Marketing Function - The marketing function tends to be more difficult to evaluate by utilising a management audit questionnaire than most other functional areas. The principal

reason is that marketing is highly dependent upon external environmental factors that are not under the control of marketing management. Typical examples include the prices of competitors, the general level of economic activity, and the rate of inflation. Similarly, marketing is often dependent upon human judgement, involved with complex relationships, and beset with imperfect knowledge, resulting in decisions being made by sheer intuition rather than by some type of scientific analysis. Although experience and intuition are vital ingredients in marketing, they can be greatly enhanced by computer analysis and quantitative techniques. No matter what view-point, or what combination of the two approaches intuitional and quantitative- is found within an organisation, the five sections of the marketing management audit questionnaire, namely:

I. Marketing Overview II. Sales

III. Market Research IV. Advertising

V. Physical Distribution.

Marketing Overview - No matter what type of business organisation, marketing generally starts the information flow from customers desiring specific goods and/or services. Not only does marketing receive orders from customers, but also marketing efforts are focused on them. The Company’s marketing executives derive their information about customers and the market place through marketing intelligence, formal market research, and company accounting information. Marketing intelligence activity represents the continuous effort to keep informed about current developments among customers, competing products, and the marketing environment. In a similar manner, market research centres on a more formal approach to current developments in particular, project-oriented research. The company’s accounting system generates sales and cost information to complement marketing intelligence and research. Overall, marketing management needs an effective information flow to relate its efforts to constantly changing conditions.

The purpose of this initial section of the marketing management audit questionnaire is two-fold. First, this section concentrates on the ability of marketing management to meet changing environmental factors, both external and internal. The manner in which marketing management relates to changing environmental factors is one way of determining how well it is prepared to meet the challenges of changing times. The proper meshing of the external and

internal environments with an Organisation, s business functions, particularly marketing, leads to efficiency and economy of organisational operations for accomplishing Predetermined objectives. Second, this section determines the degree of integration of the marketing function with other functional areas that relate to marketing.

Sales - Evaluation of an organisation’s sales effort through the management audit questionnaire (Section II) starts with examining the capabilities of sales management.

Questions on long-range marketing plans with respect to such items as products, services, policies, and sales-person compensation are set forth. Similar questions are asked about short- or medium-range marketing plans. As with long-range sales plans, these questions ultimately evaluate the ability of an organisation’s sales management to perform its assigned tasks. Specifically, emphasis is placed on the ability of sales managers to meet sales quotas that not only result in profitable operations, but also increase customer satisfaction and keep salespersons sufficiently motivated to meet new sales goals. Enlarging upon this last point, the sales organisation structure should be flexible enough to meet both short- and long-term sales growth objectives and changing business conditions. Likewise, the sales compensation plan should encourage both immediate and longer-term sales.

Building upon the above subsections of the questionnaire, questions relating to sales management leadership are developed. Emphasis is placed on the effectiveness of sales management in getting the sales staff to achieve specific sales goals. Also, the degree of confidence and trust between sales managers and sales-persons is assessed.

Complementary to leadership is an evaluation of sales management’s communication skills, with particular emphasis on critical information needed to keep sales persons abreast of important organisational activities. In the final subsection, the degree of sales control exercised by sales management is reviewed - that is, how well sales goals are related to actual sales so that corrective action can be undertaken if results are below expectations.

Market Research - Before extensive new product development is undertaken, it is helpful to initiate a market research study to determine the feasibility of bringing a new product to the market place. The first subsection of the market research section (See Section III) evaluates the effects of long-range plans on market research. In like manner, the relationships of short- or medium-range plans to market research are set forth. The focus of both subsections is on the effectiveness of market research management and its staff to fulfill its assigned tasks in researching new products. Underlying these questions is the next subsection, which evaluates market research structures for undertaking specific studies. More specifically, question relating to emerging and shifting markets are asked.

In the leadership subsection, the capabilities of the market research manager are examined.

Also, the effectiveness of market research communication from sources outside the group, especially from customers, is evaluated. Similarly, the exchange of ideas between the market research group and its management is examined for determining communication effectiveness. Within the control subsection, market research costs are reviewed to determine the degree of management control over ongoing projects. In most cases, costs are compared to budgeted amounts, which form the basis for corrective action.

Advertising - The advertising section of the marketing management audit questionnaire (See

Section IV) is an extension of the sales section. An all-inclusive sales plan should include long-range as well as short- to medium-range advertising plans. From that perspective, questions relating to such areas as the adequacy of the advertising budget and the tie-in of regular and special promotions to advertising are evaluated. Next, questions relating to the advertising structure are evaluated. The central focus of this subsection is on the competency of advertising management to meet current sales objectives during upswings and downswings of the economy. The management-by-exception principle is employed to compare actual advertising costs to budgeted amounts. Also, advertising management’s ability to integrate its own area with personal selling and promotion is evaluated.

Within the next subsection, advertising leadership is examined from several managerial viewpoints. For instance, is the organisation an innovator in advertising, does it keep with the times, and does it have a well-thought-out advertising program? Although it may well be progressive in advertising, its methods of communication must be compatible with the message directed at its customers. In essence, there must be a balance in the overall advertising programme to reap its full benefits. Also, there must be adequate managerial control over the advertising effort. In the final subsection, advertising control is therefore evaluated, with the accent or keeping advertising costs within the budgeted amounts.

Physical Distribution - As with the prior sections, the physical distribution (PD) section (See Section V) of the marketing management audit questionnaire is an integral part of marketing activities. To ensure proper distribution of an organisation’s products (services), the first subsection of long-range plans centres on questions that are oriented toward the future.

Fundamentally, these questions on distribution assess the value received for cost incurred. In the next subsection, the physical distribution structure is evaluated from several viewpoints, namely, their number, their efficiency, and the ability to meet changing conditions.

Within the leadership subsection, distribution channels under PD management are assessed in terms of their ability to move a large volume of merchandise to customers at a low cost and, at the same time, achieve a high rate of inventory turnover. Complementary to this subsection is one on communication. These questions highlight physical distribution effectiveness or lack thereof, particularly in relaying essential managerial and operational information. In the last subsection, physical distribution control is reviewed, particularly in the areas of costs and inventories.

Yes No N.A.

I. MARKETING, OVERVIEW A. Long-range plans:

1. Are long-range marketing plans in agreement with:

a. long-range organisations objectives?

b. long-range plans of other functional areas?

c. medium-range marketing plans?

d. short-range marketing plans?

2. Are long-range marketing plans reviewed by:

a. Board of directors?

b. Top Management ?

3. Do long-range marketing plans include the following functional areas:

a. Sales ? b. Market research ? c. Advertising ?

d. Physical distribution ?

4. Is there an official Planning Committee to develop long-range marketing plans?

5. Does marketing management, accept and under-stand these long-range plans?

6. Are marketing management efforts directed towards accomplishing these long-range plans?

7. Is performance against long-range marketing plans measured periodically?

8. Are long-range marketing reviewed periodically so as to stay current?

9. Have forecasts been sufficiently accurate to develop long-range marketing plans?

10. Is the management by exception principle an in-tegral part of long-range marketing plans?

B. Short- or medium-range plans:

1. Are short- or medium-range marketing plans in agreement with:

a. short- or medium-range organisational objectives?

b. short- or medium-range plans of other functional areas?

c. long-range marketing plans?

2. Are short- or medium-range marketing plans reviewed by:

a. top management?

b. middle management?

c. lower management?

3. Do short- or medium-range marketing plans include the following functional areas:

a. Sales ?

b. Market research?

c. Advertising ?

d. Physical distribution?

4. Are there procedures for developing short- or medium-range marketing plans?

5. Does marketing management accept and under-stand these short- or medium-range plans?

6. Are marketing management efforts directed towards accomplishing these short- or medium range plans?

7. Is performance against short- or medium-range plans measured periodically?

8. Are short- or medium-range marketing plans reviewed periodically to stay current?

9. Have forecasts been sufficiently accurate to develop short- or medium-range marketing plans?

10. Is the management by exception principle an in-tegral part of short- or medium-range marketing plans?

C. Organisational structure:

1. Is the marketing organisation structure adequate to fulfill stated marketing:

a. objectives?

b. plans?

c. strategies?

d. programs?

e. policies?

2. Is the marketing organisational chart compatible with

other functional organisational charts?

3. Is it clear who is charged with responsibility and who has authority over:

a. Sales ?

b. market research?

c. advertising?

d. physical distribution?

4. Does each marketing person know his or her job well?

5. Is it clear what the superior-subordinate relationships are in the marketing department?

6. Are there adequate job descriptions for each marketing position?

7. Is there a competent employee assigned to each marketing position?

8. Can the quality of marketing personnel be assessed for :

a. management?

b. employees?

9. Is the marketing department adequately staffed?

10. Are reporting relationships clearly defined and understood by marketing personnel?

11. Is marketing management held accountable for its actions?

12. Is there provision within the marketing department for periodic review of its organisation structure?

D. Leadership:

1. Does marketing management provide the leadership to develop:

a. new product opportunities?

b. new market segments?

c. new promotional ideas?

2. Is some form of leadership evident in these

marketing areas:

a. sales?

b. market research?

c. physical distribution?

3. Is marketing management sufficiently progressive to take a chance on a new product?

4. Is the organisation’s marketing program geared to leadership in the market-place?

5. Does marketing management provide the know-how to meet competition head on?

E. Communication:

1. Have short-to long-range marketing objectives and plans been communicated to the proper marketing personnel ?

2. Have the organisation’s marketing strategies and programmes been communicated to the proper marketing personnel.

3. Have the organisation’s marketing policies been communicated to the proper marketing personnel?

4. Are communication channels adequate for the coordination of marketing activities, in regard to:

a. new product introduction?

b. pricing policies?

c. personal selling practices?

d. special promotions?

e. market research studies?

f. advertising programmes?

g. physical distribution methods?

5. Is there effective feedback of important marketing information to the proper personnel?

F. Control:

1. Do the managers of marketing activities exercise

In document Adcanced Auditing and Professional Ethics Vol. 2 (Page 108-114)