Discuss the various factors that affect the design of marketing organization in the Indian context.
The principles of organisation apply whether you are designing the entire organisation or
a department within it. The three most basic functions necessary for any business
organisation are finance, production and marketing. Each of these functions is organised
separately. Thus, within the organisation structure of the firm you would have distinct
organisations for each function. In this unit we shall discuss the specifics of organising
the marketing function. Broadly speaking, marketing is concerned with all aspects of the product, pricing promotion and distribution. All sub-functions or activities relating to these four basic dimensions are included in the marketing function. You have to account for these various ctivities when designing the marketing organisation.
The structure of a marketing organisation can be studied at different levels, such as
overall organisational issues at each of these levels. These are the various factors that affect the design of marketing organization in the Indian context. ——
Advertising and Sales Promotion Marketing Research Marketing Information System Dealer Development Customer Service New Product Development Marketing Planning.
Sales : The Sales factor is performed by a team of sales people who are responsible for actually selling the product or service. The product may be sold directly to the actual customers and this is known as direct sales. Or else the product may be sold to distributors, wholesalers, retailers or other middlemen, who in turn sell to the actual customers. This is known as indirect selling. A firm may sell either directly or indirectly or use a combination. We shell discuss indirect selling in the following section while here \\e shell confine ourselves to direct selling through company sales force. There are three basic methods in which the sales force may be organised: geographic division, product di\ ision and customer or marketing channel division.
company manufacturing computer peripherals, printers, floppy disks, and consumable items such as magnetic tape has one sales team selling to original equipment manufacturers (OHM) who are these items in assembling their own branded computer, and another sales team selling to computer retail outlets such as Computer Point, computer City, which retail these individual items on per piece basis.
Many companies use a combination of above basis for organizing the sales force. At the head office level, the sales team may be divided on a product basis, but if the market is very large, the team may be further sub-divided on a geographic basis. Thus, there is sales spcciali/ation at the product level as well as the market level.
Distribution: Distribution refers to the physical movement of goods from the factory to the customer. In organising the distribution function, the objective must be to find the least-cost physical distribution method, which allows you to service your customer in the most efficient manner.
There are three most common types of physical distribution organisations. The first is where the company has one plant and delivers to a single market. In this case the plant is usually located close to the market, the godown/warehouse is next to the plant and the cost of distribution is relatively low. Examples of this kind can be found in case of perishable foods and confectionaries, such as bread. The company may use its own sales force or distributors who in turn use wholesalers and retailers to reach the actual customers or a combination of both distributors and own sales forces. In the second type, there arc many geographically farflung markets which are served from one plant. The manufacturer can choose to ship directly to customers in each
market, appoint regional or town level distributors, set up own godowns and branches in each important centre or use a combination of any these.
The third case is where there are multiple plants catering to multiple markets. The two problems in this situation are (i) those of minimising the transportation and the stock cam ing costs at the current level of facilities and (ii) the long-term problem of deciding whether the combination of existing godowns and distribution centres is the most cost-effective one
At your end. you have to take decisions regarding the number and location of godowns, type of transportation to be used, strength and role of sales force. The decision regarding sales force has to be taken in relation to the type of intermediaries available. There are wholesalers, stockists, distributors, commission and freight (C&F) agents, who can act as middlemen for moving your product form your godown to the final customer. The combination of intermediaries varies form company to company, and may also vary within
the same company, for each product and each market.
Advertising and Promotion: There are many objectives for which advertising may be used. Some objectives are long-term and their scope is wide enough to include the entire operations of the firm. Other objectives are shot-term and have a limited scope and coverage. Most firms divide their advertising budget into two parts, one part (and often the larger part) is reserved to be used by the head office for achieving long-term or corporate objectives. This part of the budget is used for advertising in national media such as television and magazines such as India Today. Some of
the corporate objective may he building corporate image, creating brand image at the national level, capturing a specified share of the national market. Thus, a large part of the advertising is planned, controlled and executed by the corporate office. The branch offices may be given a certain budget and authority which they can use for advertising in local newspapers, local radio, local hoardings etc. The branch offices may also have freedom to undertake some local lc\cl sales contests. This is the most commonly observed pattern of organising the advertising function, hut there can be many variations.
Marketing Research: In many companies, marketing research is organised along the same lines as advertising. The major chunk of research activity is centralised at the corporate office and the branch offices have the freedom to undertake only some local lc\cl research. In a country like ours, where most market research organisations arc located in the major metropolitan cities, allowing the branch offices located in small touns to initiate local research is rather irrelevant simply because there exist no reputed research organisations in these towns. Thus for all practical purposes, the entire marketing research function is usually organised at the corporate office.
Marketing Information System (MIS): MIS refers to the system of collecting, processing and using information, which helps improve the quality of decision-making in the area of marketing. The basic processes are collecting, processing, maintaining and using information. There arc three ways in which MIS can be organised. In the first method, the branch office not only collects but also processes the information uhicli it has collected. After processing, all the relevant and critical reports are passed on to the corporate office. 1 lowever. all the information files and records, collectively known as ihe data base are maintained at the head office. _
In the third method, all the three tasks of collecting, processing and maintaining information, are deccntralixed at the branch level. The head office receives regular reports and can requisition any additional information that it requires.
I he use of computers and introduction of real time information systems and networking has greatly increased the efficiency of MIS, irrespective of the manner in which it (MIS) is organised.
Customer and Dealer Relations: This is rather a broad-team and may include activities such as after sales service, and development of new customers, markets, and dealers. The specific activities included under this head would vary according to the nature of product and type of distribution channel which the firm has. In terms of organising this function, it is usually deccntrali/.ed since efficient servicing of the relationally requires proximity to the customer and dealer. But the manner of servicing the customer/dealer may be strictl) defined b\ company policies, guidelines and procedures.
Nc\\ Product Development: This is probably the most critical function for a company \\hich wants to be in business five, ten and fifteen years from today, and yet it is often the most neglected function. The reason for this is that most companies are organised for toda\ and not for the future. New product development requires vision and foresight and the ability to take risks. It requires an organisation in which new product development is recogamsed and organised as a separate activity and allocated resources but the expectation of results is not specified.
It is not enough to merely create a research and development cell. At the most it may produce some technical improvements or modifications in the product. But unless is a marketing person involved with R & D, you cannot expect a new product which would satisfy customer wants. Ideally the organisation for new product development must include marketing people who have
thorough knowledge of market and buyer characteristics.
One \\ay of organising for new product development is to totally segregate the organisation for existing and new products as shown in Figure. Richardson Hindustan Limited (engaged in manufacturing and marketing the Vicks range of products and C'learasil cream and soap) is organised on the basis of product teams. Of the total of 20 product terms, only S work on the existing products, which the remaining 12 work on nc\\ products.
Marketing Planning: This includes activities such as forecasting, target setting, budgeting, establishing control and review procedures, and strategy formulation. Sales targets are usually set on the basis of market knowledge of the sales staff combined \\ith the top management's vision for the future. Each area salesman provides feedback on the potential in his area and the competitor's strength. All this data are compiled into a ureawisc target plan which is discussed across the table between the marketing people and the top management.
budgeting and establishing control and review systems have traditionally been the exclusive preserves of lop management. The budget for the coming year is based upon last \ear's budget with a certain percentage increase to account for inflation and genuine increase in expenditures. The middle and lower levels of management have not much to contribute in this kind of budgeting exercise. But the introduction of zero-based budgeting has changed this. In x.ero-based budget there is no historical precedent to base
the budget upon. Ivach expenditure head has to be justified afresh for inclusion in the budget, since the last year's expenditure on this head is assumed to be zero. The entire onus is on the operating managers for preparing and justifying expenditure heads. In strategy formulation, top management requires the active participation of the marketing people in term of their feedback on success of present strategy, competitors acitivities. and consumer tastes.
I lui.v the functional marketing organisation is based
Thursday, June 11, 2009
Discuss the various factors that affect the design of marketing organization in the Indian context.