marketing control notes

8/14/2019 Marketing Control Notes

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Unit -5

Marketing organisation and control

Types of marketing organisation structures

Organisation is the vehicle for achieving the goals and

aims of the business. Organisation is formed whenever the

human beings gather together collectively for achieving the

common purpose.1. Line and staff organisation

2. Productoriented organisation

3. Territoryoriented organisation

4. Organisation with a complex structure.


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1. Line and staff organisation

In many firms the marketing job is structured consisting of

some line and some staff functions. Basically the line functions andstaff functions are organized into separate departments. There

should be coordination between the line and the staff functions at

high level. It is mostly suited for small and medium sized

businesses.

2. Productbased organisation

The line and staff organization could not serve the purpose

of large scale businesses, so the emergence of product based

organisation came into picture. Usually these companies produce

more than one product and they appoint the managers to take care

of the products individually.


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3. Territoryoriented organization

Unlike in the earlier organisation structure wherein the

product manager is being responsible for the product welfare it lieswith the line executives in the territory-oriented organisation. The

marketing job is the responsibility of line managers in charge of

territory unit.

4.Complex organisation

Complex organizations are those organizations which

are a mixture of line and staff organization, product based

organization, territory based organization. These types of

organization can also be called as multi product or multi-market

firms. They have the head offices which have many staff

departments which deals with specialized functions of

marketing.


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Factors affecting marketing organisations

The marketing organisations of different firms are found to

vary from one another due to various factors such as,

1. Relationship between line and staff function2. Careful planning of levels and spans

3. Effective coordination

4. Unambiguous job specifications

Relationship between line and staff functionThere must exists a good relationship between the line and

the staff functions while structuring and developing a marketing

organization. No organization is free from the conflicts of the line

and the staff functions. The source of friction and the consequentinefficiency can be abolished by proper integration between the line

and staff function.


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Careful planning of levels and spans

The various levels in an organization and the span of

control must be properly planned and built in. the modern

organization aims at reducing the levels in an organization to makethe information accessible to all quicker and faster rate leading to

effective communication and good control, because if there are too

many levels in an organization then there are the chances of

information getting delayed leading to ineffective communication,

dilution of responsibility and poor control.

Effective Coordination

The marketing organizations should also provide for

effective coordination among the different levels withinmarketing. There must be effective coordination between the

marketing departments and other departments like production,

finance, personnel, etc.,


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Unambiguous job specifications

The integral part of creating a marketing organization

is defining clear job specifications with respect to each

executive position in marketing organization. It helps in the

removal of the ambiguities and provides role clarity. It alsoreduces friction in an organization.


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Annual plan control

Annual plan control consists of many tools, all of which

are used to establish whether the targets set in the companysannual plan have been achieved or not. The company adopts a

management by objectives methodology in four steps.

1. Sets monthly or quarterly sales targets.

2. Closely watches the productsperformance in the selected

areas.3. Identifies significant differences between actual sales and

the set targets and the reasons and causes therefore.

4. Takes necessary steps to correct the situation and reduces

the gap between the target and sales actually achieved. This

could result in changing the support programs or even

reduoing the sales targets set earlier.


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Plan performances are regularly checked by managers using the five

tools described as follows.

Sales analysis

Analyzing company's share Marketing costs to sales analysis

Financial analysis

Sales analysis

This tool appraises and assesses actual sales achieved

relative to the target. Two separate tools are used in this exercise.

Sales variance analysis to calculate the contribution of various

factors to the short fall in sales.


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Analysing companys share

Overall sales figures do not indicate a companys

performance vis--vis its competitors. The only way a companycan ascertain this information is to calculate its own share of the

market.

Marketing costs to sales analysis

Annual plan control must ensure that over spend

doesnt occur to enable achieve the targeted sales. The most

important aspect here is the marketing expense to sales ratio.

Marketing expense ratios must be watched closely.


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Financial analysis

The expenses to sales ratios must be scrutinised within a

larger financial pattern, so as to enable the company to identifyexactly where the profits are emanating.

Market information analysis

All the controls discussed so far have been financial in

nature. Companies also need to analyse information availablein their markets.

the first of these is based on consumers,

New consumers added

Preferences of targeted market

Unhappy, disappointed customers

Product quality(relative to competition)

Consumers dropped

Quality of service

Relative awareness in the market segment.


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Efficiency Control

Profitability analysis is a regular activity carried out by all

companies. When the company notes that some products, areas or

specific markets are realising low profits, it must take corrective

action or in other ways find more competent and effective means

to manage its sales team, its advertising and sales promotion and

channels of distribution.

They assist brand managers with budgeting and advise and inform

marketing executives on the financial consequences of marketing

decisions.

The sales teams

Advertising efficiencySales promotion

Distribution efficiency


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The sales teams

Sales managers must keep a close watch on important

market place signals with regard to the levels of efficiency in

their specific areas.The actual calls by each sales executives; real time spent

with each customer; the income gained per visit; any expenses

incurred on customer and the average cost of each visit.

Advertising EfficiencyIt is generally accepted that one cannot assess or

evaluate the value received in return for the money spent on

advertising. Even so, it is imperative for advertising managers to

monitor the following.

Cost of exposure per thousand consumers for eachseparate advertising medium used; the percentage of targeted

consumers who actually were attracted by and saw the

advertisement in a newspaper or magazine.


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Sales promotion

Sales promotion utilises a generous number of tools to

motivate consumer interest in a product, and also to induce trying

it out. To enhance the achievement of sales promotion, the

management should; document the cost incurred on each

promotion and also the revenue earned by it; the number of

coupons exchanged; enquiries received in response to

demonstrations; cost of display per sales rupee.Distribution efficiency

It is essential for managements to economise on stocks,

sites for warehouse and types of transport used.

There are many tools available to achieve the aboveactions.

Management also needs to keep an eye on the cost of

logistics, accuracy of order filling, timely deliveries and the

mistakes in its invoicing system.


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Profitability Control

In this era of competition the companies are trying to adoptnew marketing strategies to sometimes beat up the competitor or some

other times to stay in competition. The companies try to follow profit

making strategies which determine the profit from products, territories

and even trade channels. Phillip kotler have suggested 3 steps for

profitability control. They are,i. Identifying the functional expenses

ii. Assign the functional expenses to marketing entities

iii. Prepare a profit and loss statement for each marketing

entry.


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Identifying the functional expenses

The first and the foremost step involves identifying the

functional expenses incurred to sell a product in a defined territory

or through a channel. The functional expenses includes salaries,

office rent, warehousing cost, insurance cost, taxes, transportation,

conveyance, travelling, commissions, advertising, sales promotion,

entertainment and packing. In order to calculate the profits

generated from the sales of a product we deduct all the above said

expenses from the total sales revenue.Assign the functional expenses to marketing entities

The second step is to assign the various functional

expenses to marketing entities. This becomes important when

expenses are incurred on non-marketing entities too.

Prepare a profit or loss statementAfter the completion of 2 steps, now the marketer has to

follow the 3rd step i.e., he has to prepare the profit or loss

statement.


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Strategic Control

The companies to stay in competition and beat up the competitorshould always have detailed reviews of their marketing strategies, the

success achieved and etc. the system of strategic control helps the

management to determine the fit between the firms marketing and its

external environment.

This can be done with the help of 2 tools namely,

i. Customer relationship barometer and

ii. Marketing audit.


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The customer relationship barometer

This aims to assess how well is the customer integrated

with the organisation. It provides inputs to the followingparameters,

a) Organisation structure

b) Organizational policies

c) Organizational system

d) Technologye) Skills, attitude and knowledge of the people

f) Strategy for customer retention and

g) The core values of the organisation and their

internalization.


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Marketing audit

A marketing audit is an extensive, orderly, regularappraisal of the companys marketing environment, its goals,

strategies and other operations, preferably carried out by an

independent organisation to: identify areas where there are

problems or opportunities; and advise the company as to be taken

to improve its performance.We shall first take a detailed look at the four main aspects

of a marketing audit.

There are six options available to conduct marketing

audits. They are known as self audit, audit from across, audit from

above, companys auditors, company task force audit or outsideaudit.


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Marketing Audit

Marketing audit can be explained, as a systematic,

independent, critical , unbiased, periodic, comprehensive review and

appraisal of its policies, programmes, strategies, environment, activities

to determine the problem areas and opportunities and recommending a

plan of action to improve the companysmarketingperformance.

Marketing audit has four characteristics. They are as follows,

1. Comprehensive

2. Systematic

3. Independent

4. Periodic


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1. Comprehensive

Marketing audit is vast in nature and it thus covers all the

major marketing activities of a business not just few problems.

Marketing audit is pervasive in nature. If the audit covers only

few areas such as sales force, pricing or some other marketing

activity then it would be called as functional audit.

2.Systematic

The marketing audit is a very systematic scrutinization

of the organization's micro and macro environment, the

marketing goals and strategies, the marketing systems and

specific activities. The audit identifies the areas which needs

improvement and an action plan is then implemented to achievethe desired objectives. The action plans can be both for long

term as well as short term in nature.


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3.Independent

There are six ways to conduct a marketing audit : self audit,

audit from across, audit from above, company auditing office,

company task force audit and outsider audit. The best audit amongthe following is the outsider audit as the audit is being done by the

outsider consultants who devote their time and attentions and who

also have experience in various industries and they impartial in their

operations to carry out the audit.

4. Periodic

Usually the marketing audits are conducted only after

facing certain drawbacks like the decrease in sales value, fall in the

sales force morale and various similar difficulties. Normally thecompanies do not go for marketing audit in good times but rather

they conduct the marketing audit in the crisis period.


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Components of marketing Audit

The components of marketing audit can be summarized as follows,Part I: Marketing Environment Audit

(a) Macro environment

(b) Task environment.

Part II: Marketing Strategy Audit

Part III: Marketing Organisation AuditPart IV: Marketing Systems Audit

Part V: Marketing Productivity Audit

Part VI: Marketing Function Audit

P t I M k ti E i t A dit


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Part I: Marketing Environment AuditMacro environment

The marketing environment audit is to two ways, the first

one is the macro environment and the second one is the task

environment. In macro environment we have some subdivisions.1. Demographic

2. Economic

3. Environmental

4. Technological

5. Political6. Cultural

Task environment

1. Markets

2. Customers

3. Competitors4. Distribution and dealers

5. Suppliers

6. Facilitators and marketing firms

7. Public


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Part II: Marketing Strategy Audit

1. Mission of the Business

2. Marketing Objectives and Goals

3. Strategy

Part III: Marketing Organisation Audit

1. Formal Structure

2. Functional Efficiency

3. Interface Efficiency

Part IV: Marketing Systems Audit

1. Marketing Information System (MIS)

2. Marketing Planning Systems3. Marketing Control System

4. New-product Development System


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Part V: Marketing Productivity Audit

1. Profitability Analysis

2. Cost-effectiveness Analysis

Part VI: Marketing Function Audit

1. Products

2. Price3. Distribution

4. Advertisement, Publicity, Sales Promotion and Direct and Marketing

5. Sales Force


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Online Marketing

Online marketing is the achievement of marketing goals

through the utilization of the internet and the web based technologies.

Online marketing is also known as internet marketing is also known asinternet marketing or marketing on the web.

Online marketing has two channels. They are as follows,

1. Commercial online service and

2. Internet

Commercial online service

Online services such as American online, CompuServe

and productivity offer marketing services to subscribers that pay

a monthly fee. These services also provide information on

education, sport, entertainment, shopping and the latest

international news.


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The Internet

This is a vast international network, connecting other

computer networks as well as companies, universities, libraries

and so on. With the introduction of the worldwide web the usageof the internet increased very rapidly. The use of the internet itself

is free. Users only need to pay for the services of a commercial

provider that enables the user to access the internet.

Steps involved in online marketing1. Registration of a domain name which is interest sites address it

acts as the telephone number for people who wish to visit the

site.

2. Secondly the companies develop a web site contains web

pages often called as world wide web(www) which containstext, picture, or sound.


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Webmarketing can be viewed in four different ways

1. A business

2. A medium3. A marketing channel and

4. A complete marketplace.

Benefits of online marketingthe benefits of online marketing can be divided into the

following,

1. Benefits to sellers

2. Benefits to customers.


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Benefits to sellers1. Access to all markets

2. Global marketing

3. Scope for unimpeded, constraints free growth

4. Offers many services and products from a single stop

5. Targets the customer individually

6. Helps in building relationships with customers

7. Helps to reduce costs

8. A versatile medium of communicationBenefits to customers

1. Convenience

2. Search advantage and wider options

3. Customers can bargain on Net with a Host of Sellers

4. Transparency and Accuracy

5. Costumers can get Morefor Less

6. The power equation shifts in favour of the customer


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Limitations of Online Marketing

Disadvantages of online marketing1. All products do not lend equally well for web-marketing

2. Costs involved are not inconsequential

3. No reliable about profitability

4. Lack of personal interaction while making a purchase

5. Security6. Can leave businessman feeling isolated

7. Information overload

8. Hard to tell if people are lying

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