MANAGING THE MARKETING PROCESS

MANAGING THE MARKETING PROCESS

In addition to updating their marketing plans, companies often need to restructure

business and marketing practices in response to major environmental changes such as

globalization, deregulation, computer and telecommunications advances, and market

fragmentation. Against this dynamic backdrop, the role of marketing in the organiza�tion must change as well. Now that the enterprise is fully networked, every functional

area can interact directly with customers. This means that marketing no longer has

sole ownership of customer interactions; rather, marketing needs to integrate all the

customer-facing processes so that customers see a single face and hear a single voice

when they interact with the firm. To accomplish this requires careful structuring of the

marketing organization.

Organization of the Marketing Department

Modern marketing departments take numerous forms. The marketing department

may be organized according to function, geographic area, products, or customer mar�kets. Global organization is another consideration for firms that market goods or ser�vices in other countries.

Functional Organization

The most common form of marketing organization consists of functional specialists

(such as the sales manager and marketing research manager) who report to a market�ing vice president, who coordinates their activities. The main advantage of a func�tional marketing organization is its administrative simplicity. However, this form loses

effectiveness as products and markets increase. First, a functional organization often

leads to inadequate planning for specific products and markets because products that

are not favored by anyone are neglected. Second, each functional group competes with the other functions for budget and status. Therefore, the marketing vice presi�dent constantly has to weigh the claims of competing functional specialists and faces a

difficult coordination problem.

Geographic Organization

A company selling in a national market often organizes its sales force (and sometimes

other functions, including marketing) along geographic lines. The national sales man�ager may supervise four regional sales managers, who each supervise six zone man�agers, who in turn supervise eight district sales managers, who supervise 10 sales peo�ple. Several companies are now adding area market specialists (regional or local

marketing managers) to support the sales efforts in high-volume, distinctive markets.

For example, McDonald’s now spends about 50 percent of its advertising budget

regionally, and Anheuser-Bush has subdivided its regional markets into ethnic and

demographic segments, with different ad campaigns for each.

Product- or Brand-Management Organization

Companies that produce a variety of products and brands often establish a product-

(or brand-) management organization as another layer of management within the

marketing function. A product manager supervises product category managers, who

in turn supervise specific product and brand managers. A product-management orga�nization makes sense if the firm’s products are quite different, or if the sheer number

of products is beyond the ability of a functional marketing organization to handle. 

In both consumer and industrial markets, product and brand managers are

responsible for product planning and strategy; preparing annual marketing plans and

sales forecasts; working with advertising and merchandising agencies to create pro�grams and campaigns; stimulating support among sales reps and distributors; ongoing

research into product performance, customer and dealer attitudes, opportunities and

threats; and initiating product improvements to meet changing market needs.

The product-management organization allows the product manager to concen�trate on developing a cost-effective marketing mix for each product, to react more

quickly to marketplace changes, and to watch over smaller brands. On the other hand,

it can lead to conflict and frustration when product managers are not given enough

authority to carry out their responsibilities effectively. In addition, product managers

become experts in their product but rarely achieve functional expertise. And appoint�ing product managers and associate product managers for even minor products can

bloat payroll costs. Finally, brand managers normally move up in a few years to another

brand or transfer to another company, leading to short-term thinking that plays havoc

with long-term brand building. 

To counter these disadvantages, some companies have switched from product

managers to product teams. For example, Hallmark uses a triangular marketing team

consisting of a market manager (the leader), a marketing manager, and a distribution

manager; 3M uses a horizontal product team consisting of a team leader and repre�sentatives from sales, marketing, laboratory, engineering, accounting, and marketing

research.

Another alternative is to introduce category management, in which a company focuses

on product categories to manage its brands. Kraft has changed from a classic brand-man�agement structure, in which each brand competed for resources and market share, to a

category-based structure in which category business directors (or “product integrators”)

lead cross-functional teams of representatives from marketing, R&D, consumer promo�tion, and finance. These category teams work with process teams dedicated to each prod�uct category and with customer teams dedicated to each major customer.20 Still, categorymanagement is essentially product-driven, which is why Colgate recently moved from

brand management (Colgate toothpaste) to category management (toothpaste category)

to a new stage called “customer-need management” (mouth care). This last step finally

focuses the organization on a basic customer need.21

Market-Management Organization

Many companies sell their products to a diverse set of markets; Canon, for instance,

sells fax machines to consumer, business, and government markets. When customers

fall into different user groups with distinct buying preferences and practices, a market

management organization is desirable. A markets manager supervises several market

managers (also called market-development managers, market specialists, or industry

specialists). The market managers draw upon functional services as needed or may

even have functional specialists reporting to them.

Market managers are staff (not line) people, with duties similar to those of prod�uct managers. This system has many of the same advantages and disadvantages of prod�uct management systems. Its strongest advantage is that the marketing activity is orga�nized to meet the needs of distinct customer groups. This is why Xerox converted from

geographic selling to selling by industry, as did IBM, which recently reorganized its

employees into 14 customer-focused divisions. In fact, several studies have confirmed

the value of market-centered organization: Slater and Narver found a substantial posi�tive effect of market orientation on both commodity and noncommodity businesses.22

Product-Management/Market-Management Organization

Companies that produce many products that flow into many markets tend to adopt a

matrix organization. Consider DuPont, a pioneer in developing the matrix structure. Its

textile fibers department consists of separate product managers for rayon and other

fibers plus separate market managers for menswear and other markets. The product

managers plan the sales and profits for their respective fibers, each seeking to expand

the use of his or her fiber; the market managers seek to meet their market’s needs

rather than push a particular fiber. Ultimately, the sales forecasts from the market

managers and the product managers should add to the same grand total. 

A matrix organization would seem desirable in a multiproduct, multimarket

company. However, this system is costly and often creates conflicts as well as questions

about authority and responsibility. By the early 1980s, a number of companies had

abandoned matrix management. But matrix management has resurfaced and is again

flourishing in the form of “business teams” staffed with full-time specialists reporting

to one team boss. The major difference is that companies today provide the right con�text in which a matrix can thrive—an emphasis on flat, lean team organizations

focused around business processes that cut horizontally across functions.23

Corporate-Divisional Organization

As multiproduct-multimarket companies grow, they often convert their larger product

or market groups into separate divisions with their own departments and services. This

raises the question of what marketing services and activities should be retained at cor�porate headquarters. Some corporations leave marketing to each division; some have

a small corporate marketing staff; and some prefer to maintain a strong corporate

marketing staff.

The potential contribution of a corporate marketing staff varies in different

stages of the company’s evolution. Most companies begin with weak marketing in their

divisions and often establish a corporate staff to bring stronger marketing into the divi�sions through training and other services. Some members of corporate marketingmight be transferred to head divisional marketing departments. As divisions become

strong in their marketing, corporate marketing has less to offer them. Some compa�nies then decide corporate marketing has done its job and proceed to eliminate the

department.24

Global Organization

Companies that market internationally can organize in three ways. Those just going

global may start by establishing an export department with a sales manager and a few assis�tants (and limited marketing services). As they go after global business more aggres�sively, they can create an international division with functional specialists (including mar�keting) and operating units structured geographically, according to product, or as

international subsidiaries. Finally, companies that become truly global organizations have

top corporate management and staff plan worldwide operations, marketing policies,

financial flows, and logistical systems. In these organizations, the global operating units

report directly to top management, not to the head of an international division.

Building a Companywide Marketing Orientation

Many companies are beginning to realize that their organizations are not really market�and customer-driven—they are product or sales driven. Companies such as Baxter,

General Motors, and Shell are working hard to reorganize themselves into true market�driven companies. The task is not easy: it requires changes in job and department defi-

nitions, responsibilities, incentives, and relationships.

To create a market- and customer-focused company, the CEO must: convince

senior managers of the need to be more customer-focused; appoint a senior market�ing officer and marketing task force; get outside help and guidance; change reward

measurement and system to encourage actions that build long-term customer satisfac�tion; hire strong marketing talent; develop strong in-house marketing training pro�grams; install a modern marketing planning system; establish an annual marketing

excellence recognition program; consider restructuring as a market-centered organi�zation; and shift from a department focus to a process-outcome focus.

DuPont successfully made the transition from an inward-looking to an outward�looking orientation when it began building a “marketing community” by reorganizing

divisions along market lines and holding marketing management training seminars

for thousands of managers and employees. The company also established a marketing

excellence recognition program and honored employees from around the world who

had developed innovative marketing strategies and service improvements.25 It takes a

great deal of planning and patience to get managers to accept customers as the foun�dation and future of the business—but it can be done, as the DuPont example shows.

Marketing Implementation

Organization is one factor contributing to effective marketing implementation, the

process that turns marketing plans into action assignments and ensures that such

assignments are executed in a manner that accomplishes the plan’s stated objectives.26

This part of the marketing process is critical, because a brilliant strategic marketing

plan counts for little if it is not implemented properly. Whereas strategy addresses the

what and why of marketing activities, implementation addresses the who, where, when,

and how. Strategy and implementation are closely related in that one layer of strategy

implies certain tactical implementation assignments at a lower level. For example, top

management’s strategic decision to “harvest” a product must be translated into spe�Bonoma identified four sets of skills for implementing marketing programs:

(1) diagnostic skills (the ability to determine what went wrong); (2) identification of

company level (the ability to discern whether problems occurred in the marketing

function, the marketing program, or the marketing policy); (3) implementation skills

(the ability to budget resources, organize effectively, motivate others); and (4) evalua�tion skills (the ability to evaluate results).27 These skills are as vital for nonprofits as

they are for businesses, as the Alvin Ailey Dance Theater has discovered. 

Like many nonprofit cultural organizations, the company founded by Alvin

Ailey in 1958 always seemed to be operating in the red—despite its ability to attract

full houses—because of the high costs of mounting a production. But Judith

Jameson, the principal dancer who succeeded Ailey as director after his death, has

been able to keep the company in the black, thanks largely to her skill at motivating

others to carry out marketing efforts. The nonprofit implements its marketing plan

through a high-powered board of directors and a group of businesses that want to

associate with the Ailey company for their own marketing purposes. For example,

Healthsouth Corporation provides free physical therapy to the dancers and benefits

from the association when marketing its sports medicine clinics. With an audience

that is almost half African American and 43 percent of which is between the ages of

19 and 39, Ailey provides access to an important market for its corporate partners,

earning their enthusiastic support.28

Evaluating and Controlling the Marketing Process

To deal with the many surprises that occur during the implementation of marketing

plans, the marketing department has to monitor and control marketing activities con�tinuously. Table 1.1 lists four types of marketing control needed by companies: annual�plan control, profitability control, efficiency control, and strategic control.

Annual-Plan Control

The purpose of annual-plan control is to ensure that the company achieves the sales,

profits, and other goals established in its annual plan. The heart of annual-plan con�trol is the four-step management by objectives process in which management (1) sets

monthly or quarterly goals; (2) monitors the company’s marketplace performance;

(3) determines the causes of serious performance deviations; and (4) takes corrective

action to close the gaps between goals and performance. 

This control model applies to all levels of the organization. Top management

sets sales and profit goals for the year that are elaborated into specific goals for each

lower level. In turn, each product manager commits to attaining specified levels of

sales and costs; each regional district and sales manager and each sales representative

also commits to specific goals. Each period, top management reviews and interprets

performance results at all levels, using these five tools:

➤ Sales analysis. Sales analysis consists of measuring and evaluating actual sales in

relation to goals, using two specific tools. Sales-variance analysis measures the relative

contribution of different factors to a gap in sales performance. Microsales analysis

looks at specific products, territories, and other elements that failed to produce

expected sales. The point of these analyses is to determine what factors (pricing,

lower volume, specific territories, etc.) contributed to a failure to meet sales goals. 

➤ Market-share analysis. Company sales do not reveal how well the company is

performing relative to competitors. To do this, management needs to track its

market share. Overall market share is the company’s sales expressed as a percentage