Because many surprises occur during the implementation of marketing plans, the marketing department must practice constant marketing control. Marketing control involves evaluating the results of marketing strategies and plans and taking corrective actions to ensure that objectives are attained. Marketing control involves four steps. Management first sets specific marketing goals. It then measures its performance in the market place and evaluates the causes of any differences between expected and actual performance. Finally Management takes corrective actions to close the gaps between its goals and performance. This may require changing action programs or even changing the goals
Operating
control involves checking
ongoing performance against the annual plan and taking corrective action when
necessary. Its purpose is to ensure that the company achieves sales, profits
and other goals set out in its annual plan. It also involves determining
profitability of different products, territories, markets and channels.
Strategic
Control involves looking at
whether the company’s basic strategies are well matched to its opportunities.
Marketing strategies and programs can quickly become outdated and each company
should periodically reassess its overall approach to the market place. A major
tool for such strategic control is a marketing audit. The marketing audit is a
comprehensive, systematic, independent and periodic examination of a company’s
environment, objectives, strategies and activities to determine problem areas
and opportunities. The audit provides good input for a plan of action to
improve the company’s marketing performance.
The
marketing audit covers all major marketing areas of a business, not just a few
trouble spots. It assesses the marketing environment, marketing strategies
marketing organization, marketing systems, marketing mix and marketing
productivity and profitability. The audit is normally conducted by an objective
and experienced outside party. The findings may come as surprise- and sometimes
as a shock to management. Management then decides which actions make sense and
how and when to implement them.
Market Environment
The market environment is
a marketing
term and refers to factors and forces that affect a firm’s ability to build and
maintain successful relationships with customers. Three levels of the
environment are 3: Micro (internal) environment - small forces within the
company that affect its ability to serve its customers. Meso environment – the
industry in which a company operates and the industry’s market(s). Macro
(national) environment - larger societal forces that affect the
microenvironment.[1]
The Marketing
Environment
Elements of the environment. The marketing environment
involves factors that, for the most part, are beyond the control of the
company. Thus, the company must adapt to these factors. It is important
to observe how the environment changes so that a firm can adapt its strategies
appropriately. Consider these environmental forces:
- Competition: Competitors often “creep” in and threaten to take away markets from firms. For example, Japanese auto manufacturers became a serious threat to American car makers in the late 1970s and early 1980s. Similarly, the Lotus Corporation, maker of one of the first commercially successful spreadsheets, soon faced competition from other software firms. Note that while competition may be frustrating for the firm, it is good for consumers. (In fact, we will come back to this point when we consider the legal environment).Note that competition today is increasingly global in scope. It is important to recognize that competition can happen at different “levels.” At the brand level, two firms compete in providing a very similar product or service. Coca Cola and Pepsi, for example, compete for the cola drink market, and United and American Airlines compete for the passenger air transportation market. Firms also face less direct—but frequently very serious—competition at the product level. For example, cola drinks compete against bottled water. Products or services can serve as substitutes for each other even though they are very different in form. Teleconferencing facilities, for example, are very different from airline passenger transportation, but both can “bring together” people for a “meeting.” At the budget level, different products or services provide very different benefits, but buyers have to make choices as to what they will buy when they cannot afford—or are unwilling to spend on—both. For example, a family may decide between buying a new car or a high definition television set. The family may also have to choose between going on a foreign vacation or remodeling its kitchen. Firms, too, may have to make choices. The firm has the cash flow either to remodel its offices or install a more energy efficient climate control system; or the firm can choose either to invest in new product development or in a promotional campaign to increase awareness of its brand among consumers.
- Economics. Two economic forces strongly affect firms and their customers:
- Economic
Cycles. Some firms in particular are extremely vulnerable to changes
in the economy. Consumers tend to put off buying a new car, going out to
eat, or building new homes in bad times. In contrast, in good times,
firms serving those needs may have difficulty keeping up with demand. One
important point to realize is that different industries are affected to
different degrees by changes in the economy. Although families can cut
down on the quality of the food they buy—going with lower priced brands,
for example—there are limits to the savings that can be made without
greatly affecting the living standard of the family. On the other hand,
it is often much easier to put off the purchase of a new car for a year
or hold off on remodeling the family home. If need be, firms can keep the
current computers—even though they are getting a bit slow—when sales are
down. The economy goes through cycles. In the late 1990s, the U.S.
economy was quite strong, and many luxury goods were sold. Currently, the
economy fluctuates between increasing strength, stagnation, or slight
decline. Many firms face consequences of economic downturns. Car makers,
for example, have seen declining profit margins (and even losses) as they
have had to cut prices and offer low interest rates on financing.
Generally, in good economic times, there is a great deal of demand, but
this introduces a fear of possible inflation. In the U.S., the Federal
Reserve will then try to prevent the economy from “overheating.” This is
usually done by raising interest rates. This makes businesses less
willing to invest, and as a result, people tend to make less money.
During a recession, unemployment tends to rise, causing consumers to
spend less. This may result in a “bad circle,” with more people losing
their jobs due to lowered demands. Some businesses, however, may take
this opportunity to invest in growth now that things can be bought more
cheaply.
Inflation. Over time, most
economies experience some level of inflation. Therefore, it is useful to
explicitly state whether a reference to money over time involves the actual
dollar (or other currency) amount exchanged at any point (e.g., one dollar
spent in 1960 and one dollar in 2007) or an “inflation adjusted” figure that
“anchors” a given amount of money to the value of that money at some point in
time. Suppose, for example, that cumulative inflation between 1960 and 2007 has
been 1,000%--that is, on the average, it costs ten times as much to buy the
same thing in 2007 as it did 47 years earlier. If the cumulative inflation
between 1960 and 1984 had been 500%, we could talk about one 1984 dollar being
worth fifty 1960 cents or two 2007 dollars. It is important to note that
inflation is uneven. Some goods and services—such as health care and college
tuition—are currently increasing in cost much higher than the average rate of
inflation. Prices of computers, actually decline both in absolute numbers
(e.g., an average computer cost $1,000 one year and then goes for $800 two
years later) and in terms of the value for money paid once an adjustment has
been made for the improvement in quality. That is, two years later, the
computer has not only declined in price by 20%, but it may also be 30% better (based
on an index of speed and other performance factors). In that case, then, there
has actually been, over the period, a net deflation of 38.5% for the category.