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THE ORGANIZATION OF THE MARKETING SECTIONS WITHIN THE FIRMS SELLING OIL PRODUCTS Rada Dr. Ioan Constantin Rada, University of Oradea, UniversităŃii street, no. 1, phone number 0740/048182, e-mail: [email protected] Păcală Drd. Anca Păcală, University of Oradea, UniversităŃii street, no. 1, phone number 0722/822275, e-mail: [email protected] Abrudan Drd. Simona Veronica Abrudan, University of Oradea, UniversităŃii street, no. 1, phone number 0744/241599, e-mail: [email protected] The modern Marketing Section can take different forms. All organizational structures that relate to the marketing activity should be adapted to the four dimensions of the marketing activity: functions, geographical areas, products and markets. The firm specialised in oil products can follow the example of successful companies that, instead of putting into practice a centralised marketing policy, which is identically applied for all its clients, might structure their selling of oil or complementary products, as well as that of the liquefied oil gas charges, their advertisements and selling promotion activities, and the personal selling, in such a way that they might became more versatile in terms of the specific needs of the locations where their sections (commercial units, storehouses), distribution centres and fixed units develop their activity, or even where their competitors have placed their distribution stations or the stable centres for selling the liquefied oil gas charges. The firm selling different kinds of oil products, liquefied oil gas charges, or other complementary products can set down a way of organizing its Marketing Service, taking into consideration the product-oriented criterion. This way of organization does not replace the functional structuring, but is used as a different management level. “the successful adaptation to changes that occurs on the oil products business and consumption markets” “in order to benefit from a modern marketing section, the firm selling oil-products has gone through different stages in its evolution” “all the forms of organizing the marketing activity should be adapted to the four dimensions of the marketing activity: functions, geographic locations, products and markets” “the relationships between the services and the sections within a firm selling oil-products are often marked by mistrust and deep-seated rivalry” “when the firm selling oil products organizes its activities in terms of its customers, and when its management comes to the conclusion that the marketing activity should not be restricted exclusively to the Marketing Section proper, but should involve each of the sections and providers of services within the firm, it will become a successful company in the field of commerce with oil-products” 1. Ways of organizing of the Marketing Department within the firm saling oil products The modern Marketing Department can take different forms. All organizational structures that relate to the marketing activity should be adapted to the four dimensions of marketing activity: functions, geographical areas and markets. 1.1. The organization of the marketing department in terms of functional criteria. This type of organization of marketing activity consists in the subordination of several specialists from different marketing areas to a Head of the Marketing Department, who organizes their activity: 1138 HEAD OF THE MARKETING DEPARTMENT SPECIALIST WITH MARKET SURVEY AND PLANNING MARKETING SPECIALIST WITH MARKETING INFORMATION SPECIALIST WITH MARKETING RESEARCH SPECIALIST WITH MARKETING ANALYSIS SPECIALIST WITH MARKET ADVERTISING AND PROMOTION Fig.1. The organization of the marketing department in terms of functional criteria of the selling oil products firm The main advantage of organizing the marketing activity by functional criteria lies in the simplicity of this method of organization. However this method loses its efficiency with the increase of the oil, complementary, l.o.g. products that are being sold and the expansion of the market. First, there is an inadequate planning for some products and markets since nobody is fully responsible of a certain product or market. Secondly, functional groups compete with others for a larger part of the budget and a higher status. The head of the Marketing Department must temper the demands of competing specialists and thus the co-ordination becomes increasingly difficult. 1.2. The organization in terms of geographical criteria A company selling oil products distributes its products on either a regional or a national market, often organizing its Marketing Department by geographical criteria. Thus, the general manager is able to co-ordinate area managers (branches, warehouses), who consequently manage the activity of those sections, and co-ordinate managers of oil products distributions stations, as well of managers of fixed stations that sell l.o.g charges, who actually manages the sales in stations, through salesmen.The level of control increases by going down on hierarchy to managers of sections and managers of stations (co-coordinating administrators). There are some factors that stimulate such a marketing method. First, in the case of oil, complementary, and LPG products, the market has divided slowly in a multitude of small markets, families with many children, pensioners, elder citizens, car owners, since the traffic of heavy vehicles within the citz has been restricted. Marketing specialists realized that it is difficult to create a single program for different groups. For instance, it is impossible to apply the same distribution program in a border station or a city district. − Secondly, the company might improve its information technology and its market research, thus stimulating the local marketing activity. For instance, the data acquired by recording systems, installed in distribution stations, allow a better real time tracking of gasoline, diesel, LPG or complimentary oil products in each station, thus allowing a precise identification of local problems, opportunities and required marketing steps. − A third factor is the presence and the increasing strength of competitor stations, whose register systems give them access to more and more information. Sometimes the competitors may not try to counterstrike the marketing campaigns of the company, which are directed towards customers, being concerned with the marketing activitz directed towards the local selling, from one station to another. For instance, the company may start this campaign with the knowledge of the economic potential of areas and the needs of the customers. In mainly agricultural areas, or in those where the traffic of heavy trucks predominates, the Diesel oil will certainly sell better. In urban areas, where personal cars predominate, the gasoline will sell better. The LPG charges shall will be sold in a larger proportion in areas inhabited by older people. Within each commercial area where the company has some sub-sections or distribution stations, the managers must have the adequate competence in order to control the advertising and the promotion programs, adapted to the demands and the conditions of local market. They can use local advertising elements only if these are efficient in the respective areas. Such activities can be accompanied by an orientation towards the emancipation of commercial unit . This means that the commercial unit will work more as “franchise”. Instead of being strictly managed from a central office, local managers can be encouraged to became more independent in terms of decision-making. − 1.3. The organization in terms of the products that are being sold. 1139 The firm selling different kinds of oil products, LPG charges, or other complementary products, can set down a way of organizing its Marketing Service, taking into consideration the product-oriented criterion. This way of organization does not replace the functional structuring, but may be used as a different level of the management . Within the product-oriented organization, the product manager (the head of the Marketing Department) assumes leadership and coordinates managers that are responsible with different categories of products (oil products, l.p.g charges, related services). The product-oriented marketing is acceptable if oil, complementary and LPG products are different and the total number of the sold products exceeds the capacity of the Marketing Departmen, which is organized by functional criteria. This organization system can be used together with the type of organization by functional criteria, within the Marketing Department, by setting the task of product manager to specialists who have other duties as well. The tasks refer to the elaboration of marketing plans, the supervision of the process of implementation, the analysis of results and the subsequent corrective action. For instance, in the case of oil products, the following examples of tasks may be relevant: the elaboration of competitive long-term strategies for the marketing of oil products setting the annual marketing plans and prognosis cooperation with the advertising and the “merchandising” specialist, in order to create commercials, programs and campaigns for oil products − stimulating the support of oil products by sale staff and resellers − continuous gathering of information regarding the performances of oil products, customer and reseller attitudes, new problems and opportunities − initiate actions to improve the merchandising system of oil products for a better satisfaction of demands, within an ever-changing market The product managers working within the Marketing Department must dedicate a great amount of time for advertising activities and sales promotion, and spend more time with employees, rather than with customers. The organization in relation to products, together with theorganization by functional criteria, present some advantages: First, the head of the Marketing Department, as products manager, can focus upon the ellaboration of a marketing mix that is economically efficient for oil products, GPL charges and complementary products. Secondly, the head of the Marketing Department can react more promptly than a commission of specialists in marketing problems. Thirdly, the firms producing complimentary products are no longer neglected because of the support they receive. In addition, product management is an excellent training school for all specialists from Marketing Department, who are responsible with products-and not only, because these specialists become involved in all areas of activity withinthe firm selling oil products. Product management might create some conflicts and frustrations. Usually, the product managers are not granted enough authority so that they might efficiently accomplish their tasks. They have to rely on their persuasion skills in order to ensure the cooperation of the advertising specialist, as well as that of the selling, technical and the legal departments. They are often called "big boss", although they are treated as small coordinators. They are “suffocated” by bureaucratic activities that are associated with a firm selling oil products. In order to manage in their own field, they sometimes need to ignore the rules of fair competition. Secondly, the product managers became experts as far as the product they are selling is concerned (oil, complementary or GPL charge), but rarely became experts in some of the functions of the firm. Thirdly, the way of organization based on product management is expensive if this is not associated with the type of organization in terms of functional criteria. Fourth, product managers supervise the activity of selling the oil, the complemetary product, or theGPL charges for only for period of short time as they might be made responsible for another product in few years' time, move to a different firm, or abandon completely the product management, thus encouiraging the short-time marketing planning and influencing the long term selling of the respective product. For a better organization of the system in terms of the integrated products criterion, the following process should be followed: − − − − − − The firm must state clearly the role and tha tasks of the product manager in relation to the product. He or she is the person who comes up with suggestions, but does not make decisions The firm needs to set the process of conceiving and analysing its strategies, in order to provide a workframe for the activity of the product manager. The firm must not allow its product managers to dedicate their activity to the setting of some superficial marketing plans for the product they are responsible for, which would result in numerous statistics but bring about poor strategic reasoning. When the role of the manager is defined, the firm must take into consideration the possible conflicts that might arise between product managers and other specialists from Marketing Department. It must 1140 be stated celarly what decisions are to be made by the product managers and what decisions will result from the collaboration between different specialistas − The firm must draw up a formal procedure in order to solve the possible conflicts of interest between product managers and the specialists from the Marketing Department, through the intervention of the head of the department. Both sides involved in the conflict must forward to the head of the department, in written form, their points of view. − The firm must create a system that might evaluate results, in relation to the responsibilities of the product manager. For instance if the latter is responsible with the profits that are expected after the selling of a certain product, he or she must be able to exert control over the factors that influence the profits. − Another alternative for the organization of the marketing service, in terms of the product cirterion, relies on the product team, made up of the product managers and other specialists within the marketing department, who are responsible with the advertising, information and analysis processes, etc. A thiord alternative would be the attribution of two or more products to a product manager. 1.4. Organising the marketing department in terms of the market. The firm sells its products on the commodity and the business markets. When customers can be separated into groups of consumers, with specific preferences and buying practices (for instance, in the case of the commodity market, the buyers of oil products and l.o.g charges – oil, disel oil etc.), the organization can be made in relation to the market criteria. The head of the marketing department co-ordinates the activity of more than one market manager (they are also called managers for the development of the market, or market executives). The market managers can make use of the functional services of the Marketing department whenever necessary. They also organize the activity of the respective market sector. They have duties that are similar to those of the product managers. The market manager ellaborates long-term and annual strategies for the market sectors he or she is responsible with.They must analyze the tendencies that predominate on the respective markets and understand which are the most appropriate products to be sold on that market (oil, complementary products, or the l.p.g. charges). Their activity is evaluated in terms of their contribution to the increase of the market share rather than in terms of the rentability registered on that particular market. This form of organization presents many of the advantages and the disadvantages of product-based management systems. The main advantage is represented by the fact that the marketing activity is directed towards the satisfaction of specific groups of customers rather than focus on the marketing fucntions, regions, or products. The only way to obtain a market-oriented organization is to place the commodity and the business markets at the centre around which the commercial units, the distribution stations and the fixed centres of the firm selling oil products are organised. The marketing department should establish the tasks for those responsible for the commodity and the business markets. For instance, the person responsible for the business market should establish contact with the economic agents, the institutions (schools, hospitals, prisons, etc), agricultural associations, etc, in order to understand their demand for oil products. 1.5. The organization of the marketing department in terms of the combined criteria of product and market. The firm selling more than one oil product, l.o.g charge, or additional products, on the commodity and the business markets might be confronted with a dilemma. It can rely on a system of organization based on the product management or on the market management. In the second situation, those who are responsible with the commodity and the business markets should be familiar with the different types of oil products, l.p.g. charges and additional products that are needed on the market, and the agent might rely on both the product and the market managers. This alternative can be put into practice. 1141 Commodity markets (population) The market manager Business markets Economic agents Resellers Agricultural associations Institutions Oil products The product manager Additional products l.p.g. charges. Fig.2. The system of organiation (management) in terms of the product and the market The firm can establish, within its marketing department, separate responsibilities for each oil product, l.o.g charge or additional product, and for each commodity or business market. Its aim is to extend the usage of the products it is responsible for, and consequntly the market managers will have to estimate the quantity of oil products required on the market. On the other hand, the market managers are interested to satisfy the needs of the market they are responsible for, rather than promote a certain type of oil or additoional product, which is not demanded on the market he or she is responsible for. In setting plans for that specific market, they will ask each product manager about the prices of different oil products, l.o.g. charges and additional products, and about the existing resources. The final predictions of market and product managers should lead towards the same general conclusions. A matrix-type organization represents an ideal choice when the firm intends to sell many products on several markets. However, this system may prove expensive and conflict-generating. First, there is the problem of the cost needed for the product (oil products, l.o.g. charges and additional products) and the market managers. The following problems might appear: − − How should the selling force be organised? Should the selling forces be distinctive for oil products (gasoline, diesel oil, fuels), l.o.g. charges and additional products? Should the selling forces be organised in terms of the commodity and the business markets? Wouldn't it be necessary for the selling force to be specialised? Who should set the price for a certain product or a certain market? Could the agent responsible for a certain oil product be granted the authority to suggest the price for oil products on the two markets? What happens when the agent responsible for the commodity market feels that the selling of the oil product (the diesel oil) will decrease if the price is not changed? Bibliography : 1. 2. 3. 1.Kotler & Amstrong, - “Principiile marketingului”, Ed. Teora, Bucureşti, 2002, Ed. a II a. 2.Rada,I.C.;Ungur, I.;GogoneaŃă, E; - “Marketingul comercializării produselor petroliere”, Ed.PamGroup, 2002 3. Negucioiu, A; Dragoescu, A; Pop, Sabin; - “Economie politică”, Ed.G. BariŃiu, Cluj Napoca, 1998 1142