commerce 28: marketing organization and control
TRANSCRIPT
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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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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
.
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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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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
rits
De
me
rits
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7: Marketing Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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 Management
28: Marketing Organization and Control
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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7: Marketing Management
28: Marketing Organization and Control
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.