Monday, January 3, 2011

UNIT-V MARKETING ORGANIZATION AND CONTROL

 


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.

Marketing Organisation: Marketing organization is the framework for planning and making marketing decision that are essential to marketing success. It is the vehicle for making decision on all marketing areas such as product, price, place and promotion. Marketing organization is a group of marketing persons working together towards the attainment of certain common objectives. Marketing organization provides a system of relationships among various marketing functions to be performed by coordinating among marketing people.

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.
  1. The type of environment in which the firm is operating in terms of operations and size.
  2. The Nature of particular requirement for success in a given business which again         determines the size.
  3. 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

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

1. 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

2. 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




Marketing Control:

Marketing control is concerned with analyzing the performance of marketing decision, identifying the problem/opportunities and taking actions to take advantage of opportunities and resolving problems. It is the sequel to marketing planning. All manager need to exercise control over their decision and marketing operations.

            Specifically marketing performance is measured in terms of market share, sales, profits. Hence most control measures are designed with these parameters in mind. But today's marketing needs to measure the following.

a)      Market share
b)      Sales and profits
c)      Marketing effectiveness
d)      Customer satisfaction
e)      Customer perception of the firms and its brands


There are four types of controls with different objectives and tools and exist with different levels of management.

1)  Annual plan control:  It is with top or middle level mgmt to evaluate actual performance with targeted to analyze differences or gaps. The tools used are sales analysis, market share analysis, sales and expense ratios, and financial analysis.
2) Profitability control: It is used by marketing department to examine profitability by product, territory, customer segment and trade channel.
3) Efficiency control: It is used to asses the effectiveness 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 used by the top mgmt to examine wether the firm and marketing capable to cope with environment or not. The major tool used here is marketing audit.

Marketing Control Process:

Marketing Control Process includes monitoring, evaluating and improving the performance in each activity. There are six steps in this

a)      Decide the aspect of marketing operation to be evaluated:
The first step in mcp is deciding about the marketing operation to evaluate.
Eg: effectiveness of media for product advertisement, sales person performance, or performance of company product

b)      Establish measurement criterion
In this stage performance standards are decided against which actual performance is evaluated.
Eg: control sales person performance, in this one can measure new accounts obtained, call frequency ratio and order per call
c)      Establishing monitoring mechanism
After setting the standards, the next step is to develop monitoring mechanism tools like marketing information system(MIS). MIS is used to record performance of all marketing areas like monthly sales volume for products.
d)      Compare actual results with standards of performance
In this stage, results obtained through monitoring process are compared with pre established standards of performance.
e)      Analyze performance improvement
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:

Definition: Marketing audit is 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 asses the effectiveness of different marketing mix elements.

Types of Marketing Audit:

Marketing Environment Audit: It is divided into two groups i.e macro environment and task environment. Macro environment audit includes analysis of political, economical, technological and cultural aspects. Task environment audit covers customers,competitors, markets, dealer/distributors, suppliers, marketing firms and public.

Marketing Strategy Audit: This audit reviews firms marketing mission, objectives, goals, and strategies and to appraise their adaptability to present and future environment.

Marketing Organisation Audit: The audit evaluates the firms capability in implementing necessary strategies for the future environment. It also reviews formal organization structure and efficiency.

Marketing Systems Audit: It evaluates the subsystems of a system such as marketing information system, marketing planning system, marketing control system and new product development system.

Marketing productivity Audit: This audit critically examines the profitability of different marketing entities and cost effectiveness of different heads of marketing expenditure.

Marketing Function Audit: It is a functional audit mainly covering marketing mix components namely product, price, place and promotion (advertising, sales promotion, sales force and publicity).


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