Marketing
Organization
The company must have people who can carry
out marketing analysis, planning, implementation, and control. If the company is
very small, one person might do all the marketing work - research, selling,
advertising, customer service, and other activities. As the company expands,
organizations emerge to plan and carry out marketing activities. In large
companies, there can be many specialists: brand managers, salespeople and sales
managers, market researchers, advertising experts, and other specialists. Modern
marketing activities occur in several forms. The most common form is the
functional organization, in which functional specialists head different
marketing activities - a sales manager, advertising manager, marketing research
manager, customer service manager, new-product manager. A company that sells
across the country or internationally often uses a geographic organization, in
which its sales and marketing people run specific countries, regions, and
districts. A geographic organization allows salespeople to settle into a
territory, get to know their customers and work with a minimum of travel time
and cost. Companies with many, very different products or brands often create product management or brand management organization. Using this approach, a
manager develops and implements a complete strategy and marketing program for
a specific product or brand. Product management first appeared in Procter &
Gamble in 1929. A new soap, Camay, was not doing well, and a young P & G
executive was assigned to give his exclusive attention to developing and
promoting this brand. He was successful, and the company soon added other
product managers. Since then, many organizations, especially in the food, soap,
toiletries, and chemical industries, have introduced the brand management
system, which is in widespread use today. Recent dramatic changes in the
marketing environment have caused many companies to rethink the rule of the
product manager. Today's consumers face an ever-growing set of brands and are
now more deal-prone than brand-prone. As a result, companies are shifting away
from national advertising in favor of pricing and other point-of-sale
promotions. Brand managers have traditionally focused on long-term,
brand-building strategies targeting a mass audience, but today's marketplace
realities demand shorter-term, sales-building strategies designed for local
markets. A second significant force affecting brand management is the growing
power of retailers. Larger, more powerful, and better-informed retailers are now
demanding and getting more trade promotions in exchange for their scarce shelf
space. The increase in trade promotion spending leaves fewer resources for
national advertising, the brand manager's primary marketing tool. To cope with
this change, Campbell Soups created brand sales managers, These combine product
manager and sales roles charged with handling brands in the field, working with
the trade, and designing more localized brand strategies. The managers spend
more time in the field working with salespeople, learning what is happening in
stores, and getting closer to the customer. Other companies, including
Colgate-Palmolive, Procter & Gamble, Kraft, and Lever Bros, have adopted
category management, which has brands grouped according to the sections or
aisles in supermarkets or other stores. Under this system, brand managers
report to a category manager who has total responsibility for a category. For
example, at Procter & Gamble, the brand manager for Dawn liquid dishwashing
detergent reports to a manager who is responsible for Dawn, Ivory, Joy, and all
other light-duty liquid detergents. The light-duty liquids manager, in turn,
reports to a manager who is responsible for all of P & G's packaged soaps
and detergents, including dishwashing detergents, and liquid and dry laundry
detergents. This offers many advantages. First, the category managers have
broader planning perspectives than brand managers do. Rather than focusing on
specific brands, they shape the company's entire category offering. Second, it
better matches the buying processes of retailers. Recently, retailers have
begun making their individual buyers responsible for working with all suppliers
of a specific product category. A category management system links up better
with this new retailer 'category buying' system. The aim of a supplier is to
become a category leader who works closely with the retailer to increase
category sales rather than that of one brand. These category leaders have
considerable power and responsibility. They can clearly directly influence the
sales of their competitors' products but not if it damages retailers' profits.
Some companies, including Nabisco, have started combining category management
with another idea: brand teams or category reams. Instead of having several
brand managers. Nabisco has three teams covering biscuits - one each for adult
rich, nutritional, and children's biscuits. Headed by a category manager, each
category team includes several marketing people - brand managers, a sales
planning manager, and a marketing information specialist handling brand
strategy, advertising, and sales promotion. Each team also includes specialists
from other company departments: a finance manager, a research and development
specialist, and representatives from manufacturing, engineering, and
distribution.
Thus category managers act as a small
business, with complete responsibility for the performance of the category and
with a full complement of people to help them plan and implement category
marketing strategies. For companies that sell one product line to many
different types of markets that have different needs and preferences, a market
management organization might be best. Many companies are organized along market
lines. A market management organization is similar to a product management
organization. Market managers are responsible for developing long-range and
annual plans for the sales and profits in their markets. This system's main
advantage is that the company is organized around the needs of specific
customer segments. JFK Gibbs, Unilever's personal care products division, has
scrapped both brand manager and wales development roles. It had many strong
brands, including Pears, Faberge Brut, Signal, and Timotei, but sought to
improve its service to retailers and pay more attention to developing the
brands. To do this it created two new roles: brand development managers and
customer development managers. (Customer development managers work closely with
customers and have also taken over many of the old responsibilities of brand
management. This provides an opportunity for better coordination of sales,
operations, and marketing campaigns. The change leaves brand development
managers with more time to spend on the strategic development of brands and
innovation. They have the authority to pull together technical and managerial
resources to see projects through to their completion. Elida Gibbs'
reorganization goes beyond sales and marketing. Cross-functional teamwork is
central to the approach and this extends to the shop floor. The company is
already benefiting from the change. Customer development managers have
increased the number of correctly completed orders from 72 percent to 90 percent. In addition, brand development managers developed Aqua tonic - an aerosol
deodorant - in six months, less than half the usual time
Marketing Control
Because
many surprises occur during the implementation of marketing plans, the
marketing department must engage in constant marketing control. Marketing
control is the process of measuring and evaluating the results of marketing
strategies and plans and taking corrective action to ensure the achievement of
marketing objectives. It involves the four steps shown in Figure 3.8.
Management first sets specific marketing goals. It then measures its
performance in the marketplace and evaluates the causes of any differences
between expected and actual performance. Finally, management takes corrective
action to close the gaps between its goals and its performance. This may
require changing the action programs or even changing the goals. Operating
control involves checking ongoing performance against the annual plan and
taking corrective action when necessary. Its purpose is to ensure that the
company achieves the sales, profits, and other goals set out in its annual plan.
It also involves determining the profitability of different products,
territories, markets, and channels. Strategic control involves looking at whether
the company's basic strategies match its opportunities and strengths. Marketing
strategies and programs can quickly become outdated and each company should
periodically reassess its overall approach to the marketplace. Besides
providing the background for marketing planning, a marketing audit can also be
a positive tool for strategic control. Sometimes it is conducted by an
objective and experienced outside party who is independent of the marketing
department. Table 3.2 shows the kind of questions the marketing auditor might
ask. The findings may come as a surprise - and sometimes as a shock - to
management. Management then decides which actions make sense and how and when
to implement them.
Implementing
Marketing Many managers think that 'doing things right' (implementation) is as
important, or even more important, than 'doing the right things'(strategy): A
-surprisingly large number of very successful large companies don't have
long-term strategic plans with an obsessive preoccupation on rivalry. They concentrate
on operating details and doing things well. Hustle is their style and their
strategy. They move fast and they get it right ... Countless companies in all
industries, young or old, mature or booming, are finally learning the limits of
strategy and concentrating on tactics and execution.19 Implementation is
difficult - it is easier to think up good marketing strategies than it is to
carry them out. People at all levels of the marketing system must work together
to implement marketing plans and strategies. Marketing implementation requires
day-to-day decisions and actions by thousands of people both inside and outside
the organization. Marketing managers make decisions about target segments,
branding, packaging, pricing, promoting, and distributing. They work with people
elsewhere in the company to get support for their products and programs. They
talk to engineering about product design, manufacturing about production
and inventory levels, and finance about funding and cash flows. They also
work with outside people. They meet with advertising agencies to plan ad
campaigns and with the media to obtain publicity support. The salesforce urges
retailers to advertise, say, Nestle products, provide ample shelf space, and
use company displays. Successful implementation depends on several key
elements. First, it requires an action program that pulls all the people and
activities together. The action program shows what must be done, who will do
it, and how decisions and actions will be coordinated. Second, the company's
formal organizational structure plays an important role in implementing marketing
strategy. In their study of successful companies, Peters and Waterman found
that these firms tended to have simple, flexible structures that allowed them
to adapt quickly to changing conditions. Their structures also tended to be
more informal - HewlettPackard's MRWA (management by walking around), 3M's
'clubs' to create small group interaction, and Nokia's youthful, egalitarian
culture.21 However, the structures used by these companies may not be right for
other types of firms, and many of the study's excellent companies have had to
change their structures as their strategies and situations have changed. For
example, the same informal structure that made Hewlett-Packard so successful
caused problems later. The company has since moved towards a more formal
structure (see Marketing Highlight 3.4). Another factor affecting successful
implementation is the company's decision-and-reward systems - formal and
informal operating procedures that guide planning, budgeting, compensation, and
other activities. For example, if a company compensates managers for short-run
results, they will have little incentive to work towards long-run objectives.
Companies recognizing this are broadening their incentive systems to include
more than sales volume. For instance, Xerox rewards include customer
satisfaction and Ferrero's freshness of its chocolates in stores. Effective
implementation also requires careful planning. At all levels, the company must
fill its structure and systems with people who have the necessary skills,
motivation, and personal characteristics. In recent years.
Summary
Strategic planning involves developing a strategy for long-run survival and growth. Marketing helps in strategic planning, and the overall strategic plan defines marketing's role in the company. Not all companies use formal planning or use it well, yet formal planning offers several benefits. Companies develop three kinds of plans: annual plans, long-range plans, and strategic plans. Strategic planning sets the stage for the rest of company planning. The strategic planning process consists of developing the company's mission, understanding a company's strengths and weaknesses, its environment, business portfolio, objectives and goals, and functional plans. Developing a sound mission statement \s a challenging undertaking. The mission statement should be market-oriented, feasible, motivating, and specific if it is to direct the firm to its best opportunities. Companies have plans at many levels: global, regional, national, and so forth. The higher-level plans contain objectives and strategies that become part of subordinate plans. These strategic imperatives are objectives or defined practices. At each level, a strategic audit reviews the company and its environment.
A SWOT analysis summarizes the main elements of this audit into a
statement of the company's strengths and weaknesses and the chief threats and
opportunities that exist. From here, strategic planning calls for analyzing the
company's business portfolio and deciding which businesses should receive more
or fewer resources. The company might use a formal portfolio-planning method
like the BCG growth-share matrix or the General Electric grid. However, most
companies are now designing more customized portfolio-planning approaches that
better suit their unique situations. This analysis and mission lead to
strategic objectives and goals. Management must decide how to achieve growth
and profits objectives. The product/market expansion grid shows four avenues
for market growth: market penetration, market development, product development, and diversification. Once strategic objectives and strategies are defined,
management must prepare a set of functional plans that coordinate the
activities of the marketing, finance, manufacturing, and other departments. Each
of the company's junctional departments provides inputs for strategic planning.
Each department has a different idea about which objectives and activities are
most important. The marketing department stresses the consumer's point of view.
Marketing managers must understand the point of view of the company's other
functions and work with other functional managers to develop a system of plans
that will best accomplish the firm's overall strategic objectives. To fulfill
their role in the organization, marketers engage in the marketing process.
Consumers are at the center of the marketing process. The company divides the
total market into smaller segments and selects the segments it can best serve.
It then designs its marketing mix in order to differentiate its marketing offer
and to position this offer in selected target segments. To find the best mix
and put it into action, the company engages in marketing analysis, marketing
planning, marketing implementation, and marketing control. Each business must
prepare marketing plans for its products, brands, and markets. The main
components of a marketing plan are the executive summary, current marketing
situation, threats and opportunities, objectives and issues, marketing
strategies, action programs, budgets, and controls. To plan good strategies is
often easier than to carry them out. To be successful, companies must implement
the strategies effectively. Implementation is the process that turns marketing
strategies into marketing actions.
The process consists of five key elements:
1. The action program identifies crucial tasks and decisions needed to implement the marketing plan, assigns them to specific people, and establishes a timetable.
2. The organization structure defines tasks and assignments and coordinates the efforts of the company's people and units.
3. The company's decision-and-reward systems guide activities such as planning, information, budgeting, training, control, and personnel evaluation and rewards. Well-designed action programs, organization structures, and decision-and-reward systems can encourage good implementation.
4. Successful implementation also requires careful human resources planning. The company must recruit, allocate, develop and maintain good people.
5. The firm's company
culture can also make or break an implementation. Company culture guides people in
the company; good implementation relies on strong, clearly defined cultures
that fit the chosen strategy. Most of the responsibility for implementation
goes to the company's marketing department. Modern marketing activities occur
in a number of ways. The most common form is the functional marketing
organization, in which marketing functions are directed by separate managers
who report to the marketing director. The company might also use a geographic
organization, in which its sales force or other functions specialize by
geographic area. The company may also use the product management organization,
in which products are assigned to product managers who work with functional
specialists to develop and achieve their plans. Another form is the market
management organization, in which main markets are set to market managers
who work with functional specialists. Marketing organizations carry out
marketing control. Operating control involves monitoring results to secure the
achievement of annual sales and profit goals. It also calls for determining the
profitability of the firm's products, territories, market segments, and
channels. Strategic control makes sure that the company's marketing objectives,
strategies, and systems fit with the current and forecast marketing environment.
It uses the marketing audit to determine marketing opportunities and problems and to recommend short-run and long-run actions to improve overall marketing
performance. The company uses these resources to watch and adapt to the
marketing environment.
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