In this article we will discuss about:- 1. Meaning and Definition of Marketing Organisation 2. Need for Marketing Organization 3. Factors 4. Structure 5. Essentials.
Meaning and Definition of Marketing Organisation:
The marketing manager is faced with the task of achieving various predetermined objectives. These objectives may relate to profit maximisation, customer satisfaction, image building or sales maximisation etc. Achievement of these objectives requires proper internal arrangement or organisation.
Thus, for achieving the objectives, it is essential that marketing policies and strategies are properly implemented. Proper implementation requires a good organisational set up where authority and responsibilities are properly delegated.
Organising is a managerial function. It is a framework of relationship among different person in an organization which specifies their authority, responsibilities and duties. Organization is thus, a mechanism through which policies are executed into actions. Marketing organization is made up of two words – marketing and organization. Marketing organization is a framework for planning and executing decisions in marketing activities. It is a group of marketing people working together in a coordinated manner to achieve pre-determined marketing objectives.
Organisation as a structure in the words of Professor Wheeler is, “Internal organization is the structural framework of duties and responsibilities required of personal in performing various functions within the company. It is the blue-prints, a mechanism”.
According to George Terry organisation is “The establishment of effective authority relationship among selected work, person and work places in order for the group to work together”.
In the words of Cundiff, Still and Goroni, “The marketing organisation provides the vehicle for marketing decision on product marketing channels, physical distribution, promotion and prices”.
Marketing organisation is thus, a mechanism of dividing and then grouping together of various marketing activities and establishing authority and responsibility among marketing personnel to ensure coordinated efforts toward achievement of marketing goals. It is a system of relationship among various marketing functions, performed by different marketing personnel in a coordinated manner to achieve marketing objectives.
Need for Marketing Organization:
Marketing organization is an important framework of relations for the achievement of marketing goals.
As such the need for marketing organisation arises on account of following reasons:
In the organization people lack initiative to undertake specific responsibilities on their own. They are unable to maintain close relations amongst themselves.
Hence, they have to be brought together and specific authority and responsibilities have to be assigned.
ii. To Balance Individual Goals and Organizational Goals:
In an organization, people are guided by individual goals which are quite different from organizational goals. To reconcile the two goals, organization became necessary. Every individual tries to balance the individual goals with the organizational goals.
iii. To Avoid Conflict:
Organisation consists of people who have vertical or horizontal relationship. This may lead to confusion and conflict if lines of authority and responsibility are not cleared defined. Therefore organisation of activities became essential. Each individual should know his specific role, responsibility and authority. This will ensure proper coordination of activities in the organization.
iv. Organization Ensures Proper Performance of Different Functions:
Marketing involves various functions and sub-functions. People in the marketing department should be clear with their specific marketing responsibilities. Further, a balance is also to be achieved with other functional departments like production, finance and personnel.
v. Nature of Marketing Job:
The nature of marketing job is such that it involves people in activities such as idea, innovation and behaviour of consumer and other intermediary. The study of complex human behaviour becomes organised. A good organisation structure ensures proper coordination and willingness to perform the complex task.
Factors Influencing Size of Marketing Organization:
1. Management’s Philosophy:
One of the major factors influencing size of marketing organization is the philosophy of the company’s management. Management may pursue different philosophy like that of centralization or decentralization, individual action or group action, their attitude and value judgment.
2. Type of Product:
The nature of product has significant influence on the size of marketing organization. Technical products like engineering goods require greater explanation, hence direct selling became a better option, and this requires larger sales force and organisation. On the other hand, fast moving goods (FMCG) can be easily sold through the distribution channel and hence require smaller sales force and small organization.
The length of the product line organisation is a major factor determining the size of sales organisation. If the firm deals in large number of product, it requires big size organization. To sell big variety of products, firm has to develop market oriented organisation structure so as to cover new areas and new markets. For small number of products, functional organization is suitable.
Markets relates to various factors like size of the market, location of the market, nature of the market, scope of the market etc. Each of these factors influences the size of the organisation. If the markets are widely dispersed, large sales force is required and so the size of the organisation is large and vice versa.
The distribution channel developed by a firm has a direct effect on the size of the marketing organization. Under indirect channels, intermediaries are there, who sell the product, thus, the size of organization is small whereas, under direct channel system, firm employees its own sales people to sell the goods, therefore the size of organization is large.
6. Needs and Requirements of the Customers:
Market, today are highly complex as there is a continuous change in the customer’s requirements and expectation from the company. As a result as customer’s demand better facilities and new facilities, company has to accordingly adjust its sales organization.
7. Business Conditions and Environment:
The environment in which a unit carries out its activities also has an impact on the size of the marketing organization. The requirement of success in that industries and the rate of changes in that industry is an important factor that decides the size of organization.
8. Sales Activity:
The size of marketing organization depends to a large extent on the sales activity of the form. If more sales and sales related activities are there, the size will be large and vice versa.
Structure of Marketing Organisation:
The organization structure of any firm depends mainly on its market needs and management philosophy.
As such there are two important ways in which organizations can be classified:
i. Classical classification based on classical school of thought, which divides organization as Line organization, Line and Staff organization, Functional organization and Committee organization.
ii. Modern classification based on modern school of thought, which divides the organization on the basis of functions, products, customers, geography or a combination of uses.
Accordingly on the basis of modern school of thought, various types of organization structure are:
Functional Organisation:
This is the simplest form of organization structure, which is very commonly used. It is suitable for those organizations which deal in few lines of product. A functional organization divide the marketing department on the basis of specialised marketing research, selling, distribution, product planning, pricing, advertising etc. each function assigned to a separate marketing manager.
Functional organization has the merit that it helps in developing managerial and technical skills in different marketing functions. However, the demerit is that the decision making authority and co-ordination are highly centralized. At the same time the marketing manager has to face the problem of improper control and co-ordination, particularly when the organization expands.
Product Based Organization:
Product based organization is one which divides the organization into units based on different types of products. Under these types of arrangement different products are identified and organization is classified on the basis of different product.
Here closely related products are grouped together and that group is assigned to a particular product manager. Thus, the product manager of a particular product is responsible for the marketing of the product of his group, as well as building the brand image, brand building, new product development etc.
Customer Based Organization:
This type of organization structure, is used when firm focuses greater attention on different types of customers it serve. As the business units are increasingly becoming customer centric, the firms are trying to organise themselves on the basis of different consumer group.
This helps them in deciding specialised products, pricing, and distribution and promotion policy for different group of customers. Each customer group is under separate marketing manager who is responsible for all the marketing activities of that particular group.
This type of organization is justified when different customer group are sufficiently different and business is done on a large scale. Under this structure organization is divided in different parts according to different characteristics like – social class, religion etc. The chief merit of this organizational structure is that it focuses on the needs and wants of each class of customers hence, specialisation can be achieved. However, the main demerit is that duplication of functions may be there.
Geographic organization is used when the companies operate in large geographical areas which are significantly different. Different areas of the total market may have different characteristics, different needs, languages, culture etc. which require different marketing strategy and special attention by the company.
In this case the company have to organize themselves on the basis of different geographical areas like region or division etc. Each geographical area is under the control of regional sales manager. A commonly used method, geographical organization, is similar to the customer based organization. This is because both focus on the different customer used in different regions. However, flow of information may be disturbed between different regions.
Apart from the above mentioned organizational structure, a very commonly used organization is a combination on different types of organizational structure like product based, functional based, customer based or geographical based.
Essentials of Good Marketing Organisation Structure:
1. Clarity of Relationship between Line and Staff People:
While developing a marketing organization, clarity should be ensured in defining the relationship between line function and staff function. In absence of this, conflicts may be there which will disturb the smooth functioning of the organization. To avoid friction and inefficiency, therefore, it is necessary that proper and meaningful integration of the line and staff function is there. Cooperative relationship between various departments and functions signifies a good marketing organizational structure.
2. Levels and Span of Control:
Another important factor which should be seriously considered is the level in the organization and span of control. Span of control refer to the number of subordinates being controlled by a superior. Each executive position must be clear as to its span of control. Efforts should be made to avoid too many levels in the organization.
More levels in the organization lead to ineffective communication and thereby delay in flow of information. Greater span of control also leads to poor control. A good marketing organization should therefore avoid too many levels.
3. Role Clarity:
A good marketing organization structure should try to maintain clarity in the job requirement of an executive. Job requirements include factors like basic function/role of the executive, his authority and responsibility, his financial powers, to whom he will report etc. If the executive is clear regarding his role, smooth functioning will be there in the organization. Otherwise, ambiguity will be there, resulting in friction and inefficiency in the organization.
4. Effective Co-Ordination:
Effective coordination among various functions and departments of the organization should be ensured. The marketing department should have effective coordination with various other departments of the organization like finance, personnel, production, corporate planning etc. Coordination should be an essential part or a built mechanism of the organization.
5. Marketing Oriented:
A marketing organization should represent the interest of the customer within the company, which helps in long term growth of the firm. The requirement of the consumer and the market should be taken care of. Organization should be structured around the products and the markets.
6. Recognizing Informal Relations:
An organisational structure in general defines the horizontal and vertical relationship between the people. However, apart from formal relationship, it is the informal relationship also which decides the success of the organisation.
Popularly known as “Grapevine” in management literature, informal relations are the invisible alliances between the people in the organisation. These relations help in building the goodwill and team spirit, and therefore its significance cannot be underestimated. A good marketing organisation should thus recognise both the formal and informal relations in the organisation.
7. Flexible Structure:
A good marketing organisation should be flexible and not static or immovable. Markets are highly dynamic and therefore the organisation should also be dynamic, adjusting to the changing needs of the markets and environment. An organisation structure should not be rigid or watertight but flexible so that it can be easily understood and can adapt to the changes. This will help in better response to the competitors and the customers.
8. Maintaining Balance:
The overall effectiveness in the marketing organisation calls for the balance in the activities. Whether the organisation is big or small, attempt should be made to avoid extremes and excesses and maintain balance. In other words, nothing should be over-emphasised in the organisation. Line and staff relationship, centralisation and decentralisation, short and long span of control, different levels in the organisation, etc. should be balanced. This ensures smoothness in operations.
9. Perpetual Existence:
It is important for the organisation to stand the test of time and changes in the environment. It should not be such which can be easily destroyed. Building an organisation is a complex task involving substantial investment, therefore it should be so developed, so as to easily meet the changes in the market and adapt accordingly. This is reflected in the increasing number of people in the organisation and their growing experience.
10. Cost Effectiveness:
Organisation should be so structured that it is cost effective. A balance between the cost and benefit should be maintained. For this purpose all types of excesses should be avoided. Undue duplication of efforts and overstaffing should not be there.
11. Flow of Information:
A two-way flow of information should be there in the organisation, i.e. from bottom to top and top to back. Smooth flow of information both ways ensures better functioning in the organisation. At the same time this information should be authentic and timely. In general, when information flow upwards it turns from specific to general and when it moves downwards, it turns from general to specific.