Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
 Chapter 14

Designing
Market-Driven
Organizations
Very important to align the strategy and capabilities
of the organization with the market
Must reflect customer value requirements
in its design, roles, and activities

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 Designing market-driven organizations
Issues

1. Trends in organization design

2. Organizing for market-driven strategy
3. Marketing departments
4. Structuring marketing resources
5. Organizing for global marketing and
global customers

14-3
 Trends in organization design (1)
Suitable organization design is imperative for successful corporate strategy

Traditional structures
* Consist of business units, controlled by a
central authority (head office)
* Centralized, vertical, “command and control”
* Create barriers to the spread of knowledge
* Ideas and commands flow vertically
* Creating “silos” with little communication
across business units

14-4
 Trends in organization design (1)
Suitable organization design is imperative for successful corporate strategy

The New Organization

* Organizational design shifts
* many have implemented major changes (driven by
communications technology, the globalization of production and
sales, and the transfer of responsibility to outsiders for core
business functions, through outsourcing, joint ventures, and
alliances
* Innovation
* Looking outside for knowledge and expertise
* The knowledge-based worker
* Operate more effectively as “internal partner” rather than
conventional employees; lesson formal structure; emphasis more
on leadership & talent management

14-5
 Trends in organization design (1)
Suitable organization design is imperative for successful corporate strategy

The New Organization

* Managing culture
* Active management of the culture of an organization

14-6
 Trends in organization design (1)
Suitable organization design is imperative for successful corporate strategy

The New Organization

* Collaborative working
* Emphasize the importance of organizing around teams
* Informal networks
* Culture change and effective teamwork requires insight into
the informal networks that employees create outside
company’s formal structure
* Organizational diversity and external
relationships

14-7
 Alternative Organizational Structures
Traditional
Hierarchy
Process
Overlay
Functional
Structure

Process
Structure
Functional
Overlay Horizontal
Structure

14-8
Process-based organizational structure

Processes that define value

e.g. knowledge management, CRM
Processes that create value
Process e.g. new product development,
Leadership innovation
Processes that deliver value
e.g. logistics, customer service,
value chain relationships
Coordination
mechanisms
to link Specialist resource groups support process
process and Managers e.g. functional departments,
resource business units, external collaborators
leadership Resource Group Leadership

14-9
 Trends in organization design (2)

Key characteristic of new effective organization

design emphasizing on –
*Managing organizational process (not on
structure)
*Organizational agility and flexibility
* Prioritize speed and responsiveness
* Doing things faster than the competition
*Employee motivation
* Motivation and aspiration at all levels

14-10
 Organizing for market-driven strategy (1)

* Strategic marketing and organization structure

* Increasingly important to examine organizational issues in the
implementation of marketing strategy
* Factors lead companies to rethink how they organize for effective
marketing
* To counter performance shortfalls by better integration
* To globalize products and brands effectively
* To bring sales and marketing closer together
* To focus on brands and products
* When there are major shifts to respond to weakening business performance
* Organizational change is a continuing process in many companies

14-11
Organizing for market-driven strategy (2)

Aligning the organization with the market

* Organization are evolving toward closer alignment with
their markets as a result of new marketing strategies
and increasingly assertive customer demanding more
accountability and responsiveness
* Companies are structuring around customer groups
* 3 stages of evolution:
1. Improving alignment through informal lateral integration
2. Using integrating mechanisms such as key account or
segment managers
3. Full customer alignment with customer-based units at the front
of the organization or matrix structures around segments

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Customer-based front-end organization

Senior Management

Mediation
from the
center

Shared planning and metrics Customer-based

Back-end Units
Internal linkages Front-end Units

Product customers Solutions customers

14-13
Organizing for market-driven strategy (3)

* Marketing functions versus marketing

processes
* Instead of just conventional marketing functions or
departments
* Marketing seen as a set of processes that work
across the organization and its partner to shape and
implement strategy

examples

14-14
 Organizing for market-driven strategy (4)
* Marketing as cross-functional process
* A process perspective underlines the cross-functional
role of marketing
* Working across traditional boundaries to develop and
implement strategy
* Challenges of achieving integration – depends on strong
linkages between marketing and other functional units
* Finance/accounting
* Operations
* Sales
* R&D
* Customer service
* Human resource management
* Various approaches to achieving effective integration

14-15
 Marketing departments
Marketing capabilities and competencies in an organization are
important resources that create value in a company
Not necessary to have conventional mktg dept!

* Important organization design

choices:
* Centralization versus decentralization
* Integration or diffusion
* Contingencies for organizing (Refer to the 4
organizing concepts)
* Evaluating organizational designs –
prioritize and balance conflicting consequences

14-16
 Organizing Concepts
Classic view of 4 organizing
Centralized
concepts
Formalized
Nonspecialized

BUREAUCRATIC TRANSACTIONAL
Internal External
(hierarchical) (market)
Organization Organization
of Activity of Activity
ORGANIC RELATIONAL

Decentralized
Nonformalized
Specialized
14-17
 Structuring marketing resources (1)
Structuring array of marketing resources in a formal organization design involves
important management choices
* Structuring issues
* Specialist functions are attractive because they develop expertise, resources,
and skills in a particular activity
* Emphasis on functions may be less appropriate when trying to direct activities
toward target markets, products and customers
* Major forms of marketing organizational designs
* Functional organizational design
* Product-focused design
* Product/brand management
* Category management
* Venture teams
* New product teams
* Market-focused design – used when a business unit serves more than 1 market target
* Matrix design – cross-classification approach to emphasize 2 different factors such as
products & marketing functions

14-18
Traditional Marketing Organization Designs

Functional

Matrix TRADITIONAL Product-

DESIGNS Focused

Market-
Focused

14-19
Product-Focused Structure

14-20
 Marketing Organization Based on a
Combination of Functions and Products

14-21
 Structuring marketing resources (2)
Self-managing teams Business process Information
emphasis technology application

New marketing roles

*Identification of new marketing specializations (e.g.
information officer, relationship officer, customer officer, strategic account
manager, internet-based)
*Venture marketing organizations as high priority
opportunity
*Partnering with other organizations – outsourcing all or
some of their mktg functions cost reduction, expertise, flexibility, &
shared risk
*Networked organizations as new organization form;
independent organizations linked together to achieve a common objective

14-22
New organizational structure for marketing

Vice President
of Marketing

Director of Chief
Product Customer
Management Officer

Customer Customer Marketing

Service Database Research

14-23
 The Marketing Coalition Company

Source: Ravi S Achrol, “Evolution of the Marketing Organization: New Forms for Turbulent
Environments”, Journal of Marketing, October 1991, 88.
14-24
 Organizing for global marketing and
global customers

* Key issue
* The degree to which products and marketing
strategies and programs are standardized
across domestic and international markets,
* as compared to being adapted to local
requirements
* Critical importance
* Developing global customers

14-25
14-26
14-27
 Organizing for global marketing and
global customers (1)
* Organizing for global marketing strategies
* Buyers differ in their needs, preferences, and priorities –
* Marketing strategies often require sensitivity to cultural and
linguistic difference
* Language and distance barriers complicate organizational
relationships
* Important issue – recognize when standardized marketing
strategies can be used, and when they must be modified
* 3 possible organization designs in international operations –
1. a global product division;
2. geographical divisions;
3. a matrix design incorporating 1 or 2 in combination with centralized
functional support

14-28
14-29