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• Excessive inventories leading to high carrying charges and obsolescence Benefits of auditing the marketing function (3 marks)• A company can independently and objectively review different opportunities with respect to marketing strategy, and ensure consistency between opportunity and effort. • The firm’s marketing strategy can be re-evaluated. • Priorities can be set for marketing programs. • Managers of all departments can be made aware of the importance of their contribution to customer satisfaction. Key areas to be reviewed in a management audit of the marketing function (9 marks)• Review the overall organization of the marketing function: (3 marks)4
Determine whether the formal policies and procedures for marketing activities are clearly defined. Determine whether responsibilities for marketing management are clearly set out and known to staff. Determine whether procedures exist for reviewing and evaluating marketing activities. Review management controls for these elements of marketing management. • Review systems and practices for pricing: (3 marks)1! Determine market demand and the willingness of customers to buy at certain prices. 2! Evaluate the competition and the prices of similar products. 3! Determine whether the corporation has a formal policy on pricing and a regular review of prices, and whether this policy takes plant capacity into account. 4! Determine whether the marketing, finance, and production departments are all participants in pricing. 5! Determine whether market research has been conducted by the corporation. 6! Evaluate the quality of the information on which pricing decisions are based. 7! Determine whether procedures and controls over price lists and price changes are adequate. 8! Examine a sample of prices and review the information and analysis used to make pricing decisions in order to determine whether pricing systems and practices are actually followed. • Review systems and practices for advertising: (3 marks)1! Determine whether there are overall systems and practices to provide adequate control of advertising expenditures. 2! Determine whether the objectives of the advertising campaign are measurable, for example, a 10% increase in sales of deluxe day planners. 3! Determine whether the corporation has looked into alternatives and has kept the costs and benefits of each alternative in mind. 4! Determine whether the corporation has detailed budgets for implementing established strategies and follows up on them systematically. 5! Evaluate the policies for contracting with advertising agencies. 6! Examine the controls for ensuring that the corporation pays only for the services rendered at the agreed price. 7! Determine whether the corporation has a system for evaluating the results of advertising programs.