Description
It explanation of growing importance of marketing within the organization structure of a firm, design factors for marketing organization. types of marketing organizations,
Marketing Organization
Prashant.V.Yatgiri
B.E; M.B.A
Professor Global Business School, Hubli.
Marketing Organization … Agenda
• Growing importance of Marketing within the Organizational structure of a firm • Stages in development of a Mktg Orgn • Factors affecting design of a Mktg Orgn • Different types of Marketing Organizations with advantages and limitations • Conclusion remarks
2
Growing importance of Marketing within the Organizational structure of a firm
Marketing Organizations are -
Structural entities which execute a sales plan
Designed to carry out mutually agreed business goals
Constituted with clear structures, roles and responsibilities for each person, group or department 3
A well designed Marketing Organization serves the purpose of –
Achieving both organizational and individual goals in terms of higher sales, market share and customer loyalty.
Achieving both qualitative and quantitative goals through a group of individuals
4
Undertaking effective marketing of products manufactured by the Organization and also products purchased for resale
Ensuring timely distribution of products to customers in an economical and efficient way
.. Its both an orienting point for cooperative endeavor and a structure of human relationships.
5
We witness marketing organizations –
Having a group of individuals striving jointly to reach the corporate objectives
Also bear both formal and informal relationships to one another
Throwing open a pattern of relationships among subgroups and individuals for attainment of the goal In short – Marketing Organization is a structural body through which the functions of Marketing Management are 6 carried out.
Marketing Organization .. Definition
“Marketing Organization refers to any system,
body or group of people, comprising various sub-systems, which are interrelated and or interdependent on each other for achieving organization?s marketing goals”
7
Designing Marketing Organization … Guiding Principles
Irrespective of the nature of an organization, the following principles are involved in its design:
1. Specialization
2. Departmentalization
3. Standardization 4. Formalization 5. Centralization 6. Evaluation and 7. Structure
8
1. Specialization: Division of labor on the basis of a particular type or set of activity.
2. Departmentalization: Integration of differentiated or specialized activities and then grouping of individuals into departments and divisions.
9
3. Standardization: Refers to existence of procedures and systems helping integrate the entire organization
4. Formalization:
Refers to the extent to which all procedures, systems and policies are written, so that it operates independent of the person who founded it
10
5.Centralization:
Refers to the level at which authority for decisionmaking is concentrated. Involves designing formal reporting relationships and information systems, leading to hierarchical levels and spans of control.
6. Evaluation: Refers to providing systems for appraisal and compensation
11
7. Structure: Refers to the total configuration or arrangement of individuals, departments, reporting relationships, information flows, span of control that give a specific shape to the organization
Various kinds of organization structures can be designed based on the above seven principles.
But when making a choice, the following drive the difference between alternate structures: Facilitation of objectives, accomplishment of tasks, managerial control and management of cost.
12
Marketing Organization … Changing Roles
Changing role of marketing function and its place in the overall organization over a period of time More firms now are adopting the ‘Marketing Orientation’ philosophy
Firms with marketing orientation have come to stay after passing through many distinct phases ….
13
Stage One:
Simple Sales Department Only a sales staff headed by a sales manager and no marketing activity. Stage Two: Sales dept.with some Marketing
Need for mktg research and new product development felt. This was done by sales dept along with their existing sales jobs.
14
Stage three:
Separate Marketing Department Establishment of a full fledged marketing department Sales and marketing organized as two separate departments, each having distinct activities
Stage four: Integrated Marketing Department Sales and marketing are integrated and organized as a single department
15
Marketing Director heads the department with the sales manager reporting to him.
All other marketing activities like MR, promotions, MIS, customer service and NPD organized under the marketing director.
Its important to note that @ Ultimate success of every business is determined in its marketplace @ It is most critical that one has a marketing organization that facilitates the process and supports 16 the achievement of objectives.
Marketing Organization … Design factors
# Objectives of the firm:
Objectives may pertain to – Desired market share, expected sales/profit levels, desired position in the industry/market, desired customer image and competitive posture. A firm requiring largest market share would have a different type of structure than one that has the objective of earning a certain customer image.
17
# Nature of the product and line of activity
Depending on the kind of product and the technicalities involved for selling the same, we do find difference in structures amongst firms.
Also the number of product assortments that the firm offers has a direct bearing on the type of marketing organization it chooses.
Assessment to be made in terms of similarities in the nature of the product, type of customer needs and 18 customers served and the marketing channel.
# Areas of Operation
It refers to the number of markets that a firm caters to and the location of these markets.
Separate marketing organizations need to be built for different geographical markets that are at a distance
Greater the difference in individual markets in terms of customer tastes and habits, greater the need for a separate marketing organization at the local market level.
Ex: Multi-national companies organizing their subsidiaries in various countries of the world.
19
# Nature of the Industry
Firm characterized by fast changing customer preferences or rapid technological developments needs marketing organizations that are flexible in adapting to changing situations. Mktg organization should facilitate active interaction within the related sub-functions such as sales and Mktg research & between sales and R&D for marketing success. Such structures need to be flexible, loosely organized thus permitting easy flow of information between related sub-functions.
20
# Influence of Information and Communication Technology
This influence has led to the replacement of humans for machines for aspects related to information processing, replacement of supervisory cadres performing the roles of controlling.
Greater decentralization of decision making, resulting in removal of many intermediate management levels and moving towards a flatter structure.
21
Marketing Organizations … Types
A developed structure assists marketing personnel identify their roles, responsibilities and command the organization. A proper structure helps enhance productivity, reduce conflicts and improve the quality of individual work. Organizations adopt different kinds of structures from the simple line organization to special designs like functional, geographic, product based, market (customer) centered and managing through team forms of organizations.
22
Line Organizations
President/ Owner Vice President Marketing
Decisions flow down the line of execution Followed by many small marketing firms
Marketing Officers
Most of the times „One man show? organizations
Suffer from fire fighting operations of the executives No exclusive time devoted to marketing
23
Functional Organization
24
Each function assigned to a specialist who reports to the top marketing position.
Functions form a part of the structure based on the nature of the product, service or industry to which the firm belongs.
Most common functions in Marketing are: Sales, Distribution, Advertising, Sales Promotion, Marketing Research, MIS, Dealer development, Customer Service, NPD and Public Relations.
25
Geographic Organization
Vice President (Marketing)
General Manager (Marketing)
Manager (Advertising)
Manager (Sales)
Manager (MIS)
Area Sales Mgr (N) Area Sales Mgr (S)
Area Sales Mgr (W)
District Sales Officer-1 Sales Executive-1
District Sales Officer-2
26
Sales Executive-2
Geographic organization structure is chosen: * When the area of sales coverage is very large * There is a marked difference in the market and buyer characteristics in each area. * The figure shows a functional marketing organization with sales function organized on a geographic basis
* Such organizations have geographic division of authority and decision-making.
* This type widely used in cases of a single product or a range of similar products to be marketed to many scattered markets.
27
Product based Marketing Organizations
Vice President (Marketing) General Manager (Marketing) Manager (Advertising) Asst. Sales Mgr (Product „A?) Manager (Sales) Asst. Sales Mgr (Product „B?) Manager (MIS) Asst. Sales Mgr (Product „C?)
District Sales Officer-1 (Brand 1)
District Sales Officer-2 (Brand 2)
28
Sales Representative -1
Sales Representative-2
Product based Organizations suitable when:
# A firm has a wide range of products, each significantly different from each other.
# In such cases, the sales force is organized around each distinct product / product groups.
# Differentiating aspects between the products may be aspects related to – technical process involved, customer characteristics boiling to the salespersons 29 specialized skills required for the same.
A Product Manager needs to make decisions in interaction with various other functions within the Organization
30
Customer based Marketing Organizations
Vice President (Marketing) General Manager (Marketing) Manager (Advertising) Asst. Sales Mgr (OEM?s) Manager (Sales) Asst. Sales Mgr (Institutions) Manager (MIS) Asst. Sales Mgr (Channels)
District Sales Officer-1 (Private Institutions)
Sales Representative -1
District Sales Officer-2 (Govt. Institutions)
Sales Representative-2 31
Customer based Marketing Organizations suitable when:
# The organization has distinct customer groups or marketing channels to serve
# The firm finds it useful to have this distinction as the methods used for sales to these customer groups is totally different.
# More suitable in case of B2B organizations.
32
Managing through Teams
33
Product and Geographic Combination Organizations
General Manager (Marketing)
Manager (Advertising) Manager (Sales) Manager (MIS)
Asst. Sales Mgr (Product „A?)
Area Sales Manager (South Region) District Sales Officer (South Region) Sales Representative -S
Asst. Sales Mgr (Product „B?)
Asst. Sales Mgr (Product „C?)
Area Sales Manager (West Region) District Sales Officer (West Region) Sales Representative - W
34
Combination Organizational Structure :
# At the head office level, the sales function is divided on product basis
# Further, if the market is very large, the team may be sub-divided on a geographic basis.
# Thus we have the sales specialization at the product level as well at the market level.
35
Conclusion Remarks ….
@ A marketing organization?s design is a function of the diversity of products, markets and product/market combinations along with marketing objectives held by the firm.
@ The four commonly used organizational designs in marketing are based on functions, products, markets and a combination of these three factors. @ Each type of organization is useful under specific conditions and has its own pros and cons. 36
Choice of an organizational structure is a function of:
# Evaluation of the types on the basis of its effectiveness in accomplishing the specified objectives
# The extent of managerial control available
and
# The cost involved in the set-up.
37
Marketing Organization …
Thanks for a patient hearing !!!
38
doc_502454479.ppt
It explanation of growing importance of marketing within the organization structure of a firm, design factors for marketing organization. types of marketing organizations,
Marketing Organization
Prashant.V.Yatgiri
B.E; M.B.A
Professor Global Business School, Hubli.
Marketing Organization … Agenda
• Growing importance of Marketing within the Organizational structure of a firm • Stages in development of a Mktg Orgn • Factors affecting design of a Mktg Orgn • Different types of Marketing Organizations with advantages and limitations • Conclusion remarks
2
Growing importance of Marketing within the Organizational structure of a firm
Marketing Organizations are -
Structural entities which execute a sales plan
Designed to carry out mutually agreed business goals
Constituted with clear structures, roles and responsibilities for each person, group or department 3
A well designed Marketing Organization serves the purpose of –
Achieving both organizational and individual goals in terms of higher sales, market share and customer loyalty.
Achieving both qualitative and quantitative goals through a group of individuals
4
Undertaking effective marketing of products manufactured by the Organization and also products purchased for resale
Ensuring timely distribution of products to customers in an economical and efficient way
.. Its both an orienting point for cooperative endeavor and a structure of human relationships.
5
We witness marketing organizations –
Having a group of individuals striving jointly to reach the corporate objectives
Also bear both formal and informal relationships to one another
Throwing open a pattern of relationships among subgroups and individuals for attainment of the goal In short – Marketing Organization is a structural body through which the functions of Marketing Management are 6 carried out.
Marketing Organization .. Definition
“Marketing Organization refers to any system,
body or group of people, comprising various sub-systems, which are interrelated and or interdependent on each other for achieving organization?s marketing goals”
7
Designing Marketing Organization … Guiding Principles
Irrespective of the nature of an organization, the following principles are involved in its design:
1. Specialization
2. Departmentalization
3. Standardization 4. Formalization 5. Centralization 6. Evaluation and 7. Structure
8
1. Specialization: Division of labor on the basis of a particular type or set of activity.
2. Departmentalization: Integration of differentiated or specialized activities and then grouping of individuals into departments and divisions.
9
3. Standardization: Refers to existence of procedures and systems helping integrate the entire organization
4. Formalization:
Refers to the extent to which all procedures, systems and policies are written, so that it operates independent of the person who founded it
10
5.Centralization:
Refers to the level at which authority for decisionmaking is concentrated. Involves designing formal reporting relationships and information systems, leading to hierarchical levels and spans of control.
6. Evaluation: Refers to providing systems for appraisal and compensation
11
7. Structure: Refers to the total configuration or arrangement of individuals, departments, reporting relationships, information flows, span of control that give a specific shape to the organization
Various kinds of organization structures can be designed based on the above seven principles.
But when making a choice, the following drive the difference between alternate structures: Facilitation of objectives, accomplishment of tasks, managerial control and management of cost.
12
Marketing Organization … Changing Roles
Changing role of marketing function and its place in the overall organization over a period of time More firms now are adopting the ‘Marketing Orientation’ philosophy
Firms with marketing orientation have come to stay after passing through many distinct phases ….
13
Stage One:
Simple Sales Department Only a sales staff headed by a sales manager and no marketing activity. Stage Two: Sales dept.with some Marketing
Need for mktg research and new product development felt. This was done by sales dept along with their existing sales jobs.
14
Stage three:
Separate Marketing Department Establishment of a full fledged marketing department Sales and marketing organized as two separate departments, each having distinct activities
Stage four: Integrated Marketing Department Sales and marketing are integrated and organized as a single department
15
Marketing Director heads the department with the sales manager reporting to him.
All other marketing activities like MR, promotions, MIS, customer service and NPD organized under the marketing director.
Its important to note that @ Ultimate success of every business is determined in its marketplace @ It is most critical that one has a marketing organization that facilitates the process and supports 16 the achievement of objectives.
Marketing Organization … Design factors
# Objectives of the firm:
Objectives may pertain to – Desired market share, expected sales/profit levels, desired position in the industry/market, desired customer image and competitive posture. A firm requiring largest market share would have a different type of structure than one that has the objective of earning a certain customer image.
17
# Nature of the product and line of activity
Depending on the kind of product and the technicalities involved for selling the same, we do find difference in structures amongst firms.
Also the number of product assortments that the firm offers has a direct bearing on the type of marketing organization it chooses.
Assessment to be made in terms of similarities in the nature of the product, type of customer needs and 18 customers served and the marketing channel.
# Areas of Operation
It refers to the number of markets that a firm caters to and the location of these markets.
Separate marketing organizations need to be built for different geographical markets that are at a distance
Greater the difference in individual markets in terms of customer tastes and habits, greater the need for a separate marketing organization at the local market level.
Ex: Multi-national companies organizing their subsidiaries in various countries of the world.
19
# Nature of the Industry
Firm characterized by fast changing customer preferences or rapid technological developments needs marketing organizations that are flexible in adapting to changing situations. Mktg organization should facilitate active interaction within the related sub-functions such as sales and Mktg research & between sales and R&D for marketing success. Such structures need to be flexible, loosely organized thus permitting easy flow of information between related sub-functions.
20
# Influence of Information and Communication Technology
This influence has led to the replacement of humans for machines for aspects related to information processing, replacement of supervisory cadres performing the roles of controlling.
Greater decentralization of decision making, resulting in removal of many intermediate management levels and moving towards a flatter structure.
21
Marketing Organizations … Types
A developed structure assists marketing personnel identify their roles, responsibilities and command the organization. A proper structure helps enhance productivity, reduce conflicts and improve the quality of individual work. Organizations adopt different kinds of structures from the simple line organization to special designs like functional, geographic, product based, market (customer) centered and managing through team forms of organizations.
22
Line Organizations
President/ Owner Vice President Marketing
Decisions flow down the line of execution Followed by many small marketing firms
Marketing Officers
Most of the times „One man show? organizations
Suffer from fire fighting operations of the executives No exclusive time devoted to marketing
23
Functional Organization
24
Each function assigned to a specialist who reports to the top marketing position.
Functions form a part of the structure based on the nature of the product, service or industry to which the firm belongs.
Most common functions in Marketing are: Sales, Distribution, Advertising, Sales Promotion, Marketing Research, MIS, Dealer development, Customer Service, NPD and Public Relations.
25
Geographic Organization
Vice President (Marketing)
General Manager (Marketing)
Manager (Advertising)
Manager (Sales)
Manager (MIS)
Area Sales Mgr (N) Area Sales Mgr (S)
Area Sales Mgr (W)
District Sales Officer-1 Sales Executive-1
District Sales Officer-2
26
Sales Executive-2
Geographic organization structure is chosen: * When the area of sales coverage is very large * There is a marked difference in the market and buyer characteristics in each area. * The figure shows a functional marketing organization with sales function organized on a geographic basis
* Such organizations have geographic division of authority and decision-making.
* This type widely used in cases of a single product or a range of similar products to be marketed to many scattered markets.
27
Product based Marketing Organizations
Vice President (Marketing) General Manager (Marketing) Manager (Advertising) Asst. Sales Mgr (Product „A?) Manager (Sales) Asst. Sales Mgr (Product „B?) Manager (MIS) Asst. Sales Mgr (Product „C?)
District Sales Officer-1 (Brand 1)
District Sales Officer-2 (Brand 2)
28
Sales Representative -1
Sales Representative-2
Product based Organizations suitable when:
# A firm has a wide range of products, each significantly different from each other.
# In such cases, the sales force is organized around each distinct product / product groups.
# Differentiating aspects between the products may be aspects related to – technical process involved, customer characteristics boiling to the salespersons 29 specialized skills required for the same.
A Product Manager needs to make decisions in interaction with various other functions within the Organization
30
Customer based Marketing Organizations
Vice President (Marketing) General Manager (Marketing) Manager (Advertising) Asst. Sales Mgr (OEM?s) Manager (Sales) Asst. Sales Mgr (Institutions) Manager (MIS) Asst. Sales Mgr (Channels)
District Sales Officer-1 (Private Institutions)
Sales Representative -1
District Sales Officer-2 (Govt. Institutions)
Sales Representative-2 31
Customer based Marketing Organizations suitable when:
# The organization has distinct customer groups or marketing channels to serve
# The firm finds it useful to have this distinction as the methods used for sales to these customer groups is totally different.
# More suitable in case of B2B organizations.
32
Managing through Teams
33
Product and Geographic Combination Organizations
General Manager (Marketing)
Manager (Advertising) Manager (Sales) Manager (MIS)
Asst. Sales Mgr (Product „A?)
Area Sales Manager (South Region) District Sales Officer (South Region) Sales Representative -S
Asst. Sales Mgr (Product „B?)
Asst. Sales Mgr (Product „C?)
Area Sales Manager (West Region) District Sales Officer (West Region) Sales Representative - W
34
Combination Organizational Structure :
# At the head office level, the sales function is divided on product basis
# Further, if the market is very large, the team may be sub-divided on a geographic basis.
# Thus we have the sales specialization at the product level as well at the market level.
35
Conclusion Remarks ….
@ A marketing organization?s design is a function of the diversity of products, markets and product/market combinations along with marketing objectives held by the firm.
@ The four commonly used organizational designs in marketing are based on functions, products, markets and a combination of these three factors. @ Each type of organization is useful under specific conditions and has its own pros and cons. 36
Choice of an organizational structure is a function of:
# Evaluation of the types on the basis of its effectiveness in accomplishing the specified objectives
# The extent of managerial control available
and
# The cost involved in the set-up.
37
Marketing Organization …
Thanks for a patient hearing !!!
38
doc_502454479.ppt