Topic 2.

DIAGNOSTICS OF MARKETING

2.1. The content, purpose, objectives and process of marketing diagnostics.

In order to improve marketing activities and increase competitiveness, enterprises need

to regularly evaluate the effectiveness of the marketing function. Thus, the purpose of
marketing diagnostics is to confirm that the content of this function responds (or does not
respond) to the level of existing knowledge, techniques and marketing methods and that the
products produced by the enterprise are competitive due to the correct use of these methods
and sales techniques.
V.V. Zhivetin, V.L. Samokhvalov, N.P. Chernov, I.A. Feraponova - believe that the
effectiveness of marketing policy in relation to a specific enterprise (industry, a group of
industries) is formed from the results of improving production and marketing activities in the
following key areas: optimal use of market potential, including for a new product; increase in
the reliability of forecasted data; finding the market segment of the product; improving the
accuracy of market balance analysis, etc.
M. Tugan-Baranovsky, L.V. Balabanova proposes to evaluate the effectiveness of
marketing in the following areas: buyers, marketing integration, information adequacy,
strategic orientation, operational efficiency.
N.K. Moiseeva, M.V. Konyshev present the indicators of marketing activity by
functions (market research, assortment policy, sales activities, communication activities) and
generalizing indicators (profitability, strategy activity).
G. Assel proposes to evaluate the effectiveness of marketing activities, as the
effectiveness of marketing costs. At the same time, with the help of economic-statistical
methods, the relationship between marketing costs and the result-sales volume or profit-is
investigated.
M.M. Glazov suggests diagnosing the marketing function via analysis of the dynamics
of the company's total turnover before taxation, as well as the dynamics of the same turnover,
adjusted for the growth of prices. At the same time, the rates of growth of these indicators
should be studied, with details on the "goods-markets" segments not only in value, but also in
physical terms. The structure of costs for production and sales of products for each commodity-
market relationship is studied. In addition, the share of the enterprise in a given segment of the
market is determined, the growth rates of the markets are examined, which are compared with
the growth rates of the enterprise's production. The distribution of sales is analyzed depending
on the "period of life" of the product ("launch", "growth", "maturity", "recession"), which
makes it possible to assess the development possibilities of the enterprise: too many goods at
the "recession" stage carry the risks of bankruptcy enterprises, too many products at the stage
of "launching" can create quite serious problems with the profitability of the enterprise, and in
this case additional investments in production will be required.
Then you need to analyze the movement of cash on each bundle of "goods-markets".
Only as a result of positive cash flows, especially from "commodity markets" in the "maturity"
and "recession" phase, can an enterprise finance scientific research related to the creation of
new products (the "launch" stage).
Thus, the main purpose of diagnosing the function of marketing is to increase its
effectiveness.
The results of diagnosing the effectiveness of marketing activities demonstrate how
effectively marketing activities are being carried out at the moment (which marketing functions
are performed, who performs them, how effectively they are executed - that is, whether time
and money are justified for implementation). Diagnostics includes the following areas of
effectiveness:
*Analysis of the effectiveness of the current department of marketing (structure, methodology
and methods used, etc., is the department worth the money it spends),
· Analysis of advertising and PR (how much does it cost to receive one customer, how much
does a potential customer call, the number and quality of company mentions in the media),
· Analysis of the results of marketing activities (percentage of clients leaving for competitors
and reasons, cost of a lost client, analysis of staff performance "mysterious buyers", etc.)
· Analysis of the company’s performance and its individual territorial divisions (branches),
· Analysis of assortment policy (which groups of goods generate profit and which are
unprofitable and why, analysis of the effectiveness of interaction with suppliers),
· Analysis of the effectiveness of pricing policy (does your pricing policy work for you),
· Analysis of the sales system (selected sales method, sales technologies, interactions with
dealers and affiliates), methods of sales forecasting.
The general process of conducting marketing diagnostics is as follows:
a) analysis of marketing results (sales development, market share, own competitive position,
profitability of sales) - sources of information: commercial statistics, accounting
documentation, industry analysis;

b) evaluation of the current policy (by types of goods, price, distribution channels, sales
intensity, advertising activities) - information sources: catalogs, price lists,quotations,
marketing plan, survey of sales managers;

c) evaluation of the means and organization necessary to implement the marketing function;
assessment of material resources, level of personnel skills and organization of this specialized
function - information sources: inventory, company's organizational chart, survey of managers;

d) audit of management and control methods (information systems, methods and procedures,
planning, budgets, control); - sources of information: plans and budgets, internal instructions;

e) Analysis of the current situation, taking into consideration the impact of internal and external
factors to this function - information sources: service instructions, interviews, internal
correspondence;

e) identification of links between causes (enterprise policy, its means, organization,

management methods, external factors, interaction between specialized functions) and
consequence, i.e., financial result;

g) conclusions: the search for strengths and weaknesses in terms of the marketing function, as
well as recommendations on how to improve it.

2.2 Analysis of marketing results

At this stage, the dynamics of turnover, or the revenues from the sale of products
adjusted for the growth of prices, inflation and increase of price are examined.

Example: Dynamics of turnover before taxation, thousand lei

Indicators Span time

2013 2014 2015 2016
1. Total turnover of the enterprise before taxation
2.Annual rate of inflation in the industry (given - the
Department of Statistics)
 3. The annual growth rate of the enterprise's prices (given -
calculated by specialists on enterprise)
4. Turnover of the enterprise before taxation, adjusted for the
growth of enterprise prices (1/3)
5. Rate of growth in turnover before tax, adjusted for price
increases,%(r.4n + 1 / 4n * 100-100)
6. Rate of market growth,% (source- Statistics Department)
7. Difference in the growth rate of turnover before taxation,
taking into account the adjustment of growth prices and market
(r.5-r.6)

Conclusion:

This analysis should be combined with the analysis of the market or the geographical
area of sales. At the same time, the rates of growth in commodity-market segments are studied,
the causes of negative changes are revealed.
Example.We will analyze the dynamics of sales of products by segments of goods - markets in
terms of geographical sales areas.
2015 2016 Absolute deviation Growth rate,
2016/2015 2016/2015
P1 P2 P3 P1 P2 P3 P1 P2 P3 P1 P2 P3
1. Wholesale,
Th.lei
Share%
(уд. Вес)
2. Retailsales,
Th.lei
Share,%

3. Total
sales,th.lei
Сonclusion:
.

Then the analysis should be followed by detailed dynamics of turnover ( in value terms)
and sales in pieces on different product and types of activities.
Example. Let us make a detailed analysis of revenues from sales in value terms across product
types of commercial enterprise “ Gumeniuc” I.I.
Product 2014 2015 Growth Absolute deviation
Sum, Share,% Sum, Share,% rate,% Sum,th.lei Share,%
th.lei th.lei
1.Shoes
2. Boots
3.Mocassins
4.high boots
5.trainers
Total

Conclusion:

The next step is to analyze the position of the enterprise on the market in comparison
with the main competitors (benchmarking). This evaluation process includes:
- identification of key factors for comparison;
- determination of the specific gravity of each factor (expert method);
-value of the factor on a 10-point system;
-calculation of the final values for each factor by multiplying the score by its specific
weight;
- determination of the sum of the total values
Example. We will present benchmarking studies of a commercial enterprise
specializing in the retail sale of children's shoes in the markets of Moldova
 Key factor of Weight I.I I.I Vita I.I LTD
competitiveness factor Gumeniuc Lina Luca Rstires
Assortment policy
Price Policy
Stuff qualification
New technologies
Policy of sales and
advertising
Quality of the product
Brand reputation
Total
Conclusion:

Continued analysis of the result of the marketing function is the analysis of sales,
depending on the period of life of the product. Too many goods at the stage of recession bear
the risks of bankruptcy of the enterprise. Too large number of products at the launch stage can
create quite serious problems with the profitability and profitability of the enterprise, in which
case additional investments in production will be required.
Example. Let us analyze the sales according to life cycle of the product.
Life cycle 2014 2015 2016 Absolute Absolute
deviation deviation
2015/2014 2016/2015
sum share sum share sum share sum share sum share
Implementation
Growth
Youth
decrease
total
Conclusion:

The next stage in the analysis of the results of the marketing department is studying
the structures for each bundle "commodity-market" in the dynamics over a long period of time
(at least 3 years), while the "direct-costing" method is used as an example of the
dismemberment of the parameter by components.
Thus, the structure of the trading margin or the next most important result of the work
of the marketing department is studied. Of great interest is the indicator that characterizes the
share of trade margin in turnover, which is determined in%, and its dynamics. The structure of
variables and constants is also analyzed.
Example. We will carry out a diagnosis of the trade mark-up of various groups of goods of a
commercial enterprise LTD “ Acvilina group”, which is the leading distributor of mass
consumer products.

Indicators 2012 2013

Revenu purchas profit trade Revenu purchas profit trade
es from e value margi margi es from e value margi margi
sales, of n n sales, of n n
Th.lei goods, Th.lei goods,
th.lei th.lei
wholesale of
tobacco
products
Wholesale of
alcohol
drinks/non
alcohol
Wholesale of
futniture
Wholesale of
oils
Wholesale
coffe,
condiment
Wholesale,foo
ds for pets
Retail sales of
furniture
Other types of
retail sails
Revenues
from services
Total revenues
from sales
Notes:
profit margin,% = (sales price-purchase price) / selling price *100%
trade mark-up,% = (sale price-purchase price) / purchase price* 100%
Conclusion:
 The next step is analysis of the constant expenditures of marketing department, that is:
salaries for the content of the personnel of the commercial department, costs for conducting
surveys and studies, transportation costs, expenditures for necessary material resources
(premises, office supplies, information support). It is also necessary to assess the actual
potential of the marketing function, in terms of the structural divisions of the commercial
department.
Example. Let us analyze the efficiency of work of commercial department
Type of constant 2015 2016 Absolute deviation
expenditures Sum,th.lei Share,% Sum,th.lei Share,% Sum,th.lei Share,%
Wages of the
personnel of the
commercial
department
expenditure on
research and surveys
Transportation
expenditures
Trip expences
Total constant
expenditures
Revenues from sales
Expenditures of com.
Dep for 1 lei of it
profit
Conclusion:

The next step in the analysis should be the study of goods produced by the enterprise,
namely: the ability of goods to meet the needs of customers and their ability to resist
competitors. It is necessary to analyze the range of products: its "width", "depth" and
"length".

The "width" of the assortment is determined by the number of groups of goods.

The "depth" of a group of goods is measured by the number of different goods that it
includes.
 The "length" of the assortment is related to the total amount of goods produced by the
enterprise, and is calculated as the product of the number of groups by the number of goods
in each group.
The evaluation of goods is carried out on the basis of information about competitors'
products on such competitive characteristics as:

1. The process of using the goods:

- quality of service and efficiency of use;

- ease of use;
- strength or resistance to various loads of the product;
- security;
- duration of use;
- expenses for maintenance.
2. Evaluation procedure:
- the image of the goods;
- the form or appearance of the goods.
3. Production function:
- mode of production;
- used materials.
4. Price
5. Value for money
6. Time spent in stock and delivery time
7. After-sales service and warranty.

The final stage in evaluating the results of the activities of the marketing department
is to compare the results from commercial activity with the goals set. This information can be
obtained for the three preceding years and from the goals set for the future, expressed in the
planned indicators of the commercial service and the enterprise as a whole. Evaluation can be
carried out on a three-dimensional scale (weak, medium, strong), or in physical sales volume
or in monetary terms by gross revenue.
Example. analyze the implementation of the plan of department marketing
Planned Factual Rate of implementation
indicators indicators weak medium strong
1. sales volume
2.sales volume on product types:
a)product 1
b)product 2
c)product 3
3.Sales volume on markets:
a)Moldova
b)Russia
c)Europe
4.Sales volume on type of
distribution:
a) wholesale
b)retail sales
5. rate of growth in relation to the
previous period as a whole,%
6. market share,%
 a)total
b)segments:
-segment 1
-segment 2
-segment 3
7. he position of the enterprise in
the market relative to the leader in
the industry,%

Conclusion:

An integrated assessment of the enterprise's commercial service can be the evaluation

of the marketing potential of an enterprise, which can be carried out according to the
following scheme:

Example: Firm "A" plans to enter the market with the product, which is already offered by
two potential competitors "B" and "C". Evaluate the level of marketing potential of the firm
"A" for the marketing of goods, if the maximum possible level of marketing potential is 5
points. Determine the competitive position of firm "A" in the market relative to firms "B" and
"C". It is known that the marketing potential of firm "B" is 4.4 points, and the marketing
potential of firm "C" is 3.2 points. The table contains the initial data for determining the
marketing potential of firm "A".

Elements of competivness K mpi Rmpi

1.Quality of the product
2.Price per unit
3.Advetising activities
4.Servise
5.Expenditures

mpi - coefficient of significance for the i-th component of the marketing potential (specific
gravity); Rмpi - rating of the i-th component of the marketing potential, points.

Conclusion:
2.3.Diagnostics of the marketing policy of the enterprise.

Marketing is:
1. Sale of goods that are not returned to buyers who return.

2. Deliver the right product at the right place at the right time at the right price, i.e. "Absolute
hit to the point".

The essence of marketing-mix, is to manage 5-P:

1. Product (Product) - the production of products and the provision of services needed by
consumers.

2. Placement - select channels and marketing methods.

3. Promotion - informing consumers about the offered goods and services.

4. Price - the development of the correct pricing strategy.

5. People (the consumer) - participants in trading activities - marketing research.

 Formulation of the commercial policy of the enterprise consists in determining the
principles and program of actions depending on the commercial results to be achieved and the
state of the market. The ultimate goal of its development and analysis is to confirm that: it is
correctly structured in terms of selected segments, markets, consumers, potential customers
and the volume of sales; and methods, tools and leverage (goods, prices, distribution, sales
intensity, promotion and advertising) of marketing are used in mutual communication among
themselves.

a)product policy.

Diagnosis of the commodity policy assumes:

- study of the general philosophy of goods policy;

- Analysis of the development policy of existing goods;

- clarification of the attitude of the administration to the production of goods at various stages
of their life

- Analysis of the policy of modernization and the creation of new products.

To implement the policy of goods, it is necessary to collect and analyze such
quantitative characteristics as: the number of projects for launching new products; the average
period of time corresponding to the birth of a new product with the details of the projects;
number of investment projects, etc.

b)Price policy.

The main goal of any pricing policy is to achieve the highest possible level of profit. Methods
and policies for setting prices can be determined based on 3 criteria: based on cost; based on
the level of profitability; proceeding from the prices in the market.

In practice, four methods of pricing are most often used:

- "costs plus";

- market method;

- inverse method;

- "time plus materials."

"Cost plus". The principle of this method is to determine the actual costs (actual costs) and the
addition of profit for a certain margin of profitability (profit margin).

Market method (market pricing). Here, the prices to be set must reflect the market situation,
i.e. The price should be established under the influence of supply and demand.

"Backward pricing". This is a kind of "cost-plus" method. This method is used for deliveries
of goods or products to a large buyer, which essentially dictates its terms of payment, and you
try to modify what you offer, in accordance with its price requirements. Then, a series of "cost-
plus" calculations are performed with changes in the various components of the price, which
allows to decide whether the requirements of the buyer can be met without sacrificing profit.

"Time plus materials" (time & materials). It is used mainly in the sphere of non-retail service
enterprises. The customer is charged for the time taken to complete the work, and the cost of
materials and spare parts used.

Realization in practice of the "cost plus" method:

Production enterprises:

Sales price = (cost of materials per unit of production + total overhead expenses / total volume
of oroducts) + markup(%) + taxes

Enterprises of wholesale and retail trade:

Sales price = net acquisition price + markup(%) + taxes

Enterprises of the service sector. Pricing in the sphere of non-retail service enterprises is
usually based on the "time plus materials" method. The basic "costs plus" equation takes the
following form:

rate per hour= total overhead (including all wages) / planned total useful time in hours +
markup(%) + taxes

When diagnosing pricing policies, the following issues should be addressed:

- Who is responsible for setting prices;

- By what principle are established prices for existing, modernized and new products;

- What are the price-quality ratios of competitors? etc.

c).Distribution policy.
Distribution networks can be either integrated into the enterprise or completely
independent (wholesale warehouse, retail store, shopping areas, mail order, etc.). The choice
of a distribution network depends on many criteria: geographic location; consumer tastes and
habits; features of the product (its nature, physical properties, risks they bear - toxicity,
perishable goods); conditions of storage, transportation; legislation; from the potential of the
enterprise.
When diagnosing the distribution policy, the following issues should be addressed:

- analysis of the company's main areas of distribution;

- the advantages and disadvantages of the forms of distribution used, etc. are evaluated.

d). Sales intensity policy.

In the area of increasing the intensity of sales, the company has basically 3 options:
1. Use of agents representing several firms (salespeople).

2. Exclusive Representatives

3. Sellers who are in the state of the enterprise or its sales units on a salary.

When diagnosing the policy of distribution of sales, the following issues should be
addressed:
- What type of vendor does the enterprise use and why;
- Does the company have a sales strengthening department?
- How is this department organized? etc.

e). Promotion and advertising policy. (Ford: "If I had $ 4, I would spend $ 3 of them for
advertising"),
To carry out the promotion and advertising policy, the enterprise must use the necessary
amount of general (image) advertising; advertising specific goods; advertising at the points of
sale; fairs, exhibitions ... At the same time, the enterprise must use a variety of means of
information transfer: posters, television, radio, press, etc.
To diagnose this area it is advisable to give an overall assessment of the promotion
policy; evaluate the advertising policy; determine the scale of the advertising campaign and its
structure; find out what the costs are borne by the enterprise, what percentage of the turnover
is its advertising budget. At the same time, a comparative assessment of this percentage of the
enterprise under study should be made with the same percentage of competing enterprises.

Example: Diagnosis of the advertising budget, thousand lei

handbill Daily Press TV Radio banners Total
афиши press specialized advertising
"golden costs
pages"
1.General (image)
advertising
2. Advertising of
new products
3. Advertising to
Maintain Goods
4. Advertising of
the revival of
products with
declining sales
5. Advertising in
response to
competitors
6. Advertising for
other reasons
Total advertising
costs
Conclusion
 Conclusion on the quality of the marketing function.

The final stage in the diagnosis of the marketing function is a qualitative generalized
evaluation of the commercial function on a three-dimensional scale (weak, medium or strong)
for the following main variables of the marketing function: research and development, goods,
prices, customers, distribution, promotion, advertising, marketing planning, , material means,
human resources, methods used and marketing tools.
The evaluation criterion can be the average level in the studied data field of the region,
city or territories.
A signal to a potential crisis situation is the emergence of cumulative growth in the
magnitude of deviations of certain indicators that characterize the marketing activity of an
enterprise.