MARKETING CONTROL

PROF MILIND A MARATHE

 Learning from mistakes and constantly improving products is a key in all successful
companies. Listening to customers is a big part of that effort. You have to study what
customers say about their problems with your products and stay tuned into what they
want, extrapolating from leading-edge buyers to predict future requirements.

 Marketing control forms a crucial part of the marketing activity.

 It is a comprehensive process which compares the marketing performance against the set
goal. The process finds out discrepancies to initiate a corrective action.

 Marketing control is a continuous monitoring of marketing activity.

 Planning and control are the two processes which have a close link with each other.

According to Philip Kotler ‘Marketing control is the process of taking steps to bring actual results
and desired results close together.’

The control process

 There are various elements of marketing control process. It can be divided into 4 core steps
namely

 1.Goal setting

 2.Measuring the performance

 3.Checking the performance

 4.Take corrective action

1.Goal Setting :-

 This is the first stage in control process.

 Standards are the citeria of the expected markeing performance. The actual performance is
measured and evaluated against these standards.

 Standards can be in terms of qualitative or quantitative terms,

 sales volume, sales expenses can be measured per product, region, customerwise.

 The qualitative standards seek to fined out the brand image, customer satisfaction,
relationship between a sales manager and a sales executive. Thus quantitative standards
measure performance in terms of monetary value while qualitative standards measure
performance in terms of nontangiable terms .
  A question to be asked in goal setting is ‘ What do we want to achieve’?

2.Measuring the performance

 The next stage in the marketing control process is to appraise the performance of different
functions

 There are different elements of marketing mix. The performance of these elements of
marketing mix should be measured and a feedback should be collected. The process of
appraisal can be conducted on the continuous basis or in a periodic manner.

 question to be asked in measuring the performance is ‘What is happening?’

3.Checking the performance

 In this stage the performance is checked. It reveals if there is any deviation from the
performance standards. The deviation may be favourable or unfavourable.

 Technique like sales quata will help to measure the performance of sales team. Similarly
tools like budget can measure and control costs. A question which can be asked is ‘Why it is
happening’?

4.Take corrective action

 plans are redesigned on the basis of the inputs provided by the marketing information
system This is based on measurement of actual performance. It can be said that if the
performance is above the standard and if it is happening at repeated number of times then
there may be a need to rewise the standard

 The feed back and analysis helps in increasing the effectiveness of policies , targets and
resources. Hence a question that can be asked is ‘what should we do about it’?
Types of Control Prime Responsibility Purpose of Control Approaches

1.Annual-plan control Top management To examine whether the Sales analysis

Middle management planned results are being
achieved
Market share analysis
Sales to expense ratios
Financial analysis
Market based scorecard
analysis

2.Profitability control Marketing controller To examine where the Profitability by:

company is making and losing Product
money Territory
Customer
Segment
Trade channel
Order Size
3.Efficiency control Line and staff management To evaluate and improve the Efficiency of;
Marketing controller spending efficiency and Sales force
impact of marketing Advertising
expenditures Sales promotion
Distribution
4.Strategic Control Top management To examine whether the Marketing-effectiveness
Marketing auditor company is pursuing its best rating instrument
opportunities with respect to Marketing audit
markets, products and Marketing excellence review
channels Company ethical and social
responsibility review.

MARKETING COST ANALYSIS

 The objective of marketing analysis is to trace, assign or allocate costs to specific marketing
activity.

 It is based on assumption that certain costs are directly or indirectly assignable to every
marketing segment.

 Marketing costs can be of different types

 Physical distribution

 Logistics

 Warehousing
  channel management costs

 Cost incurred in market research

 Cost of credit sales.

Benefits of Marketing cost Analysis

A large number of benefits are available for the firm due to a careful and systematic marketing cost
analysis. They may be enlisted as

 1.To help in reducing the marketing cost

 2. To assist in savings

 3. To find out the costs incurred by various marketing functions

 4. To find out the alternate ways of performing these activities and doing a comparison of
these different methods in terms of cost Vs benefit from the methods

 5. it assists in ensuring a competitive position of product in the market.

 6. Cost reduction enables a firm to keep a on pricing

 7. It enables in identifying the customers, products and markets which are not profitable.

 8. A firm can weigh the various services offered like before sale during the sales and offer
the sale.

Budgetary Control

 A budget provides a direction towards the utilization of resources needed for achieving
projected sales and profit planning. A budget is a financial statement of expected results
expressed in numerical terms.

  Analysis of budget can be done by comparing actual figures with budgeted figures..the
differences may occur due to external factors like interest rate..This are called as variance. If
the actual figure is more favorable than the budgeted fig. it is reported by favourable. If the
actual figure is worse than the budgeted figure it is reported by letters ADV (Adverse) for ex.
The sales budget of XZ company may look like
 B U D GETARY C ON TROL

Rs. Budgeted Actual fig Variance Result

fig
Product P 600 500 -100 ADV

Product Q 700 720 +20 FAV

Product R 500 600 +100 FAV

Profit Impact Of Marketing Strategy (PIMS)

 This was originated in 1972 Afterwards this was implemented as strategic planning model
for general electric corporation.

 The PIMS model indicates that there are definite linkages between the strategy and
performance . Buzzel and Gole(1987) have listed out these linkages.

 There is a strong relationship between market share and profit

 the quality of products and service offered by a firm visa vis the competitors affects the
business units performance

 For few businesses vertical integration is a profitable strategy.

 profitability may be affected by the investment intensity.

 It was observed that some businesses termed as cash cows turn out to be dry businesses
while the businesses termed as dogs and question marks (as per the BCG Matrix Strategy)
may generate cash

 The factors which increase return on investment also help in long term value.
 K EY F ACTOR S MEAS U R ED B Y P IMS

Customer satisfaction measurement

 Research enables a company to determine whether they have value drive relationship with
their customer.

 The satisfaction related to customer relationship can be about

 Quality of product, service offered

 Performance of service offered

 Whether the product, service has exceeded the expectatio

80-20 Principle

 The 80-20 Principle is also known as Pareto Principle. A principle, named after economist
Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The
principle states that, for many phenomena, 20% of invested input is responsible for 80% of
the results obtained

 The Pareto principle was generalized as 80-20 rule. by a well known guru Joseph M Judah.

 The principle says the 80% of sales volume comes from 20% of its customers. i.e. very small
accounts. Eighty percent of the customers could result from 20% of marketing and sales
initiatives. Eighty percent of company sales could arise from 20% of products.

 The 80/20 Principle will provide a businesses know how to:

 • target marketing and sales initiatives,

 • To measure the success of customer-facing departments such as Customer support

  • To get a snapshot of overall business health at a glance.

Marketing Audit

 Marketing Audit is designed to build foundation for development of overall marketing

strategy

 . It is a reexamination and evaluation of marketing objectives and policies.

 A marketing audit is a comprehensive, systematic independent and periodic examination of

a companys marketing environment , objectives, strategies, and activities.

It tries to find out answers for the following questions.

 Does the company understand its business correctly?

 What type of business, a company is currently in?

 What type of business a company is heading to?

 What should be the business a company should be doing in future?

 Whether the company is able to achieve the objectives of its business correctly?

 What is the nature of competition at present ?

 What will be the competitive environment in future?

Marketing audit will have following characteristics

 Comprehensive
  An marketing audit covers entire gamut of marketing activity. Which may include product,
price ,place and promotion etc.

 Systematic

 Marketing audit is systematic and evaluation of companies marketing environment.

 The procedure can be described as

 Scanning of marketing environment

 Scan of internal marketing

 Examination of marketing activities

 Finding out the problem

 Suggesting suitable action plan

 Independent

 A marketing audit should be unbiased. Hence it should be conducted by independent

authorities. For conducting the audit there are3 different yardsticks which can be used like
audit from top, audit across auditing office.

Marketing Strategy Audit

 Business mission and marketing objectives:

 Is the mission of the company defined properly. Does the mission statement have marketing
orientation . Has th company set clear objectives to guide marketing planning and
performance.

 Marketing strategy: whether the company have formulated a strong marketing strategy for
achieving its objectives.

 Budgets: Has the company budgeted adequate resources to segments, territories and
marketing mix elements.

Marketing Organization Audit

 Formal structure-Are all marketing activites effectively and efficiently structured a long
functional product, marketing and territory lines.

 Functional efficiency- Do marketing and sales communicate effectively? Is marketing staff

properly trained and rightly supervised, motivated and correctly evaluated .
  Cross functional efficiency- Does marketing people gell effectively with people in other
departments like R &D operations, HR, IT.

Marketing Systems Audit

 Marketing information system:- is the marketing information system providing accurate and
timely information.

 Is the company using marketing research effectively

 Marketing planning system:- is the marketing planning system well conceived and effectively
used

 Marketing control system:- Are annual plan objectives being achieved?

 New product development:- Is the company having an effective new product development
process.

Marketing Productivity Audit

 Profitability Analysis. How profitable are the companies different products markets and
territories.

 Cost effectiveness Analysis- How the cost reduction can be done?

QUESTIONS
 Q.1. Identify and discuss in broad terms the important aspects to be attended to in the
marketing audit of an organization?

 Q.2. Discuss the nature and scope of marketing audit?

 Q.3. ‘Marketing Control is a process that guides the marketing activity towards marketing
goals’. Analyse statement?

 Q.4. ‘Marketing Control is a tool to find out whether the desired goals and results are
actually being achieved or not’ Discuss the statement

 Q.5. A ‘marketing audit’ is a periodic review of marketing activity Discuss?