In this module we begin our exploration of the CADDIE process – specifically the CA of the CADDIE process. After comleting this module yo should have amore detailed understanding of the CADDIE business-marketing planning process, including the 2 main types of research that marketing practitioners employ as needed marketing research and everyday marketing research. You should also be able to outline how a marketing audit is synthesised into a report and a SWOT summary presentation for consideration by the Strategic Business Planning Group as part of the business-marketing lanning process.

As needed marketing research is research needed to better understand an emergent phenomenon. As needed marketing research is conducted when there are changes to the situational factors [COMP] that may impact on organisational performance [e.g., changes in customer preferences, changes in organisational performance, a change in market conditions, the entry of a new competitor/product to the market].

As needed marketing research may adopt a qualitative or a quantitative methodology, or a mixed method approach [qualitative and quantitative] where the emergent phenomenon is explored and then measured. The research may uncover a new marketing problem that requires special marketing attention. In these cases, an as needed marketing action plan will be designed and developed to manage the phenomenon and this process may be either:

• • • Part of the longitudinal and routine CADDIE business-marketing planning process
    • Independent from the longitudinal and routine CADDIE business-marketing planning process

Author’s comment: As needed research is the traditional research taught in a business school as part of a ‘business research methods’ course. 

Everyday marketing research is the research that marketing practitioners would undertake as part of their everyday work routine. The routine activities of marketing practitioners that are either strategic or tactical. We can classify everyday marketing research as strategic when a marketing practitioners collects and analyses information as part of a marketing audit for the Strategic Business Planning Group or tactical when it is a component of a marketing action plan. Everyday marketing research may be collecting information for a marketing action plan or performance information after implementation of a marketing action plan.

In the course of their work, marketing practitioners generally move freely between as needed marketing research and everyday marketing research. For example, during a marketing team meeting a marketing manager may table a report on some research that has been recently published in a trade magazine [for example, changing consumer preferences]. The chief researcher may make a presentation of the findings. The marketing manager may invite questions and comments from the meeting. The next item at the meeting may be a presentation, from the sales manager, of last month’s sales figures.  During the sales manager’s presentation, it was noted that the sales from one particular retail store have unexpectedly dropped. The sales manager may indicate that he wishes to research that situation and report his findings at the next meeting.

Author’s comment: A marketing audit and report is likely to include as needed marketing research if situational factors have changed and new insight is needed. Regardless of whether the research is ‘as needed’ or ‘everyday’ it is important to develop market research skills as this provides the ability to critically evaluate information.

Everyday marketing research

We can define everyday marketing research as:

Research that is conducted regularly and routinely to monitor and achieve the marketing objectives of the organisation; this includes the steps to collect and analyse information, design and develop strategic marketing plans, implement and evaluate marketing action plans, and take corrective action when needed.

We will now turn our attention to everyday marketing research. Everyday marketing research is longitudinal and routine – it is part of a marketing practitioners regular and everyday routine. Everyday marketing research is both strategic and tactical.

Strategically, marketing practitioners collect and analyse everyday marketing research for the design and development of the business plan, the marketing plan, and the marketing action plans. The business planning process may be conducted on an annual, six-monthly, and sometimes on a quarterly basis. Some organisations have a rolling plan with regular reviews.

Collecting and analysing information and presenting it for inclusion in a business plan is referred to as conducting a marketing audit.

Following the marketing audit; the Chief Marketing Officer would report the findings to a Strategic Business Planning Group [which she/he is a member] for consideration. This information would help shape the organisational business plan and provide guidance for the plans of the various disciplines. Often within in a business plan and a marketing plan, the findings of a marketing audit are summarised and included under the heading – Situational analysis.

Tactically, marketing practitioners collect and analyse everyday marketing research data as part of their everyday evaluation of an organisation’s performance. Everyday marketing research, at a tactical level, monitors the performance of an organisation against the marketing objectives stated in the marketing action plans.

Author’s comment: A marketing practitioner is conducting everyday marketing research when he/she reviews the sales performance data.

Audit of the situational factors

In keeping with COMP, we will begin our audit with the customer. However, the marketing concept is not just about satisfaction for the customer, therefore, it would be prudent to identify and remain focused on the organisation’s needs throughout the process. Starting with a customer audit is traditional, however, discussions with marketing practitioners suggests that sales performance data is also a good place to start – as this may indicate the presence and urgency of a potential problem.

It is worth noting that during the marketing audit the same information may be listed under more than one heading. For example, segmentation could be listed in customer, organisation, market, and product. However, this information is for analysis only and would be synthesised within the marketing audit report.

The marketing audit and the report are undertaken to enable the Strategic Business Planning Group to determine the attractiveness of the market and an organisation’s ability to compete within the marketplace, to identify the basis of competition within a market [where to compete, who to compete with, how to compete] and the strategic imperatives needed to compete successfully. These determinants will provide the directions for the marketing planning process.

Customer audit

Organisations that adopt a segment[s] of the market strategy will begin by identifying the market segments this information is important and during the decision-making process will be employed to determine:

• • • Which segments does the organisation intend to target?
    • Which segments does the organisation not intend to target?

Generally, although there are exceptions, an organisation will not have the resources to target and position a product offering to appeal to each market segment. Organisation must approach the profitable segments and avoid the unprofitable segments.

Identify the customer segments and the characteristics of the segments.

• • • Determine the methodology for undertaking the market segmentation process
    • Characteristics [sales, growth, profitability, lifetime value]
    • Characteristics [demographics, psychographics]
    • Characteristics [expectations – quality, value]
    • Characteristics [product requirements]
    • Consider an organisation’s capabilities & constraints, then identify the attractiveness of segments
    • Bargaining power of customers [see Porter’s 5 competitive forces in this chapter]
    • Identify income characteristics of segments [ability & willingness to purchase]
    • Identify preferred payment methods, mediums,
    • Location [in-store & on-line]
    • Buying patterns [frequency]
    • Motivators to enter the buyer decision process
    • Satisfaction [transactional, cumulative, collective]
    • Retention [NPS]
    • Social media habits
    • Word of mouth and referrals
    • Competition within segment
    • Consumer behaviour
    • Involvement [e.g., family members, friends, groups, society]

Organisational audit

Many organisations operate in a dynamic market and from time to time may need to realign their organisational philosophy and statements of purpose to better articulate their desired purpose. Often the need to realign the organisational philosophy and statements of purpose is recognised during the organisational audit; perhaps, the organisational audit is the catalyst for conversations. Furthermore, the organisational objectives are likely to be realigned after the marketing audit and the report has been presented. Therefore, the CADDIE business-marketing planning process presents the opportunity for an organisation to adapt to the market. The organisational audit is not a creative document; it is exploratory and fact-finding and part of the planning process. The objective is to undertake an audit of the capabilities and constraints facing the organisation [other disciplines will conduct their own analysis].

Clearly a marketing audit and the report is not ‘puffery’ or seeing the organisation ‘through rose coloured glasses’, therefore when the facts are listed and presented in the report it will be a combination of positive and negative factors – these could be summarised in the report as capabilities and constraints, however, it is not uncommon to discuss them as strengths and weakness.

• • • Past and present objectives
    • Past and present performance
    • 9 marketing objectives [3Xfinancial, 3Xstrategic, 3Xcommunication objectives]
    • Gaps between budget forecast and actual achievements
    • Current capabilities and constraints
    • Key success factors, organisational competencies, culture, patents, technological skills, processes, employee performance, relative costs, marketing channel effectiveness, barriers to exit a market
    • Revenue analysis
    • Size, growth, pricing, strategies, total sales and margins by product, life cycle, market position, market-share by segment, cost of sales, shareholder value analysis
    • Brand analysis
    • Customer relationship analysis, brand strength [uniqueness, relevance], brand stature [esteem, knowledge], brand equity [value as an asset], brand awareness, brand associations

Market audit

Author’s comment: It is easy to confuse a marketing audit with a market audit. A marketing audit covers all COMP factors. Whereas a market audit is more specific. You may recall that ‘a market’ is all current and potential buyers and sellers [domestic or commercial], and ‘the market’ are the factors that influence supply and demand. Therefore a market audit looks at buyers and sellers and the influencing factors.

After collecting and analysing the information from the customer audit and the organisational audit, marketing practitioners will turn their attention to the market audit. Given that a customer audit [buyer] has been previously undertaken, the market audit may begin with a  competitor audit [seller]; an analysis of competing brands, products and other competing factors before moving on to other market influencing factors. A market audit will include macro-external factors that may impact on the customer, organisation, and the total market. This process is sometimes referred to as environmental scanning.

We will organise the macro-external factors into categories of Competition, Economic conditions, Market attractiveness, Sociocultural factors, Technological influences, Environmental considerations, Ethical & legal factors, and Political influences – the acronym of CEMSTEEP. may assist. In many organisations, marketing practitioners are part of the organisation and therefore marketing practitioners will work with other disciplines to explore the macro-external factors.

Competition [Cemsteep]

Organisations face different types of competition, exploring the source of competition can reveal a more holistic picture of the factors that may impact on sales.

We begin by identifying present and potential competitors. Then the characteristics of competitors are documented. Initially, this may seem a daunting task, however, in time it will become an everyday marketing research activity and a regular part of the sales manager’s report.

In the market audit report, it may be worthwhile to position competitor information as visually as possible – sometimes referred to as perceptual mapping. This may assist the executive team and other disciplines during the strategic business planning process and when articulating the desired market position and the basis of competition. For example, a pricing matrix [e.g., cost to customer V perceived value] would identify the value of the organisation’s products against competing products; this may assist the executive team across a range of decisions.

A market audit would reveal the capabilities and constraints of competitors and their place in the hierarchy – market size and market power. It is also worthwhile to document past responses when an organisation is faced with increased competition. Furthermore, by listing competitors’ past and current strategies it may provide insight to the future strategic directions of competitors.

The competition types are brand competition, product competition, generic competition, and total budget competition.

Brand competition: Is where a number of organisations offer similar and competing products to the same target market. Customers will often select the brand and then the product [e.g., select the brand of sports shoe and then the product]. Brand competition is present in automobiles – people often select automobiles by brand and then the model. Consider the SUV market where products may be similar and people will be influenced by brand and then the model. Perceptual mapping is often a useful tool to gain a visual perspective.

• • • Revenue analysis: Size, growth, pricing strategies, total sales and margins by product, life cycle, market position, market-share by segment, cost of sales, shareholder value analysis, past and current performance
    • Current capabilities and constraints: customer relationship analysis, brand strength [uniqueness, relevance], brand stature [esteem, knowledge], brand equity [value as an asset], brand awareness, brand associations, past and current objectives, organisational competencies, culture, patents, technological skills, processes, employee performance, relative costs, marketing channel effectiveness, barriers to exit a market

Product competition: This is where organisations are competing with similar products and there is a choice [e.g., between different types of product some of which may be from the same brand], however, although similar – the products compete on features, benefits, and price. For example, compare the variety of competing products on offer in a supermarket [e.g., the types of biscuits]. Perceptual mapping is often a useful tool to gain a visual perspective.

• Analysis of competing products. perceptual mapping, features, benefits, pricing, size, revenue, profitability, growth

Generic competition: This is where the customer has a choice of different methods of achieving the same outcome – different products that may satisfy the same need [e.g., catching a train, bus, taxi, riding a bicycle, or driving a car to work]. A group of friends are considering a night out – one suggests a meal at an Italian restaurant another suggests a visit to the cinema, another a stand-up comedy night at a local pub. This is often referred to as substitute products.

Total budget competition: This is the broadest form of competition and recognises that at an holistic level all organisations compete for their share of the consumer’s available money – this is sometimes referred to as share of wallet. For example, a couple may be considering a holiday in the south-west of Western Australia, however, after a great deal of consideration they purchase a new refrigerator instead. The holiday has been postponed to a time when there are fewer competing needs. Some products are more vulnerable to total budget competition than others.

Models of market competition

Marketing practitioners must adapt their products and their organisations to suit the nature of the marketplace in which they operate. Markets have different models of competition [sometimes this is referred to as the 5 market models or 5 market systems]. Economists often use this classification as it provides a macro understanding of industries and industry trends.

Understanding models of competition can help organisations to make decisions regarding whether to enter/exit a market, what pricing strategies to adopt, and the overall attractiveness of a market. The market models of competition are pure competition, monopolistic competition, an oligopoly, a monopoly, and a monopsony – each is described below:

Pure competition: Many buyers and sellers with no dominant players and products that have limited augmentation [undifferentiated product].  These are often described as commodities – for example wheat, coffee, sugar, gold, oil. In pure competition, no one participant [buyer or seller] can influence the market greatly.

Monopolistic competition: Many buyers and sellers with no dominant players and products, however, there is the ability to augment the product and therefore differentiate one product from another. Laptop computers, large screen televisions are examples of monopolistic competition where the core product is essentially the same, however, competitors are distinct by aesthetic appeal, performance, build quality, price, status – etc.

Oligopoly: There are many buyers, however, due to barriers to enter the market there are only a small number of sellers. The core product is the same, however, in an oligopoly the products can be augmented to appeal to buyers. The airline industry is an example – the core product [safe transportation of the person and their baggage from one location to another] is the same, however, competitors are differentiated by reputation, service quality, price, convenience, status – etc. There is always the risk of sellers colluding to control the market.

Monopoly: There are many buyers, however, due to barriers to enter the market there is only one seller. This often occurs in government services where it would be inefficient or undesirable to have competition; for example, the issuing of passports. In a monopoly, buyers have no considered set of products and only one alternative. The costs of maintaining a monopoly [e.g., telephone lines] can be considerable so often governments open up the markets to provide competition. There is always the risk of sellers seeing no need to innovate.

Monopsony: There is only one buyer, however, there are many sellers [or organisers that may tender for a contract]. In a situation such as a monopoly [e.g., building essential services – water supply] there may be many alternative contractors tendering. In a monopsony, buyers have considerable power when the list of alternative suppliers is comprehensive. However, often a balance in negotiations occurs when a supplier may have a competitive advantage through skills, experience, and a global talent pool.

Warning: It would be wrong to assume that competition is limited to external competition. Often internal competition for organisational resources is intense; it should be noted that there is a downside to internal competition; Pfeffer and Sutton, (2000) state that intense internal competition results in winners and losers, this distorts employee focus, and turns ‘friends into enemies’, whereas, internal cooperation/collaboration is a strategic strength. Marketing practitioners refer to internal cooperation/collaboration as internal marketing. It is generally regarded that internal cooperation/collaboration and a focus on external competition are the catalysts for total product quality, value, customer satisfaction, and subsequently organisational satisfaction.

Economic conditions [cEmsteep]

The prevailing economic factors influence the economy and impact a number of factors including consumer confidence. Although the market audit report will outline the economic factors from a marketing perspective; it is likely that this information will also be included in the financial report delivered to the strategic business planning group for their consideration. However, it is important to note that this data will be insightful for marketing practitioners when designing and developing the marketing plans and marketing action plans – so it must be communicated. Therefore, a summary of the current and potential economic situations, GDP, consumer confidence indicators, business confidence indicators, employment rate, costs of raw materials, household disposable income, interest rates, exchange rates will influence marketing strategies and tactics.

Economic conditions fall into 4 classifications [prosperity, recession, depression, and recovery]. Consumer and organisational decisions that are made in periods of prosperity and strong economic growth are likely to be quite different to decisions that are made in periods of economic slowdown.

Market influencers [ceMsteep]

When organisations co-exist in a market they must compete to survive and to prosper – in nature this is referred to as natural selection – Darwinism.

Within any industry there would be factors that influence supply and demand within the market. Although many market influencing factors can be anticipated and controllable [to some degree]; there are other marketing influencing factors that cannot be anticipated and are beyond the control of the organisation. Consider, for example, how some organisations would be impacted by the weather – how would a mild summer or hot summer or unseasonal weather impact on sales of airconditioners. chocolate, clothing, events. Organisations often undertake scenario planning as part of risk planning.

Auditing the market influencing factors can assist the organisation to make strategic and tactical decisions regarding product offerings, product pricing, product availability, and communication of the product and brand value proposition. Through this understanding marketing practitioners are better equipped to track changes over time and predict future trends (Bruce, 2000).

When undertaking a market audit and having completed the audit of the competition and the prevailing economic conditions marketing practitioners should aggregate this information to provide an overview of the competitive nature of the industry [market attractiveness].

An overall view of the market should be included in the report to identify market segments and market share within the selected segments. The overall view may include:

• • • Market size, profitability, growth, market patterns, potential, profitability, life cycle issues
    • Competencies, strategic imperatives, Key Success Factors
    • B2B & B2C communication channels
    • Structure of market channels [distribution]
    • Emerging trends and developments
    • Market life cycle factors

Sociocultural factors [cemSteep]

The marketing genre of consumer behaviour explores the sociocultural factors that influence how people consume. Sociocultural factors are prevailing and potential situations, cultural values and influences, demographics, education, wealth distribution, prevailing attitudes, living conditions, lifestyles. The audit of sociocultural factors would identify social pressures or changes in societal standards that may influence consumer behaviour and may result in changes to regulations facing an industry – two examples,1]  today there is a distinct movement towards anti-social behaviour caused by alcohol consumption – this will influence the hospitality industry and 2] today, in Australia, there is increased scrutiny of banking practices following a government investigation.

Technological [cemsTeep

 current and potential situations, emerging technologies, opportunities or threat from disruptive technologies Changes in technology, for example, the products impacted as a result of ‘smartphones’ [e.g., decline in small digital cameras].

Environmental [cemstEep} current and potential situations, regulations and pending regulations concerning waste, energy, pollution and sustainability regulations  

Ethical and legal [cemsteEp]

 Ethical: some issues may be legal, however, may not reflect the values of society – sometimes the values of society may have shifted [see sociocultural factors]. Previously we have discussed the importance of values¹²³ in the buyer decision process. Increasingly marketing practitioners are aligning themselves with ethical issues and this could be considered a form of market segmentation. Legal: current and potential situations, regulations regarding employment [e.g., equal opportunities], consumer rights, product labelling, advertising standards, anti-competitive behaviour, health and safety – etc.

Political [cemsteeP]

 current and potential political situations, degree of intervention, degree of stability [e.g., forthcoming election], tax policies, trade policies entry/exit barriers, monetary policies, prevailing attitudes of political parties and movements

Product audit

Previously we discussed the product considerations that marketing practitioners take into consideration during the planning process. It should be kept in mind that there are a number of product considerations that are of importance to the business plan and the other discipline plans – this will vary regarding the nature of the product. It is unlikely that everyone in the Strategic Business Planning Group has an understanding of marketing – therefore detailing the nature of the product can assist members from other disciplines to make better informed decisions.

There is a need at this stage to work collaboratively with other members of the Strategic Business Planning Group. For example, the Chief Finance Officer can access existing sales data to determine past sales, however, they need the forecast sales from the Chief Marketing Officer to enable them to undertake their finance plan. Similarly, the Chief Finance Officer will provide an economic forecast to enable the Chief Marketing Officer to accurately forecast sales and to determine product pricing. The business planning process is therefore an iterative process that begins with the collection and analysis of macro and micro factors – the business planning process is a compound process.

Product information would include:

• • • Product considerations
    • Product sales analysis
    • Total sales X product
    • Total sales X territory
    • Sales by [hour/day/week/month/year/ or other suitable unit of measure e.g., weather]
    • Number of transactions
    • Average sell price
    • Margins X product
    • Cost of sales
    • Product inventory [e.g., value of inventory on hand – usage rates]
    • Product adoption & life cycle [Decisions that are made by customers in the early stages of a product life cycle are likely to be different from the other stages]
    • Product strategy
    • product line – mix, positioning, uniqueness, value proposition, augmentation, involvement, contact, product components, decision type, recipient[s], category, classification, awareness