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Since the beginning of the 1990s significant research has been conducted into the extent to the extent in which firms in various sectors efficiently use marketing approaches and the relationship between marketing tools utilisation and firm performance. Many companies feel that their marketing operations need regular reviews and overhauls but do not know how to proceed. Some companies simply make many small changes that are economically and politically feasible, but fail to get to the heart of the matter. One of potential steps forward in their effort is to concentrate on systematic marketing audit. This paper reviews the existing debate and presents the initial thoughts on the development of marketing audit template as a benchmarking tool for assessment of “best practices” in civil engineering firms, operating on our market.
Key words Marketing audit, Benchmarking,
The marketing audit as an idea dates back to the early fifties. As for whether the marketing audit has reached a high degree of methodological sophistication, the answer is generally no. Whereas two certified public accountants will handle an audit assignment using approximately the same methodology, two marketing auditors are likely to bring different conceptions of the auditing process to their tasks. Benchmarking is a powerful tool that can provide to managers invaluable insight into company’s performance. According to Business encyclopedia (at www.ansvers.com), benchmarking is a process of comparing an organization’s or company’s performance to that of other organizations or companies using objective and subjective criteria. The technique has been widely used for assessing competitiveness and has been employed by large multinational organizations (e.g. Xerox) for several decades. It has also been widely applied in the agribusiness sector (e.g. Haines & Hassan, 1997) and in the construction industry (Garnett and Pickrell, 2000). A large literature exists in relation to its theory and implementation in practice. Discussion
Marketing audit utilization as a benchmarking tool requires concise discussion on the nature and potential outcomes and limits of marketing audit and benchmarking. We will concentrate just on several important issues, connected with definition of both concepts. In its fullest form and concept, a marketing audit has four basic characteristics. The first and most important is that it is broad rather than narrow in focus. The term “marketing audit” should be reserved for a horizontal (or comprehensive) audit covering the company’s marketing environment, objectives, strategies, organization, and systems. A second characteristic feature of a marketing audit is that it is conducted by someone who is independent of the operation that is being evaluated.
There is some loose talk about self-audits, where a manager follows a checklist of questions concerning his own operation to make sure that he is touching all the bases. Most experts would agree, however, that the self-audit, while it is always a useful step that a manager should take, does not constitute a bona fide audit because it lacks objectivity and independence. The third characteristic of a marketing audit is that it is systematic. The marketing auditor who decides to interview people inside and outside the firm at random, asking questions as they occur to him, is a “visceral” auditor without a method. This does not mean that he will not come up with very useful findings and recommendations; he may be very insightful.
A final characteristic that is less intrinsic to a marketing audit but nevertheless desirable is that it be conducted periodically. Typically, evaluations of company marketing efforts are commissioned when sales have turned down sharply, sales force morale has fallen, or other problems have occurred at the company.
The above ideas on a marketing audit can be brought together into a single definition: A marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s, / business unit’s marketing environment, objectives, strategies, and activities with a view of determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance.
How is the marketing performed? Marketing auditing follows the simple three-step procedure shown in figure 1.
Figure 1: Three-step procedure of marketing audit
Briefly stated, the first step of marketing audit process calls for a meeting between the company officer(s) and a potential auditor to explore the nature of the marketing operations and the potential value of a marketing audit. If the company officer is convinced of the potential benefits of a marketing audit, he and the auditor have to work out an agreement on the objectives, coverage, depth, data sources, report format, and the time period for the audit. The second step consists of various data collection methods deployment, with a clear goal: to collect necessary data both from inside and outside the company, to elaborate them and to use them in the final stage. Report preparation and presentation is the final step in the process of marketing audit.
A major principle in marketing audits is to start with the marketplace first and explore the changes that are taking place and what they imply in the way of problems and opportunities. Then the auditor moves to examine the company’s marketing objectives and strategies, organization, and systems. Finally he may move to examine one or two key functions in more detail that are central to the marketing performance of that company. However, some companies ask for less than the full range of auditing steps in order to obtain initial results before commissioning further work. The company may ask for a marketing environment audit, and if satisfied, then ask for a marketing strategy audit. Or it might ask for a marketing organization audit first, and later ask for a marketing environment audit.
According to Kotler, a full marketing audit has six major components, each having a semiautonomous status if a company wants less than a full marketing audit (Kotler, 2000):
Benchmarking has been used in the organisational and product improvement context increasingly during the last fifteen years. There are many different definitions of benchmarking. For managers and organisations, benchmarking is well defined by some significant contributors to the subject area as follows:
• Benchmarking is the search for and implementation of best practices (Camp, 1995). • Benchmarking is the continuous process of measuring products, services and processes against the strongest competitors or those renowned in their field (Zairi and Leonard, 1994). • A continuous process for evaluating the products, services and work processes of organisations that are recognised as representing best practices for the purpose of organisational improvement (Spendolini, 1992).
Each of these definitions appears to emphasise different things. There is, really, little difference between them and if we add them all together they illustrate that benchmarking is a systematic way of achieving continuous improvement. In some way, this supports the argument to look at how benchmarking may be deployed in improving performance in civil engineering sector.
According to Haines & Hassan (1997) there are four types of benchmarking:
• internal (comparison of a firm’s internal operations), • competitive (competitor-to-competitor comparisons),
• functional (comparisons with similar functions (in different businesses) within the same broad industry or to industry leaders) and, • generic (comparisons of business processes that are very similar regardless of industry). Haverty and Gordon (2006) pointed out, that the benchmarking process compares programs and strategic positions of competitors or exemplary organizations to those in the company reviewing its status for use as reference points in the formation of organization decisions and objectives. Comparing how an organization or company performs a specific activity with the methods of a competitor or some other organization doing the same thing is a way to identify the best practice and to learn how to lower costs, reduce defects, increase quality, or improve outcomes linked to organization or company excellence.
If we talk in terms of benchmarking methods, then Northumbria’s research has suggested that three benchmarking methods have developed through benchmarking taking the form of different activities (Friedewald, 2000):
1. metric benchmarking;
2. diagnostic benchmarking;
3. process benchmarking.
Much benchmarking concerns comparisons of performance data from other organisations. We label this metric benchmarking. So long as we are comparing “apples with apples”, metric benchmarking can serve a useful purpose as a “call to action”. However, its emphasis is on the “what” rather than the “how”. This form of benchmarking can help an organisation to pinpoint aspects of performance that need to improve, but on its own it cannot help them to learn how to improve.
Diagnostic benchmarking seeks to explore the practices adopted and performance achievement of the organisation in order to identify areas of relatively weak performance and organisational practices that show room for improvement.
Process benchmarking involves two or more organisations comparing their practices in a specific area of activity, in depth, to learn how better results can be achieved. Research has indicated that this mode of benchmarking offers the greatest potential benefits but it requires a code of conduct to be in place between the partner companies and has been described as difficult and expensive to do to fully capitalise upon its potential (Wainwright, 2005).
The exploratory nature of research on marketing audit utilization in the management processes of civil engineering companies provides a variety of possible directions for us. In this investigation we can continue in the framework given at the figure 2 below.
Figure 2: Future research basic framework
While the foregoing has stressed the positive aspects of marketing audits and their utility in a variety of situations, it is important to note some of the problems and pitfalls of the marketing audit process. Problems can occur in the objective-setting step, the data collection step, or the report presentation step.
The paper identified major outcomes that are necessary for the development of marketing audit template as both a research tool and practical analytical tool for assessment current performance in organizations. In order to draw further conclusions on the utilization of
marketing audit template it is necessary to operationalize the concept and test in qualitative studies.
In this paper, several aspects of marketing audits and benchmarking are discussed. The discussion is a result of thoughts on the focus of the dissertation aimed at the analysis of manager’s perception of the marketing audit importance and of the marketing audit influence on company performance. The marketing audit is one important answer to the problem of evaluating the performance of company or its business units. Marketing audits are distinguished from other marketing exercises in being comprehensive, independent, systematic, and periodic. A full marketing audit would cover the company’s (or division’s) external environment objectives, strategies, organization, systems, and functions.
The contribution of benchmarking to marketing audit procedure can be seen in several aspects: identification of best practices from any industry, which can then be incorporated into a company’s operations; benchmarking provides realistic targets, which can be shown to have been achieved by other industries; it reduces resistance to change and employees can see that ideas have actually worked in other organisations; technical or innovative ideas can be transferred from other industries; broadens employees’ experience and knowledge base; used correctly it can become a tool of continuous improvement and can provide employee motivation to change; provides better understanding of the competition and any gaps that may exist; provides better understanding of customer needs, leading to fewer complaints and more satisfied customers; provides a systematic framework for objective analysis and evaluation; and provides insights into how to adopt, adapt and implement changes in processes. The research intentions, aimed at marketing audit utilization has been outlined.
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Other reports and documents
Benchmarking. Available at: http://www.answers.com/topic/benchmarking (approached 30. 4. 2010) Marketing audit. Available at http://www.copernicusmarketing.com/univers/audit.shtml (approached 30. 4. 2010)