Definition of Marketing and Distribution Control

Marketing being an important functional area of Management requires a control system which will monitor the marketing process so as to ensure effective implementation of marketing plans of the organization. Marketing control is a process in which management generates information on marketing performance of the business concern.

Two major forms of control are (a) control over efficient allocation of marketing effort. (b) Secondly, comparison of planned performance and actual performance. In the two forms first one, marketer may use past data as a standard against which to evaluate future marketing expenditure. In case of second one, management is reminded of the remedial actions needed to be taken for performance discrepancies.

(Adopted from Philip Kotler, Marketing Management: The Millennium Edition PHL,2000)

The above given tables gives a clear picture of four types of control required for managing the marketing activities in an organization.

Marketing control process is carried out in two phases. They are control to check efficient allocation of marketing effort and checking the differences between the planned performance and actual performance. However control on marketing activities can be exercised at level of marketing.

Strategic Control

Here the aim is to check whether the strategy framed for the marketing activities are duly followed and implemented and the expected results are attained. Hence it is expected on the part of a prudent business man to conduct the Marketing Audit periodically so as to make a periodic, comprehensive, and systematic evaluation of the organization’s marketing operations that specifically analyses the marketing environment and business concerns internal marketing activities.

Thus Strategic control helps the firms to understand the change in the marketing scenario for the firm and help to avoid product failure and to tap the market potential for the firm’s product.

Annual Plan Control

Plan acts as the standard against which the firm’s actual performance can be compared to arrive at the deviations, if any. Sales volume, Profit earned and Market share are the quantitative standards which help to measure the firms marketing performance. Hence a business concern may use the following tools to check on plan performance.

Sales Analysis

Market share analysis

Marketing expenses –to- sales ratio

Financial analysis

Market based sore card analysis

Efficiency and Effectiveness Control

Under this control system effort is taken to check whether the resources like sales force Advertising are used efficiently. Whereas the effectiveness control evaluates the capacity of strategic components to accomplish the objectives. To check whether the market potential is tap or not, the firm can evaluate the effectiveness of Distribution channel, Channel Members and the product.

Profitability Control

The main aim of this part of Marketing Control is to find out which segment of the business is earning profit for the firm and which the money loser is. Here the term segment means the unit taken up for analysis. This unit may be a customer segment, Product Line, Territories; Channel Structure this study helps the firm to make budget allocations on the basis of the profitability and market potential.

Thus an effective Marketing Control system has four distinct factors such as Strategic control, Strategic control, Efficiency and effectiveness control and Profitability Control. A company’s marketing effectiveness is reflected in the degree to which it exhibits the five major attributes of a marketing orientation such as Customer Philosophy, Integrated Marketing organization, Adequate Marketing Information, Strategic Orientation, and Operational efficiency.

Distribution Control

The very purpose of manufacturing an item is to make it reach the ultimate customer on time; this aim is fulfilled by the efficient distribution system adopted by the manufacturer. A prudent manufacturer adopts a channel of distribution which is cost effective. Generally distribution system consist of the activities like, Transportation, Ware housing, packaging, Inventory control, and material handling. Distribution control’s aim is to minimize the cost involved in carrying out these activities.

The manager in charge of distribution activities is also responsible for preparing the budget for distribution expenses. So he must be provided with the past cost data relating to distribution expenses. This will help him to estimate the future cost related to distribution expenses. The distribution system’s cost structure can be framed in to an equation, as illustrated below,

D=T+FW+VW+S

Where

D = Total distribution cost

T = Total Transportation cost.

FW = Fixed Ware housing cost.

VW = Variable ware housing cost (including inventory cost)

S = Cost of lost sales due to average delivery delay.

Profit contribution of each channel of distribution is found out to identify the effective channel of distribution. At all juncture effectiveness of cost control measures must monitored so as to ensure best results from the efforts taken for both marketing and distribution control.

Summary

Auditing is an important tool of management Control. It checks the authenticity of books of accounts of a business concern. An Audit is an examination of accounting records of a business concern, done with a view to check whether correctly and truly they reflect the transactions to which they purport to relate. The objectives for carrying out Auditing can be discussed under three heads. They are: Primary objectives, Secondary objectives, Specific objectives. Internal Check is important for successful Audit in an organization. Internal Check ensures that the assets of the concern are intact and the policies of the management are followed promptly. Internal Audit on the other hand involves continuous review ofall the operations of the firm to ensure the management that all activities are carried out in an efficient manner.

Whereas External Audit is done by the qualified external Auditor, appointed by the share holders. An organization needs to carry out different types of Audits like Management Audit, Marketing Audit, social Audit, Energy Audit Etc. depending up on its requirement and necessity. The Auditor Who carries out different types of Audit has different types of duties and responsibilities depending up on the type of the Audit. However for a company Auditor the power, duty and responsibilities are stated in the Statute.

The second major tool of management control is Budgeting. Budgeting helps management to have financial control over the various activities related to finance in an organization. Budget is a detailed plan of operations for some specific future period. It is an estimate prepared in advance of the period to which it applies. It acts as a business barometer as it is a complete programme of activities of the business for the period covered. Budgetary control refers to the principles, Procedures and Practice of achieving given objectives through budgets and budget reports. Budgets are of different type. To control different Functions of Management different Budgets are prepared. Production budget, ZBB, Flexible and Fixed budgets, Performance budgets are prepared to exercise control over various activities.