LEARNING OBJECTIVES
In this chapter, we will address the following questions:
1. What are important trends in marketing practices?
2. What are the keys to effective internal marketing?
3. How can companies be socially responsible marketers?
4. What tools are available to help companies monitor and improve their marketing activities?
5. What do marketers need to do to succeed in the future?
SUMMARY
1. The modern marketing department has evolved through the years from a simple sales
department to an organizational structure where marketers work mainly on
cross-disciplinary teams.
2. Some companies are organized by functional specialization; others focus on
geography and regionalization, product and brand management, or market-segment
management. Some companies establish a matrix organization consisting of both product
and market managers.
3. Effective modern marketing organizations are marked by customer focus within and
strong cooperation among marketing, R&D, engineering, purchasing, manufacturing,
operations, finance, accounting, and credit.
4. Companies must practice social responsibility through their legal, ethical, and social
words and actions. Cause marketing can be a means for companies to productively link
social responsibility to consumer marketing programs. Social marketing is done by a
nonprofit or government organization to directly address a social problem or cause.
5. A brilliant strategic marketing plan counts for little unless implemented properly,
including recognizing and diagnosing a problem, assessing where the problem exists, and
evaluating results.
6. The marketing department must monitor and control marketing activities
continuously. Marketing plan control ensures the company achieves the sales, profits, and
other goals in its annual plan. The main tools are sales analysis, market share analysis,
marketing expense-to-sales analysis, and financial analysis of the marketing plan.
Profitability control measures and controls the profitability of products, territories,
customer groups, trade channels, and order sizes. Efficiency control finds ways to
C H A P T E R
23MANAGING A
HOLISTIC MARKETING
ORGANIZATION FOR THE
LONG RUN
increase the efficiency of the sales force, advertising, sales promotion, and distribution.
Strategic control periodically reassesses the company’s strategic approach to the
marketplace using marketing effectiveness and marketing excellence reviews as well as
marketing audits.
7. Achieving marketing excellence in the future will require a new set of skills and
competencies.
OPENING THOUGHT
This chapter sums up the concept of marketing in today’s environment. Marketing must be
involved in all elements of the company’s operations and work closely with its suppliers,
channel partners, with the understanding that each element or function provides an
opportunity to market the product to the ultimate consumer. In many ways, this chapter
focuses on the “management” of marketing in terms of the ability of the marketing personnel
to work with cooperation and to encourage customer focus by each discipline. Marketers
today must also be concerned for the welfare of society as a whole. Finally, marketers must
focus their attention to the implementation process of solving marketing opportunities.
Students engaged in disciplines outside of marketing may present differing opinions of the
value of their discipline to the overall health of the organization. The instructor’s challenge is
to demonstrate how a holistic approach is preferable or even necessary in today’s (and more so
for the future) competitive environment. Companies that do not/will not adopt such a view are
likely to find that they are not competitive in the future.
TEACHING STRATEGY AND CLASS ORGANIZATION
PROJECTS
1. At this point in the semester-long marketing plan project, this chapter is the second of two
parts of oral presentations of the student’s projects. Students should emphasize here how
specifically, their marketing plans contain a holistic view of the marketing process.
2. The concept of “internal marketing” is prevalent now in popular books and magazines.
Students should read and review at least four sources from the Web and comment on what
additional information, techniques, and formulas for success they have discovered. How
does this information compare, contrast, or add to the information contained in the chapter.
What is the future of “internal marketing” and why are companies so intent on
succeeding?
3. Sonic PDA Marketing Plan: The last step in completing a marketing plan is to provide for
organizing, implementing, evaluating, and controlling the total marketing effort. In
addition to measuring progress toward financial targets and other objectives, marketers
need to plan how to audit and improve their marketing activities.
Sonic has asked you to plan the management of the marketing effort for the PDA product.
Look back at the objectives, strategies, and programs you have developed. Then answer
these questions:
What is the most appropriate organization for Sonic’s marketing and sales
departments?
What control measures should Sonic incorporate into its marketing plan?
What can Sonic do to evaluate its marketing?
How can Sonic evaluate its level of ethically and socially responsible marketing?
Summarize your answers in a written marketing plan or enter the answers in the Marketing
Organization and Implementation sections of Marketing Plan Pro.
ASSIGNMENTS
Successful holistic marketers have integrated relationship marketing, internal marketing, and
social marketing into their organizations. Students should chose three companies that they
believe practice holistic marketing and then defend their choices by outlining the marketing
programs of the selected companies.
Some companies like the Newman’s Own Brand, have built a business model on social
responsibility. Students should find three other examples of such socially responsible firms
and comment on whether or not they see “social responsibility” as a need component for
marketing in the future. Specifically, knowing what we now know about consumer-buying
behavior, is “socially responsible” a determinant for future success—is it a mega-trend? Or
just a “trend”?
In the Marketing Memo entitled “Fueling Strategic Innovation,” Professor Steven Brown of
Ulster University claims that marketers are spending too much of their time in research and
not enough in marketing imagination and producing products with significant consumer
impact. Split the class into two sections: pros and cons and have them defend/attack Professor
Brown’s assumption.
Have the students read Michael F. Porter and Mark R. Kramer, “Strategy & Society,” Harvard
Business Review, December 2006, pp. 78-82; Clayton M. Christense, Heiner Baumann, Rudy
Ruggles, and Thomas M. Stadtler, “Disruption Innovation for Social Change, Harvard
Business Review, December 2006, pp. 94-101 and report on their findings. In particular, ask
the students to comment on the sustainability of these concepts into the 21st Century.
Students should research and find two examples of a successful cause-marketing program
currently available in their area and evaluate whether or not they believe that this
cause-marketing program is (a) building the firms brand awareness; (b) enhancing brand
image; (c) establishing brand credibility; (d) evoking brand feelings; (e) creating a sense of
brand community; and (f) eliciting brand engagement. Students should be able to defend their
opinions citing financial, market share, stock price growth, and other definitive measures.
Drawing a clear line between normal marketing practices and unethical behavior is not easy.
Identify two firms, in your area, that you feel are or have demonstrated unethical behavior
(although not per se illegal). Why do you believe that such practices will be not successful for
the firm in the future? Do the other students in the class agree with your assertion? On the
other hand, do they believe that the examples offered are just “creative” marketing?
DETAILED CHAPTER OUTLINE
Opening vignette: Holistic marketers must engage in a host of carefully planned,
interconnected marketing activities and satisfy an increasingly broader set of constituents as
they pursue success as measured by short-term and long-term metrics. Some firms, like
Patagonia, have embraced a new vision of corporate enlightenment, which embraces social
responsibility and sustainability, and made it the very core of what they do.
I. Trends in Marketing Practices
A. Important Shifts in Marketing and Business Practices
i. Reengineering
ii. Outsourcing
iii. Benchmarking
iv. Supplier partnering
v. Customer partnering
vi. Merging
vii. Globalizing
viii. Flattening
ix. Focusing
x. Justifying
xi. Accelerating
xii. Empowering
xiii. Broadening
xiv. Monitoring
xv. Uncovering
B. Shifts in marketing and business practices, firms also face ethical dilemmas and
perplexing trade-offs (e.g., convenience of disposable products vs. desire to
minimize waste)
C. Firms must develop fully integrated marketing programs and meaningful
relationships with a range of constituents
II. Internal Marketing requires that everyone in the organization accept the concepts and
goals of marketing and engage in identifying, providing, and communicating customer
value
A. In a networked enterprise, every functional area can interact directly with
customers.
B. Characteristics of Company Departments That Are Truly Customer Driven
i. R&D listens to consumers and solicits their reactions and suggestions,
involves other departments, seeks best of class solutions, and continuously
improves and refines products
ii. Purchasing searches for the best suppliers, builds long-term relationship
with a few, more reliable high-quality suppliers, they do not compromise
quality for price savings
iii. Manufacturing invites customers on tours, visits customers’ factories,
work overtime to keep promised delivery schedules, search for ways to
produce goods faster, at lower costs, with fewer adverse environmental
consequences, aim for zero defects, meet customer requirements for
customization where this can be done profitably
iv. Marketing studies customer needs and wants in well-defined market
segments, allocates efforts where the most long-run profit potential lies,
develops winning offerings for each target segment, measures company
image and customer satisfaction and loyalty on a continuous basis,
continuously gathers and evaluates ideas for new products/improvements
and influences other departments to be customer-centered
v. Sales acquires specialize knowledge of the customer’s industry, gives
solutions and makes promises it can keep, informs product development
about customer needs, serves the same customers for a long period of time
vi. Logistics sets high standards for service delivery and meets them, provides
knowledgeable and friendly customer service
vii. Accounting prepares reports and invoices that relate to customer needs and
segments
viii. Finance understands and supports marketing investments and tailors
financial packages to customers’ financial requirements
ix. Public relations disseminates favorable news about the company and
handles damage control for unfavorable news, advocates for better
company policies and practices
x. Customer contact employees are competent, courteous, cheerful, credible,
reliable and responsive
C. Organizing the Marketing Department
i. Functional Organization—the most common form
1. Administrative simplicity
2. Challenge to develop smooth working relationships
ii. Geographic Organization—area marketing specialists by region
iii. Product- or Brand-Management Organization—serves as another layer of
management in a functional organization
1. Makes sense if products are different or there are more products
than a functional organization can handle
2. Also known as a hub-and-spoke system
3. Lets the product manager concentrate on developing a
cost-effective marketing program and react more quickly to new
products in the marketplace
4. Gives the company’s smaller brands a product advocate
5. Disadvantages:
a. Product and brand managers may lack authority to carry
out their responsibilities.
b. They become experts in their product area but rarely
achieve functional expertise.
c. The system often proves costly.
d. Brand managers normally manage a brand for only a short
time so they fail to build long-term strengths.
e. Fragmentation of markets makes it harder to develop a
national strategy.
f. Product and brand managers focus the company on
building market share rather than customer relationships.
6. An alternative in a product-management organization is product
teams.
7. There are three types: vertical, triangular, and horizontal
a. Triangular and horizontal product-team approaches let
each major brand be run by a brand-asset management
team
b. An alternative eliminates product manager positions for
minor products and assign two or more products to each
remaining manager. This is feasible when two or more
products appeal to a similar set of needs.
c. Another alternative, category management, a company
focuses on product categories to manage its brands.
i. Means to better manage the development of
premium brands
ii. Helps firms address the plight of under-performing
brands
iii. Fosters internal competition among brand
managers results in strong incentives to excel but
also competition for resources and lack of
coordination
iv. Retailers think in terms of categories
iv. Marketing-Management organization is desirable when customers fall into
different user groups with distinct buying preferences and practices
1. Market managers supervise several market-development
managers, market specialists, or industry specialists and draw on
functional services as needed
2. Market managers are staff (not line) people, who develop
long-range and annual plans for their markets and are judged by
their market’s growth and profitability
3. Many companies are reorganizing along market lines and
becoming market-centered organizations
4. Customer-management organizations deal with individual
customers rather than the mass market or even market segments,
and report much higher accountability for the overall quality of
relationships and greater employee freedom to take actions to
satisfy individual customers
v. Matrix-Management Organization is appropriate for companies that
produce many products for many markets
1. Costly and often creates conflicts
2. Some corporate marketing groups assist top management with
overall opportunity evaluation, provide divisions with consulting
assistance on request, help divisions that have little or no
marketing, and promote the marketing concept throughout the
company
D. Relationships with Other Departments
i. Departments define company problems and goals from their own
viewpoints, so conflicts of interest and communications problems are
unavoidable.
ii. Many companies now focus on key processes rather than on departments
because departmental organization can be a barrier to smooth
performance.
iii. All areas of the organization need to work effectively together and
cross-functional teams are often created
E. Building a Creative Marketing Organization
i. Many companies are product and sales driven (not market and customer
driven)
ii. Transforming into a true market-driven company requires:
1. Developing a company-wide passion for customers
2. Organizing around customer segments instead of products
3. Understanding customers through qualitative and quantitative
research
iii. What steps can a CEO take to create a market- and customer-focused
company?
1. Convince senior management of the need to become customer
focused.
2. Appoint a senior marketing officer and marketing task force.
3. Get outside help and guidance
4. Change the company’s reward measurement and system
5. Hire strong marketing talent.
6. Develop strong in-house marketing training programs.
7. Install a modern marketing planning system.
8. Establish an annual marketing excellence recognition program.
9. Shift from a department focus to a process-outcome focus.
10. Empower the employees.
iv. Although it’s necessary to be customer oriented, it’s not enough. The
organization must also be creative: build a capability in strategic
innovation and imagination.
1. Assemble tools, processes, skills, and measures that let the firm
generate more and better new ideas than its competitors
2. Put together inspiring work spaces that help to stimulate new ideas
and foster imagination
3. Watch trends and be ready to capitalize on them
4. Market leaders can miss trends when they are risk averse, obsessed
about protecting their existing markets and physical resources, and
more interested in efficiency than innovation
III. Socially Responsible Marketing
A. Internal marketing must be matched by a strong sense of ethics, values, and social
responsibility
i. Taking a more active, strategic role in corporate social responsibility is
thought to benefit not just customers, employees, community, and the
environment but also shareholders.
ii. Firms feel they also benefit in different ways
iii. The most admired—and most successful—companies in the world abide
by high standards of business and marketing conduct that dictate serving
people’s interests, not only their own.
B. Corporate Social Responsibility: a three-pronged attack that relies on proper legal,
ethical, and social responsibility behavior
i. Legal Behavior: Organizations must ensure every employee knows and
observes relevant laws
ii. Ethical Behavior: Business practices come under attack because business
situations routinely pose ethical dilemmas
1. Certain business practices are clearly unethical or illegal: bribery,
theft of trade secrets, false and deceptive advertising, exclusive
dealing and tying agreements, quality or safety defects, false
warranties, inaccurate labeling, price-fixing or undue
discrimination, and barriers to entry and predatory competition.
2. Companies must adopt and disseminate a written code of ethics,
build a company tradition of ethical behavior, and hold their
people fully responsible for observing ethical and legal guidelines
iii. Social Responsibility Behavior: Marketers must exercise their social
conscience in specific dealings with customers and stakeholders
iv. Sustainability: The ability to meet humanity’s needs without harming
future generations
1. Triple bottom line—people, planet, and profit—and the people
part of the equation must come first.
2. Sustainability means more than being eco-friendly, it also means
you are in it for the long haul”
3. Greenwashing gives products the appearance of being
environmentally friendly without living up to that promise
4. Because insincere firms have jumped on the green bandwagon,
consumers bring a healthy skepticism to environmental claims.
5. They are also unwilling to sacrifice product performance and
quality, nor are they necessarily willing to pay a price premium for
green products
C. Socially Responsible Business Models: companies that innovate solutions and
values in a socially responsible way are most likely to succeed
D. Cause-Related Marketing links the firm’s contributions toward a designated cause
to customers’ engaging directly or indirectly in revenue-producing transactions
with the firm.
i. Part of corporate societal marketing (CSM), or marketing efforts “that
have at least one noneconomic objective related to social welfare and use
the resources of the company and/or of its partners”
ii. A successful cause-marketing program can improve social welfare, create
differentiated brand positioning, build strong consumer bonds, enhance the
company’s public image, create a reservoir of goodwill, boost internal
morale and galvanize employees, drive sales, and increase the firm’s
market value.
iii. Consumers may develop a strong, unique bond with the firm that
transcends normal marketplace transactions.
1. Builds brand awareness
2. Enhances brand image
3. Establishes brand credibility
4. Evokes brand feelings
5. Creates a sense of brand community
6. Elicits brand engagement
iv. Backfires if consumers question the link between the product and the
cause or see the firm as self-serving and exploitive or if consumers do not
think a company is consistent and sufficiently responsible in all its
behavior
v. To avoid backlash, some firms take a soft-sell approach to their cause
marketing
E. Designing a Cause Program: Tips
i. Select a focus area that aligns with your mission, goals, and
organization.
ii. Evaluate your institutional “will” and resources
iii. Analyze your competitors’ cause positioning
iv. Choose your partners carefully
v. Don’t underestimate the name of your program—it’s key to the identity
of your campaign
vi. To create a sustainable and effective program, start by developing a
cross-functional strategy team
vii. Leverage both your assets and those of your partner(s) to bring the
program to life
viii. Communicate through every possible channel
ix. Go local and Innovate
F. Some experts believe the positive impact of cause-related marketing is diluted if a
company is only occasionally engaged in a number of causes.
i. Limiting support to a single cause, however, may limit the pool of
consumers or other stakeholders who can transfer positive feelings from
the cause to the firm.
ii. Many popular causes also already have numerous corporate sponsors.
iii. Opportunities may be greater with “orphan causes”—diseases that afflict
fewer than 200,000 people
iv. Most firms choose causes that fit their corporate or brand image and
matter to their employees and shareholders
G. Social Marketing by a nonprofit or government organizations furthers a cause,
such as “say no to drugs” or “exercise more and eat better
i. Choosing the right goal or objective for a social marketing program is
critical
ii. Social Marketing Program Objectives can be cognitive, action, behavioral,
or value oriented
iii. The planning process follows many of the same steps as for traditional
products and services
1. Who Are We?
2. Where Do We Want to Go?
3. How Will We Get There?
4. How Will We Stay on Course?
iv. Key success factors for changing behavior include:
1. Choose target markets that are most ready to respond.
2. Promote a single, doable behavior in clear, simple terms
3. Explain the benefits in compelling terms.
4. Make it easy to adopt the behavior.
5. Develop attention-grabbing messages and media.
6. Consider an education-entertainment approach.
IV. Marketing Implementation and Control
A. Characteristics of a Great Marketing Company
i. The company selects target markets in which it enjoys superior advantages
and exits or avoids markets where it is intrinsically weak.
ii. Virtually all the company’s employees and departments are customer- and
market-minded.
iii. Good working relationship between marketing, R&D, and manufacturing
iv. Good working relationship between marketing, sales, and customer
service
v. Incentives designed to lead to the right behaviors
vi. Builds and tracks customer satisfaction and loyalty
vii. Manages a value delivery system in partnership with strong suppliers and
distributors
viii. Skilled in building its brand name(s) and image
ix. Flexible in meeting customers’ varying requirements
B. Marketing Implementation is the process that turns marketing plans into action
assignments and ensures they accomplish the plan’s stated objectives
i. Implementation addresses the who, where, when, and how of marketing
activities
ii. Companies today are striving to make their marketing operations more
efficient and their return on marketing investment more measurable
iii. Marketing resource management (MRM) software provides a set of
Web-based applications that automate and integrate project management,
campaign management, budget management, asset management, brand
management, customer relationship management, and knowledge
management.
C. Marketing Control is the process by which firms assess the effects of their
marketing activities and programs and make necessary changes and adjustments.
i. Four types of control
1. Annual-plan control
2. Profitability control
3. Efficiency control
4. Strategic control
ii. Metrics include sales metrics, customer readiness to buy metrics, customer
metrics, distribution metrics, and communication metrics
iii. The marketing audit is a comprehensive, systematic, independent, and
periodic examination of a company’s or business unit’s marketing
environment, objectives, strategies, and activities
1. View to determining problem areas and opportunities and
recommending a plan of action to improve the company’s
marketing performance.
2. Characteristics: Comprehensive, Systematic, Independent,
Periodic
3. Components: Macroenvironment, Task Environment, Marketing
Strategy Audit, Marketing System Audit, Marketing Productivity
Audit, Marketing Function Audit
iv. A Marketing Excellence Review highlights where changes could help the
firm become a truly outstanding player in the marketplace.
V. The Future of Marketing requires more accountability than in the past.
A. To succeed in the future, marketing must be more holistic and less departmental.
B. Marketers must achieve wider influence in the company, continuously create new
ideas, and strive for customer insight by treating customers differently but
appropriately.
C. They must build their brands more through performance than promotion.
D. They must go electronic and win through building superior information and
communication systems.