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A marketing audit reviews all tactics and their results, including consumer response, cost, and sales. It also analyzes external and internal factors, such as competitors, economic health, and operations. Common audit report formats include SWOT, five forces, and PEST.
To ensure that a marketing plan performs as expected, companies often complete a marketing audit. This usually consists of a review of all tactics and their results. These results typically include consumer response to a promotion or event, cost, and a review of sales and other activities stemming from each tactic. Typically, a review and update of an annual marketing plan follows a study of promotions.
Each marketing tactic is reviewed in depth to determine if the tactic increased business. Another important factor in this analysis is deciding whether the sales generated from each promotion were worth the expense. Cost per lead and cost per sale can often help determine this.
The cost per lead is the total cost of the tactic divided by the number of responses or queries generated by the individual marketing or advertising promotion. When the total cost of the promotion is divided by the number of completed sales, the result is the cost per sale. For example, Company A spends $10,000 on a direct mail package that generates $5,000 in sales. The cost per sale is therefore $2.
A company must also review its place in the market, compared to its competitors and how current economic and social factors may affect its business. As a result, a marketing audit usually includes a study of current external and internal factors. These factors include a study of competitors’ products, pricing, brand awareness, local and national economic health, and internal business operations.
Companies can use one or several different approaches to study these factors. Common marketing audit report formats include a strengths, weaknesses, opportunities, and threats (SWOT) analysis; a five forces analysis; and a political-economic-social-technological study (PEST).
Using SWOT, a company lists its advantages and disadvantages compared to its competitors or companies producing similar products. Also included is a check of any market conditions that could help or hurt the company’s chances of success. These conditions include economic factors as well as any challenges a competitor might bring to the market. The company also regularly reviews its internal operations and procedures.
A five forces analysis is a similar marketing audit study. This format is often used to review an individual product or business unit rather than the entire marketing plan. Using this approach, the marketing team looks at similar issues covered in a SWOT analysis and combines these findings into five clusters. These groups are labeled as buyer power, threat of entry, competitive rivalry, power of suppliers, and threat of substitutes.
PEST is another marketing audit format alternative. Some marketers change the order of the letters in PEST and call this the STEP study. A PEST or STEP marketing audit usually focuses on factors that are primarily outside the company’s internal controls. Study subjects include political climate, economic health, social perspectives, and technology that can be used to deliver the product. PEST is similar to the opportunities and threats parts of SWOT.
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