The process of analysis as part of the planning process involves both an external audit and an internal audit.
The advantages of scanning the environment include:
- · Opportunities can be spotted and capitalized upon
- · Provides objective information which can be analyzed
- · Increases sensitivity to changing needs of environment
- · Provides stimulation for strategy-making
- · Can contribute to development of corporate image
- · Continuing education for executives
The external audit is an examination of the forces external to the company that impact upon the firm’s operations and future direction. A simple tool for performing this analysis is the PEST framework (political, economic, social and technological) within with environmental forces can be sorted and highlighted. A development of the framework is SLEPT, which adds in legal forces to those to be examined, or STEEPLE (social, technological, economic, environmental, political, legal, educational), or PLEESTIC (political, legal, environment, economic, social cultural, technological, international, competition). The latter, which is new, ignores the fact that competition is a micro consideration.
A simple PEST analysis can be applied to the Royal Mail postal services in the UK, which is subject to the following:
Political agendas very much apply to the state-owned postal services, with even broader attitudes towards state intervention having an impact on the freedom given by government.
The general economic condition will determine demand for its services. Exchange rates may mean that it is cheaper to post from overseas if a company has a large mailing programme to around the world.
There has been a growth in other forms of communication, with many consumers using the telephone, email, text messaging and social networking.
The growth of email, mobile phone services and internet communications such as social networking and Skyping has led to a decline in demand for ordinary letter services.
If we add a legal heading to the list, then we can include government directives and legislation.
The above are macro environmental forces acting on the organization, many of which apply to all firms in the particular market sector. Micro forces, by contrast, are those which very often apply to the individual business. These include the nature of the:
This can be memorized by – MCCSDP.
The markets in which the company must be understood, covering market size, growth, and market segments.
It is essential to be aware of competitors’ products and services, and try to understand their present and future direction. For example, a new product coming from a competitor may warrant defensive action. In the age of digital it is also important to gauge what mediums your competitors are connecting with customers on, both on and offline.
Customers remain central to the marketer’s view of the micro environment. Customer requirements have to be analysed in detail, and the marketing mix designed to meet customer needs.
Marketers must be aware of special factors amongst suppliers that may impact upon the marketing plan. A shortage of components could jeopardize a product launch.
Likewise a new computer system at a distributor may affect the timing of the launch of a new product.
This includes any group that can have an impact on the micro marketing environment – e.g. pressure groups, the government, shareholders, the media, and local community. The local community will have views on changes to office location, for example when Vodafone wanted to build a new set of offices in Newbury, it faced considerable local opposition.
The internal audit looks at the business itself, its mission, objectives and strategy. A marketing audit analyses the marketing organization, its systems, productivity and functions, to see how effectively they are operating.
- · The marketing strategy audit, which focuses upon a review of the organization’s marketing objectives and strategy, with a view to determining how well suited they are to the current and forecasted market environment.
- · The marketing organization audit, which follows on from the previous point, and is concerned specifically with an evaluation of the structural capability of the organisation and its suitability for implementing the strategy needed for the developing environment.
- · The marketing systems audit, which covers the quality of the organization’s systems for analysis, planning and control.
- · The marketing productivity audit, which examines the profitability of different aspects of the marketing programme and the cost-effectiveness of various levels of marketing expenditure.
- · The marketing functions audit, involving a detailed evaluation of each of the elements of the marketing mix.
Audit tools for internal analysis include SWOT analysis as well as portfolio tools and Gap Analysis.
Additionally you will also want to know about strengths and weaknesses in Human Resources, Production, Finance and R&D, as this may influence what you want to do with the organization.
The marketing audit is completed with the preparation of a SWOT analysis:
- · Strengths
- · Weaknesses
- · Opportunities
- · Threats
The SWOT is a powerful summary tool, drawing together the findings of the internal and external audit to evaluate the strategic position of a company. For the purposes of creating strategy, an organization will attempt to capitalize upon its strengths and minimize its weaknesses.
These could include a strong brand, a broad customer base, customer loyalty, high level of customer engagement online, and an active sales team.
Examples could be poor marketing skills, low product quality, and a lack of innovation.
There might be strong growth in the market, new markets and mediums to exploit, or the disappearance of a leading competitor. E.g. the growth of digital brings new mediums through which entire new markets can be reached and growth in current markets can prevail.
New low-cost competitors could be emerging, whist the bargaining power of buyers is increasing. At the same time overall growth in the market may be slowing.
The marketing plan outline
The following structure is an outline marketing plan. For more detailed information on marking planning, see our previous post on the importance of planning and the planning process.
Outline Marketing Plan:
1. Executive summary
2. Corporate strategy
- · Mission and objectives
3. External and internal analysis
- · Overview of market
- · Competitor analysis
- · Future trends
- · SWOT
4. Marketing objectives
5. Marketing strategy
- · Growth strategies
- · Competitive strategy
- · Segmentation, targeting and positioning
6. Marketing mix
- · Product
- · Price
- · Place
- · Promotion
- · People
- · Process
- · Physical evidence
9. Market research
11. Control and forecasting
12. Financial forecasts
13. Possible competitor response
14. Alternative strategies
15. Implications of marketing plan on other parts of the business