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Law Of Diminishing Marginal Product - Client Marketing Audit engine Builders

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The paper is intended to frame the marketing situation of the company and to make reasonable recommendations about the allowable tact and amelioration of a strategic marketing position.
As written in A Framework for Marketing administration and Marketing administration Millennium Edition, Tenth Edition (Kotler, Philip), "Modern marketing calls for more than developing a good product, pricing it attractively, and production it accessible to target customers. associates must also describe with present and possible stakeholders, and with the general public. The marketing communications mix consists of five major modes of communication: advertising, sales promotion, social relations and publicity, personal selling, and direct marketing."

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Law Of Diminishing Marginal Product

Kotler also wrote that for a company to make an "effective marketing transportation requires eight steps: (1) recognize the target audience, (2) rule the transportation objectives, (3) make the message, (4) pick the transportation channels, (5) make the total transportation budget, (6) rule on the transportation mix, (7) quantum the communications' results, and (8) conduct the integrated marketing transportation process.

Within the following marketing audit an honest attempt has been endeavored to accurately scrutinize behaviors and contemporaneously report conversations with employees, ownership, prospects and customers in such a was as not to describe the identity of the source. Hopefully, such anonymity has bolstered the honesty of those that have given information to the author. In turn, the resulting honesty should have improved the chances for an correct compilation of the current marketing position of the Company.
To the extent that accrued sales data and financial statement information was not ready for describe and comparison to commerce norms and metrics the audit was slight to interviews and subjective data. While some polling has been executed with customers in order to paint an correct photograph of local and surrounding demographics and shop share, the company should attempt to regain more comprehensive shop share data to fully exercise their place in the industry.

During the past five weeks, the following elements of the marketing position of the company have been reviewed:

Part I. Marketing Environment Audit

· Macro environment

· Demographic

· Economic

· Technological

· Competitors

Part Ii. Marketing Strategy Audit

· Business Mission

· Strategy

Part Iii. Marketing society Audit

· Formal Structure

· Functional Efficiency

· Interface Efficiency

Part Iv. Marketing Systems Audit

· Marketing control System

· New-Product Development

Part V. Marketing Productivity Audit

· Profitability Analysis

· Cost-Effective Analysis:

Part Vi. Marketing Function Audit

· Products

· Price

· Distribution

· Sales Force

Essentially it is the Auditor's concept that the company suffers no problems that well concept out transportation both internal and external to the firm coupled with consistent performance through solid team construction processes and a permanent convert in attitude cannot remedy. Albeit there lies strong institutional resistance to convert in the company which is endemic to most all small intimately held operations, much can be done to follow the determined convert in effect required if the company ever desires to stretch beyond a local company serving customers haphazardly.

Part I. Marketing Environment Audit

Macro environment

Demographic:

Since the customer demographics comprise direct retail purchasers as well as automotive machine mend shops we look to the individuals and their buying habits within the two groups. First, the individual buying habits of the customers dictates how to advent not only the existing demographic but new undeveloped markets as well. Traditionally, the company has combined mass mailing with direct in person customer sense by the exterior marketing department.
In 2000, a major competitor in the rebuilt machine company from Indiana, "Jasper", entered the Texas shop by employing a direct sales force with full administration staff in the major markets. Jasper sells directly to the end user, the mend shop mechanic and this advent has changed the way customers can buy engines. In addition, ownership has caused Internet exposure via the websites to become formidable additions to the strategic marketing front consistently generating approximately 40% of the sales volume according to ownership since no financial data is made ready to employees for administration purposes.
Jasper prices significantly higher than Client, Inc. But offers a stout warranty. The company can compete on both the length benefit and the warranty if it accounts for it in price. In response to Jasper as well as a declined machine market, the company has hired a marketing person to lead the marketing and sales attempt for the foreseeable future. Within the last two months, Client., Inc mailed 8800 pieces of a composition flyer event invitation to remind customers that Client., Inc is still in business. The mailer resulted in approximately 100 attendees to the barbeque event November 8, 2003. Two or three motors were sold as a result.
Economic:

No doubt exists that as long as man drives the internal combustion engine; quiz, will exist for rebuilt change engines. Client., Inc stands ready to serve this demand. some factors lead to the comprehensive quiz, in a given shop as regards engines. First, the general economic condition can lead to whether habitancy drive their cars longer requiring sometimes a change machine or they buy a new one. Client., Inc obviously prefers the former. Price conditions currently are tough as what is believed to be an end to general commerce compression in the estimate of machine producers, which started in late 2000 and is now tapering off. Nevertheless, ownership has attributed its loss in volume to a poor cheaper while this Auditor believes a case could be made that the company has shrunk due to improper handling of some strategic issues.
Ownership's short-term attitude to the cost of warranty rather than coupling that with the consequences of irritating customers over warranty such that they cease the connection may not have been realized.

As a response to this compression, Client., Inc has laid off much staff shrinking the payroll to have its height in 2000 when gross sales were also double what they are today. The company has held prices garage for the past eighteen months, as it has found innovative ways to cut costs.
Technological:

The President has indicated a desire to transform the company from a mom and pop performance to a firm that allows rigorously recruited and hired employees to take fee and responsibility of the company's destiny toward growth and profitability so that all stakeholders will prosper. As such, systems from accounting to order entry to dispatch, communications and fuel and fleet administration must be improved and brought up to date so that the company can jump ahead of expectations and get away from the reactionary mode of operating. New skill sets must be recruited to fit the model if this company is going to ever perform anyone more than a fifty-employee company.
Competitors:

As indicated earlier, Jasper Engines is a late entry to the Texas shop and at the top of the price tier. Other competitors comprise Four Star, Thunderbolt, Jasper, Roadmaster and others as well as local small town machine shops. Jasper has effectuated a policy to sell to anyone. Others have marketed mend shops but tend to work through parts distributors where possible.
Summary end Part I.

In 2000, the Texas remanufactured auto machine shop changed by the entry of Indiana's Jasper machine and Transmissions to the State. Jasper changed the commerce here not only by entering as a formidable competitor but in their marketing tact of selling directly to the buyer through the mend shop rather than through a seller or distribution network. Jasper seized onto the ultimate high dollar end of the shop with its pricing structure where the company and others missed out by pricing too low and delivering lower quality.

Economic conditions ordinarily declined the auto shop and this took auto machine remanufactures with it. As a follow to shop belt tightening the Company's ownership made the strategic error of electing a perceived cash flow remedy of not paying warranty claims for shabby craftsmanship rather than controlling cost in a more productive manner and preserving customer relationships. The company has as a follow lost 45% of year 2000 top line sales.

The Company's technology is par with commerce in the plant but at least ten years lagging in order processing and information technology. The company has no network administrator and problems result.

As the shop has stabilized during 2003, the company by recognizing opportunities and grasping a second wind now endeavors to position itself to capture shop share in risk balanced shop place activities and niches.

Part Ii. Marketing Strategy Audit

Business Mission:

Although ownership possesses a clear mind of mission in the generic sense, part of the mission gets confused when verbally imparted to the employees. That is to say that no graphic written strategic company plan of activity or company mission exists. If one does exist it no promotion exists or is made ready to employees for empowerment and responsibility purposes.

The owner and leadership have indicated their desire to recapture lost accounts and make new channels and customer niches and are willing to invest the time, power and dollars to do so. The whole process of this marketing audit has indirectly caused a spur in the reasoning of what the company is doing and why they are doing it. In other words, the ownership and employees have begun to perceive that determined convert is a good thing and that in order to thrive in a global machine shop a firm must be flexible and "roll" with shop conditions and demands. Customers will not accept less than classic service and a allowable pricing model; they will just take their order to the competition.

Marketing Objectives and Goals:

The marketing objectives and goals are the proverbial "Let's grow" which is to say that no formal written goals and objectives are recorded or articulated to the team. The general laborer temperament is stagnation at holding their job rather than working and dreaming to excel and in effect enjoy advent to work. In other words, employees take care of themselves first and the company (the President) and Customers next. As such, the only way to plan marketing and quantum performance is from the daily profit and loss statement, which only seems to be ready to the owner and not managers or staff. The purpose of this audit is to rule the activity items needed to formulate a formal marketing policy that the staff may implement.
Strategy:

While the strategy may be clear in the mind of the ownership of the company, there is gargantuan vagueness when an laborer is asked the question. The ownership is clear in foresight albeit not documented so that it may be measured. The company is not using best basis or best convention for shop segmentation nor does it have a clear criterion for rating segments and choosing the best ones the company merely sells to the one on the phone or in their face first.
There is no formal marketing resources allocation mix. Monies are provided when the ownership believes the task will be beneficial. Moreover, "the Marketing Budget" exists in the ownership mind but not on a real allocation whereas a administration team could be charged and then held accountable for results.

Summary end Part Ii.

The company has no formalized mission statement. Disconnection exists in the middle of ownership goals and laborer execution. Marketing and sales goals are articulated as "Let's grow." The ownership has requested this audit to recognize qoute areas in order to make and activity plan for 2004.
Marketing strategy should be written and shared among the employees for morale, accountability, incentive, quality and brand imaging.

Part Iii. Marketing society Audit

Formal Structure:

Prior to September 2003, there was no concentrated marketing attempt for well over a year. customer pleasure has not been made a responsibility of Marketing, Sales or output but rather the ownership handles "heat cases" as they ultimately make their way to him. Once these situations arrive at "firefighter headquarters."
Headquarters consists of a small desk with an outdated obsolete computer networked to a "Novell" theory that is so unproductive when one loads any current day schedule "the whole network is slowed", according to one employee. The owner whether "handles" it right then or "puts them in cue." Cue means that they go on a wall file for added negotiation.
Most all of the employees believe that customers' frustration is so highly enhanced and embellished by this cuing of complaints or untimely resolution that lost customers are the result. A new warranty mechanism must be articulated and implemented. Marketing activities are ad hoc.
Functional Efficiency:

Good transportation and working relations in the middle of marketing and sales now exists. Since overcoming a rocky beginning in September in the middle of this Auditor and determined long time entrenched employees, sales and marketing are in constant transportation with each other. In the past, the "sales guy" would just go about his company and there was no transportation in the middle of him and other staff. stock managers (General Manager) are not able to plan profit or sales volume due to no reporting available.
Interface Efficiency:
There are gargantuan problems as regards transportation and interaction in the middle of sales and manufacturing to the extent that the manufacturing owner seems to employ an "us (manufacturing) against them (sales)" philosopy. This individual told the author in October 2003 in an attempted impromptu leadership meeting that "there is nothing that we can do to get better, we are doin' it as well as it can be done."
Many employees in the inside have stated that the manufacturing owner has threatened the owner in the past with a total labor walkout if his demands are not accommodated. As a follow to this and this employees general attitude, the inside the office leadership resents this individual and that causes apprehension about the working connection so both sides ignore each other. Lower quality, customer pleasure and high warranty costs are the resulting victim in the end.
The established détente and dysfunctional performance cause problems to the extent that transportation and cooperation is highly difficult. The auditor believes that this dysfunctional behavior creates and indeterminable incommunicable cost to the company in dollars due to diminished quality and morale.
One only needs to describe the with photographs on the next page to understand the true room for revising just by noticing the filthy and non-inspected for safety working conditions. As such the Auditor, while not a certified safety inspector believes that if a regulatory agency like Occupational safety and condition administration were to scrutinize the plant, the company would incur weighty fines. This slip-shod manner in operations carries over into the general image of the company through the delivery model.
Summary end Part Iii.

No concentrated marketing attempt has existed for at least the last year. customer pleasure is handled on an emergency basis as a rule and the old adage of the squeaky wheel gets the grease. Sales counter personnel are distracted with too many non-revenue producing activities. Sales and marketing are jointly working to enlarge the "thinking" of personnel in order to deliver a classic stock to customers. Warranty cash expended is weighed more heavily than long-term customer effects.

Part Iv. Marketing Systems Audit

Marketing control System:

There is no each year plan objective to track or gauge achievement. The ownership rather than the administration periodically reviews stock profitability, markets, and channels of distribution. Marketing costs are ad-hoc evaluated with the gut instinct rather than with formality or plan. Again, if such a plan exists it is not shared with leadership since the owner is the leader. This control theory achieves the follow of stifling growth rather than improving it. The Auditor makes recognition of ownership's desire and new found efforts to step back and allow leaders to germinate a new initiative of team work, responsibility and profitability.

New-Product Development:

The company is not well organized to gather, create or screen new-product ideas? Idea generation comes from spur of the moment conversations held with many interruptions and no performance or very difficult performance consequences. It is operated with loose, shoot from the hip mentality with the ownership dictating his desires since as the laborer consensus says, "he knows all and a lot better than us." In the past the owner has executed much research. Employees perceive that personal initiative is fruitless, not rewarded and discouraged. The disconnection in the middle of facilitating passive aggressive behavior and honest transportation cause tension when the owner "is around." This complaint requires that goals, targets and minimum standards for performance dictate rewards and compensation increases. The old saying of just giving him/her adequate rope to hang him/herself would apply here.
The perception of this attitude by employees is two fold. By placing all blame on the owner, employees avoid taking responsibility for any actions or results. Vice versa, the owner by not properly delegating and then holding personnel accountable only ratifies the laborer attitude. adequate and allowable shop and stock testing is to "whatever the shop will bear." In summation, the owner commits the traditional sin, searching for approval from employees rather than pushing them to make their talents and allowing them to make mistakes to grow.
Summary end Part Iv.

Information is not disseminated to habitancy that need to take responsibility for their daily performance. New-product amelioration does not exist.

Part V. Marketing Productivity Audit

Profitability Analysis:

The company's profitability of dissimilar products, markets, territories and channels of distribution is unknown to the extent that the ownership does not describe that information to employees. There are no findings pursuant to entry or exit from markets to the extent rendered in the aforementioned statement.
Cost-Effective Analysis:

Marketing activities are accepted and in line given the developmental level of the Company.
Summary end Part V.

Distribute information to trusted team members and enlist team construction with true slight authority for a allocation to perform objectives.

Part Vi. Marketing Function Audit

Products:

Product-line objectives are to double sales volume to where it was three years ago so overhead costs are contained. It is unknown which product-lines should be vast or contracted since that information is not made ready by ownership.

Buyers' attitude toward our general stock is good until there is a warranty issue. The ownership executes all warranty claims and takes a short-term advent to solving the claim. While the ownership believes most machine issues are caused by mechanic at premise (this activity mitigates costs by blaming the customer), once the claim is not handled to the customers' pleasure that customer goes away and tells many to do the same. The general quality of the stock to its presentation is in drastic need of improvement.
Price:

The company's pricing objectives are to be price competitive and we are. The ownership enduringly reviews and is aware of the shop as regards price. Customers that buy believe that we are competitive. Customers that do not buy do so for an array of reasons.
Distribution:

Since inception the distribution objectives have been ad-hoc with not much order place on efficiency or consolidation. Now, that ownership has developed the means to wholesale our stock by way of a extra d/b/a/ and website dedicated to the parts seller (jobber), marketing can make new customers and channels through such.
The company considers increasing its distribution channels to added diversify its channel mix from delivery and pick up.
Advertising, Sales Promotion, Publicity, and Direct Marketing:

The company has no formalized advertising budget, at least not one known by the staff. The company does not employ media except the United States Mail. ownership has recently chosen to buy weekly newspaper type advertisement commencing January 2004 convinced that during the Christmas season peoples cars always run and never need motors. The company has a database but does not employ on-line marketing save the website and sporadically (used once or twice according to staff memory) uses coupons.

Sales Force:

What are the sales force objectives? Unknown. Is the sales force large adequate to perform the company's objectives? Debatable. The three salesmen at the counter probably exert more attempt and activity during the day than any other employees in the company. The direct issue in sales is not attempt or activity but direction or lack thereof. The salesmen serve not only as sales habitancy to walk in customers and in bound phone calls but they also serve the company in a myriad of functions.

The salesmen talk the phones of the company fielding every single in advent call. This is an issue because it is a distraction from sales. In a move to cut costs in recent memory, ownership decided to retire the receptionist. This move was good and bad. When no receptionist answered all the calls, every call then and now arrived straight at the sales counter.
The resulting poor allocation of labor may have decreased payroll costs significantly but the underlying incommunicable costs of lost sales is not measured or realized. In a word, sales guys need to be on the phone with customers or prospects. This customer service or prospecting time is lost due to the extraordinary distraction of having to jump to talk the phone when it rings.
While the Auditor is not informed of payroll pursuant to sales personnel, it is imagined with certainty that the lost dollars in opportunity costs relative to lost sales overwhelmingly advocates a better system. The sales force is not organized. The sales owner is also the general owner as well as a salesman. Procedures are not adequate for setting quotas or evaluating performance.
Without any measurement no incentives are paid and employees are unhappy about lower compensation. How does the company sales force compare to competitors' sales forces? Unknown.

As the means to determining all of these questions, the Auditor tried to describe assorted data compiled by the company over the past few years. Specifically, we wanted to look to daily, weekly and monthly sales totals and then compare these to their past equivalents. In order to verify the authenticity of the historical data, we wanted to analyze the data to rule who the customers have been and why, what factors yield the best gross margin as well as net income.
We would have reviewed this data within the prior committed time limits but such data is not made ready to employees to craft a timely report to management. The most difficult part of the pathology will be gaining access to the data since the computer theory is not now maintained and not administered from a networking position. This cost cutting quantum could be catastrophic is any one of a estimate of issues occurs.

Summary end Part Vi.

Overhead costs have been slashed to a minimum. ownership has indicated a goal of year 2000 sales volume at ,000,000. Warranty costs must be managed as well as the good will of the customer. Look to quality deficiencies in the manufacturing process to cut the true cost of warranties by implementing zero tolerance for defects. Wear safety glasses in the plant and make at least minimal safety procedures. impose the procedures and allow no one to work exterior the law or rules.

The company should balance advertising and marketing with a consistent message to customers. Formalize the marketing, advertising and sales allocation as well as all other operating budgets. improve the quality of stock by improving the quality of workers. Start with the worst performing 10% and replace them with more hungry individuals. Eliminate those with non-cooperative or difficult personalities. Remember the company has to deal with the social and that means that everybody contributes to sales, image and quality. Focus employees on their traditional and secondary jobs and eliminate distractions.

Recommended Marketing Improvements

· Enlist team work among leadership

· Establish budget

· Set monthly sales targets

· Monitor daily the progress

· Allocate marketing dollars to maximum impact media

· Advertise

· Diversify media used in advertising

· Promote customer events that pay for themselves via increased sales

· Establish safety and quality as internal standards of living

· Translate internal safety and quality to the brand and the market

· Establish competitors stock and pricing and perform "best of class" solutions

References

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