SETTING STANDARDS:

• Measuring actual performance

• Taking corrective measures

An earlier view of control saw this concept in action only after errors were detected, but in the modern view of management, control is a foreseeing action.

“Management control can be defined as a systematic effort by business management to compare performance to predetermined standards, plans, or objectives in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives” – Wikipedia.

SETTING STANDARDS:

Management control takes place at a number of levels within an organization namely:

strategic, operational and tactical levels. In effect, control variables at one level cascade to the next level below and translate in nature and focus accordingly. For example, these controls may predominantly be financial in nature at the strategic level but translate to departmental activities at the operational level, and hence encompass both financial and non-financial information. Further down to the tactical level, they translate into

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productivity both for the groups and the individual. Therefore, the focus of this exercise in any organization is on finance, performance appraisal and benchmarking.

Marketing activities are inherently more volatile due to the constantly changing business environment which is driven by the needs and wants of the market. Therefore, for marketing performance to be measured correctly, the appropriate criterion for marketing activity needs to be determined, namely: annual plan, profitability, efficiency and strategy.

For Shan Foods, the criteria to measure marketing success should be evaluated from the following factors:

• Measurement of awareness (of the product range)

• Feedback on customer satisfaction

• Market share data – both in terms of levels of sales, and repeat business

Annual plan: Measures the extent of marketing success over a period of time. Shan Foods should be on analyzing:

• Sales

• Market share

• Expenses

• Customer perception

Budgeting:

The process of developing any kind of strategy and its budgeting are intertwined.

Budgeting process translates marketing strategy into financial terms, and is the single most common control mechanism. It serves not only to quantify plans but also to coordinate activities, highlight areas of critical importance and assign individual responsibilities. Difficulty, time, negotiation, and paperwork: all figure into the budgeting process. Simply put, it is a tool for resource allocation and acquiring the approval for all such allocations. Shan Foods’ managers preparing a budget should look into:

• Budgeting guidelines – policy and procedure relating to budget formulation.

Includes assumptions, methods, and presentational requirements.

• Cost behavior – understanding the cost drivers within an area of responsibility and how those costs are allocated.

• Timescale – specific time and manageability considerations set for budgetary periods, example financial year or a rolling budget, with forecasts over regular intervals.

• Objectives – specific aims and goals and how they will be assessed.

Though budget types can be historic, zero-based or activity related, it is recommended that Shan Foods pursue activity related budgeting for their marketing pursuits since such a budget would have calculation rules such as percentage of sales, or average industry spending, and these precursors are used to determine the available funds for marketing.

Profitability: Creates a systematic basis for allocating cost and defining profit both in terms of products or marketing activities. Ultimately it should help Shan Food’s decision making in terms of:

• Expansion

• Reduction or elimination of product offerings

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• Resource allocation through various distribution channels.

Efficiency control: Gains optimum value from the marketing assets. Shan Food managers should look for value for money by analyzing the impact of promotional activities and setting controls on:

• Sales

• Advertising

• Directing marketing

Monitoring marketing performance: When deciding on how to monitor marketing performance, reasonable standards need to be allowed. Shan Foods’ emphasis should be on monthly monitoring (or weekly in case of critical situations). The question in mind should be,

• What is the time period that allows the most realistic and accurate picture of our marketing performance?

• Which KPIs need to be at the center of attention at the moment?

• Is there a need to create new KPIs?

Improving marketing program and their effectiveness:

In order to establish a better marketing control system, the biggest obstacle at Shan Foods may be the oft-repeated element of resistance. Being a ‘seth’ company, there might be a lack of constructive and positive attitude at the top management. The basic objective of any top management should be to make its sales and marketing people more effective.

Practicality and clarity should be addressed when implementing changes. This could be done through a series of thought provoking questions:

• What specific actions should be taken?

• When should the actions be taken?

• By whom should the actions be taken?

• What could be realistic starting and completion dates?

• Who shoulders the responsibility of implementing these corrective actions?

Strategic control: Reviews marketing strategy and its subsequent implementation, in terms of the direction towards strategic organization goals. This exercise comprehensively examines marketing activities and assesses their effectiveness and makes recommendations to improve marketing performance. It is usually conducted in the form of a:

• Marketing audit