Marketing Organization: Chapter 15

Marketing Organization
Marketing Organization

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, and 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 organizations. 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, 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 small businesses, 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

Strategic Planning


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 -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 - Hewlett-Packard'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 toward long-run objectives. Companies recognizing this are broadening their incentive systems to include more than sales volume. For instance, Xerox's 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.

Principles for Public Policy Towards Marketing



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 profit 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 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. Planning good strategies is often easier than carrying 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 guides 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.

Business Actions Towards Socially Responsible Marketing


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