Wednesday, 10 August 2011

Types of Marketing Organization

Marketing department can be organized using several variables/bases as discussed in this post. They include;

Functional Organization
The functional form of organization is the simplest and most bureaucratic design.
At the SBU level, managers of each functional department, such as production or marketing, report to the general manager. Within the marketing department, managers of specific marketing activity areas, such as sales, advertising, or marketing research, report to the marketing vice president or director.

At each level the top manager coordinates the activities of all the functional areas reporting to him or her, often with heavy reliance on standard rules and operating procedures. This is the most centralized and formalized organization form and relies primarily on hierarchical mechanisms for resolving conflicts across functional areas. Also, because top managers perform their coordination activities across all product-markets in the SBU, there is little specialization by product or customer type.

These characteristics make the functional form simple, efficient, and particularly suitable for companies operating in stable and slow-growth industries where the environments are predictable.

Geographical Organization

Probably the most widely used method of specializing activities is to organize a sales force on the basis of geographical territories. Under this type of organization, each sales person is assigned a specific geographical area - called a territory - in which to sell. Several sales people representing contiguous territories are placed under a territorial sales executive, who reports directly to the general sales manager. These territorial executives usually are called district or regional sales managers.

A territorial organization usually ensures better implementation of sales strategies in each local market and better control over the sales force.

Product Management Organization

When a company or SBU has many product-market entries, the simple functional form of organization is inadequate. A single manager finds it difficult to stay abreast of functional activities across a variety of different product-markets or to coordinate them efficiently. One common means of dealing with this problem is to adopt a product management organization structure. This form adds an additional layer of managers to the marketing department, usually called product managers, brand managers, or marketing managers, each of whom has the responsibility to plan and manage the marketing programmes and to coordinate the activities of other functional departments for a specific product or product line.

A product management structure decentralizes decision making while increasing the amount of product specialization within the SBU. If the product managers are also given substantial autonomy to develop their own marketing plans and programmes, this structure can also decrease the formalization within the business.

Finally, although the product managers are responsible for obtaining cooperation from other functional areas both within and outside the marketing department, they have no formal authority over these areas. They must rely on persuasion and compromise - in other words, more participative methods - to overcome conflicts and objections when coordinating functional activities. These factors make the product management form of organization less bureaucratic than the functional structure.

Product management organizations have a number of advantages. They identify and react more quickly to the threats and opportunities individual product- market entries face improved coordination of functional activities within and across product-markets, Moreover there is and increased attention to smaller product-market entries that might be neglected in a functional organization. Consequently, about 85 percent of all consumer goods manufacturers use some form of product management organization.

Despite its advantages, a product management organization has shortcomings. The major one is the difficulty of obtaining the cooperation necessary to develop and implement effective programs for a particular product given that a product manager has little direct authority. Also, the environment facing product managers is changing drastically. They increasingly must face the fact that customers can quickly compare products and prices and even suggest their own.
As a result of these trends and the inherent weakness of the product management type of organization, many companies have undertaken two major types of modifications - market management and matrix organization.

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