Marketing control process.

What do we want to achieve?- Goal setting. What is happening?- performance

measurement. Why it is happening?- performance diagnosis. What should we do about it?- corrective action.

Types of marketing control.A. Annual plan control.I. Sales analysis –

Consists of measuring and evaluating actual sales in relation to sales goals.

a. Sales variance analysis – Measures relative contribution of different factors to gap in sales performance

Variance due to price decline = (1-0.80)(3000) = 600 - 37.50

Variance due to volume decline = (1)(4000-3000) = 1000 - 62.50 1600 - 100

b. Micro sales analysis.

II. Market share analysis.

Defining & measuring market share

a. Overall market share –

Company’s overall market share is it’s sales expressed as a % of total market sales.

b. Served market share –

As a % of total sales to it’s served market.

c. Relative market share – To top three competitor.

Company sales as % of combined sales of three largest competitor.

These conclusions from market share analysis are subject to certain qualification.

o The assumption that outside forces affect all companies in the same ways is often not true.

o That a company’s performance should be judged against the average performance of all companies is not always valid.

o If new firm enter the industry then existing firms market share might fall.

o Sometimes market share decline is deliberately engineered by a company to improve profits.

o Market share can fluctuate for many minor reasons.

Managers must carefully interpret market share by product line, customer type, regions & other breakdowns.

Four components of market share movements –

Overall = Customer X Customer X Customer X Price

Market Share Penetration Loyalty Selectivity Selectivity

Customer Penetration.

It is the percentage of all customers who buy from this

company. Customer Loyalty.

It is the purchase from this company by it’s customer expressed as a percentage of their total purchase from all suppliers of the same product.

Customer Selectivity.It is the size of average customer purchase from company expressed as a percentage of size of average customer purchase from an average company.

Price Selectivity.

It is the average price charged by this company expressed as a percentage of the average price charged by all companies.

III. Marketing expenses to sales analysis. Sales force to sales – 15% Advertising to sales – 5% Sales promotion to sales – 6% Market research to sales – 1% Sales administration to sales – 3%

Upper control limit.

Desired level.

Lower control limit.

IV. Financial analysis. Rate of return on net worth. Profit margin.

Net profits Return on FinancialNet sales assets Leverage

Asset Turnover XNet Sales Net Profits Total assets

Total assets Total assets Net worth Return on net worth = Net profits Net worth

V. Customer Satisfaction Tracking.

B. Profitability Control.I. Methodology of marketing profitability

analysis.a. Identifying the functional expenses.

Selling – Advertising – Packaging – Delivery – Billing – Collection.

o Sales.o Cost of goods sold.o Gross Margin.o Expenses.o Salaries.o Rent.o Supplies.o Net Profit.

b. Assigning the functional expenses to the marketing entities.

c. Preparing a profit & loss statement for each marketing entity.

II. Determining the best corrective action.

Alternative action evaluation.

III. Direct v/s Full costing.o Direct cost.o Traceable common costs.o Non traceable common costs.

C. Efficiency Control.

I. Sales force efficiency.o Average no. of sales calls per sales person per day.o Average sales call time per contact.o Average revenue per sales call.o Average cost per sales call.o Entertainment cost per sales call.o Percentage of orders per hundred sales call.o No. of new customers per period.o No. of loss customers per period.o Sales force cost as a percentage of total sales.

II. Advertising efficiency.o Advertising cost per thousand target buyers reached

by media vehicle.o Percentage of audience who noted, saw, associated

& read most of each print advertisement.o Consumer opinion on the advertisement content &

effectiveness.o Before & after measurement of attitude towards the

product.o No. of enquiries stimulated by the advertisement.o Cost per enquiry.

III. Sales promotion efficiency.o Percentage of sales sold on deal.o Display cost per sales dolor.o Percentage of coupons redeemed.o No. of enquiries resulting from demonstration.

IV. Distribution efficiency.o Inventory control.o Warehouse location.o Transportation modes.

D. Strategic control.

I. Marketing effectiveness rating review.o Customer philosophy.o Integrated marketing organization.o Adequate marketing information.o Strategic orientation.o Operational efficiency.

Marketing audit.

It is a comprehensive, systematic, independent & periodic examination of company’s business unit’s marketing environment, objectives, strategies & activities with a view to determine problems areas & opportunities & recommending a plan of action to improve the company’s marketing performance.

Marketing audit procedure. Components of marketing audit.

1. Marketing environment audit.

Macro environment.o Demographic.o Economic.o Ecological.o Technological.o Political.o Cultural

Task environmento Markets.o Customers.o Competitors.o Distribution & dealers.o Suppliers.o Facilitators & marketing firms.o Publics.

2. Marketing strategy audit.o Business mission.o Strategy.o Marketing objectives & goals.

3. Marketing organization audit.o Formal structure.o Functional efficiency.o Interface efficiency.

4. Marketing system audit.o Marketing information system.o Marketing planning system.o Marketing controlling system.o New product development system.

5. Marketing productivity audit.o Profitability analysis.o Cost effectiveness analysis.

6. Marketing function audit.o Product.o Price.o Distribution.o Advertising sales promotion publicity.o Sales force.

Marketing excellence review. Company ethical & social responsibility review.