Marketing control


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Marketing control

  1. 1. Unit -5 Marketing organisation and controlTypes of marketing organisation structures Organisation is the vehicle for achieving the goals and aims of the business. Organisation is formed whenever the human beings gather together collectively for achieving the common purpose. 1. Line and staff organisation 2. Product – oriented organisation 3. Territory – oriented organisation 4. Organisation with a complex structure.
  2. 2. 1. Line and staff organisation In many firms the marketing job is structured consisting of some line and some staff functions. Basically the line functions and staff functions are organized into separate departments. There should be coordination between the line and the staff functions at high level. It is mostly suited for small and medium sized businesses.2. Product – based organisation The line and staff organization could not serve the purpose of large scale businesses, so the emergence of product based organisation came into picture. Usually these companies produce more than one product and they appoint the managers to take care of the products individually.
  3. 3. 3. Territory – oriented organization Unlike in the earlier organisation structure wherein the product manager is being responsible for the product welfare it lies with the line executives in the territory-oriented organisation. The marketing job is the responsibility of line managers in charge of territory unit.4.Complex organisation Complex organizations are those organizations which are a mixture of line and staff organization, product based organization, territory based organization. These types of organization can also be called as multi product or multi-market firms. They have the head offices which have many staff departments which deals with specialized functions of marketing.
  4. 4. Factors affecting marketing organisations The marketing organisations of different firms are found to vary from one another due to various factors such as, 1. Relationship between line and staff function 2. Careful planning of levels and spans 3. Effective coordination 4. Unambiguous job specificationsRelationship between line and staff function There must exists a good relationship between the line and the staff functions while structuring and developing a marketing organization. No organization is free from the conflicts of the line and the staff functions. The source of friction and the consequent inefficiency can be abolished by proper integration between the line and staff function.
  5. 5. Careful planning of levels and spans The various levels in an organization and the span of control must be properly planned and built in. the modern organization aims at reducing the levels in an organization to make the information accessible to all quicker and faster rate leading to effective communication and good control, because if there are too many levels in an organization then there are the chances of information getting delayed leading to ineffective communication, dilution of responsibility and poor control. Effective Coordination The marketing organizations should also provide for effective coordination among the different levels within marketing. There must be effective coordination between the marketing departments and other departments like production, finance, personnel, etc.,
  6. 6. Unambiguous job specifications The integral part of creating a marketing organization is defining clear job specifications with respect to each executive position in marketing organization. It helps in the removal of the ambiguities and provides role clarity. It also reduces friction in an organization.
  7. 7. Annual plan control Annual plan control consists of many tools, all of which are used to establish whether the targets set in the company‟s annual plan have been achieved or not. The company adopts a management by objectives methodology in four steps. 1. Sets monthly or quarterly sales targets. 2. Closely watches the product‟s performance in the selected areas. 3. Identifies significant differences between actual sales and the set targets and the reasons and causes therefore. 4. Takes necessary steps to correct the situation and reduces the gap between the target and sales actually achieved. This could result in changing the support programs or even reduoing the sales targets set earlier.
  8. 8. Plan performances are regularly checked by managers using the fivetools described as follows.  Sales analysis  Analyzing companys share  Marketing costs to sales analysis  Financial analysisSales analysis This tool appraises and assesses actual sales achieved relative to the target. Two separate tools are used in this exercise. Sales variance analysis to calculate the contribution of various factors to the short fall in sales.
  9. 9. Analysing company‟s share Overall sales figures do not indicate a company‟s performance vis-à-vis its competitors. The only way a company can ascertain this information is to calculate its own share of the market.Marketing costs to sales analysis Annual plan control must ensure that over spend doesn‟t occur to enable achieve the targeted sales. The most important aspect here is the marketing expense to sales ratio. Marketing expense ratios must be watched closely.
  10. 10. Financial analysis The expenses to sales ratios must be scrutinised within a larger financial pattern, so as to enable the company to identify exactly where the profits are emanating.Market information analysis All the controls discussed so far have been financial in nature. Companies also need to analyse information available in their markets. the first of these is based on consumers, New consumers added Preferences of targeted market Unhappy, disappointed customers Product quality(relative to competition) Consumers dropped Quality of service Relative awareness in the market segment.
  11. 11. Efficiency Control Profitability analysis is a regular activity carried out by all companies. When the company notes that some products, areas or specific markets are realising low profits, it must take corrective action or in other ways find more competent and effective means to manage its sales team, its advertising and sales promotion and channels of distribution. They assist brand managers with budgeting and advise and inform marketing executives on the financial consequences of marketing decisions. The sales teams Advertising efficiency Sales promotion Distribution efficiency
  12. 12. The sales teams Sales managers must keep a close watch on important market place signals with regard to the levels of efficiency in their specific areas. The actual calls by each sales executives; real time spent with each customer; the income gained per visit; any expenses incurred on customer and the average cost of each visit.Advertising Efficiency It is generally accepted that one cannot assess or evaluate the value received in return for the money spent on advertising. Even so, it is imperative for advertising managers to monitor the following. Cost of exposure per thousand consumers for each separate advertising medium used; the percentage of targeted consumers who actually were attracted by and saw the advertisement in a newspaper or magazine.
  13. 13. Sales promotion Sales promotion utilises a generous number of tools to motivate consumer interest in a product, and also to induce trying it out. To enhance the achievement of sales promotion, the management should; document the cost incurred on each promotion and also the revenue earned by it; the number of coupons exchanged; enquiries received in response to demonstrations; cost of display per sales rupee.Distribution efficiency It is essential for managements to economise on stocks, sites for warehouse and types of transport used. There are many tools available to achieve the above actions. Management also needs to keep an eye on the cost of logistics, accuracy of order filling, timely deliveries and the mistakes in its invoicing system.
  14. 14. Profitability Control In this era of competition the companies are trying to adoptnew marketing strategies to sometimes beat up the competitor or someother times to stay in competition. The companies try to follow profitmaking strategies which determine the profit from products, territoriesand even trade channels. Phillip kotler have suggested 3 steps forprofitability control. They are, i. Identifying the functional expenses ii. Assign the functional expenses to marketing entities iii. Prepare a profit and loss statement for each marketing entry.
  15. 15. Identifying the functional expenses The first and the foremost step involves identifying the functional expenses incurred to sell a product in a defined territory or through a channel. The functional expenses includes salaries, office rent, warehousing cost, insurance cost, taxes, transportation, conveyance, travelling, commissions, advertising, sales promotion, entertainment and packing. In order to calculate the profits generated from the sales of a product we deduct all the above said expenses from the total sales revenue.Assign the functional expenses to marketing entities The second step is to assign the various functional expenses to marketing entities. This becomes important when expenses are incurred on non-marketing entities too.Prepare a profit or loss statement After the completion of 2 steps, now the marketer has to follow the 3rd step i.e., he has to prepare the profit or loss statement.
  16. 16. Strategic Control The companies to stay in competition and beat up the competitorshould always have detailed reviews of their marketing strategies, thesuccess achieved and etc. the system of strategic control helps themanagement to determine the fit between the firm‟s marketing and itsexternal environment.This can be done with the help of 2 tools namely, i. Customer relationship barometer and ii. Marketing audit.
  17. 17. The customer relationship barometer This aims to assess how well is the customer integrated with the organisation. It provides inputs to the following parameters, a) Organisation structure b) Organizational policies c) Organizational system d) Technology e) Skills, attitude and knowledge of the people f) Strategy for customer retention and g) The core values of the organisation and their internalization.
  18. 18. Marketing audit A marketing audit is an extensive, orderly, regular appraisal of the company‟s marketing environment, its goals, strategies and other operations, preferably carried out by an independent organisation to: identify areas where there are problems or opportunities; and advise the company as to be taken to improve its performance. We shall first take a detailed look at the four main aspects of a marketing audit. There are six options available to conduct marketing audits. They are known as self audit, audit from across, audit from above, company‟s auditors, company task force audit or outside audit.
  19. 19. Marketing Audit Marketing audit can be explained, as a “systematic,independent, critical , unbiased, periodic, comprehensive review andappraisal of its policies, programmes, strategies, environment, activitiesto determine the problem areas and opportunities and recommending aplan of action to improve the company‟s marketing performance”.Marketing audit has four characteristics. They are as follows, 1. Comprehensive 2. Systematic 3. Independent 4. Periodic
  20. 20. 1. Comprehensive Marketing audit is vast in nature and it thus covers all the major marketing activities of a business not just few problems. Marketing audit is pervasive in nature. If the audit covers only few areas such as sales force, pricing or some other marketing activity then it would be called as functional audit.2.Systematic The marketing audit is a very systematic scrutinization of the organizations micro and macro environment, the marketing goals and strategies, the marketing systems and specific activities. The audit identifies the areas which needs improvement and an action plan is then implemented to achieve the desired objectives. The action plans can be both for long term as well as short term in nature.
  21. 21. 3.Independent There are six ways to conduct a marketing audit : self audit, audit from across, audit from above, company auditing office, company task force audit and outsider audit. The best audit among the following is the outsider audit as the audit is being done by the outsider consultants who devote their time and attentions and who also have experience in various industries and they impartial in their operations to carry out the audit.4. Periodic Usually the marketing audits are conducted only after facing certain drawbacks like the decrease in sales value, fall in the sales force morale and various similar difficulties. Normally the companies do not go for marketing audit in good times but rather they conduct the marketing audit in the crisis period.
  22. 22. Components of marketing Audit The components of marketing audit can be summarized as follows, Part I: Marketing Environment Audit (a) Macro environment (b) Task environment. Part II: Marketing Strategy Audit Part III: Marketing Organisation Audit Part IV: Marketing Systems Audit Part V: Marketing Productivity Audit Part VI: Marketing Function Audit
  23. 23. Part I: Marketing Environment Audit Macro environment The marketing environment audit is to two ways, the first one is the macro environment and the second one is the task environment. In macro environment we have some subdivisions. 1. Demographic 2. Economic 3. Environmental 4. Technological 5. Political 6. Cultural Task environment 1. Markets 2. Customers 3. Competitors 4. Distribution and dealers 5. Suppliers 6. Facilitators and marketing firms 7. Public
  24. 24. Part II: Marketing Strategy Audit 1. Mission of the Business 2. Marketing Objectives and Goals 3. StrategyPart III: Marketing Organisation Audit 1. Formal Structure 2. Functional Efficiency 3. Interface EfficiencyPart IV: Marketing Systems Audit 1. Marketing Information System (MIS) 2. Marketing Planning Systems 3. Marketing Control System 4. New-product Development System
  25. 25. Part V: Marketing Productivity Audit 1. Profitability Analysis 2. Cost-effectiveness AnalysisPart VI: Marketing Function Audit 1. Products 2. Price 3. Distribution 4. Advertisement, Publicity, Sales Promotion and Direct and Marketing 5. Sales Force
  26. 26. Online Marketing Online marketing is the achievement of marketing goals through the utilization of the internet and the web based technologies. Online marketing is also known as internet marketing is also known as internet marketing or marketing on the web. Online marketing has two channels. They are as follows, 1. Commercial online service and 2. InternetCommercial online service Online services such as American online, CompuServe and productivity offer marketing services to subscribers that pay a monthly fee. These services also provide information on education, sport, entertainment, shopping and the latest international news.
  27. 27. The Internet This is a vast international network, connecting other computer networks as well as companies, universities, libraries and so on. With the introduction of the worldwide web the usage of the internet increased very rapidly. The use of the internet itself is free. Users only need to pay for the services of a commercial provider that enables the user to access the internet.Steps involved in online marketing 1. Registration of a domain name which is interest sites address it acts as the telephone number for people who wish to visit the site. 2. Secondly the companies develop a web site contains web pages often called as world wide web(www) which contains text, picture, or sound.
  28. 28. Web – marketing can be viewed in four different ways 1. A business 2. A medium 3. A marketing channel and 4. A complete marketplace. Benefits of online marketing the benefits of online marketing can be divided into the following, 1. Benefits to sellers 2. Benefits to customers.
  29. 29. Benefits to sellers 1. Access to all markets 2. Global marketing 3. Scope for unimpeded, constraints free growth 4. Offers many services and products from a single stop 5. Targets the customer individually 6. Helps in building relationships with customers 7. Helps to reduce costs 8. A versatile medium of communicationBenefits to customers 1. Convenience 2. Search advantage and wider options 3. Customers can bargain on Net with a Host of Sellers 4. Transparency and Accuracy 5. Costumers can get „More for Less‟ 6. The power equation shifts in favour of the customer
  30. 30. Limitations of Online Marketing Disadvantages of online marketing 1. All products do not lend equally well for web-marketing 2. Costs involved are not inconsequential 3. No reliable about profitability 4. Lack of personal interaction while making a purchase 5. Security 6. Can leave businessman feeling isolated 7. Information overload 8. Hard to tell if people are lying