Strategic Marketing 1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control

Designing Market-Driven Organizations Chapter 14 Designing Market-Driven Organizations McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Designing market-driven organizations Trends in organization design Organizing for market-driven strategy Marketing departments Structuring marketing resources Organizing for global marketing and global customers

Designing market-driven organizations Procter and Gamble Global restructuring to improve innovation and competitiveness Global business units for products and market development units to tackle local market issues Change agents appointed to work across business units Virtual innovation teams work through intranet Organization design supports clear strategies so all business disciplines can work together

Trends in organization design (1) The New Organization Traditional structures Centralized, vertical, “command and control” Organizational design shifts Innovation The knowledge-based worker Managing culture Collaborative working Informal networks Organizational diversity and external relationships

Organization costs Cadbury Schweppes - world’s largest confectionery business Restructuring at cost of $900 million Organizational structure has become too complex with too many overlaps Organizational costs account for 20% of turnover - compared to 12% at competitors Reorganization is central to regaining competitiveness

Trends in organization design (2) Managing organizational processes Organizational agility and flexibility Zara Toyota Employee motivation “MySpace Generation”

Alternative Organizational Structures Traditional Hierarchy Process Overlay Functional Structure Process Structure Functional Overlay Horizontal Structure

Process-based organizational structure Processes that define value e.g. knowledge management, CRM Processes that create value e.g. new product development, innovation Process Leadership Processes that deliver value e.g. logistics, customer service, value chain relationships Coordination mechanisms to link process and resource leadership Specialist resource groups support process Managers e.g. functional departments, business units, external collaborators Resource Group Leadership

The Toyota way Pillar I Challenge Kaizen - continuous improvement Genchi Genbutsu - go and see for yourself Pillar II Respect Teamwork EM2 - Everything Matters Exponentially

The MySpace Generation Lives online - social networking sites are a way of life Children of the babyboomers Ambitious, demanding and question everything Work/life balance is very important Expected to be the highest maintenance workforce in history and the most high-performing “You raised them, now manage them”

Organizing for market-driven strategy (1) Strategic marketing and organization structure Aligning the organization with the market Informal lateral integration Integrating mechanisms Full customer alignment

Customer-based front-end organization Senior Management Mediation from the center Shared planning and metrics Customer-based Front-end Units Back-end Units Internal linkages Product customers Solutions customers

Organizing for market-driven strategy (2) Marketing functions versus marketing processes Marketing as cross-functional process The challenge of integration Marketing’s links to other functions Finance/accounting Operations Sales R&D Customer service Human resource management Approaches to achieving effective integration

Marketing departments Centralization versus decentralization Integration or diffusion Contingencies for organizing Evaluating organizational designs

Organizing Concepts BUREAUCRATIC TRANSACTIONAL ORGANIC RELATIONAL Centralized Formalized Nonspecialized BUREAUCRATIC TRANSACTIONAL Internal (hierarchical) Organization of Activity External (market) Organization of Activity ORGANIC RELATIONAL Decentralized Nonformalized Specialized

Structuring marketing resources (1) Structuring issues Functional organizational design Product-focused design Product/brand management Category management Venture teams New product teams Market-focused design Matrix design

Traditional Marketing Organization Designs Functional TRADITIONAL DESIGNS Product- Focused Matrix Market- Focused

Product-Focused Structure

Marketing Organization Based on a Combination of Functions and Products

Structuring marketing resources (2) New marketing roles New marketing specializations Venture marketing organizations Partnering with other organizations Networked organizations

New organizational structure for marketing Vice President of Marketing Director of Product Management Chief Customer Officer Customer Service Customer Database Marketing Research

The Marketing Coalition Company Source: Ravi S Achrol, “Evolution of the Marketing Organization: New Forms for Turbulent Environments”, Journal of Marketing, October 1991, 88.

Organizing for global marketing and global customers Organizing for global marketing strategies Business functions Organizational issues Coordination and communication Organizing for global customers The growth in global retailers Global account management structures

Global account management at Microsoft Single executive/team in charge of single customer and all global needs Restricted to customers by revenue size but also willingness/ability to partner Senior managers encouraged to develop relationships with senior managers at global accounts Global business managers work across business units, functions and organizations