CHAPTER 22 Managing a Holistic Marketing organization for Long Run Trends in Marketing Practices Reengineering: Appointing teams to manage customer-value-building processes and break down walls between departments. Outsourcing: Greater willingness to buy more goods and services from outside domestic or foreign vendors. Benchmarking: Studying “best practice companies” to improve performance. Supplier partnering: Increased partnering with fewer but better value-adding suppliers. Customer partnering: Working more closely with customers to add value to their operations.
Merging: Acquiring or merging with firms in the same or complementary industries to gain economies of scale and scope. Globalizing: Increased effort to “think global” and “act local. ” Flattening: Reducing the number of organizational levels to get closer to the customer. Focusing: Determining the most profitable businesses and customers and focusing on them. Accelerating: Designing the organization and setting up processes to respond more quickly to changes in the environment. Empowering: Encouraging and empowering personnel to produce more ideas and take more initiative. Internal Marketing
Organizing the Marketing Department Functional Organization Geographic Organization Product or Brand management organization Some of the tasks that product or brand managers may perform include: ? Developing a long-range and competitive strategy for the product. ? Preparing an annual marketing plan and sales forecast. ? Working with advertising and merchandising agencies to develop copy, programs, and campaigns. ? Increasing support of the product among the sales force and distributors. ? Gathering continuous intelligence on the product’s performance, customer and dealer attitudes, and new problems and opportunities. Initiating product improvements to meet changing market needs. This organization has some disadvantages too: ? Product managers and specifically brand managers are not given enough authority to carry out their responsibilities. They have to rely on persuasion to get the cooperation of other departments. ? Product and brand managers become experts in their product area but rarely achieve functional expertise. They vacillate between acting as experts and having to defer to real experts. ? The product management system often turns out to be costly.
One person is appointed to manage each major product or brand and soon managers are appointed to manage even minor products and brands. ? Brand managers normally manage a brand for only a short time. Short-term involvement leads to short-term planning and plays havoc with building long-term strengths. ? The fragmentation of markets makes it harder to develop a national strategy from headquarters. ? Brand managers must increasingly please regional and local sales groups, resulting in a transfer of power from marketing to sales. Product and brand managers cause the company to focus on building market share rather than building the customer relationship. Yet the customer relationship, not the brand, may be the primary lever for value creation. MARKET-MANAGEMENT ORGANIZATION ? When customers fall into different user groups with distinct buying preferences and practices, a market-management organization is desirable. ? A market manager supervises several market managers (also called market-development managers, market specialists, or industry specialists). ? The market managers draw on functional services as needed.
MATRIX-MANAGEMENT ORGANIZATION ? A matrix organization would seem desirable in a multiproduct, multimarket company. ? This system is costly and often creates conflicts. ? There is the cost of supporting all the managers. ? There are also questions about where authority and responsibility should reside. Relation with other departments Building a Creative Marketing Organization ? Developing a company-wide passion for customers. ? Organizing around customer segments instead of around products. ? Developing a deep understanding of customers through qualitative and quantitative research.
Socially Responsible Marketing Corporate Social Responsibility Legal behavior ? Society must use the law to define, as clearly as possible, those practices that are illegal, antisocial, or anticompetitive. ? Organizations must ensure that every employee knows and observes any relevant laws. ? For example, sales managers can check that sales representatives know and observe the law, such as the fact that it is illegal for salespeople to lie to consumers or mislead them about the advantages of buying a product. Ethical behavior
Companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold its people fully responsible for observing ethical and legal guidelines. Social Responsibility Behavior Sustainability The importance of meeting humanity’s needs without harming future generations. Socially Responsible Business Models ? The future holds a wealth of opportunities for companies. ? Technological advances in solar energy, online networks, cable and satellite television, biotechnology, and telecommunications promise to change the world as we know it. At the same time, forces in the socioeconomic, cultural, and natural environments will impose new limits on marketing and business practices. ? Companies that are able to innovate new solutions and values in a socially responsible way are the most likely to succeed. Cause-Related Marketing ? Cause-related marketing is marketing that links the firm’s contributions to a designated cause to customers’ engaging directly or indirectly in revenue producing transactions with the firm. ? Cause marketing has also been called a part of corporate societal marketing (CSM) which Drumwright and Murphy define as marketing efforts “that have at least one on-economic objective related to social welfare and use the resources of the company and/or of its partners. ” ? They also include other activities such as traditional and strategic philanthropy and volunteerism as part of CSM. CAUSE MARKETING BENEFITS AND COSTS A successful cause marketing program can produce a number of benefits: ? Improving social welfare ? Creating differentiated brand positioning ? Building strong consumer bonds ? Enhancing the company’s public image with government officials and other decision makers; ? Creating a reservoir of goodwill Boosting internal morale and galvanizing employees; and driving sales Choosing a cause Many companies choose to focus on one or a few main causes to simplify execution and maximize impact. One of the more focused cause marketers is McDonald’s. Ronald McDonald Houses in more than 20 countries offer more than 5,000 rooms each night to families needing support while their child is in the hospital. Ronald McDonald House program has provided a “home away from home” for nearly 4 million family members since its beginning in 1974. Social Marketing
Cognitive campaigns ? Explain the nutritional value of different foods ? Explain the importance of conservation. Action campaigns ? Attract people for mass immunization. ? Motivate people to vote “yes” on a certain issue. ? Motivate people to donate blood. ? Motivate women to take a pap test. Behavioral campaigns ? Demotivate cigarette smoking. ? Demotivate hard-drug usage. ? Demotivate excessive consumption of alcohol. Value campaigns ? Alter ideas about abortion. ? Change attitudes of bigoted people. Evaluation and Control Annual plan control Sales Analysis
Market Share Analysis Needs to track its market share in one of three ways Overall market share/Served market share/Relative market share A useful way to analyze market share movements is in terms of four components: Overall market share=Customer penetration (% of all the customers who buy from the company)XCustomer loyalty X Customer selectivity (average customer purchase from the company compared to average company)X Price selectivity(Average price of the company with others) Marketing expense to sales analysis Financial analysis Profitability Control
Marketing Profitability Analysis Step: 1: Identifying functional expense Step: 2: Assessing functional expenses to marketing entities Step: 3: Preparing a profit and loss statement for each marketing entity Determining corrective actions Direct versus full costing Efficiency control Strategic control The Marketing audit Comprehensive The marketing audit covers all the major marketing activities of a business, not just a few trouble spots. It would be called a functional audit if it covered only the sales force, pricing, or some other marketing activity.
Systematic The marketing audit is an orderly examination of the organization’s macro-and micromarketing environments, marketing objectives and strategies, marketing systems, and specific activities. The audit indicates the most-needed improvements, which are then incorporated into a corrective action plan involving both short-run and long-run steps to improve overall effectiveness. Independent A marketing audit can be conducted in six ways: self-audit, audit from across, audit from above, company auditing office, company task force audit, and outsider audit.
Self-audits, in which managers use a checklist to rate their own operations, lack objectivity and independence Periodic Typically, marketing audits are initiated only after sales have turned down, sales force morale has fallen, and other problems have occurred. Companies are thrown into a crisis partly because they failed to review their marketing operations during good times. A periodic marketing audit can benefit companies in good health as well as those in trouble. THE MARKETING EXCELLENCE REVIEW
Companies can use another instrument to rate their performance in relation to the best practices of high-performing businesses. The Future of Marketing In these ways, modern marketing will continue to evolve and confront new challenges and opportunities. As a result, the coming years will see: ? The demise of the marketing department and the rise of holistic marketing. ? The demise of free-spending marketing and the rise of ROI marketing. ? The demise of marketing intuition and the rise of marketing science, ? The demise of manual marketing and the rise of automated marketing. The demise of mass marketing and the rise of precision marketing. Proficiency will be demanded in areas such as: ? Customer relationship management (CRM). ? Partner relationship management (PRM). ? Database marketing and data-mining. ? Contact center management and telemarketing. ? Public relations marketing (including event and sponsorship marketing), ? Brand-building and brand-asset management. ? Experiential marketing ? Integrated marketing communications ? Profitability analysis by segment, customer, channel.