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Nearly every agribusiness and certainly all publicly owned companies have financial audits performed regularly by outside auditors to ensure that there are no discrepancies or over- sights that could cause serious problems for the business and/or investors in the business. Similarly, a marketing audit is an objective examination of a company’s entire marketing program. The marketing audit examines the firm’s marketing objectives and its plan for accomplishing these objectives in light of its resources, the market conditions, and its dis- tinctive strengths and weaknesses (Figure 8.1). In the market planning process outlined in Chapter 6, the marketing audit plays a key role in the evaluation stage of the process. It is a tool that firms can use to better understand past marketing efforts in order that future efforts will be even more effective.
The first step in a marketing audit is to carefully analyze how the agribusiness is doing with each product or service it markets. This step involves estimating total market potential, determining the firm’s share of the market, and attempting to identify what factors are responsible for the firm’s market position with each product or service.
Here the firm will re-examine its marketing goals for each of its products or services and assess what progress they have made toward achieving the goal. Areas where the firm falls short of the goal should be carefully explored to better understand why performance was poor. Did the firm miss the mark when assessing the needs of the target market.
Did competitors introduce new products or programs that caused problems for the firm’s marketing plan? Did the firm fail to execute the plan effectively? Or, was the marketing goal too ambitious?
Figure 12. Marketing audit procedures
A feed ingredients company that has an objective of a 10 percent annual increase in beef supplement sales at a time when the beef industry is under pressure from low prices might be better served by creating a new objective of holding beef supplement sales constant, while devoting more resources to expanding sales of supplements for another species where the economics are better.
Answers to these types of questions will be provided in part by the remaining steps of the marketing audit. But, before moving to step two of the marketing audit, it is important to note that while much focus is given to areas where performance was poor, there is another, equally important, perspective. An effective marketing audit also attempts to capture the insights provided by areas where performance was exceptionally good. If sales of a new granola snack bar are growing twice as fast as expected, the food firm should dig deeply into the situation to better understand why this is occurring, if it will continue, and how they can apply this success to other products.
The second step of the marketing audit reviews general market and competitive conditions. Marketing factors external to the firm are evaluated, and expected trends explored. Sometimes probabilities are attached to these expected trends or market scenarios. This information helps agribusiness managers to shape their marketing strategies. The focus here is re-visiting key assumptions about trends in technology, regulations and policies, general economic conditions, and the competitive environment. In today’s dynamic market, a marketing plan based on dated forecasts of such areas is likely to fail. Marketers must challenge their previous assumptions, and generate new scenarios for the future they believe they will be moving into.
The third step of the marketing audit focuses on identifying the firm’s distinctive competencies, that is, areas where the firm is particularly strong in relation to the competition. Distinctive competencies may include financial, human resource, marketing, and production advantages. As indicated earlier, these distinctive competencies often form the basis for the total marketing strategy. For example, consider a semen company that is fortunate enough to have an extremely good line of bulls with exceptionally strong performance records. This measurable product quality distinction can form the basis for a quality-oriented marketing strategy with a premium pricing approach, a relatively small field sales force, and consider- able emphasis on progeny testing.
While firms must give careful consideration to the idea of distinctive competencies during the market planning process, the intent here in the marketing audit is to re-consider the issue to make sure the areas identified earlier remain strengths. This part of the marketing audit may involve data collected during a competitor analysis or during a customer needs analysis.
The fourth step of the marketing audit is to objectively evaluate the agribusiness’s overall marketing strategy, given a review of past performance in the firm’s target markets, a re-examination of the firm’s market environment, and a re-assessment of the firm’s distinctive competencies. In rapidly changing markets, strategies can become out of date and ineffective quite quickly.
This step of the marketing audit should also consider how the marketing plan is to be implemented. A good plan will be ineffective if it is poorly executed. Continuing to use the same channels of distribution because “that’s the way we always do it” may be a poor choice. Do incentive travel packages offer the best type of sales promotion for dealers, or would it be best to return dollars in the form of a rebate or perhaps just sell at lower prices in the first place? Did farmers find the weekly text message on pest pressure in their area helpful, or was it simply “one more message they had to delete”? Analysis of such implementation issues forces the marketer to think deeply about whether or not the current marketing strategy is still the correct one.
Given a thorough examination of where the firm has been and new forecasts for the future, the goal of this step is to make sure the firm’s market strategy still fits. This is some- times called gap analysis. The gap is the difference between desired performance at some point in the future and what performance will be if the firm does not change marketing strategies. Obviously, the larger the gap that exists, then the greater the need for the firm to revisit its marketing strategy. Through this analysis, the next marketing plan can be made more effective in terms of the current and expected market conditions.
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