Chap 2 Flashcards
it is the process of the companies to uncover and unearth marketing weaknesses and the
company’s examination of its marketing
environment.
Marketing Audit
Marketing audit examines six major marketing components:
- The MAcro Environment and Task
Environment - Marketing strategy
- Marketing organizations
- Marketing systems
- Marketing productivity
6 MArketing functions
marketing audit’s four characteristics:
- Comprehensive
- Systematic
- Independent
- Periodic
covers all the major marketing activities of a business
Comprehensive
an orderly examination of the organization’s macro and micromarketing
environment
Systematic
can be conducted in different ways independently
Independent
initiated only after sales have turn down or sales force has fallen
Periodic
• business must monitor key macro environment
(demographic economic, technological,
political-legal, and social-cultural)
• must also monitor the micro environment
(customers, competitors, distributors, and
suppliers
• opportunities can be classified to their
attractiveness and to thier success probability.
• threats should be classified according to
seriousness and probability of occurence.
External Environment Analysis
Models/tools to assess external environment
PESTEL ANALYSIS
- Political Factors
- Economic Factors
- Socio-cultural Factors
- Technological Factors
- Environmental
- LEgislative Environmental
Models/tools to assess external
environment
PORTER’S 5 FORCES
- Threat of New Entrant
- Bargaining Power of the Suppliers
- Intensity of Rivalry
- Bargaining Power of Buyers
- Threat of Substitute
Internal Environment Analysis
The 7’S Mc Kinsey
- Shared VAlues
- Structure
- Style
- Systems
- Staff
- Strategy
- Skills
Marketing Coast and Financial
Analysis
• By identifying the fixed and variable
components of cost and by distinguising
between direct and indirect costs, managers will be able to examine some of the profitability implications of pricing and
marketing expenditures decisions.
• By understanding the profitability structure from a product, managers can identify cost- volume-profit relationships and implicationsfor marketing budgets.
is the process of estimating the impact on
sales of the change in price or in
marketing expenditures; that is the change
in sales resulting from given change ina
marketing program indicates how
productive that marketing program is.
Productivity Analysis
are used to represent relationships between price or a marketing expenditure and sales.
sales-response functions
costs, such as product-specific
advertising, taht are incurred on behalf of
a specific or service are known
direct fixed cost
costs such as institutional advertising,
incurred to support the total business
indirect-fixed cost
are indirect costs that can be allocated to various products on some non-arbitrary basis.
traceable cost
•the purpose of distinguising the various
types of fixed costs is to provide a basis
for evaluating the contributions made by
different products or services to the
overall profitability of the firm.
•the profitability of individual products or
services can be measured onced the
management has separated the fixed cost.
Productivity Analysis
• in an organization, the large portion of the total operating cost is essentially fixed.
• with this, managers will generally pursue
policies that will take advantage of
economies of scale.
Cost-Volume-Profit Relationship
• also known as step-variable cost represents
a potential limitation to economies of scale.
• semi-fixed costs are costs that donot vary
automatically on a per unit basis (as
variable cost do) but may change if
substantial increases in volume occur.
Semi-fixed Cost
in addition to evaluating the impact of
margins and direct fixed costs on
profitability, retailers must assess the
amount of space (physical assets) or
inventory investment (financial assets) that
is appropriate for a given product, product
line, or department.
Special Profitability Issues for the Retailers
3 basic measures- Special Profitability Issues for the Retailers
- inventory turnover
- sales per square foot
- gross-margin return on inventory
investment
the ratio of the product’s sales to the average dollar value of the inventory held for that product.
Inventory turnover
equivalent to sales per square foor multiplied by gross profit margin percentage.
sales per square foot
measures the profit return rather than the sales return on inventory investment
gross-margin return on inventory
investment
Implications for Marketing Budgets
• managers should have an understanding
of the product objectives and an industry
sales forecast in order to develop a
budget.
• managers must have some estimate of the productivity of a proposed price and
marketing expenditure level in generating
company sales.
• however, assuming that management has
developed these estimates of productivity
the budgeting process can proceed in
either of two ways:
the direct approach or
the indirect approach.
the budgeting process can proceed in
either of two ways:
the direct approach or
the indirect approach.
