Market Audit

A market audit examines a company from a marketing perspective, just as a financial audit, tax audit, or IT audit examines a company from each of their own perspectives. However, while those audits focus principally on internal data, a market audit gathers a great deal of information from outside the company, in order to compare the company's performance and character to those of its competitors. In this respect it has much in common with the Competitive Market Analysis. While other audits may be performed by accountants, a market audit is the work of a marketer.

The questions asked in a market audit begin very simply, by identifying the type of organization, the products or services it sells, and the customers to whom it sells them. These questions can be broken down very specifically, though, and as more and more specific answers are yielded, a clearer picture of the market is created. Two television networks may seem essentially similar—they both broadcast in the same regions, their programming includes comedies, dramas, news, and sports, and their flagship programming airs in the same hours. But a closer look reveals that one network appeals largely to families and older couples, while the other targets a college-age demographic; this information affects advertisers' decisions about which network to favor their advertising dollars with, and the networks' own decisions about how to maintain or change their appeal to their demographic.

As much data as possible and relevant is collected, in order to provide points of contrast between the company and its competitors. How much does the company charge for its product, and what is the comparative value of its competitors product? Pepsi-Cola made its mark in a crowded field of Coca-Cola competitors by charging the same price for its cola but selling it in bottles that were twice the size. When comparing prices, coupons, discounts, and other incentives are taken into account, as are factors that affect ease of purchase-such as availability, associated costs (a market audit of a resort or tourist attraction would take into account the cost of travel, and perhaps the “cost” of using up vacation days). Much of the data will bear on factors that are outside the company's control, or at least not the result of its choices: both Pepsi and Coca-Cola, for instance, likely sell better in stores that also sell salty snacks, which affects the market data even though it is [Page 1073]not the result of a marketing decision. That they likely sell best in hot weather is another marketing point; consider Coca-Cola's long-lived advertising campaign associating the product with Christmas, Santa Claus, and polar bears, integrating its image with that of winter festivity and positioning the product with respect to the colder months.

A market audit will seek to identify key information to inform the company's marketing strategy. Is the company an industry leader? Is the general perception of its importance and leadership proportionate to its market share? How does the public think of the company, and to what demographics does it appeal? (In the case of the two television networks, does the audience perceive that it outgrows one and grows into the other, and if so, does the younger-skewing network want to retain that audience as it matures, or simply guarantee that there is a constant flow of new viewers?) The specifics, of course, will always depend on the industry. Market audits may depend to some extent on classic market research tools like customer satisfaction surveys, mystery shopping, and price elasticity testing, and may employ more recent devices such as commercial eye tracking or so-called “coolhunting,” a marketing practice that developed in the 1990s to seek out and lay claim to the cutting edge of youth culture.

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