Marketıng Management Dersi 8. Ünite Özet
Managing Marketing Effort
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Managing Marketing Effort
Introduction
Significant changes in technology affected the speed of globalisation in the last century. It resulted in continuing global proliferation of technology and managerial knowhow. Thus, both the economic and national boundaries disappeared. New international players are now entering in the world markets more easily than before.
The question “what kind of trends can have an impact on marketing organisations?” is another important issue.The important terms that have an impact on organisations and their organisational structure are globalisation, mergers, outsourcing and technology.
Evolution of The Marketing Department
We will investigate the evolution of marketing department in this section. The issue of how a marketing department should be placed into an organisation has been questioned for many years.
Structure: The “structure” is organisation of an object or system. Each company must have a structure. Coordination: The design of an organisation revolves around the coordination of activities within the organisation.
Culture: Culture is a system of behavioural norms and shared values passing from generation to generation in an organisation or in a system.
Power: Power is potential influence, or the ability to influence others’ behavior or the course of events.
The “structure” is organisation of an object or system. Culture is a system of behavioural norms and shared values passing from generation to generation in an organisation or in a system. Power is potential influence, or the ability to influence others’ behavior or the course of events.
Simple Sales Department
This stage is a kind of starting point of new born companies. If companies are a little large, they have a sales manager who keeps them under surveillance with mobile salespeople. If company needs any market research, advertisement or other marketing activities requiring expertise, then the manager can do outsourcing. Outsourcing means obtaining some goods and service outside.
Sales Department with Supportive Marketing Functions
As the business grows, the sales department needs to do extra tasks, such as market research, sales and cost analysis, advertising and sales enhancing efforts. Therefore, growing companies begin to employ professionals who can manage needed functions and other functions.
Separate Marketing Department
The continuing growth of the company will warrant additional investment in marketing research, new product development, advertising and sales promotion and customer service. In this stage, market research, new product development, advertising and customer services gain importance as well as sales force activities.
Modern Marketing Department
As you will recall from the previous pages, in a separate marketing department stage, the sales and marketing departments start to work together. However, their conflict of interests gets bigger in time.
Process and Outcome-Based Company
In modern marketing era, companies want to establish closer relationships with their customers. Therefore, some hierarchical levels of organisations are changed into the new titles.
According to the processes or outcomes, the concept of product management has been replaced by either category management or key account management. Category management is defined as: a retailer/ supplier process of managing categories as strategic business units, producing enhanced business results by focussing on delivering consumer value. In category management, brand managers report to category managers. A category manager is responsible for resolving disputes, being referee, maintaining the position of brand, and developing new brands so that the brands of the same firm do not come across. On the other hand, in key account management, key account customers are of strategic importance to the selling company, serviced by appointed managers trained to meet that customer’s specific needs.
Organising The Marketing Department
Organising a marketing department basically implies the allocation of activities to groups10. In the marketing literature, a marketing organisation is examined in two ways:
1) marketing as a functional group within an organisation
2) marketing as a set of activities like advertising, customer service, digital marketing, market research, etc.
Functional Marketing Organisation
This type of organisation is known as one of the most common forms of organisational structure. Accordingly, marketing is seen as a function that depends on top management just like other functions such as production, finance or human resources managment, etc.
Functional marketing organisation has the advantage of simplicity of organizational levels to reduce hierarchy. On the other hand, it has the difficulty of creating an effective communication environment among the responsible people.
Geographic Marketing Organisation
Companies that sell products nationwide usually organize their sales force and other organizations according to their geographical locations such as Aegean, Marmara and Mediterranean regions. This model is preferred by companies that tend to establish their production units in close proximity to regional markets.
This model is preferred by the companies that tend to establish their production units in close proximity to regional markets.
Product or Brand Management Organisation
Product or brand managers plan, direct and control their business and marketing efforts. Responsibilities of a product or a brand manager is given below:
- To create long term and competitive strategies related to products,
- Prepare sales estimates and sales quotas together with product market share manager,
- Provide interest and support from sales force and distributor,
- Cooperate with advertising agencies and intermediaries in preparing programs and campaigns,
- Review product performance, quality and packaging designs,
- Continuously collect information about the market performance of products,
- Start market research when needed,
- Analyse the results of sales, profits, activities of competitors and their market shares. Demand plans when needed,
- Consult for distribution, production and quality control. Product or brand management organisation has some advantages. These advantages are discussed below.
- Product manager ensures coordination and compliance between product and marketing mix.
- More rapid response is given to marketrelated problems.
- Smaller brands are also concerned.
- Product managers create a good training space for young managers.
Also, the product or brand management organisation has some disadvantages. Disadvantages are given below.
- Product managers may not be active in some tasks because they are not authorized.
- Product managers specialize in the product they are dealing with. As they may not have expertise on other marketing functions (i.e. advertising), this may cause problems.
- At first, company appoints a product manager for each product. Then, the overloaded product manager requests another brand manager and/or an assistant. Therefore, payroll costs rise. Meanwhile, the number of functional experts in areas such as packaging, promotion, marketing research, etc. increases.
Market Management Organisation
Vestel is one of the largest technology companies in the world selling its products to consumers, government and also business market.
Market management organisation is an organisation which serves for different markets and user groups with distinct buying preferences and practises.
Matrix Management Organisation
It is the organizational structure which staff assigned to both the functional department and the project or product manager. In this structure, two or more business units use the functional departments of the enterprise to increase profitability. The matrix structure combines the advantages of functional expertise and product project expertise to make the best use of talented people. The most obvious feature of this model is that a sub-function manager has two supervisors. Some disadvantages of this model are that; it may be costly and it often creates troubles.
Relatıonshıps Wıth Other Departments
As a famous quote from Peter Drucker mentions “marketing is not only much broader than selling… It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise”.
Marketing Implementation
No matter how well a business is planned, uncontrollable changes can affect the business. In such cases, marketing strategy and tactics also need to change. It is clear that the success of marketing depends on the success in implementation. The definition of marketing implementation emphasizes the process that turns marketing plans into action assignments and ensures they accomplish the plan’s stated objectives.
Marketing Implementation emphasizes the process that turns marketing plans into action assignments and ensures they accomplish the plan’s stated objectives.
Strategy is an action plan that helps the organization achieve its goals by forging the best fit between the firm and the environment.
Evaluation and Control
To cope with many uncontrolled circumstances for implementation of marketing strategies and plans, marketing department must monitor and control all these activities. The definition of control is: “the process of taking measures to match the actual results and the planned results”. It is difficult to decide whether the goals and objectives are achieved effectively and efficiently without control.
Marketing Control is the process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments.
Annual Plan Control
Annual plan control can be implemented in four steps. Firstly, management sets monthly or quarterly objectives. Secondly, management controls market performance. Thirdly, management adjusts the causes of problems. Lastly, management prepares an action plan to close the gaps between goals and performance.
Market Share Analysis
During market share analysis, companies should pay attention to the following factors:
- The effect of uncontrollable factors is not the same for every enterprise in the same industry.
- The comparison of the performance of a business with the average performance of all businesses is not always meaningful.
- The decline in a business’s market share does not mean that the business is performing worse than an average business in the industry.
- Sometimes, the decline in market share may be the result of a conscious policy that the business implements to increase profits.
Marketing-Sales Expenses Ratios
The control of the annual marketing plan requires businesses to determine that they are not over-spending to gain sales goals. Management wants to monitor these ratios. One of the rates based on this issue is the ratio of marketing expenses/sales. In addition, periodic fluctuations can be tracked from charts.
Financial Anaysis and Market Based Scorecard Analysis
Financial analysis is usually performed by marketers to find profitable strategies beyond sales. In a financial analysis, the aim of marketers is to identify the factors which affect the company’s rate of return on net worth. The rate of return on net worth is the output of two ratios: company’s return on assets and its financial leverage.
Profitability Control
The effectiveness of a marketing program cannot be measured only by the sales generated and the market share.
In the marketing profitability analysis, there are some steps for companies to follow:
- By identifying functional expenses, companies should measure how much of their expenses will be for each activity.
- Then, the company determines how the functional expenses are associated with each of the activites and assigns these functional expenses to the marketing entities.
- The next step is to prepare a profit and loss statement for each marketing entity.
- Finally, the last step is assigning functional expenses to marketing entities.
Efficiency Control
At the efficiency controls, it is examined whether the marketing tactics related to distribution and marketing tactics are carried out effectively. If a company’s profitability analysis reveals poor profits in certain products, territories or markets; then managers start to search for more efficient ways to manage these poor profitable units. To achieve this aim, to improve marketing efficiency, companies, sometimes, assign a marketing controller position. In such case you may think of a question: “What does a marketing controller basically do?”
Strategic Control
Strategic control is about matching company’s basic strategies with opportunities. Unexpected circumstances can affect company strategy and programs quickly. To reply unexpected situations urgently, company should measure its approaches to target market.
Marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s environment, objectives, strategies and activities to determine problem areas and opportunities.
Marketing audit is more inclusive than other assessments. It covers all major marketing aspects of a company. If it covers only sales force or other marketing activity, then it is called functional audit. Functional audits are useful but sometimes they can be misleading for management.
Introduction
Significant changes in technology affected the speed of globalisation in the last century. It resulted in continuing global proliferation of technology and managerial knowhow. Thus, both the economic and national boundaries disappeared. New international players are now entering in the world markets more easily than before.
The question “what kind of trends can have an impact on marketing organisations?” is another important issue.The important terms that have an impact on organisations and their organisational structure are globalisation, mergers, outsourcing and technology.
Evolution of The Marketing Department
We will investigate the evolution of marketing department in this section. The issue of how a marketing department should be placed into an organisation has been questioned for many years.
Structure: The “structure” is organisation of an object or system. Each company must have a structure. Coordination: The design of an organisation revolves around the coordination of activities within the organisation.
Culture: Culture is a system of behavioural norms and shared values passing from generation to generation in an organisation or in a system.
Power: Power is potential influence, or the ability to influence others’ behavior or the course of events.
The “structure” is organisation of an object or system. Culture is a system of behavioural norms and shared values passing from generation to generation in an organisation or in a system. Power is potential influence, or the ability to influence others’ behavior or the course of events.
Simple Sales Department
This stage is a kind of starting point of new born companies. If companies are a little large, they have a sales manager who keeps them under surveillance with mobile salespeople. If company needs any market research, advertisement or other marketing activities requiring expertise, then the manager can do outsourcing. Outsourcing means obtaining some goods and service outside.
Sales Department with Supportive Marketing Functions
As the business grows, the sales department needs to do extra tasks, such as market research, sales and cost analysis, advertising and sales enhancing efforts. Therefore, growing companies begin to employ professionals who can manage needed functions and other functions.
Separate Marketing Department
The continuing growth of the company will warrant additional investment in marketing research, new product development, advertising and sales promotion and customer service. In this stage, market research, new product development, advertising and customer services gain importance as well as sales force activities.
Modern Marketing Department
As you will recall from the previous pages, in a separate marketing department stage, the sales and marketing departments start to work together. However, their conflict of interests gets bigger in time.
Process and Outcome-Based Company
In modern marketing era, companies want to establish closer relationships with their customers. Therefore, some hierarchical levels of organisations are changed into the new titles.
According to the processes or outcomes, the concept of product management has been replaced by either category management or key account management. Category management is defined as: a retailer/ supplier process of managing categories as strategic business units, producing enhanced business results by focussing on delivering consumer value. In category management, brand managers report to category managers. A category manager is responsible for resolving disputes, being referee, maintaining the position of brand, and developing new brands so that the brands of the same firm do not come across. On the other hand, in key account management, key account customers are of strategic importance to the selling company, serviced by appointed managers trained to meet that customer’s specific needs.
Organising The Marketing Department
Organising a marketing department basically implies the allocation of activities to groups10. In the marketing literature, a marketing organisation is examined in two ways:
1) marketing as a functional group within an organisation
2) marketing as a set of activities like advertising, customer service, digital marketing, market research, etc.
Functional Marketing Organisation
This type of organisation is known as one of the most common forms of organisational structure. Accordingly, marketing is seen as a function that depends on top management just like other functions such as production, finance or human resources managment, etc.
Functional marketing organisation has the advantage of simplicity of organizational levels to reduce hierarchy. On the other hand, it has the difficulty of creating an effective communication environment among the responsible people.
Geographic Marketing Organisation
Companies that sell products nationwide usually organize their sales force and other organizations according to their geographical locations such as Aegean, Marmara and Mediterranean regions. This model is preferred by companies that tend to establish their production units in close proximity to regional markets.
This model is preferred by the companies that tend to establish their production units in close proximity to regional markets.
Product or Brand Management Organisation
Product or brand managers plan, direct and control their business and marketing efforts. Responsibilities of a product or a brand manager is given below:
- To create long term and competitive strategies related to products,
- Prepare sales estimates and sales quotas together with product market share manager,
- Provide interest and support from sales force and distributor,
- Cooperate with advertising agencies and intermediaries in preparing programs and campaigns,
- Review product performance, quality and packaging designs,
- Continuously collect information about the market performance of products,
- Start market research when needed,
- Analyse the results of sales, profits, activities of competitors and their market shares. Demand plans when needed,
- Consult for distribution, production and quality control. Product or brand management organisation has some advantages. These advantages are discussed below.
- Product manager ensures coordination and compliance between product and marketing mix.
- More rapid response is given to marketrelated problems.
- Smaller brands are also concerned.
- Product managers create a good training space for young managers.
Also, the product or brand management organisation has some disadvantages. Disadvantages are given below.
- Product managers may not be active in some tasks because they are not authorized.
- Product managers specialize in the product they are dealing with. As they may not have expertise on other marketing functions (i.e. advertising), this may cause problems.
- At first, company appoints a product manager for each product. Then, the overloaded product manager requests another brand manager and/or an assistant. Therefore, payroll costs rise. Meanwhile, the number of functional experts in areas such as packaging, promotion, marketing research, etc. increases.
Market Management Organisation
Vestel is one of the largest technology companies in the world selling its products to consumers, government and also business market.
Market management organisation is an organisation which serves for different markets and user groups with distinct buying preferences and practises.
Matrix Management Organisation
It is the organizational structure which staff assigned to both the functional department and the project or product manager. In this structure, two or more business units use the functional departments of the enterprise to increase profitability. The matrix structure combines the advantages of functional expertise and product project expertise to make the best use of talented people. The most obvious feature of this model is that a sub-function manager has two supervisors. Some disadvantages of this model are that; it may be costly and it often creates troubles.
Relatıonshıps Wıth Other Departments
As a famous quote from Peter Drucker mentions “marketing is not only much broader than selling… It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise”.
Marketing Implementation
No matter how well a business is planned, uncontrollable changes can affect the business. In such cases, marketing strategy and tactics also need to change. It is clear that the success of marketing depends on the success in implementation. The definition of marketing implementation emphasizes the process that turns marketing plans into action assignments and ensures they accomplish the plan’s stated objectives.
Marketing Implementation emphasizes the process that turns marketing plans into action assignments and ensures they accomplish the plan’s stated objectives.
Strategy is an action plan that helps the organization achieve its goals by forging the best fit between the firm and the environment.
Evaluation and Control
To cope with many uncontrolled circumstances for implementation of marketing strategies and plans, marketing department must monitor and control all these activities. The definition of control is: “the process of taking measures to match the actual results and the planned results”. It is difficult to decide whether the goals and objectives are achieved effectively and efficiently without control.
Marketing Control is the process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments.
Annual Plan Control
Annual plan control can be implemented in four steps. Firstly, management sets monthly or quarterly objectives. Secondly, management controls market performance. Thirdly, management adjusts the causes of problems. Lastly, management prepares an action plan to close the gaps between goals and performance.
Market Share Analysis
During market share analysis, companies should pay attention to the following factors:
- The effect of uncontrollable factors is not the same for every enterprise in the same industry.
- The comparison of the performance of a business with the average performance of all businesses is not always meaningful.
- The decline in a business’s market share does not mean that the business is performing worse than an average business in the industry.
- Sometimes, the decline in market share may be the result of a conscious policy that the business implements to increase profits.
Marketing-Sales Expenses Ratios
The control of the annual marketing plan requires businesses to determine that they are not over-spending to gain sales goals. Management wants to monitor these ratios. One of the rates based on this issue is the ratio of marketing expenses/sales. In addition, periodic fluctuations can be tracked from charts.
Financial Anaysis and Market Based Scorecard Analysis
Financial analysis is usually performed by marketers to find profitable strategies beyond sales. In a financial analysis, the aim of marketers is to identify the factors which affect the company’s rate of return on net worth. The rate of return on net worth is the output of two ratios: company’s return on assets and its financial leverage.
Profitability Control
The effectiveness of a marketing program cannot be measured only by the sales generated and the market share.
In the marketing profitability analysis, there are some steps for companies to follow:
- By identifying functional expenses, companies should measure how much of their expenses will be for each activity.
- Then, the company determines how the functional expenses are associated with each of the activites and assigns these functional expenses to the marketing entities.
- The next step is to prepare a profit and loss statement for each marketing entity.
- Finally, the last step is assigning functional expenses to marketing entities.
Efficiency Control
At the efficiency controls, it is examined whether the marketing tactics related to distribution and marketing tactics are carried out effectively. If a company’s profitability analysis reveals poor profits in certain products, territories or markets; then managers start to search for more efficient ways to manage these poor profitable units. To achieve this aim, to improve marketing efficiency, companies, sometimes, assign a marketing controller position. In such case you may think of a question: “What does a marketing controller basically do?”
Strategic Control
Strategic control is about matching company’s basic strategies with opportunities. Unexpected circumstances can affect company strategy and programs quickly. To reply unexpected situations urgently, company should measure its approaches to target market.
Marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s environment, objectives, strategies and activities to determine problem areas and opportunities.
Marketing audit is more inclusive than other assessments. It covers all major marketing aspects of a company. If it covers only sales force or other marketing activity, then it is called functional audit. Functional audits are useful but sometimes they can be misleading for management.