commerce 28: marketing organization and control

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7: Marketing Management

28: Marketing Organization and Control

Subject COMMERCE

Paper No and Title 7: Marketing Management

Module No and Title 28: Marketing Organization and Control

Module Tag COM_P7_M28

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TABLE OF CONTENTS

1. Learning Outcomes

2. Introduction

2.1 Meaning of Marketing Organization

2.2 Need for Marketing Organization

3. Factors affecting Marketing Organization

4. Types of Marketing Organization Structures

5. Marketing Control

6. Marketing Control Process

7. Marketing Audit

7.1 Features of Marketing Audit

7.2 Types of Marketing Audit

8. Summary

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1. Learning Outcomes

After studying this module, you shall be able to

Describe the concept and need for Marketing Organization

Identify the factors that affect a Marketing Organization

Know and choose from the different types of Marketing Organization Structures

Describe the concept of Marketing Control

State the Marketing Control Process

Understand the concept of Marketing Audit

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2. Introduction

2.1 Meaning of Marketing Organization

Marketing organization can be defined as an anatomy for planning and making marketing decision

that are critical to marketing success. It furnishes the platform for making decision on all marketing

areas such as product, price, place and promotion. Marketing organization is a group of marketing

persons working in cooperation towards the achievement of well-defined common objectives.

Marketing organization furnishes an anatomy of relationships among various marketing functions

to be performed by coordinating among marketing people.

2.2 Need for Marketing Organization

In today’s competitive marketing world, consumer is the king and rules the market. In order to gain

competitive advantage, satisfaction of consumer’s want is significant. Marketing organization is

the pillar for success for many organizations and provides a framework for the following:

Divide and fix authority among the sub ordinates

To locate responsibility

To establish sales routines

To enforce proper supervision of sales force

To avoid repetitive duties

To enable the top executives to devote more time for planning policy matters

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3. Factors Affecting the Marketing Organization

Factors influencing a marketing organization can be classified into two categories - internal and

external.

I. Internal Factors

1. Top management philosophy - Organizational planning and its working is majorly driven

by the philosophy of top management, which can be good or bad.

2. Product policy - The size of an organization is determined on the basis of the width of its

product line as with size the product offerings becomes increasingly diverse. We can

illustrate it with the help of an example, there might be a need to shift from straight

functional approach to product group approach.

3. People - The size of the organization is quite significant with respect to human values

factor as compared to the number of people. Human values are essential and the ability to

take correct decisions regarding people relies on variety of factors such as number,

qualifications, capabilities, personality, attitude, fear, suspicion and ambition.

II. External Factors

1. Business Environment – business environment is where an organization functions. With

respect to business environment following 3 points are significant:

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.

2. Markets - The ‘market’ factor affects the marketing organization to a major extent. The

distinct facets of a market such as its size, scope, nature and location require to craft 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. Being a marketer, sincere efforts are required to

match the requirements and expectations of the consumer.

4. Channels of distribution – the criteria for the selection of distribution channel relies on

the size. For example, a company has to rely on outside sales force in case the company

selects indirect channel or channels. With the selection of direct channel, size of an

organization increases as it has its own sales force.

The type of environment in which the firm is operating in terms of operations and size.

The nature of particular requirement for success in a given business which again

determines the size.

The rate at which the industry is changing which again decides on

its size and working

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4. Types of Marketing Organization Structures

The basis for structuring marketing organization of a business can be any of the following

1. Line and Staff Organization – In medium sized firms, marketing task focuses on some

line functions and some staff functions i.e. Major staff functions are organized into distinct

department and the line function is accountable to sales department. The executives at the

top level are concerned with the task of coordination b/w the line and staff

Line and staff organization

Functional Organization

Product oriented marketing

organization

Customer oriented marketing

organization

Geography oriented

marketing organization

Matrix form/Combined

base

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2. Functional organizational structure - Under the organization, the criteria for creating a

department is the performance of specified functions i.e. The Activities related to

marketing, distribution etc.

Merits of Line and Staff Organization Structure

•Furnishes expert advice from specialists

•Relives line executes of routine, specialize functions

•Enables young sales executive to acquire expertise

•Helps in achieving effective coordination

•Easy to operate

•Less Expensive

Demerits of Line and Staff Organization Structure

•Produce confusions arriving from indeterminate authority relationships

•Curbs the authority of experts

•Too much is expected from executives

•Decision making is taken by top management

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3. Product-Oriented Marketing Organization – these are those organizations that

manufacture extensive range of products often organize their marketing, training and

promotion in relation to their product.

Division of work base on specialization

Relives line executives of routine and specialized functions

Promotes application of expert knowledge

Helps to increase overall efficiency

Leads to complex relationships

Makes coordination ineffective

Promotes centralization

Lack of proper coordination

Delay in taking decisions

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4. Customer-Oriented Marketing Organization - When customers as basis are used for the

departmentation of the sales organization it is called customer oriented marketing

organization. This type of organization is done by the firms that furnish specialized services

to various categories of customers.

Merits of product oriented marketing organizations

•The salesmen can render better customer service as they possess good knowledge of product and may have close contacts with customers.

•It makes individual departments responsible for the promotion of specific products.

•It facilitates effective coordination

Demerits of product oriented marketing organizations

•It increases the employment of a number of managerial personal

•Many salesmen of same enterprise attend same customer each representing a separate product which creates confusion in the minds of the customer.

•There may be duplication of activities

It takes into account needs of each class of customers.

IT provides specialization among the enterprise staff

It makes coordination difficult

It may lead to underutilization of resources in same department

There may be duplication of activities

Me

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5. Geography/Territory based organization structure – in this form of marketing

organization, the line executives are given the responsibilities for marketing of various

products. The managers are assigned various designation such as depot manager, district

manager, area manager, zonal manager, divisional manager etc.

5. Marketing Control

Marketing control is focused on extensive facets such as analyzing the performance of marketing

decision, identifying the problem/opportunities and undertaking activities to take benefit of

opportunities and resolving problems. It is considered as an extension or a sequel to marketing

planning. In an organization, all manager are required to exercise control over their decision and

marketing operations with special reference to marketing performance which is measured in terms

of market share, sales and profits. Therefore, most control measures are planned with these

parameters in mind. But contemporary marketer needs to compute the given factors:

i. Market share

ii. Sales and profits

iii. Marketing effectiveness

iv. Customer satisfaction

Merits

• It leads to economy in terms of times and money

• It helps in taking knowledge of local customers

• It helps in effective control

Demerits

• It requires employment of number of managerial personnel.

• It dilutes control from head quarters

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v. Customer’s perception about the organization and its brands

There exist 4 categories of controls with different goals and technique and exist within the distinct

levels of management.

1. Annual plan control – In an organization, the top or middle level executives compare the

actual performance with the desired targets to analyze differences or gaps. The evaluation

tools used include sales analysis, market share analysis, sales and expense ratios, and

financial analysis.

2. Profitability control – marketing department employs this type of control to examine

which product, customer segment, territory or trade channel is generating profit.

3. Efficiency control – is employed to compute the rate of return of money spend on sales

force, advertising, sales promotion and distribution. It is used by both line and staff

executives.

4. Strategic control - It is employed by the senior executive to diagnose whether the firm

and marketing are capable of coping with the dynamic environment or not. The major tool

used for strategic control is marketing audit.

6. Marketing Control Process

. The various steps in marketing control process are:

1. Decide the aspect of marketing operation to be evaluated - The initial step in marketing

control process is related to decision making about the marketing operation to evaluate.

2. Establish measurement criterion - In this stage performance standards are established in

comparison to the actual performance is evaluated. For instance, to evaluate sales person

performance, new accounts obtained, call frequency ratio and order per call can be

analyzed.

3. Establishing monitoring mechanism – The next step after establishment of standards, is

to create monitoring mechanism tools like marketing information system (MIS). MIS is

used to record performance of all marketing areas like monthly sales volume for products

for their evaluation thereafter.

4. Compare actual results with standards of performance - In this stage, results extracted

from the monitoring process are contrasted with pre-determined standards of performance.

5. Analyze performance improvement – The performance is analyzed to make

improvement decisions, if required.

Marketing Control Process engulfs monitoring, evaluating and improving the performance in each activity

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7. Marketing Audit

7.1 Features of Marketing Audit

1. Comprehensive – The term marketing audit should be reserved for comprehensive audit

covering company’s marketing environment, objectives, strategies, etc. It should cover

horizontal audit (it is a study of overall marketing performance) and vertical audit (it is an

in-depth analysis of one aspect of the firm’s marketing strategy).

2. Systematic – generally marketing audit is conducted through a series of steps that

encompasses both internal and external marketing system.

3. Independent – Marketing audit can be conducted in different ways including – self audit,

audit from across, audit from above, company auditing office, company task force audit,

etc.

4. Periodic – conduction of marketing audit at regular intervals ensure benefits for the

organizations that are in good state as well as the companies that are in trouble. This has to

be done at periodic levels.

7.2 Types of Marketing Audit

The various types of marketing audit has been discussed below:

1. Marketing environment audit - Marketing audit has been divided into two groups (i)

macro environment and (ii) task environment. In macro environment various macro factors

such as political, economic, technological and cultural aspects are analyzed and audited.

Task environment audit encompasses customers, competitors, markets, dealer/distributors,

suppliers, marketing firms and public.

If the results/performance are not up to the desired standards a corrective action is to be taken to enhance the performance levels. For this performance improvement analysis is to be done.

Marketing audit has been defined as “a systematic review and appraisal of the basic

objectives and policies of marketing function and of the marketing organization methods,

procedures and personal employed to implement those policies and to achieve those goals”.

Marketing audit is one of the important tool to assess the effectiveness of different marketing

mix elements.

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2. Marketing strategy audit – is used to review a firm’s marketing mission, objectives,

goals, and strategies and to assess their compliance to existing and future environment.

3. Marketing organization audit – The firm’s capability in implementing necessary

strategies for the future environment is evaluated under marketing organization audit. It

also analyses formal organization structure and efficiency.

4. Marketing systems audit – Marketing systems evaluates the systems which are parts of

another system. The former systems are considered as subsystems of the later and includes

systems such as marketing information system, marketing planning system, marketing

control system and new product development system.

5. Marketing productivity audit - It is important to analyze the profitability of different

marketing entities and cost effectiveness of different heads of marketing expenditure.

Marketing productivity audit is used to analyze the profitability and cost effectiveness of

marketing expenditures made under different heads.

6. Marketing function audit - It is a functional audit broadly covering the various elements

of the marketing mix - product, price, place and promotion (advertising, sales promotion,

sales force and publicity).

8. Summary

The current module on marketing organization and control can be summarized as:

Marketing organization can be defined as a framework for planning and making marketing

decision that are essential to marketing success.

There are various factors affecting the marketing organization and these have been

categorized as internal factors (top management philosophy, product policy and people)

and external factors (business environment, markets, consumer requirements and channels

of distribution).

Different organizations can have different structures which can be any one from the

following: line and staff organization, functional organization, product oriented marketing

organization, customer oriented marketing organization, geography oriented marketing

organization and matrix form/combined base structure.

Marketing control is concerned with various aspects such as analyzing the performance of

marketing decision, identifying the problem/opportunities and taking actions to take

advantage of opportunities and resolving problems.

Also, marketing audit is used as one of the important tool to assess the effectiveness of

different marketing mix elements.

commerce 28: marketing organization and control

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