1. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 20: Managing Marketing’s Link with Other Functional Areas

2. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill When you finish this chapter, you should 20-2 Chapter 20 Objectives 1.Understand why turning a marketing plan into a profitable business requires money, information, people, and a way to get or produce goods and services. 2.Understand the ways that marketing strategy decisions may need to be adjusted in light of available financing. 3.Understand how a firm can implement and expand a marketing plan using internally generated cash flow. 4.Understand how different aspects of production capacity and flexibility should be coordinated with marketing strategy planning. 5.Understand the ways that the location and cost of production affect marketing strategy planning. 6.Know how marketing managers and accountants can work together to improve analysis of the costs and profitability of specific products and customers. 7.Know some of the human resource issues that a marketer should consider when planning a strategy and implementing a plan. 8.Understand the important new terms.

3. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Cash Flow Statement Debt Financing Sources of Capital Working Capital Capital The Finance Function: Key Concepts 20-3

4. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Production Function: Key Concepts 20-4 Mass Customization Virtual Corporation Shared Distribution Shared Distribution Excess Capacity Production Capacity

5. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Accounting Function 20-5 Marketing Cost Analysis and Interpretation Natural Accounts Functional Accounts Adapt Accounting Data

6. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Functional allocation breaks down costs by activity. Remember, though, this breakdown is seldom the whole story. Market managers still need to interpret this information to assess performance in a meaningful way. Exhibit 20-4 Functional Cost Account Allocations Sales calls $1K/100calls =$10.00/call Billing $424/34 orders = $12.50/order Packaging units costs $2,312/1,360 units =$ 1.70/unit or $ 1.70/Product A $ 5.10/Product B $10.20/Product C Advertising$425/10 units of C = $42.50/unit of C 20-6 Functional Cost Account Allocations

7. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill People are a Resource New Strategies Need New People New Strategies Need New People Communication Rapid Growth 20-7 The Human Resources Function

8. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Capital Working Capital Debt Financing Cash Flow Statement Production Capacity Virtual Corporation Mass Customization Task Transfer Natural Accounts Functional Accounts Key Terms 20-8