenditures: By total category for the last three to five

years.

By month January to December for each

year.

By yearly total to date.

Competition List your top competitors.

List your second and third-ranked

competitors.

Samples of past competitors' promotions.

Samples of competitors collateral

Samples of competitors website

Products Current products / services

Planned products and services

Pricing Pricing matrix

Cost model

Category sales: By total category for the last three to five

years.

By month January to December for each year.

By weekly total for each year.

Average sales: By month, for as many months as possible.


Other Other political, legal, economic,

environmental or trend issues that may

affect your business.

Reasonable and probable growth for this

year and the next four years (i.e. as a

percentage increase/decrease from the

previous year).

The issues or tasks that you wish to

outsource to 50five.

Future plans and goals for expansion,

revenue growth, and timing for these

goals.

People Sales and marketing team structure

Personal development plans

Skills matrix

Skills gaps

Training plans

Chances are this was quite onerous and demonstrates that your systems and structures may be a little

out of whack! Great this is a perfect place to start.

What else can you pull together?

Who can help you?


Where am I review This is a good exercise to do with others in your business, hand it out and then pull everyone together

to review the answers.

When you have finished try to put it into some order that you can work from and refer back to.

What does my business do? What sort of customers am I most attracted to?

What do they have in common? What common

problems, goals, needs, wants or desires do they

share?

How am I giving my customers what they want?

Describe.

Who needs what I have to offer? What pay off do people get from my expertise?

Who have you already helped? How have you helped them?

What does it tell you about your business?

What does it tell you about what others in your business think about what you do?


SWOT Analysis

Understanding Strengths, Weaknesses, Opportunities and Threats Why use the tool? SWOT Analysis is an effective way of identifying your Strengths and Weaknesses,

and of examining the Opportunities and Threats you face.

SWOT analysis is a framework for analyzing your strengths and weaknesses, and the opportunities and

threats you face.

This will help you to focus on your strengths, minimize weaknesses, and take the greatest possible

advantage of opportunities available.

How to use tool: To carry out a SWOT Analysis write down the answers to the following questions. Where appropriate,

use similar questions:

Strengths:

What advantages do you have?

What do you do well?

What relevant resources do you have access to?

What do other people see as your strengths?

Consider this from your own point of view and from the point of view of the people you deal with.

Don't be modest. Be realistic. If you are having any difficulty with this, try writing down a list of your

characteristics. Some of these will hopefully be strengths!

In looking at your strengths, think about them in relation to your competitors - for example, if all your

competitors provide high quality products, then a high quality production process is not a strength in

the market, it is a necessity.

Your answer


Weaknesses:

What could you improve?

What do you do badly?

What should you avoid?

Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses

that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and

face any unpleasant truths as soon as possible.

Your answer

Opportunities:

Where are the good opportunities facing you?

What are the interesting trends you are aware of?

Useful opportunities can come from such things as:

Changes in technology and markets, government, social patterns, population profiles, lifestyle

changes, etc.

A useful approach to looking at opportunities is to look at your strengths and ask yourself whether

these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you

could open up opportunities by eliminating them.

Your answer


Threats:

What obstacles do you face?

What is your competition doing?

What specifications for your job, products or services changing?

How is changing technology threatening your position?

What are you doing about bad debt or cash-flow problems?

Which if any of your weaknesses seriously threaten your business?

Your answer

Carrying out this analysis will often be illuminating - both in terms of pointing out what needs to be

done, and in putting problems into perspective.


SWOT

Now summarise all of the points above

Strengths Weaknesses

Opportunities Threats

How are you going to:-

use your strengths to take maximum advantage of

your opportunities

stop your weaknesses getting in the way of

seizing opportunities

use your strengths to overcome or resist the

threats

prevent the threats taking advantage of your

weaknesses


Key things that have helped you (or prevented) to get to the position you are in today

What are the key things that have

helped you get where you are today?

Rate 1-10

10 = most

successful

What are the key things that have

prevented you from going further?

Rate 1-10

10 = least

successful

What does this tell you?

What are you going to do about any of it?

Your answer


Market Trends To remain competitive you need to get a good understanding of market trends if your business is to

make the most of its opportunities.

It’s a good idea to buy a quality newspaper or trade magazine once a week/month, and subscribe to

news channels / newsletters which affect your market.

These are some things which can affect your market and marketing.

Seasonal / Fashion

Increase/decrease in demand

Change in attitudes

Environmental concerns

Legislation

Outsourcing / Globalisation

Competitors / new entrants / technology

What are the trends affecting your market place?

Your answer


Market Environment

A PEST analysis is an investigation of the important factors that are changing which influence a

business from the outside.

PEST stands for: Political changes - e.g. a change in government, or a change in government policy.

Economic changes - relate to changes in the wider economy such as rises in living standards or the

general level of demand, rises or falls in interest rates, etc. Social changes - relate to changes in wider

society such as changes in lifestyles e.g. more women going out to work, changes in tastes and buying

patterns. Technological changes - relate to the application of new inventions and ideas such as the

development of the Internet and websites as business tools.

What are the main developments with respect to demographics, economy, technology, government

and culture that will affect your organisation's situation?

Political-Legal

What laws are being proposed that

may affect marketing strategy?

Current legislation home market

Future legislation

European/international legislation

Regulatory bodies and processes

What national, or local agency actions

should be watched?

Home market lobbying/pressure

groups

International pressure groups

Government policies

Government term and change

Are there any insurances that need to

be in place?

Trading policies

Funding, grants and initiatives

Now Future

Positive Negative Positive Negative


Economic - Demographic

What effect will forecasted trends in the size,

age distribution, and regional distribution of

population have on your business?

home economy situation / trends

overseas economies and trends

general taxation issues

taxation specific to product/services

seasonality/weather issues

market and trade cycles

specific industry factors

market routes and distribution trends

customer/end-user drivers

interest and exchange rates

What does your company expect in the way

of inflation, material shortages,

unemployment and credit availability in the

short and long run?

Now Future


Social-Cultural

business issues

lifestyle trends

demographics

consumer attitudes and opinions

media views

law changes affecting social factors

brand, company, technology image

consumer buying patterns

fashion and role models

major events and influences

buying access and trends

ethnic/religious factors

advertising and publicity

Now Future



Technology

competing technology development

research funding

associated/dependent technologies

replacement technology/solutions

maturity of technology

manufacturing maturity and capacity

information and communications

consumer buying mechanisms/technology

technology legislation

innovation potential

technology access, licensing, patents

intellectual property issues

Now Future


Environmental

Climate

Waste reduction

ecological/environmental issues

Emissions

Recycling

Now Future



Porters 5 forces analysis

Power of Customers

This is high where there a few, large players in a market e.g. the large grocery chains. If there are a

large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large

grocery chains. The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to

another.

How much power do the people who buy from you have over you? If you only have one or two

clients or main customers they can certainly make or break you.

If you have many more than that, who is most important?

What would happen if they increased their orders dramatically, or stopped buying from you

altogether?

Your answer

Competitive rivaly within an industry

Bargaining power of

customers

Threat of new

entrants

Threat of subsitutes

Bargaining power of suppliers



Power of Suppliers

The power of suppliers tends to be a reversal of the power of buyers.

Where the switching costs are high e.g. Switching from one software supplier to another.

Power is high where the brand is powerful e.g. BMW, Pizza Hut, Microsoft.

Forwards integration e.g. Brewers buying pubs and bars.

Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Petrol stations

in remote places.

You can't survive without your suppliers. The same questions apply.

How many do you have? The smaller the number the more power they have.

Who is most important?

What would happen if they increased their prices, lengthened their delivery times, introduced a

different way of receiving orders, or stopped supplying you?

Your answer


Threat of New Entrants

Be alive to the threat of new entrants into your industry or local marketplace which will increase the

level of competition that you face. This might happen as a result of a change of legislation perhaps

deregulating an industry, or simply because another business feels there are profits to be made by

doing things in a different way. Faced with such a challenge, what would your response be?

Economies of scale e.g. the benefits associated with bulk purchasing.

The high or low cost of entry e.g. how much will it cost for the latest technology?

Do our competitors have the distribution channels sewn up?

Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger

companies do not own.

Will competitors retaliate?

Government action e.g. will new laws be introduced that will weaken your competitive position?

How important is differentiation? e.g. The Champagne brand cannot be copied.

Your answer


Threat of Substitutes

Sometimes a substitute product or service may arrive, reducing demand for yours. This may happen

because of a technological development, (e-mail over fax or mail is the classic example). Is there a risk

of that happening in your industry? This contains an element of crystal ball gazing, but forewarned is

always forearmed.

Where there is product-for-product substitution e.g. email for fax.

Where there is substitution of need e.g. better toothpaste reduces the need for dentists.

Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers

compete with travel companies.

We could always do without e.g. cigarettes.

Your answer


Intensity of rivalry between existing firms

The level of competitive rivalry can be intensified if new entrants come into the marketplace, the

power of buyers and suppliers increases, or if there are possibilities for substitute products and

services. Where competitive rivalry increases the likelihood is that profits will decrease. Can you

afford to fight the battle in the way that you are fighting it at the moment?

This is most likely to be high where entry is likely; there is the threat of substitute products, and

suppliers and buyers in the market attempt to control. This is why it is always seen in the centre of the

diagram.

Describe the level of competitive rivalry in your market.

Your answer

Porter, M. (1979) "How competitive forces shape strategy", Harvard Business Review, March/April

1979.


Who are your customers?

Objectives Know your customers better and use that knowledge to enhance profitability

Grow the number of customers, the amount of sales per customer, and the lifetime value of the

customer

Highly profitable customers: What can we do to keep these customers and keep them spending?

How can we attract more like them?

Profitable customers: How do we get more of these customers to adapt the habits (spend) like our

highly profitable ones?

Unprofitable customers: How can we phase out these customers and, in the meantime, serve them

economically?

Serve each segment more effectively and at a lower cost


How to Profile your customers

Consumer Demographics Behavioural Geographic Psychological Financial Reasons to buy Other

Age

Gender

Occupation

Income

When do they buy

How often do they

buy?

How much do they

spend

Why do they buy?

(Quality, service,

guarantees, price,

choice)

Where are they? Social class

Lifestyle

Attitudes

Interests

Needs & wants

How they pay

Disposable income

Price

Quality

Brand name recognition

Customer service

Variety of services

Discounts and sales

Attractiveness of

packaging

Convenience of

product/service use

Guarantees/Warranties

Technical support

Flexible payment terms

Financing

Do they use

technology?

How long can you

expect to keep the

customer

Social Media fans?


Commercial Demographics Behavioural Geographic Psychological Financial Reasons to buy Other

No. employees

Turnover

Services & Products

offered

Sector

Type of organisation

Growth stage

Competitors

Markets

When do they buy

How often do they

buy?

How much do they

spend

Why do they buy?

(Quality, service,

warranty, price,

choice)

Who buys – authority

Type of employees –

common

characteristics

How do they buy

Where are they? Innovative

Socially responsible

Environmentally

aware

Expect Credit

Needs & wants

Ability to pay

Payment terms

Financial data (T/O,

profit)

Credit worthiness

TO & profit goals for

future

Price

Quality

Brand name recognition

Customer service

Variety of services

Discounts and sales

Attractiveness of

packaging

Convenience of store

location

Convenience of

product/service use

Guarantees/Warranties

Technical support

Flexible payment terms

o Financing

What problems does

your products and

services solve for your

customers?

What are your

competitive

advantage (why do its

customers buy /how

you different from

your competitors)?

What major

challenges are you

facing?

What are the main

keys to success?

How long can you

expect to keep the

customer

Bottom line a customer is someone:-

Who wants your product

Who has the ability to pay for your product

Who has the authority to purchase your product


Just for fun This is one of the more fun things you can do in your business. It means thinking about your typical customer until you can see them in your

mind. Then you’ll develop an intuitive grasp of what they want, need and fear.

Start by asking a few questions and making some (educated) assumptions...then build up an archetype (or 2 - one male and one female).

Question Him Her

Personal details: What’s their name, age, job, marital status? Any children? Pets? Other dependents?

Personality: are they introvert or extrovert? Open or defensive? What’s their attitude to risk? Are they assertive? Suggestible? Naturally sceptical?

Learning style: how do they prefer to receive information? Do they respond to visual aids? Do they look for summaries or details? Can they relate to abstract ideas or do they need something more tangible?

Point of view: how do they vote? Which newspapers do they read? What are their favourite TV programmes, websites and other media?


Lifestyle: how do they spend their leisure time? What’s their ideal holiday? Who are their friends? And what type of people would they cross the street to avoid?

Anxieties: what’s keeping them awake at night (and how can you make it go away)? Think about the symptom and the root of the problem – and what their life will look like when the problem is solved.

Needs & desires: what do they want that they don’t need? What do they need that they don’t want? Finally (a really important one...) what would they hate to miss out on?

List all of the people in the organisation that you could “sell” to? (MD, Finance, IT, HR)

Your answer


List your top 20 customers Name Segment Value £ Profitabi

lity %

Number

of sales

Products/Services Frequenc

y of

Purchase

Date Last

Sale

Date Last

Contact (phone,

face to face)


Who are your top 20%? Does the 80/20 rule apply to you - 80% of your business from 20% of your customers? % Segment Number of sales Value Profitability Products/Services Contribution to total revenue %

Top 5%

Top 10%

Top 20%


Do you spend the majority of your time supporting your best customers? Which ones?

Which if any customers you should sack?

What is the right mix of products or services for those customers with the greatest buying power?

What do you like most about your customers?

What do your customers like most about you?

What do you each dislike about each other?

Your answer


Working with your customers

How do you deal with your customers

Action Things to consider

Initial contact How are telephone, fax, e-mail, mail

enquiries dealt with?

What impression does the customer get of

your organisation?

How fast and efficiently is any enquiry deal

with?

Negotiation How do you make sure you understand what

the customer really wants?

How do you handle price negotiations?

Are you flexible enough to meet their

delivery requirements?

Supply and delivery Do you supply or deliver when and where

you said you would?

Do your drivers or logistics company

maintain the image of your company?

How do you know if the customer is

satisfied?

Complaints Is the complaints process customer-friendly

Can the people handling the complaint take

immediate action?

Does the customer go away happy - how do

you know?

Relationships What is your customers' view of other people

in your “value chain”?

How do you know?

How are you going to help those on whom

you depend to add value to the customers

who depend on

Your answer


Who are the stakeholders? Shareholders

Customers

Staff

Suppliers

Sub-contractors

Bank

Unions

Local community

Your answer

What involvement do they have?

How much power or control do they have?

Who are your champions?

Who do you need to change?

Rate them 1-10 (1 being the most important)

Who needs me? Who do I need?

Who do I need to keep sweet? Who is always in the background?

Why do customers buy from you?

Customers expect quality, delivery and service, how do you add value?

Your answer


Customer Lifecycle In customer relationship management (CRM), customer life cycle is a term used to describe the

progression of steps a customer goes through when considering, purchasing, using, and

maintaining loyalty to a product or service. Its about :-

Customer acquisition

Customer retention

In short how do you get them and keep them loyal.


What do you have in place to track your customers and keep them loyal?

Your answer

Referrals

Marketing by getting referrals is not only simple, it's low cost. Many people do not bother to ask

their customers, suppliers or others for a referral.

Make a list of those customers or suppliers (or anyone in your network) that you feel you have

done a great job for and who you could ask for a referral.

Your answer


What is your market position Your market position is the place you occupy in the mind of your prospective clients. It's how

they think of you as compared to your competitors.

High price

Products and services

very similar to

everyone else

Unique products and

services

Lower price

What next 1. Database – if you are planning to buy a customer/prospect database you can now

segment it and only buy relevant data.

2. Up-sell/cross – now you can see which additional products you can sell to each

segment/customer

3. Product mix - now you can see which products/services are missing from each

segment

4. Customer phase out – now you can phase out unprofitable customers

5. Campaign management – now you can start to think about how to target each

segment


Competitors

Objectives By knowing your Competitor you may be able to predict their next moves, exploit their

weaknesses and undermine their strengths.

Business competitors are: Other organisations offering the same product or service now.

Other organisations offering similar products or services now.

Organisations that could offer the same or similar products or services in the future.

Organisations that could remove the need for a product or service.

Step 1 – What can you find out about your competitors?

Against each item put s for strength or w for weakness. e.g.

FACTOR My Business Competitor 1 Competitor 2 Competitor 3 Importance to

Customer (rate

1 to 5 1 being

highest)

Delivery Same day (S) Next day (W) Next Day (W) Same day (S) 1

Use the following sheet for each competitor, you can amalgamate them at the end. FACTOR My Business Competitor Importance

to

Customer

(rate 1 to 5

1 being

highest)

Mission Statement

Brands

Products/Services (main)

Products/Services

(secondary)

Product supply source

Pricing Strategy

Delivery costs

Quality

Service

Reliability

Stability

Expertise

Company Reputation

Number of customers

Customer retention levels

Location

Where do they sell

Sales Method


FACTOR My Business Competitor Importance

to

Customer

(rate 1 to 5

1 being

highest)

Credit Policies

Image

Marketing Methods

Do they have a website

What threats do they pose?

What strategies are your

competitors pursuing and

how successful are these

strategies?

How are your competitors

likely to respond to any

changes to the way you do

business?

Senior Management

Similarity

Differences

How well do they use

technology?

What else could you monitor?

Step 2 - Getting other data

Data you can collect Other opportunities

Annual accounts?

Press releases

Newspaper articles

Brochures

Proposals

Presentations

Campaigns

Price lists

Patent applications

Tenders

Website

Suppliers websites

Search engines

Meetings with suppliers

Trade shows

Meetings with competitors

Ex Employees

Customers


Step 3 – SWOT

Use the information you have collected to carry out a mini SWOT analysis on your competition.

Name

Total

Market

Share

Strengths Weaknesses

Rate

You

Competitor 1

Competitor 2

Competitor 3

Competitor 4

Competitor 5

What Next? Competitive strategies:

Cost leadership: Can you be a low-cost producer and sell equivalent or better goods in the

marketplace for less?

Differentiation: How can you distinguish your product in the marketplace?

Innovation: Is there opportunity to create a new way of doing business, perhaps one that

changes the nature of the industry?

Growth: Are there opportunities to expand production, sell into new markets, and introduce

new products?

Alliance: Can current or prospective production, promotion, and distribution be improved

through partnerships with suppliers, distributors, and others?

Time: Can your business reduce product cycle time? Offer express customer service? Use

time in other ways that your competitors are not doing?

Your answer


Other

How can you lock in customers and suppliers?

What are the switching costs for customers and/or suppliers?

How can you improve business processes?

How can you raise entry barriers for rivals and substitute products?

Your answer


• Core

• Actual

• Augmented Product

Products

Product management is the day-to-day management your products/services at all stages of the

product lifecycle.

Product Levels There are 3 levels of products:-

the CORE product

the ACTUAL product

and the AUGMENTED product

The CORE product is NOT the tangible,

physical product. You can't touch it.

That's because the core product is the

BENEFIT of the product that makes it

valuable to you.

The ACTUAL product is the tangible,

physical product. You can get some use

out of it.

The AUGMENTED product is the non-physical part of the product. It usually consists of lots of

added value, for which you may or may not pay a premium.


What are your main products/services?

Your answer


What are the features, benefits and USP’s (unique selling points) of each product?

Your answer

Products/services Features Benefits (Which means that) What makes it different?


What after sales /warranty do you offer?

Your answer Product/Service After sales service/warranty

Summary

Product / service Core (Benefits) Actual Augmented


Where are they on the product lifecycle?

In reality very few products follow such a prescriptive cycle. The length of each stage varies

enormously. The decisions of marketers can change the stage, for example from maturity to

decline by price-cutting. Not all products go through each stage. Some go from introduction to

decline. It is not easy to tell which stage the product is in.

Introduction Growth Maturity Decline

Introduction Stage

•At the Introduction (or development) Stage market size and growth is slight. Substantial research and development costs may have been incurred. Marketing costs may be high in order to test the market, launch it and set up distribution channels.

Growth Stage

•The Growth Stage is characterised by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale) and possibly better prices. Businesses usually continue to invest in increasing their market share. Promotional resources are traditionally invested in products that are firmly in the Growth Stage.

Maturity Stage

•The Maturity Stage is when competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole.

Decline Stage

•In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Care should be taken to control the amount of stocks of the product. Depending on whether the product remains profitable, a company may decide to end the product.

Sales &

profitabilit

y

Introduction Growth maturity Decline


Where are your products?

Your answer

Are there elements of your offering which can be removed or added? What are

these

Your answer

Product/Service Feature to be added Feature to be removed

Products/services Embryonic Growth Maturity Decline


What if any products/services be phased out?

What if any products/services be added to the line? Have you included in your range those

products or services which are more likely to be in demand in future?

What is the general state of health of each product/service and the product mix as a whole?

Your answer

Product/Service Phased out Bought in / developed State of health


Are some of products/services that are seasonal – how can you maximise the 'quiet

times'?

Your answer

How does the profitability or the future potential of each product line compare?

Your answer

Product/Service Profitability Future potential


Prices Price is the amount of money or goods for which a thing is bought or sold

For your customers, price is the monetary expression of the value to be enjoyed/benefits of

purchasing a product, as compared with other available items.

A products perceived value may be increased in one of two ways – either by:

(1) Increasing the benefits that the product will deliver, or,

(2) Reducing the cost

Knowing the difference between cost and value can increase profitability.

The cost of your product or service is the amount you spend to produce it.

The price is your financial reward for providing the product or service.

The value is what your customer believes the product or service is worth to them.

For a product:

Quality of the materials used

Finished product performance

Packaging

Delivery

After sales service

Warranty

For a service:

Level of experience

Responsiveness

Ability to meet deadlines

Value add


Analyse your costs

The first step in developing a pricing strategy is to collect data about the buying habits of your

customers. You can use that data to calculate a product's price elasticity of demand, which is a

measure of how price changes affect consumers' willingness to buy a product. You can:-

Sell your product in a limited number of markets to get a feel for how your customers react

to the product.

Sell your product at slightly different prices in each market to determine the price that

produces the most revenue.

Analyse historical data

Ask your customers

All prices must, in the long term, cover the costs of generating or marketing your product or

service and produce a reasonable profit.

Use the following table to analyse your products / prices.

Product/Service Cost of

production

(materials,

labour etc)

Overheads Distribution

costs

Commissions Profit

Compare to your competitors

You need to consider the prices charged by your competitors, to give you a benchmark against

which to position your own price.

Product/Service Your price Competitors price


How is your product better value than the competitor's?

Are you getting as much (£) for your product as your competitor?

Are your customers paying more for the extra value they receive? What will your competition do

if you change your prices?

Your answer


Describe your pricing strategy

The following is a description of a variety of methods.

•After you’ve calculated your cost based price, you can compare this price against market prices.

Competitor based

•Set a high price when you have a unique (and possibly luxury) product or service.

Premium pricing

•This is a no frills low price when you have no frills products or services.

Economy pricing

•This focuses on the price you believe customers are willing to pay, based on the benefits your business offers them.

Value based pricing

•The price charged for products and services is set artificially low in order to gain market share.

Penetration pricing

•Charge a high price because you have a substantial competitive advantage, i.e. you may be first to market.

Price skimming

•£9.97 instead of £10.00 Psychological / odd value pricing

•Different prices for different elements. E.g. Basic wash could be £2, wash and wax £4, and premium car care £7.

Product line pricing

•Add in optional extras. Optional product pricing

•When you have a product, that only you can service, or where you have a product where only your refills will fit.

Captive product pricing

•Bundle several products together and set a new price. Product bundle pricing

•E.g. BOGOF (Buy One Get One Free). Promotional / discounted pricing

•Prices are reflected in the additional costs to get it somewhere. Or it is rare in a location.

Geographical pricing

•Set a very low price to attract customers and then try to up sell them.

Loss leader pricing

•This method takes into account your costs, your desired profit, and then totals these into a price.

Cost plus


Cost plus

Example: Full cost plus pricing seeks to set a price that takes into account all relevant costs of

production. This could be calculated as follows:

E.g. Consider a business with the following costs and volumes for a single product:

Fixed costs:

Production costs £ 100,000

Research and development £ 25,000

Fixed selling costs £ 55,000

Administration and other overheads £ 32,000

TOTAL FIXED COSTS £ 212,000

Variable costs

Variable cost per unit £ 2

Total variable costs £ 200,000

TOTAL COSTS £ 412,000

Mark-Up

Mark-up % required 45%

TOTAL COSTS plus MARK UP £ 597,400

Budgeted sale volumes (units) £ 100,000

SALES PRICE £ 5.97

Describe your pricing strategy

Product/Service Lifecycle Pricing strategy

Total budgeted cost + selling / distribution costs + other overheads + MARK UP ON COST

Budgeted sales volumes


What would be the likely response of demand to higher or lower prices?

To what extent are prices set on cost, demand, and/or competitive criteria? Why?

What temporary price promotions do you use, how effective are they?

How do customers perceive the link between price and quality in your product

What would be the likely response of demand to higher or lower prices?

Why did you introduce the product / service? If you have already covered your overheads

and are using spare capacity you can use marginal costing and lower prices.

How could you 'skim the cream'? If your new product is superior to the competition you can

sell it at a higher price than competition. The volume sold may be small, but the profit

margins will be high.

How could you adopt 'penetration pricing'. Low prices and high volumes.

Your answer


Measure But above all remember you need to make a profit. So analyse and measure what you do.

There will be times when you need to change your prices. Before you do, you should analyse

the impact on your profitability.

What effect will the price change have on the volume of sales?

What will the effect be on the profit per sale?

What effect will this have on my customers?

How will my competitors react?

What tactics could we use, e.g.

o introduce new, higher-priced products or services and make old, cheaper ones

obsolete

o lower the specification - and your costs - while maintaining the same price

Your answer

Remember work on profits not sales volume.


Distribution

Getting the right product to the right customers in the right place at the right time

Distribution decisions have significant implications for:

pricing

margins and profits

marketing budgets

sales techniques

Distribution channels can include one or more of these options:

How do you distribute your products / services

Your answer

How else could you distribute your products and services?

Which are the most effective? Why?

• selling to final consumer buyers Retail

• an intermediary distribution channel Wholesale

• employees who sell on your behalf Sales force

• who sell for a commission Brokers/agents/associates

• Online channels Internet


Identify how your competitors distribute their products

Competitor Product Distribution method

How does your direct competition sell their product? Is it effective enough to follow?

Identify costs associated with your distribution channels

Product Distribution method Costs

Which channels will maximise sales and profit?

What alternative methods of distributing your product that would result in more service or less

cost?

Your answer


Match your methods to your strategy

Product Target Market Distribution method Alternatives

What are the main channels bringing products to customers?

How convenient is it for them to purchase your product or service

Who is your target audience

How does your organisation give adequate service, along with the product, to customers?

What are the efficiency levels and growth potentials of the different trade channels?

Your answer


Promotion Promotion is just one part of the marketing mix. It involves communicating information about

your company, brand, products/services.

A number of activities will go to make up the promotional mix, these can include:-

Likes and dislikes

We all have likes and dislikes, if you keep

information sent, given or collected you will

soon start to see what is real rubbish, what was

the visual impact, do the messages actually

mean anything to you, did you understand them,

did it get your attention, did they stimulate any

interest, did it create any desire by offering

something you want OR helping you to avoid

pain, did they make you want to take action.

Go through items that you have

collected, put them into piles of likes and

dislikes

Write down what you liked and disliked

Are there things that you could use in your business?

Your answer

AIDA

Attention

Interest

Desire

Action



Personal Selling

The primary function of sales is to generate and close leads, educate prospects, fill needs and

satisfy wants of consumers appropriately, and therefore turn prospects into customers.

What is the format of your sales force, is it large enough, right mix of people / skills?

How can it be organised along the best lines of specialisation (territory, market, product)?

Are they split for customer retention and new business?

Does the sales force show high morale, ability, and effectiveness?

Are they sufficiently trained? What training do they need?

What incentives do you offer? Do they have enough incentives?

What are the procedures adequate for setting quotas and evaluating performance?

How could you use a telemarketing team or use an external source to increase appointments

and leads?

Your answer


Advertising

Advertising includes billboards, bus stops, printed flyers, radio, cinema, TV, web banners, web

pop-ups, magazines, newspapers, sides/backs of buses, taxis, tubes and trains, product

placement, the backs of event tickets, car park and supermarket receipts.

What are your organisations advertising objectives?

How does your advertising get its messages across? How do you know?

Are the themes, graphics and copy consistent? Test this.

Who writes your copy? Is it effective? Too much jargon? Ask.

Are the chosen media adequate?

What is your budget, what is your ROI?

Why are you advertising?

What are you advertising?

What is the typical response rate?

Your answer


Internet

Do you have banner ads on other sites? Which ones? Which are effective?

Do you use pay per click? How effective is it?

Do you have a blog? When did you last write on it?

Have you entered your details in online directories? Which ones?

Do you Twitter or Facebook?

Do you have a newsletter? When did you last send it out? What was the response?

Your answer

Incentives/Gifts

What incentives and gifts do you use and where? How effective are these?

What is missing?

Your answer


Networking

Which networking events do you regularly attend? How are they working for you? Who goes

and what are their objectives?

When did you last ask for a speaking slot?

What business clubs can you join? List them? Who can you go with?

Your answer

Website

Do you have a website? How would you describe it?

How well can you navigate the website?

Does it have a search facility?

Do you have separate sections for each product or service?

Do you have downloadable collateral, video or other interesting information?

Can you buy online? What methods can you pay with?

Have you optimised your site?

Do you swap links with other organisations?

Your answer


Events/Exhibitions/Seminars

Do you attend any regular exhibitions or events? Which ones, why, how effective are they?

Do you run any in-house seminars? How effective are they?

Can you partner with anyone? Who?

Can you get your suppliers to co-fund?

Describe your event planning process.

List exhibitions you have been too and describe your success rate?

Your answer

Direct Marketing

Direct marketing is a way of sending your messages directly to your prospects and customers,

using things such as mail (direct mailers, postcards, mail order catalogues, newsletters ), email

and SMS.

What direct mailers do you have? What campaigns are they linked to?

How often do you send them?

What are the messages? How do these fit in with other messages?

Are they addressed to the right person? When did you last check?

Have you regularly unsubscribe emails users who request it? What process do you have in

place to do this?

Do you have an anti spamming policy? When did you last update it?

Do you use pre-paid envelopes?

How often do you send newsletters? Where is your plan?

How often do you follow up? Who does it? Do you have a telemarketing team?

Your answer


Database

Do you have a sales and marketing database? What format is it in? Who keeps it up to date?

Is it used by the sales team / customer service / marketing?

What kind of data does it contain? Can you segment customers for campaigns?

Do you buy mailing lists? From where? How often?

Have you cross checked your data with the telephone preference service?

Your answer


Sales Promotion

Sales promotion is marketing communications employed for a pre-determined, limited time to

increase demand of your products and services.

Which of these do you use and how effective are they:-

Money off offers

Price reductions - A temporary reduction in the price, such as buy before October 12th and

get £x off

Repackaging price - Get 25% extra

Coupons, or a coupon booklet is inserted into the local newspaper or delivery by the

postman, on checkout the customer is given a coupon based on products purchased, on-

line coupons

Rebates offered if the receipt or label is mailed to back to you

Competitions

Point-of-sale displays:

Incentives for customers and sales

Training

Marketing development funds

Do you offer any package (bundled) deals?

Can you make an offer with a partner? (Cross promotion)

Your answer


Publicity

Publicity is the deliberate attempt to manage the public's perception of a product, service or

organisation.

Does your organisation have a carefully formulated program of publicity?

Who is your PR company? Who manages them?

What is your PR plan?

Who will do this for you internally (if you don’t use an external one)?

Do you have publicity photos? Who took them? How up to date, relevant and interesting

are they?

When did you last send press releases, letters to editors, write whitepapers or expert pieces?

What is your policy for crisis management?

What events are you speaking at?

How often do you make announcements for appointments, annual reports, events etc?

Your answer


Sponsorship

Who and why do you sponsor?

How effective is your sponsorship?

What is the cost and ROI?

Your answer


Collateral

Do you have the following?

Logo Business Cards Company Folder Brochures

Catalogue Flyers Compliments Slip Letterhead

Exhibition Stand Presentations Sales Proposals Proposal Cover

CD/DVD Covers

Go back to your pile of likes and dislikes and compare those with your collateral.

Are the themes, colour, graphics and copy effective?

How effective is your packaging?

Did you use the same designer for all of your work?

Are your designs consistent?

What quality does your collateral convey?

Are you embarrassed to hand out your business card?

Does you corporate literature reflect what you do?

Is your identity rubbish but you don’t know how to sort it out?

Is it a painful and time consuming process getting new collateral done?

Does your designer understand your business objectives and reflect them back in your

identity?

Your answer

Not having a good identity will damage your reputation and cost you valuable sales.

Demonstrate that you mean business and ensure that your target market knows who you are and

then remembers what you stand for by having consistently designed high quality collateral.


Technology Marketing needs to make use of a vast amount of technology, for example:-

Database

Customer relationship management software (CRM)

Email & E-newsletters

Website

Blog

Social networking sites

Auto responders

E-books

Graphics packages

Office products

Google Adwords

Make a list of all of the technology you employ which impacts your marketing.

Your answer

Are you properly trained, and use it all effectively? If not book some training.

What other technology do you need?

Your answer


Action Planning

Push and Pull There are two main kinds of promotional strategy - "push" and "pull".

A push strategy tries to create consumer demand for a product.

A pull strategy tries to build up demand for a product.

Campaign Management Describe the process you go through when planning a campaign.

What meaning do the campaign codes have?

Do you have a promotional plan which ties in with your objectives? Describe it.

List campaigns, tactics, costs and ROI

Your answer


Create an action plan a direct mailer. Example:

What is the purpose of this marketing activity? To up-sell my support services package to my

existing customers

What are the expected results? Get 80% of my customers to take out an

annual support contract.

Develop better marketing materials

Clean up database

Get better at following up direct mailers

Who is your Target Market? Existing customers who have bought a solution

from me in the last 2 years.

What are your strategy and tactics? Direct mailer and email, follow up calls

Create copy and test it

Get names and clean up

Send and follow up

Try to get a meeting so that we can talk about

other things that we do.

What is your marketing message? Peace of mind

Free updates

What marketing materials do you need

(website, flyers, brochure, proposal etc)

Postcards, email template, names, website

Key to the plan Well thought out

Affordable –

good value

What is the offer By spending just £450 per annum you will get

access to a fully qualified support person who

will help you out within 8 hours (or 4 if you

take the premium contract), and free upgrades

to the system, within that version.

What is the call to action? Order now at introductory prices

Follow-up - How and when will you follow

up?

1 week after it goes out follow up calls

What is the cost? 60p per postcard incl. telephone calls

What is the timeline? 3 months from April 1st


Create an action plan for your activities.

Objective:-

Marketing Activity

What is the purpose of this marketing activity?

What are the expected results?

Who is your Target Market?

What are your strategy and tactics?

What is your marketing message?

What marketing materials do you need

(website, flyers, brochure, proposal etc)

Key to the plan

What is the offer

What is the call to action?

Follow-up - How and when will you follow

up?

What is the cost?

What is the timeline?


How do you follow up your campaigns?

Write down 3 ways you will follow up each campaign.

Your answer

1

2

3


Marketing Controls There is no planning without control. If an objective states where you want to be and the plan

sets out a road map to your destination, then control tells you if you are on the right route or if

you have arrived at your destination.

Resources What resources are allocated to accomplish the marketing tasks?

What marketing resources are allocated to various markets, territories and products?

What marketing resources are allocated to the major elements of the marketing mix (i.e.

product quality, personal selling/contact, promotion and distribution)

Make a list of your available resources.

Your answer

What else do you need?

Your answer


Budgets Where is the budget? How and when do you set it?

What are your campaign/promotion etc costs and what your ROI (return on investment)

Your answer

You should develop a simple spreadsheet which enables you to cost out each campaign or

activity. You can then measure the returns you get against each one. Do not expect miracles,

its takes time for your marketing messages to get through.

Implementation Where is your annual marketing plan? When do you start the planning? How often do you

up date it?

Does your organisation implement control procedures (monthly, quarterly, and yearly) to

ensure your annual objectives are being achieved?

How does your organisation carry out periodic studies to determine the contribution and

effectiveness of various marketing activities?

What is your organisations marketing information system to service the needs of managers

for planning and controlling operations in various markets?

Your answer


Organisation Who is your high-level marketing officer/manager to analyse, plan and implement the

marketing work of your organisation?

Who else is directly involved in marketing activity?

What training, incentives, supervision or evaluation is needed?

How are the marketing responsibilities structured to serve the needs of different marketing

activities, products, markets and territories in the best way possible?

What other resources do you need?

Do the staff understand and practice the marketing concept? If not what are your plans to

change this?

Your answer


Measurement How do you measure success?

Write down 3 measurements of success for your business

Your answer

Congratulations and well done. You are now ready to create your marketing action plan.


Where am I going?

Goals and Objectives

Setting goals and objectives is the most important aspect of any plan. Without these you will be

going no where.

Goals Goals are the large statements of what you hope to accomplish but usually aren't very

measurable. Goals are more vague and focus on the longer term. They create the setting for

what you are proposing.

The overall goal should define the long-term communications aspirations:-

Increase turnover to £1 million in 3 years

Objectives Under the goal, you set specific objectives. Objectives differ from goals in their specificity and

ability to be evaluated and measured

Marketing objectives develop out of your business goals and objectives. And they should be

driving your marketing strategy. Meeting marketing objectives should lead to sales - if they

don't, then you probably have established the wrong objectives, or you aren't executing them

effectively.

Objectives should seek to answer the question 'Where do we want to go?'. And ‘how do we get

there?’

What are your marketing / financial objectives? The purposes of objectives include:

to enable a company to control its marketing plan.

to help to motivate individuals and teams to reach a common goal.

to provide an agreed, consistent focus for all functions of an organisation.

Goals are broad Objectives are narrow

Goals are general intentions Objectives are precise

Goals are intangible Objectives are tangible

Goals are abstract Objectives are concrete

Goals can't be validated as is Objectives can be validated

The difference between where we are (current status) and where we

want to be (vision and goals) is what we do (target objectives and action

plans).


Your goals/objectives should include financial elements, such as revenue, gross profit, sales

per salesperson, and so on Number of leads needed to get the right number of visits,

quotes and orders

Number of Customers

Market share

By market segment

For each.

However, they should also include non-financial elements such as units sold, contracts signed,

clients acquired, and articles published.

Sales levels

product and service

Examine the objectives

SMART Objectives

There are a number of business objectives, which an organisation can set, e.g.:

Market share objectives: Obtain 3% market share of the [your industry] by 2013.

Profit objectives: To increase sales margins by 10% from 2010 – 2012.

Growth objectives: To grow by 15% year on year for the next five years.

Brand awareness objectives: To increase brand awareness over a specified period of time

However, whenever you set your objectives you need to remember SMART

S Specific

M Measurable

A Achievable

R Relevant

T Time bound

Set objectives that you can really do something with.


From theory to reality

Write down 3 objectives for your marketing.

Objective Long / Medium

/ Short Term

1

2

3

How will you meet your goals and objectives?

First you will have undertaken some analysis of your business and performed some market

research to ensure that these are realistic and relevant.

Example.

Objectives: I want to attract 10 new businesses who will spend an average of £5400 each on

our document managements solutions over the next 12 months

Break it down into small chunks, and start asking some relevant questions.

The Plan Now that the objectives are set, and have been broken down into bitesized chunks, you can

now begin to pull together a plan to meet them.

Don’t forget that before you can build a plan you must have done your market research.

Target

Market Price

Product


Market Research In order to obtain information about the wants, needs, preferences, beliefs and likely behaviour

of potential consumers of your products and services you need to conduct some market

research.

There are two ways to do market research:

Secondary Research involves analyzing information that already has been gathered for another

purpose.

Primary Research involves collecting new information to meet your specific needs.

Primary research can be:

Qualitative: Gathering descriptive information, usually representing verbal or narrative data

through open-ended interviews or focus groups. o Open-ended interviews are composed of questions that can not be answered

with a simple yes or no. This type of interview gives you a lot of information, but

is time consuming for both you and the person you are interviewing. The greatest

benefit to you is that you will learn a lot about the group you are studying

including common trends, emotional motivators, and general likes and dislikes of

your primary market.

o Focus groups should be led by professionals skilled in leading small groups of 6

to 12 people through a series of questions ranging from specific to general in

nature. Usually, focus group sessions last for at least an hour. Since focus groups

must be lead by trained professionals to be most effective, they are the most

expensive form of market research.

Quantitative: Gathering numerical information that can be analyzed statistically through

surveys. o Surveys take longer to develop, but are generally easier to administer than other

types of market research. Since they take less time to complete, people are

usually more willing to answer them. Also, surveys provide excellent information

if they are well-constructed with thoughtful questions. The easiest and most cost

effective way to conduct surveys is either by telephone or where the product is

sold.

Planning your research What information is required

Identify search methods Set a timeframe for the research Establish the research budget Compile and analyse the results Present the results in a plan

Now you have completed your research you can start to plan!

END

Documents

The marketing audit - Jacqui Malpass MBA