Marketing and Distribution Control

Marketing being an important functional area of Management requires a control

system which will monitor the marketing process so as to ensure effective
implementation of marketing plans of the organization. Marketing control is a
process in which management generates information on marketing performance of
the business concern.
Two major forms of control are (a) control over efficient allocation of marketing
effort. (b) Secondly, comparison of planned performance and actual performance. In
the two forms first one, marketer may use past data as a standard against which to
evaluate future marketing expenditure. In case of second one, management is
reminded of the remedial actions needed to be taken for performance discrepancies.
The above given tables gives a clear picture of four types of control required for
managing the marketing activities in an organization.
Type of Control Responsibility Purpose of control Tools used
Strategic control Top Management To check if the Marketing Audit
organization is
utilizing its
opportunities with
respect to markets,
products, and
channels
Annual plan Top and Middle To find out if the Sales analysis,
control Management planned results are Attitude ranking,
being achieved Market share
Analysis, expenses
to sales ratio
Efficiency and Middle To examine the Expenses Ratio,
effectiveness Management optimum utilization Advertising
control of available effectiveness
resources in the measures, Market
attainment of potential,
marketing strategies Contribution margin
and goals. analysis.
Profitability Marketing Find whether the Profitability by
controller company is making product, Market
profit or not segment, trade
channel, order size
Levels of Marketing Control
Marketing control process is carried out in two phases. They are control to check
efficient allocation of marketing effort and checking the differences between the
planned performance and actual performance. However control on marketing
activities can be exercised at level of marketing.
Strategic Control
Here the aim is to check whether the strategy framed for the marketing activities are
duly followed and implemented and the expected results are attained. Hence it is
expected on the part of a prudent business man to conduct the Marketing Audit
periodically so as to make a periodic, comprehensive, and systematic evaluation of
the organization’s marketing operations that specifically analyses the marketing
environment and business concerns internal marketing activities.
Thus Strategic control helps the firms to understand the change in the marketing
scenario for the firm and help to avoid product failure and to tap the market potential
for the firm’s product.
Annual Plan Control
Plan acts as the standard against which the firm’s actual performance can be
compared to arrive at the deviations, if any. Sales volume, Profit earned and Market
share are the quantitative standards which help to measure the firms marketing
performance. Hence a business concern may use the following tools to check on plan
performance.
1. Sales Analysis
2. Market share analysis
3. Marketing expenses –to- sales ratio
4. Financial analysis
5. Market based sore card analysis
Efficiency and Effectiveness Control
Under this control system effort is taken to check whether the resources like sales
force Advertising are used efficiently. Whereas the effectiveness control evaluates the
capacity of strategic components to accomplish the objectives. To check whether the
market potential is tap or not, the firm can evaluate the effectiveness of Distribution
channel, Channel Members and the product.
Profitability Control
The main aim of this part of Marketing Control is to find out which segment of the
business is earning profit for the firm and which the money loser is. Here the term
segment means the unit taken up for analysis. This unit may be a customer segment,
Product Line, Territories; Channel Structure this study helps the firm to make budget
allocations on the basis of the profitability and market potential.
Thus an effective Marketing Control system has four distinct factors such as Strategic
control, Strategic control, Efficiency and effectiveness control and Profitability
Control. A company’s marketing effectiveness is reflected in the degree to which it
exhibits the five major attributes of a marketing orientation such as Customer
Philosophy, Integrated Marketing organization, Adequate Marketing Information,
Strategic Orientation, and Operational efficiency.
Distribution Control
The very purpose of manufacturing an item is to make it reach the ultimate customer
on time; this aim is fulfilled by the efficient distribution system adopted by the
manufacturer. A prudent manufacturer adopts a channel of distribution which is cost
effective. Generally distribution system consist of the activities like, Transportation,
Ware housing, packaging, Inventory control, and material handling. Distribution
control’s aim is to minimize the cost involved in carrying out these activities.
The manager in charge of distribution activities is also responsible for preparing the
budget for distribution expenses. So he must be provided with the past cost data
relating to distribution expenses. This will help him to estimate the future cost related
to distribution expenses. The distribution system’s cost structure can be framed in to
an equation, as illustrated below,
D = T +FW+VW + S
Where
D = Total distribution cost
T = Total Transportation cost.
FW = Fixed Ware housing cost.
VW = Variable ware housing cost (including inventory cost)
S = Cost of lost sales due to average delivery delay.
Profit contribution of each channel of distribution is found out to identify the
effective channel of distribution. At all juncture effectiveness of cost control
measures must monitored so as to ensure best results from the efforts taken for both
marketing and distribution control.
Summary
Auditing is an important tool of management Control. It checks the authenticity of
books of accounts of a business concern. An Audit is an examination of accounting
records of a business concern, done with a view to check whether correctly and truly
they reflect the transactions to which they purport to relate. The objectives for
carrying out Auditing can be discussed under three heads. They are: Primary
objectives, Secondary objectives, Specific objectives. Internal Check is important for
successful Audit in an organization. Internal Check ensures that the assets of the
concern are intact and the policies of the management are followed promptly. Internal
Audit on the other hand involves continuous review of all the operations of the firm
to ensure the management that all activities are carried out in an efficient manner.
Whereas External Audit is done by the qualified external Auditor, appointed by the
share holders. An organization needs to carry out different types of Audits like
Management Audit, Marketing Audit, social Audit, Energy Audit Etc. depending up
on its requirement and necessity. The Auditor Who carries out different types of
Audit has different types of duties and responsibilities depending up on the type of
the Audit. However for a company Auditor the power, duty and responsibilities are
stated in the Statute.
The second major tool of management control is Budgeting. Budgeting helps
management to have financial control over the various activities related to finance in
an organization. Budget is a detailed plan of operations for some specific future
period. It is an estimate prepared in advance of the period to which it applies. It acts
as a business barometer as it is a complete programme of activities of the business for
the period covered. Budgetary control refers to the principles, Procedures and
Practice of achieving given objectives through budgets and budget reports. Budgets
are of different type. To control different Functions of Management different Budgets
are prepared. Production budget, ZBB, Flexible and Fixed budgets, Performance
budgets are prepared to exercise control over various activities.
Management control process involves comparing the actual performance with the
standard. The result of the control process will be location of deviations in the
performance, if any. Then there arises a need to carry out Variance Analysis, which
will help the management to understand the reason for the occurrence of such
deviations and this will pave way for framing corrective actions