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					                Unit 5: MARKETING ORGANIZATION


Organization is defined as a group of people working together to achieve common goals and
objectives of the business.

Marketing organization provides a vehicle for making decisions on products, marketing channels
, physical distributions, promotions and prices .



Need for the organization: to be competitive in the market where consumer is the king we need
to satisfy the consumer. So a good marketing organization is required to satisfy the customers.
Marketing organization is the pillar for success for many organizations and provides a
framework for the following:



    a.   Divide and fix authority among the sub ordinates
    b.   TO locate responsibility
    c.   To establish sales routines
    d.   To enforce proper supervision of sales force
    e.   To avoid repetitive duties
    f.   To enable the top executives to devote more time for planning policy matters



Factors affecting marketing organization.

Factors influencing marketing org can be categorized into internal and external factors .

Internal:

       1. Top Management Philosophy: Organizational planning and its working is greatly
influenced by philosophy which can be good or bad eg: Centralization Vs Decentralization

        2. Product policy: the width of product line of an org determines its size as the product
offerings becomes increasingly diverse. Eg: There could be a need to move away from straight
functional approach to product group approach.
       3. People: The size of the organization is not an important factor in terms of number of
people but it is important with respect to human values which are critical and correct decisions
regarding people cannot be made unless taking into consideration

              Number
              Qualifications
              Capabilities
              Personality
              Attitude
              Fear
              Suspicion
              Ambition

       Are some of the above intangible factors which affect the marketing organization?

External Factors:

       1. Business Environment: With regards to business environment three points are
          important.
              a. The type of environment in which the firm is operating in terms of operations
                  and size.
              b. The Nature of particular requirement for success in a given business which
                  again determines the size.
              c. The rate of change in industries being served which again decides on its size
                  and working.
       2. Markets: This is the factor which again affects the marketing organization i.e. one
          should note about its
              a. Size
              b. Scope
              c. Nature
              d. Location
                  Based on the above aspects we need to design the size of the organization.
       3. Consumer requirements and expectations: Consumers have their own set of
          requirements and expectations from the organization. The more varied and vivid
          services they expect that the usual requirements. as a marketer we need to increase
          the workload depending upon the consumer requirements and expectations
       4. Channels of distribution: It is the type of channel of distribution which a marketing
          firm selects based on its size. Egg : Incase the company opts for indirect channel or
          channels it depends on outside sales force and hence the organization gets thinner
          .When the organization selects direct channel its size is increased as it has its own
          sales force.
Types of marketing organization structures: The marketing organization of a business can be
structured on any of the following basis:

                 a.   Line and staff organization
                 b.   Functional Organization
                 c.   Product oriented marketing organization
                 d.   Customer oriented marketing organization
                 e.   Geography oriented marketing organization
                 f.   Matrix form / Combined base



Line and staff organization : In most business forms especially medium size the marketing job is
structured around few line functions and few staff functions i.e. Major staff functions is
organized into separate department and the line function is responsible for sales department. The
required coordination between the line and staff function is managed by the executive at higher
level.

       Merits:

                 1. Provides expert advice from specialists

                 2. Relives line executes of routine, specialize functions

                 3. Enables young sales executive to acquire expertise

                 4. Helps in achieving effective coordination

                 5. Easy to operate

                 6. Less Expensive

       Demerits:

                 1.   Produce confusions arriving from indeterminate authority relationships
                 2.   Curbs the authority of experts
                 3.   Too much is expected from executives
                 4.   Decision making is taken by top management
Functional: Under the organization the departments are created on the basis of specified
functions to be performed i.e. The Activities related to marketing, distribution etc

       Merits:

                 1. Division of work base on specialization

                 2. Relives line executives of routine and specialized functions

                 3. Promotes application of expert knowledge

                 4. Helps to increase overall efficiency

       Demerits:

                 1.   Leads to complex relationships
                 2.   Makes coordination ineffective
                 3.   Promotes centralization
                 4.   Lack of proper coordination
                 5.   Delay in taking decisions



3. Product oriented marketing organization: Organizations that produce wide variety of products
often organize marketing, training and promotion with respect to a product.

       Merits:

                 1. The salesmen can render better customer service as they possess good
                    knowledge of product and may have close contacts with customers.
                 2. It makes individual departments responsible for the promotion of specific
                    products.
                 3. It facilitates effective coordination



       Demerits:

                 1. It increases the employment of a number of managerial personal
                 2. Many salesmen of same enterprise attend same customer each representing a
                    separate product which creates confusion in the minds of the customer.
                 3. There may be duplication of activities
4. Customer oriented marketing organization: When the departmentation of sales organization is
done on customer basis it is called customer oriented marketing organization. Deparmtnetation
by customer may be done in enterprise engaged in providing specialized services to different
classes of customers.

       Merits:

                 1. It takes into account needs of each class of customers.
                 2. It provides specialization among the enterprise staff



       Demerits:

                 1.   It makes coordination difficult
                 2.   It may lead to under utilization of resources in same department
                 3.   There may be duplication of activities
                 4.   These types of sales organizations are not suitable for small enterprises.

5.Geography/Territory: In a territory oriented marketing organization , the responsibilities for
marketing of various products rests almost entirely with line executives .The territory managers
are given varying nomenclatures like depot manager, district manager, area manager, zonal
manager , divisional manager etc.

       Merits:

                 1. It leads to economy in terms of times and money
                 2. It helps in taking knowledge of local customers
                 3. It helps in effective control

       Demerits:

                 1. It requires employment of number of managerial personnel.
                 2. It dilutes control from head quarters



Matrix: There are some business firms that incorporate in marketing organization combining all
the above. Usually such firms are multi Product, multi market firms. At the head office level they
have number of staff departments to take care of each specialized functions of marketing.
MARKETING CONTROL: Marketing control means monitoring, realigning the marketing
efforts. It implies adaption of plans, laying down the standards, grids, review and analysis of
performance.

Management control is a natural sequential process to marketing planning, organizing and
executing. Any management which is sensitive to market will be benefited by a system of
marketing control.

Benefits of control:

      Puts a unit on the progress path
      Locates responsibilities for deeds ( sub ordinates)
      Keeps space with environmental changes
      It observes organizational complexities
      It brings about realistic reformulation of plans.




Role and scope of marketing control:

               1.   Marketing control is a part of management control
               2.   Helps to achieve performance
               3.   Helps in controlling wasteful expenditure
               4.   Helps in maximizing sales force productivity
               5.   Helps in directing the company to pursue best business opportunities
               6.   Helps in motivating sales force
               7.   Detection of deviations in performance
               8.   Assisting plan reformations
Types of marketing control:

There are four types of controls in most successful marketing firms. These controls have
different objectives and tools. Each of these controls exists in different levels in management.

   a. Annual Plan control

   b. Profitability control

   c. Efficiency control

   d. Strategic control

Annual plan control: the purpose of annual plan control is to ensure that the company achieves
sales, profit and other goals established in its annual plan. The four steps involved in annual in
APC are:

       a. Setting monthly and quarterly goals

       b. Monitoring its performance in market place

       c. Identify the causes of serious performance deviations

       d. Corrective actions to close the gaps between goals and performance that can be
          understood through a control process

  What do we want             What is                      Why is it                  What should we
  to achieve                  happening?                   happening?                 do about it?

     Goal Setting             Performance               Performance Diagnosis      Corrective Act

                               Measurement
Manager uses four tools to check plan performance.

   a. Sales analysis

   b. Market share analysis

   c. Market expense to sales analysis – which can be measured through

              1. Advertising to sales ratio

              2. Sales promotion to sales ratio

              3. Sales force cost to sales ratio

              4. Distribution expense to sales ratio

              5. Sales administration to sales ratio

   d. Financial analysis – with regards to return on assets forms financial leverage

   e. Customer attitude tracking

                  i. Customer surveys

                 ii. Customer panels ( company uses customer panel who agree to
                     communicate their attitudes periodically through questionnaire or over
                     telephone )

                 iii. Feedback and suggestion system
Profitability control: It allows the company to monitor its sales, profits and expenditure.

It demonstrates the relative profit earning capacity of the companies’ different products and
consumer goods. Companies are frequently surprised to find that small percentage of the product
and customers contribute to large percentage of the profits.

With increasing competition firms are finding their profit margins reducing and the companies
looking for profit making strategy and increasing the markets, territories which involve three
steps:

       1. Identify functional expenses e.g.: salaries, rent , travelling , advertising

           Calculate the gross profit and net profit contribution to the firms profit by deducting
           the above expenses and subtracting the total sales.

       2. Assign the functional expenses to marketing entities. The next step is to assign these
          functional expenses to marketing entities. This becomes important when the expenses
          are incurred on non marketing entities. e.g. Assume if the western region office of
          the firm there is an accountant, secretary, peon who does not perform any marketing
          activity, their salaries account should not be considered as a part of expense to
          marketing entity. Also if the rent is shared by two different corporations it has to be
          subtracted and these steps clearly identifies the marketing expenses Vs Non
          Marketing expenses.

       3. Prepare Profit and loss statement for each marketing entity. Based on the above data
          the marketer can prepare profit and loss statement for each marketing activity just for
          selling activity e.g.

               a. Total cost of selling:

                       i. No. of sales calls made in the period.

                      ii. No. of units sold.

                      iii. Expenses per sold.

                      iv. Expenses per call.

               b. Total sales revenue

               c. Cost of goods sold

               d. Gross profit contribution(fixed cost vs variable cost,contribution=sales-vcost)
Efficiency Control: This mechanism helps the marketer determine if there are better ways of
performing a task. They exist in determine

       a. Sales force efficiency

                 Average number of sales calls/ person/ day.

                 Average number of sales calls/ sales person/ customer group.

                 Average time spent per customer.

                 Average time spent on travel.

                 Return in time invested on different customer groups.

                 Number of new customers added

                 Number of customers lost

                 Volume of potential business lost due to competition

                 Average cost per sales call.

       b. Advertising efficiency indicator.

                 Advertising cost per 1000- target customers reached by the media

                 Advertising recall as a percent of total target market reached by the campaign

                 Awareness of brand

                 Number of enquiries generated by the advertisement

                 Cost per enquiry

                  The last two are relevant to direct marketing and industrial product advertising

       c. Distribution efficiency

                 Market reach of channel member as measured by members in terms of number
                  of customers

                 Sales extraction from the channel members

                 Cost per channel member
Strategic Control: This system helps management to determine the fit between the firms
marketing and external environment. They specially help in resolving the issues of obsolescence
in strategies, structure, policies, programs and systems. There are two tools that help
management

       a. Customer relationship barometer which aims to access how well the customer is
          integrated to the org. It provides inputs for the following parameters

                      i. Core value of the organization

                      ii. Organizational policies

                     iii. Technology

                     iv. Strategy of Customer retention



       b. Marketing Audit:

              Audit is a continuous comprehensive and systematic periodic examination of
              company’s business unit. It critically evaluates marketing activities of the firm
              and the direction of its growth.

              Marketing audit is concerned with long term business interest and challenges
              rather than short term achievements. The marketing audit is a fundamental part of
              marketing planning process. It is conducted not only at the beginning of the
              process but also at a series of points during the implementation of plan.

Features of marketing auditing:

   1. Comprehensive: The term marketing audit should be reserved for comprehensive audit
      covering companies marketing environment, objectives, strategies etc. It should cover
      horizontal and vertical audit. Horizontal audits study overall marketing performance with
      emphasis on inter relationship variables. Vertical audit is an in-depth analysis of one
      aspect of firms marketing strategy like product planning which involves a thorough audit
      of data protection within a particular function or department

   2. Systematic: marketing audit will normally increase to the extent that it follows a
      sequence of diagnostic steps covering internal and external marketing system.
3. Independent : A marketing audit can be conducted in 6 ways :

          Self Audit

          Audit from across

          Audit from above

          Company auditing office

          Company task force audit

          Out sider audit

4. Periodic: Marketing audits are initiated only after sales have come down sharply, sales
   force morale has fallen and other problems have occurred in the company. Whereas , the
   irony is that the companies have been thrown into crisis because they failed to review
   their marketing operations during good times. So, a periodic marketing audit promises the
   benefits for the companies that are in good health as well as the companies that are in
   trouble. This has to be done at periodic intervals.

				
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posted:5/19/2011
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