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CHAPTER 22 2 MANAGING A HOLISTIC MARKETING ORGANIZATION LEARNING OBJECTIVES After reading this chapter, students should: Know what are the important trends in marketing practices Know what are the keys to effective internal marketing Know how companies can be responsible social marketers Know how a company can improve its marketing implementation skills Know what tools are available to help companies monitor and improve their marketing activities CHAPTER SUMMARY The modern marketing department has evolved through the years from a simple sales department to an organizational structure where marketing personnel work mainly on crossdisciplinary teams. Modern marketing departments can be organized in a number of ways. Some companies are organized by functional specialization, although others focus on geography and regionalization. Still others emphasize product and brand management or market-segment management. Some companies establish a matrix organization consisting of both product and market managers. Finally, some companies have strong corporate marketing, others have limited corporate marketing, and still others place marketing only in the divisions. Effective modern marketing organizations are marked by a strong cooperation and customer focus among the company’s departments: marketing, R&D, engineering, purchasing, manufacturing, operations, finance, accounting, and credit. 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 non-profit or government organization to directly address a social problem or cause. A brilliant strategic marketing plan counts for little if it is not implemented properly. Implementing marketing plans calls for skills in recognizing and diagnosing a problem, assessing the company level where the problem exists, implementation skills, and skills in evaluating the results. 581 Chapter-by-Chapter Instructional Material The marketing department has to monitor and control marketing activities continuously. Efficiency control focuses on finding ways to increase the efficiency of the sales force, advertising, sales promotion, and distribution. Strategic control entails a periodic reassessment of the company and its strategic approach to the marketplace, using the rolls of the marketing effectiveness, excellence reviews, and the marketing audit. OPENING THOUGHT This chapter sums up the concepts of marketing today—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? 582 Chapter 22: Managing a Holistic Marketing Organization 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 Small Group Assignments 1. 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. 2. 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”? Individual Assignments 1. In the Marketing Insight, entitled, Fueling Strategic Innovation, the author Professor Stephen Brown of Ulster University, criticizes marketers that make too much of researching and satisfying consumers. Knowing what you know now about marketing and marketing management and citing material from all the chapters of the text, defend and then refute Professor Brown’s criticisms. 2. In the Marketing Memo entitled, Making a Difference, the authors define a process for executing and communicating a firm’s CSR program. Research known companies and identify one in particular that you feel presents a strong corporate social responsibility message. Discuss how you feel this firm is fulfilling the criteria presented in the Marketing Memo. Think-Pair-Share 1. 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 causemarketing 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. 2. 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 583 Chapter-by-Chapter Instructional Material successful for the firm in the future? Do the other student’s in the class agree with your assertion? On the other hand, do they believe that the examples offered are just “creative” marketing? MARKETING TODAY—CLASS DISCUSSION TOPICS The chapter defines evolution of the marketing department from a sales department into one that must be involved in all of the functions of the company to successfully implement a holistic marketing focus for the firm. Questions: Is holistic marketing, as described in this chapter, to mean that the marketing executive be delegated a (or assume) a more important role in the firm’s hierarchy? For example, should a firm practicing holistic marketing, have its chief marketing office as Co-CEO? Can a firm continue to have its functional responsibilities remain the same but still institute a holistic marketing program? Is holistic marketing really a management philosophy issue rather than a marketing one? END-OF-CHAPTER SUPPORT MARKETING DEBATE—Is Marketing Management An Art or a Science? Some marketing observers maintain that good marketing is something that is more than anything an art and does not lend itself to rigorous analysis and deliberation. Others strongly disagree and contend that marketing management is a highly disciplined enterprise that shares much in common with other business disciplines. Take a position: Marketing management is largely an artistic exercise and therefore highly subjective versus Marketing management is largely a scientific exercise with well-established guidelines and criteria. Pro: A well-crafted corporate mission statement reflects the values of the firm as they relate to the community at large, its stakeholders, its employees, and its customers. Once the firm’s positions are delineated in the mission statement, marketing can begin the process of setting its priorities, goals, and objectives derived from the stated priorities of the firm. With the advent of holistic marketing, what the firm believes about the communities at large and the strategic direction the firm wishes to take should be defined through its mission statement. Con: Mission statements are written for public consumption and rarely if ever do they reflect the actual goals, objectives, and mission of the firm. These statements are for public consumption and are written to placate the corporate stakeholders, employees, and consumers. Although most mission statements are written with good intentions, the real direction of the firm must be found in the application of their business practices. Marketing should not make the mistake of deriving its goals, objectives, and strategies from these platitudes. 584 Chapter 22: Managing a Holistic Marketing Organization MARKETING DISCUSSION How does cause or corporate societal marketing affect your personal consumer behavior? Do you ever buy or not buy any products or services from a company because of its environmental policies or programs? Why or why not? Suggested Response: Student answers will vary according to their responses. MARKETING SPOTLIGHT—Microsoft Discussion Questions: 1) What have been the key success factors for Microsoft? a. Product innovation. b. Brand-extension strategy. c. Heavy advertising. d. Competitiveness toughness. e. Product expansion. f. Product integration. 2) Where is Microsoft vulnerable? a. Overexposure of their trademarked name. b. Being the market leader or market innovator invites competition to challenge their dominance. c. Use of internal associates to create new products- these people are not the target market for their products and as a result may not fully understand the market. 3) What should Microsoft watch out for? a. Consumer shifts in usage of their products. b. New and/or cutting edge technology developing around them. c. Quality and functionality of their products versus key competitors. 4) What recommendations would you make to senior marketing executives going forward? a. First, do not rest on past successes—continue your strategic direction of investing in new products and in the process of creating new products. b. Look at the potential of products in the far future. 5) What should the company be sure to do with their marketing? a. Continue to capitalize on their name and develop marketing programs that cements the name Microsoft in the minds of its consumers with the concept of innovation. b. Target innovators and heavy users in product launches for diffusion and adoption across to the whole market. 585 Chapter-by-Chapter Instructional Material DETAILED CHAPTER OUTLINE Healthy long-term growth for a brand requires that the marketing organization be managed properly. Holistic marketers must embrace the complexity of marketing. They must engage in a host of carefully planned, interconnected marketing activities Successful holistic marketing requires effective relationship marketing, integrated marketing, internal marketing, and social marketing. TRENDS IN MARKETING PRACTICES In response to the rapidly changing marketing environment, companies have restructured their business and marketing practices in some of the following ways: A) Reengineering. B) Outsourcing. C) Benchmarking supplier partnering. D) Customer partnering. E) Merging. F) Globalizing. G) Flattening. H) Focusing. I) Accelerating. J) Empowering. K) The role of marketing in the organization is changing. L) Traditionally, marketers have played the role of middlemen. M) In a networked enterprise every functional area can interact directly with customers. N) Marketing in an networked enterprise must integrate all the customer-facing processes so that the customer sees a single face and hears a single voice when they interact with the firm. INTERNAL MARKETING Internal marketing requires that everyone in the organization buy into the concepts and goals of marketing and engage in choosing, providing, and communicating customer value. A) A company can have an excellent marketing department, yet fail at marketing. B) Much depends upon how the other company departments view customers.. C) Only when all employees realize that their jobs are to create, serve, and satisfy customers does the company become an effective marketer. 586 Chapter 22: Managing a Holistic Marketing Organization D) Many companies are now focusing on key processes rather than departments to serve the customer. E) To achieve customer-related outcomes, companies appoint process leaders who manage cross-disciplinary teams. Organizing the Marketing Department Modern marketing departments may be organized in a number of different, sometimes overlapping ways: functionally, geographically, by product or brand, by market, in a matrix, and by corporate division. Functional Organization The most common form of marketing organization consists of functional specialists reporting to a marketing vice president, who coordinates their activities. Figure 22.1 shows five specialists. A) Additional specialists might include: 1) Customer service manager. 2) Marketing planning manager. 3) Market logistic manager. 4) Direct marketing manager. 5) Internet marketing manager B) The main advantage of a functional marketing organization is its administrative simplicity. C) A functional organization often leads to inadequate planning for specific products and markets. Geographic Organization A company selling in a national market often organizes its sales force along geographic lines. A) Several companies are now adding area-marketing specialists (regional or local marketing managers) to support the sales efforts in high-volume markets. B) Improved information and marketing research technologies have spurred regionalization. C) Some companies have to develop different marketing programs in different parts of the country out of necessity because their brand developments (and retailers’ request it) varies so much. 587 Chapter-by-Chapter Instructional Material Product-or-Brand-Management Organization Companies producing a variety of products and brands often establish a product (or brand) management organization. A) The product management organization does not replace the functional organization but serves as another layer or management. B) A product manager supervises product category managers, who in turn supervise specific product and brand managers. C) A product-management organization makes sense if the company’s products are quite different, or if the sheer number of products is beyond the ability of a functional organization to handle. D) Product and brand management is sometimes characterized as a hub-and-spoke system. Figure 22.2 shows the hub-and-spoke system. E) Some of the tasks that product or brand managers may perform include: 1) Developing a long-range and competitive strategy for the product 2) Preparing an annual marketing plan and sales forecast. 3) Working with advertising and merchandising agencies. 4) Increasing support of the product among the sales force and distributors. 5) Gathering continuous intelligence on the product’s performance, customer and dealer attitudes, and new problems and opportunities. 6) Initiating product improvements to meet changing market needs. F) These tasks are common to both consumer and industrial product managers. 1) Consumer-product managers typically manage fewer products and spend more time on advertising and sales promotion. 2) Industrial product managers spend more time with customers, laboratory, and engineering personnel. G) The product-management organization has several advantages: 1) Product managers can concentrate on developing a cost-effective marketing mix for the product. 2) He or she can react more quickly to new products in the marketplace. 3) The company’s smaller brands have a product advocate. H) The product management has some disadvantages also: 1) Product managers and specifically brand managers are not given enough authority to carry out their responsibilities. 2) Product and brand managers become experts in their product area but rarely achieve functional expertise. 588 Chapter 22: Managing a Holistic Marketing Organization 3) The product management system often turns out to be costly. 4) Brand managers normally manage a brand for only a short time. 5) The fragmentation of markets makes it harder to develop a national strategy from headquarters. 6) Product and brand managers cause the company to focus on building marketing share rather than building the customer relationship. I) A second alternative is to switch to product teams. J) There are three types of potential product-team structures: 1) Vertical product teams. 2) Triangular product teams. 3) Horizontal product teams. Figure 22.3 shows these product teams. K) The triangular and horizontal product team approaches are favored by those who advocate brand asset management. L) They believe that each major brand should be run by a brand asset management team (BAMT) consisting of key representatives from major functions affecting brand’s performance. M) A third alternative for product management organization is to eliminate product manger positions for minor products and assign two or more products to each remaining manager. N) A fourth alternative is to introduce category management in which a company focuses on product categories to manage its brands. 1) A rationale for category management is the increasing power of the trade who thinks in terms of category of products not individual product lines. Review Key Definitions here: area marketing specialists, hub-and-spoke system, consumer-product managers, industrial product managers, product teams, vertical product teams triangular product teams, horizontal product teams, brand asset management team, and category management Market-Management Organization When customers fall into different user groups with distinct buying preferences and practices, a market-management organization is desirable. A) A market manager supervises several market managers (also called marketdevelopment managers, market specialists, or industry specialists). B) Market managers are staff people and develop long-range and annual plans for their markets. 589 Chapter-by-Chapter Instructional Material C) Market managers are judged by their market’s growth and profitability. D) Many companies are reorganizing along market lines and becoming market-centered organizations. E) In a customer-management organization, companies can organize themselves to understand and deal with individual customers. Matrix-Management Organization Figure 22.4 shows the Product Matrix System. Companies that produce many products flowing into many markets adopt a matrix organization. A) Companies can go one-step further and view the market managers as the main marketers, and their product managers as suppliers. B) A matrix organization would seem desirable in a multi-product, multi-market company. C) The rub is that this system is costly and often creates conflicts, here are two examples: 1) How should the sales force be organized? 2) Who should set the prices for a particular product or market? D) Matrix management gained advocates because companies provide the context in which a matrix can thrive—flat, lean team organizations focused around business processes that cut horizontally across functions. Corporate-Divisional Organization As multi-product, multi-market companies grow, they often convert their larger product or market groups into separate divisions. The divisions set up their own departments and services. This raises the question of what marketing services and activities should be retained at company headquarters. Divisionalized companies have reached different answers to this question: A) No corporate marketing. B) Moderate corporate marketing. C) Strong corporate marketing. D) Regardless of how formalized corporate marketing is, certain activities must occur within the organization in a “top-down” fashion. Webster sees the role of marketing at the corporate level as: 1) To promote a culture of customer orientations and to be an advocate for the customer in the deliberations of top management strategy formulation. 2) To assess market attractiveness by analyzing customer needs, wants, and competitive offerings. 590 Chapter 22: Managing a Holistic Marketing Organization 3) To develop the firm’s overall value proposition, the vision and articulation of how it proposes to deliver superior value to customers. Relations with Other Departments In principle, all business functions should interact harmoniously to pursue the firm’s overall objectives. In practice, interdepartmental relations are often characterized by deep rivalries and distrust. A) In the typical organization, each business function has a potential impact on customer satisfaction. B) Under the marketing concept, all departments need to “think customer” and work together to satisfy customer needs and expectations. C) The marketing vice president, or CMO, has two tasks: 1) To coordinate the company’s internal marketing activities. 2) To coordinate marketing with finance, operations, and other company functions to serve the customer. D) Yet there is little agreement on how much influence and authority marketing should have over other departments. E) Typically, the marketing vice president must work through permission rather than authority. F) Companies need to develop a balanced orientation in which marketing and other functions jointly determine what is in the company’s best interests. G) Perhaps, the best solution is for marketing to periodically propose a function-tofunction meeting with departments where greater understanding and collaboration is warranted. Building a Creative Marketing Organization Many companies are beginning to realize that they are not really market- and customerdriven, they are product-and-sales driven. To transform themselves into true marketdriven companies will require: A) Developing a companywide passion for customers. B) Organizing around customer segments instead of around products. C) Developing a deep understanding of customers through qualitative and quantitative research. D) The task is not easy, it will require a change in job and department definition, responsibilities, incentives, and relationships. E) The organization must also be creative. F) The only answer is for the firm to build a capability in strategic innovation and imagination. 591 Chapter-by-Chapter Instructional Material G) Companies must watch trends and be ready to capitalize on them. H) Market leaders tend to miss trends when they are: 1) Risk averse. 2) Obsessed about protecting their existing markets and physical resources. 3) More interested in efficiency than innovation. SOCIALLY RESPONSIBLE MARKETING Effective internal marketing must be matched by a strong sense of social responsibility Companies need to evaluate whether they are truly practicing ethical and socially responsible marketing. A) Several forces are driving companies to practice a higher level of corporate social responsibility: 1) Rising customer expectations. 2) Changing employee expectations. 3) Government legislation and pressure. 4) Investor interest in social criteria. 5) Changing business procurement practices. B) Business success and continually satisfying the customer and other stakeholders are closely tied to adoption and implementation of high standards of business and marketing conduct. C) Business practices are often under attack because business situations routinely pose tough ethical dilemmas. D) Drawing a clear line between normal marketing practice and unethical behavior is not easy. E) Certain business practices are clearly unethical or illegal: 1) Bribery or stealing trade secrets. 2) False and deceptive advertising. 3) Exclusive dealing and tying agreements. 4) Quality or safety defects. 5) False warranties 6) Inaccurate labeling. 7) Price-fixing or undue discrimination. 8) Barriers to entry and predatory competition. 592 Chapter 22: Managing a Holistic Marketing Organization F) Today companies that do not perform ethically or well are at a greater risk of being exposed, thanks to the Internet. Corporate Social Responsibility Raising the level of socially responsible marketing calls for a three-pronged attack that relies on proper legal, ethical, and social responsibility behavior. Legal Behavior Society must use the law to define those practices that are illegal, antisocial, or anticompetitive. A) Organizations must ensure that every employee knows and observes all relevant laws. Ethical Behavior Companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold its people fully responsible for observing ethical and legal guidelines. Social Responsibility Behavior Individual marketers must practice a “social conscience” in specific dealing with customers and stakeholders. Increasingly, people say that they want information about a company’s record on social and environmental responsibility to help decide which companies to buy from, invest in, and work for. Table 22.1 lists companies who receive high marks for social responsibility. A) Deciding how to communicate corporate attitudes and behaviors towards social responsibility can be difficult. Socially Responsible Business Models The future holds a wealth of opportunities for companies. Many companies are giving social responsibility a more prominent role. Cause-Related Marketing Many firms are blending their corporate social responsibility initiatives with their marketing activities. A) Cause-related marketing is marketing that links the firm’s contributions to a designated cause to customers’ engaging directly or indirectly in revenue-producing transactions with the firm. B) Cause marketing has also been called a part of corporate societal marketing (CSM). 593 Chapter-by-Chapter Instructional Material C) Cause-related marketing comes in many forms. Review Key Definitions here: cause-related marketing, corporate societal marketing Cause Marketing Benefits and Costs A) A successful cause marketing program can produce a number of benefits: 1) Improving social welfare. 2) Creating differentiated brand positioning. 3) Building strong consumer bonds. 4) Enhancing the company’s public image with government and other decisionmakers. 5) Creating a reservoir of good will. 6) Boosting internal morale and galvanizing employees. 7) Driving sales. B) By humanizing the firm, consumers may develop a strong, unique bond with the firm that transcends normal marketplace transactions. C) Some of the specific means by which cause marketing programs can build brand equity with consumers include: 1) Building brand awareness. 2) Enhancing brand image. 3) Establishing brand credibility. 4) Evoking brand feelings. 5) Creating a sense of brand community. 6) Eliciting brand engagement. D) The danger is that the promotional efforts behind a cause-related marketing program could backfire if cynical consumers question the link between the product and the cause and see the firm as being self-serving and exploitative. E) A number of decisions must be made in designing and implementing a causemarketing program, such as how many, and which cause(s) to choose, and how to brand the cause program. Choosing a Cause Some experts believe that the positive impact on a brand from cause-related marketing may be lessened by sporadic involvement with numerous causes A) Many companies choose to focus on one or a few main causes to simplify execution and maximize impact. 594 Chapter 22: Managing a Holistic Marketing Organization B) Limiting support to a single cause may limit the pool of consumers or other stakeholders who could transfer positive feelings from the cause to the firm. C) Most firms tend to choose causes that fit their corporate or brand image and matter to their employees and shareholders. Branding the Cause Marketing Program There are three potential options for branding a cause-marketing program. A) Self-branded: create own cause program. B) Co-branded: link to existing cause program. C) Jointly-branded: link to existing cause program. Review Key Definitions here: self-branded, co-branded, and jointly-branded Social Marketing Some marketing is conducted to directly address a social problem or cause. A) Cause-related marketing is done by a company to support a cause. B) Social marketing is done by a nonprofit or government organization to further a cause. C) Social marketing is a global phenomenon that goes back for years. D) A number of different types of organizations conduct social marketing in the United States. E) Literally hundreds of nonprofit organizations are involved with social marketing. F) Choosing the right goal or objective for a social marketing program is critical. G) Social marketing campaigns may have objectives related to changing people’s cognitions, values, actions, or behaviors. 1) Cognitive campaigns. 2) Action campaigns. 3) Behavioral campaigns. 4) Value campaigns. H) The social marketing planning process follows many of the same steps as for traditional products and services. Table 22.2 lists these steps I) Given the complexity and challenges of the issues involved with social marketing, it is important to take a long-run view. J) The actual success of the social marketing program must be evaluated in terms of the program objectives. 595 Chapter-by-Chapter Instructional Material K) Criteria might include the following: 1) High incidence of adoption. 2) High speed of adoption. 3) High continuance of adoption. 4) Low cost per unit of adoption. 5) No major counterproductive consequences. a. Corporate culture defined as “the shared experiences, stories, beliefs, and norms that characterize an organization.” Review Key Definitions here: social marketing MARKETING IMPLEMENTATION Table 22.3 summarizes the characteristics of a great marketing company A marketing company is great not by “what it is,” but by “what it does.” A) Marketing implementation is the process that turns marketing plans into action assignments and ensures that such assignments are executed in a manner that accomplishes the plan’s stated objectives. B) A brilliant strategic marketing plan counts for little if it is not implemented properly. C) Strategy addresses the what and why of marketing activities. D) Implementation addresses the who, where, when, and how. E) Thomas Bonoma identified four sets of skills for implementing marketing programs: 1) Diagnostic skills. 2) Identification of company level. 3) Implementation skills. 4) Evaluation skills. F) Companies today are striving to make their marketing operations more efficient and their return on marketing investment more measurable. G) Companies use information technology to improve the management of their marketing resources. H) Certain repetitive processes can be automated. This drive is going under such names as: 1) Marketing resource management (MRM). 2) Enterprise marketing management (EMM). 3) Marketing automation systems (MAS). 596 Chapter 22: Managing a Holistic Marketing Organization I) Marketing resource management (MRM) software provides a set of Web-based applications that automate and integrate such activities as: 1) Project management. 2) Campaign management. 3) Budget management. 4) Asset management. 5) Brand management. 6) Customer-relationship management. 7) Knowledge management. J) These software packages are Web-based and add up to what some have called desktop marketing in that marketers can find whatever information and decision structures they need on their computers. EVALUATION AND CONTROL In spite of the need to monitor and control marketing activities, many companies have inadequate control procedures Table 22.4 lists four types of marketing control needed by companies. Annual-Plan Control A) Annual-plan control aims to ensure that the company achieves the sales, profits, and other goals established in its annual plan 1) The heart of annual-plan control is management by objectives 2) Four steps are involved Figure 22.5 shows the control process. a. Management sets monthly or quarterly goals. b. Management monitors its performance in the marketplace. c. Management determines the causes of serious performance deviations. d. Management takes corrective action to close the gaps between goals and performance. B) This control model applies to all levels of the organization. Efficiency Control A) Some companies have established a marketing controller position to improve marketing efficiency. B) Marketing controllers work out of the controller’s office but specialize in the marketing side of the business. 597 Chapter-by-Chapter Instructional Material Sales-Force Efficiency A) Sales managers need to monitor the following key indicators of efficiency in their territories: 1) Average number of calls per salesperson per day. 2) Average sales call time per contact. 3) Average revenue per sales call. 4) Average cost per sales call. 5) Entertainment cost per sales call. 6) Percentage of orders per 100 sales calls. 7) Number of new customers per period. 8) Number of lost customers per period. 9) Sales-force cost as a percentage of total sales. B) When a company starts investigating sales-force efficiency, it often finds areas for improvement. Advertising Efficiency Many managers believe it is almost impossible to measure what they are getting for their advertising dollars; but they should try to keep track of at least the following statistics: 1) Advertising cost per thousand target buyers reached by media vehicle 2) Percentage of audience who noted, saw, or associated and read most of each print ad 3) Consumer opinions on the ad’s content and effectiveness. 4) Before and after measures of attitude toward the product. 5) Number of inquiries stimulated by the ad. 6) Cost per inquiry. A) Management can take a number of steps to improve advertising efficiency, including: 1) Better job in positioning the product. 2) Defining objectives. 3) Pretesting messages. 4) Using computer technology to guide the selection of media. 5) Looking for better media buys. 6) Posttesting. 598 Chapter 22: Managing a Holistic Marketing Organization Sales-Promotion Efficiency Sales promotion includes dozens of devices for stimulating buyer interest and product trial. A) To improve sales-promotion efficiency, management should record the costs and sales impact of each promotion and watch the following statistics: 1) Percentage of sales sold on deal. 2) Display costs per sales dollar. 3) Percentage of coupons redeemed. 4) Number of inquiries resulting from a demonstration. Distribution Efficiency Management needs to search for distribution economies on inventory control, warehouse locations, and transportation modes. It should track such measures as: A) Logistics costs as a percentage of sales. B) Percentage of orders filled correctly. C) Percentage of on-time deliveries. D) Number of billing errors. E) One problem is that distribution efficiency declines when the company experiences strong sales increase. Figure 22.6 describes Peter Senge’s situation in which strong sales surge causes the company to fall behind in meeting delivery dates. Strategic Control From time to time, companies need to undertake a critical review of overall marketing goals and effectiveness. Each company should periodically reassess its strategic approach to the marketplace with marketing effectiveness reviews and marketing audits. The Marketing Effectiveness Review A company’s or divisions marketing effectiveness is reflected in the degree to which it exhibits the five major attributes of a marketing orientation. A) Customer philosophy. B) Integrated marketing organization. C) Adequate marketing information. 599 Chapter-by-Chapter Instructional Material D) Strategic orientation. E) Operational efficiency. The Marketing Audit The average U.S. corporation loses half of its customers in five years, half of its employees in four years, and half of its investors in less than one year. Clearly, this points to some weaknesses. Companies that discover weaknesses should undertake a thorough study known as a marketing audit. A) A marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s or business unit’s marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance. B) The marketing audit has four characteristics: 1) Comprehensive. 2) Systematic. 3) Independent. 4) Periodic. C) A marketing audit starts out with a meeting between the company officer(s) and the marketing auditor(s) to work out an agreement on the audits: 1) Objectives. 2) Coverage. 3) Depth. 4) Data sources. 5) Report format. 6) Time frame. D) The cardinal rule of the marketing audit is not to rely solely on company mangers for data and opinions. E) Customers, dealers, and other outside groups must also be interviewed. F) The marketing audit examines six major components of the company’s marketing situation. Table 22.5 lists the major questions in a marketing audit. Review Key Definition here: marketing audit 600 Chapter 22: Managing a Holistic Marketing Organization The Marketing Excellence Review Companies can use another instrument to rate their performance in relation to the best practices of high-performing business. Management can check its perception of where its business stands in relation to these others. Table 22.6 shows poor, good, and excellent business and marketing practices. THE FUTURE OF MARKETING Top management has recognized that past marketing has been highly wasteful and is demanding more accountability from marketing A) Going forward, there are a number of imperatives to achieve marketing excellence: 1) Marketing must be “holistic” and less departmental. 2) Marketers must achieve larger influence in the company if they are to be the main architect of business strategy. 3) Marketers must continuously create new ideas if the company is to prosper in a hyper-competitive economy. 4) Marketers must strive for customer insight and treat customers differently but appropriately. 5) Marketers must build their brands through performance, more than through promotion. 6) Marketers must go electronic and win through building superior information and communication system. B) In the coming years we will see: 1) The demise of the marketing department and the rise of holistic marketing. 2) The demise of free-spending marketing and the rise of ROI marketing. 3) The demise of marketing intuition and the rise of marketing science. 4) The demise of manual marketing and the rise of automated marketing. 5) The demise of mass marketing and the rise of precision marketing. C) To accomplish these changes, a new set of skills and competencies is needed. Proficiency will be demanded in areas such as: 1) Customer relationship management (CRM). 2) Partner relationship management (PRM). 3) Database marketing and data mining. 4) Contact center management and telemarketing. 5) Public relations marketing (including event and sponsorship marketing). 6) Brand building and brand asset management. 601 Chapter-by-Chapter Instructional Material 7) Experiential marketing. 8) Integrated marketing communications. 9) Profitability analysis by segment, customer, and channel. 602