MARKETING MANAGEMENT

1. 1 of 31Copyright © 2003 Prentice-Hall, Inc.
The marketingThe marketing
organization will haveorganization will have
to redefine its role fromto redefine its role from
managing customermanaging customer
interactions tointeractions to
integrating andintegrating and
managing all themanaging all the
company’s customer-company’s customer-
facing processes.facing processes.
Kotler on
Marketing

2. 2 of 31Copyright © 2003 Prentice-Hall, Inc.
Chapter Objectives
 In this chapter, we focus on the followingIn this chapter, we focus on the following
questions:questions:
 What are the trends in company organization?What are the trends in company organization?
 How are marketing and sales organized inHow are marketing and sales organized in
companies?companies?
 What steps can a company take to build aWhat steps can a company take to build a
stronger customer focused culture?stronger customer focused culture?
 How can a company improve its marketing-How can a company improve its marketing-
implementation skills?implementation skills?
 What tools are available to help companiesWhat tools are available to help companies
monitor and improve their marketing activities?monitor and improve their marketing activities?

3. 3 of 31Copyright © 2003 Prentice-Hall, Inc.
Trends in Company
Organization
 Main responses of companies to aMain responses of companies to a
changing environmentchanging environment
 ReengineeringReengineering
 OutsourcingOutsourcing
 BenchmarkingBenchmarking
 Supplier partneringSupplier partnering
 Customer partneringCustomer partnering
 MergingMerging
 GlobalizingGlobalizing
 FlatteningFlattening
 FocusingFocusing
 EmpoweringEmpowering

4. 4 of 31Copyright © 2003 Prentice-Hall, Inc.
Figure 22.1:
Stages in the
Evolution of
the Marketing
Department
 The Evolution of theThe Evolution of the
MarketingMarketing
DepartmentDepartment
Marketing
Organization

5. 5 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing
Organization
 SSimple Sales Departmentimple Sales Department
 Sales Department With AncillarySales Department With Ancillary
Marketing FunctionsMarketing Functions
 Separate Marketing DepartmentSeparate Marketing Department
 Modern Marketing Department /Modern Marketing Department /
Effective Marketing CompanyEffective Marketing Company
 Process-And Outcome-Based CompanyProcess-And Outcome-Based Company

6. 6 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Organization
 Organizing the Marketing DepartmentOrganizing the Marketing Department
 Functional OrganizationFunctional Organization
 Field salesField sales
 Customer serviceCustomer service
 Product managementProduct management
 Geographic OrganizationGeographic Organization
 Area market specialistArea market specialist

7. 7 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Organization
 Product- or Brand-Management OrganizationProduct- or Brand-Management Organization
 Product and brand managers have these tasks:Product and brand managers have these tasks:
 Develop a long-range and competitive strategy for theDevelop a long-range and competitive strategy for the
productproduct
 Preparing an annual marketing plan and sales forecastPreparing an annual marketing plan and sales forecast
 Working with advertising and merchandising agencies toWorking with advertising and merchandising agencies to
develop copy, programs, and campaignsdevelop copy, programs, and campaigns
 Stimulating support of the product among the sales force andStimulating support of the product among the sales force and
distributorsdistributors
 Gathering continuous intelligence on the product’sGathering continuous intelligence on the product’s
performance, customer and dealer attitudes, and newperformance, customer and dealer attitudes, and new
problems and opportunitiesproblems and opportunities
 Initiating product improvements to meet changing marketInitiating product improvements to meet changing market
needsneeds

8. 8 of 31Copyright © 2003 Prentice-Hall, Inc.
Figure 22.3:
The Product
Manager’s
Interactions

9. 9 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Organization
 Pearson and Wilson’s five steps to make thePearson and Wilson’s five steps to make the
product-management system work betterproduct-management system work better
 Clearly delineate the limits of manager’s roleClearly delineate the limits of manager’s role
 Build a strategy-development-and-review processBuild a strategy-development-and-review process
 Take into account areas of potential conflictTake into account areas of potential conflict
 Set up a formal process that forces to theSet up a formal process that forces to the
top all conflict-of-interest situationstop all conflict-of-interest situations
 Establish a system for measuring resultsEstablish a system for measuring results

10. 10 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing
Organization
 A Second Alternative is to switch fromA Second Alternative is to switch from
product managers to product teamsproduct managers to product teams
 Vertical product teamVertical product team
 Triangular product teamTriangular product team
 Horizontal product teamHorizontal product team
 Third Alternative: Brand AssetThird Alternative: Brand Asset
Management Team (BAMT)Management Team (BAMT)

11. 11 of 31Copyright © 2003 Prentice-Hall, Inc.
Figure 22.5: Managing Through Teams at Kraft

12. 12 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Organization
 Market-Management/CustomerMarket-Management/Customer
Management OrganizationManagement Organization
 Market-management OrganizationMarket-management Organization
 Markets managerMarkets manager
 Customer-management OrganizationCustomer-management Organization
 Product-Management/Product-Management/
Market-Management OrganizationMarket-Management Organization

13. 13 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Organization
 Corporate-Divisional OrganizationCorporate-Divisional Organization
 No corporate marketingNo corporate marketing
 Moderate marketingModerate marketing
 Strong corporate marketingStrong corporate marketing
 Marketing Relations With OtherMarketing Relations With Other
DepartmentsDepartments
 R&DR&D
 Engineering and PurchasingEngineering and Purchasing
 Manufacturing and OperationsManufacturing and Operations
 FinanceFinance
 Accounting and CreditAccounting and Credit

14. 14 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Organization
 Building a Companywide MarketingBuilding a Companywide Marketing
OrientationOrientation
 Transforming into a true market-drivenTransforming into a true market-driven
firm requires:firm requires:
 Developing a companywide passion for customersDeveloping a companywide passion for customers
 Organizing around customer segmentsOrganizing around customer segments
instead of around productsinstead of around products
 Developing a deep understanding of customersDeveloping a deep understanding of customers
through qualitative and quantitative researchthrough qualitative and quantitative research

15. 15 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Organization
 What steps can a CEO take to create a marketWhat steps can a CEO take to create a market
and customer focused company?and customer focused company?
1.1. Convince senior management of the needConvince senior management of the need
2.2. Appoint a senior marketing officer andAppoint a senior marketing officer and
a marketing task forcea marketing task force
3.3. Get outside help and guidanceGet outside help and guidance
4.4. Change the company’s reward measurement and systemChange the company’s reward measurement and system
5.5. Hire strong marketing talentHire strong marketing talent
6.6. Develop strong in-house marketing training programsDevelop strong in-house marketing training programs
7.7. Install a modern marketing planning systemInstall a modern marketing planning system
8.8. Establish an annual marketingEstablish an annual marketing
excellence recognition programexcellence recognition program
9.9. Shift from a department focus to aShift from a department focus to a
process-outcome focusprocess-outcome focus
10.10. Empower the employeesEmpower the employees

16. 16 of 31Copyright © 2003 Prentice-Hall, Inc.
Marketing Implementation
 Thomas Bonoma’s four sets of skills forThomas Bonoma’s four sets of skills for
implementing marketing programsimplementing marketing programs
 Diagnostic skillsDiagnostic skills
 Identification of company levelIdentification of company level
 Implementation skillsImplementation skills
 Evaluation skillsEvaluation skills
Aprimo helps companiesAprimo helps companies
“manage the“manage the
business of marketing”business of marketing”

17. 17 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
Table 22.1: Types of Marketing Control
Type ofType of
ControlControl
PrimePrime
ResponsibilityResponsibility
Purpose OfPurpose Of
ControlControl ApproachesApproaches
I. Annual-planI. Annual-plan
controlcontrol
Top managementTop management
MiddleMiddle
managementmanagement
To examineTo examine
whether thewhether the
planned resultsplanned results
are beingare being
achievedachieved
Sales analysisSales analysis
Market-shareMarket-share
analysisanalysis
Sales-to-expenseSales-to-expense
ratiosratios
Financial analysisFinancial analysis
Market-basedMarket-based
scorecard analysisscorecard analysis
See text for complete table

18. 18 of 31Copyright © 2003 Prentice-Hall, Inc.
Figure 22.7: The
Control Process
Evaluation and
Control
 Annual-Plan ControlAnnual-Plan Control
 Sales AnalysisSales Analysis
 Sales variance analysisSales variance analysis
 Microsales analysisMicrosales analysis

19. 19 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
 Market-Share AnalysisMarket-Share Analysis
 Overall market shareOverall market share
 Served market shareServed market share
 Relative market shareRelative market share
 Marketing Expense-To-Sales AnalysisMarketing Expense-To-Sales Analysis

20. 20 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
 Financial AnalysisFinancial Analysis

21. 21 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
 Market-Based Scorecard AnalysisMarket-Based Scorecard Analysis
 Customer-performance scorecardCustomer-performance scorecard
 Stakeholder-performance scorecardStakeholder-performance scorecard
 Profitability ControlProfitability Control
 Marketing-Profitability AnalysisMarketing-Profitability Analysis

22. 22 of 31Copyright © 2003 Prentice-Hall, Inc.
Table 22.2: A Simplified Profit-and-Loss Statement
SalesSales $60,000$60,000
Cost of goods soldCost of goods sold 39,00039,000
Gross marginGross margin $21,000$21,000
ExpensesExpenses
SalariesSalaries $9,300$9,300
RentRent 3,0003,000
SuppliesSupplies 3,5003,500
15,80015,800
Net profitNet profit $5,200$5,200

23. 23 of 31Copyright © 2003 Prentice-Hall, Inc.
Table 22.3: Mapping Natural Expenses into
Functional Expenses
NaturalNatural
AccountsAccounts TotalTotal SellingSelling AdvertisingAdvertising
Packing andPacking and
DeliveryDelivery
Billing andBilling and
CollectingCollecting
SalariesSalaries $9,300$9,300 $5,100$5,100 $1,200$1,200 $1,400$1,400 $1,600$1,600
RentRent 3,0003,000 —— 400400 2,0002,000 600600
SuppliesSupplies 3,5003,500 400400 1,5001,500 1,4001,400 200200
$15,800$15,800 $5,500$5,500 $3,100$3,100 $4,800$4,800 $2,400$2,400
 Step 1: Identifying Functional ExpensesStep 1: Identifying Functional Expenses
Evaluation and Control

24. 24 of 31Copyright © 2003 Prentice-Hall, Inc.
Table 22.4: Bases for Allocating Functional
Expenses to Channels
Channel TypeChannel Type SellingSelling AdvertisingAdvertising
PackingPacking
andand
DeliveryDelivery
Billing andBilling and
CollectingCollecting
HardwareHardware 200200 5050 5050 5050
Garden SupplyGarden Supply 6565 2020 2121 2121
Department storesDepartment stores 1010 3030 99 99
275275 100100 8080 8080
Functional expenseFunctional expense $5,500$5,500 $3,100$3,100 $4,800$4,800 $2,400$2,400
% No. of Units% No. of Units 275275 100100 8080 8080
EqualsEquals $ 20$ 20 $ 31$ 31 $ 60$ 60 $ 30$ 30
 Step 2: Assigning Functional Expenses toStep 2: Assigning Functional Expenses to
Marketing EntitiesMarketing Entities
Evaluation and Control

25. 25 of 31Copyright © 2003 Prentice-Hall, Inc.
Table 22.5: Profit-and-Loss Statements for Channels
HardwareHardware
GardenGarden
SupplySupply
Dept.Dept.
StoresStores
WholeWhole
CompanyCompany
SalesSales $30,000$30,000 $10,000$10,000 $20,000$20,000 $60,000$60,000
Cost of goods soldCost of goods sold 19,50019,500 6,5006,500 13,00013,000 39,00039,000
Gross marginGross margin $10,500$10,500 $ 3,500$ 3,500 $ 7,000$ 7,000 $21,000$21,000
ExpensesExpenses
Selling ($20 per call)Selling ($20 per call) $ 4,000$ 4,000 $ 1,300$ 1,300 $ 200$ 200 $ 5,500$ 5,500
Advertising ($31 perAdvertising ($31 per
advertisement)advertisement) 1,5501,550 620620 930930 3,1003,100
See text for complete table
Evaluation and Control
 Step 3: Preparing a Profit-and-Loss StatementStep 3: Preparing a Profit-and-Loss Statement
for Each Marketing Entityfor Each Marketing Entity

26. 26 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
 Determine Corrective ActionDetermine Corrective Action
 Direct Versus Full CostingDirect Versus Full Costing
 Direct costsDirect costs
 Traceable common costsTraceable common costs
 Nontraceable common costNontraceable common cost
 Activity-based Cost Accounting (ABC)Activity-based Cost Accounting (ABC)
 Efficiency controlEfficiency control
 Marketing ControllerMarketing Controller
 Sales-Force EfficiencySales-Force Efficiency
 Advertising EfficiencyAdvertising Efficiency
 Sales-Promotion EfficiencySales-Promotion Efficiency
 Distribution EfficiencyDistribution Efficiency

27. 27 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
 Strategic controlStrategic control
 The Marketing Effectiveness ReviewThe Marketing Effectiveness Review
 The Marketing AuditThe Marketing Audit
 Marketing audit’s fourMarketing audit’s four
characteristics:characteristics:
 ComprehensiveComprehensive
 SystematicSystematic
 IndependentIndependent
 PeriodicPeriodic

28. 28 of 31Copyright © 2003 Prentice-Hall, Inc.
Table 22.6: Components of a Marketing Audit
Part I. Marketing Environment AuditPart I. Marketing Environment Audit
MacroenvironmentMacroenvironment
A. DemographicA. Demographic What major demographic developments and trends poseWhat major demographic developments and trends pose
opportunities or threats to this company? What actions hasopportunities or threats to this company? What actions has
the company taken in response to these developments andthe company taken in response to these developments and
trends?trends?
B. EconomicB. Economic What major developments in income, prices, savings, andWhat major developments in income, prices, savings, and
credit will affect the company? What actions has thecredit will affect the company? What actions has the
company been taking in response to these developmentscompany been taking in response to these developments
and trends?and trends?
C. EnvironmentalC. Environmental What is the outlook for the cost and availability of naturalWhat is the outlook for the cost and availability of natural
resources and energy needed by the company? Whatresources and energy needed by the company? What
concerns have been expressed about the company’s roleconcerns have been expressed about the company’s role
in pollution and conservation, and what steps has thein pollution and conservation, and what steps has the
company taken?company taken?
See text for complete table

29. 29 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
 The Marketing Excellence ReviewThe Marketing Excellence Review

30. 30 of 31Copyright © 2003 Prentice-Hall, Inc.
Table 22.7: The Marketing Excellence
Review: Best Practices
PoorPoor GoodGood ExcellentExcellent
Product-DrivenProduct-Driven Market-DrivenMarket-Driven Market-DrivenMarket-Driven
Mass-Market OrientedMass-Market Oriented Segment OrientedSegment Oriented Niche Oriented andNiche Oriented and
Customer OrientedCustomer Oriented
Product OfferProduct Offer Augmented Product OfferAugmented Product Offer OrientedOriented
Average Product QualityAverage Product Quality Better Than AverageBetter Than Average Customer SolutionsCustomer Solutions
OfferOffer
Average Service QualityAverage Service Quality Better Than AverageBetter Than Average LegendaryLegendary
End-Product OrientedEnd-Product Oriented Core-Product OrientedCore-Product Oriented LegendaryLegendary
See text for complete table

31. 31 of 31Copyright © 2003 Prentice-Hall, Inc.
Evaluation and Control
 The Ethical and Social ResponsibilityThe Ethical and Social Responsibility
ReviewReview