CRAVENS PIERCY PIERCY 8/e McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

14-2 Chapter Fourteen Designing Market-Driven Organizations McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

14-3 Designing Market- Driven Organizations  Considerations in organizational design  Organizational design options  Selecting an organizational design  Global dimensions of organizations

14-4 CONSIDERATIONS IN ORGANIZATION DESIGN Extent of need to alter vertical structures Extent of partnering with other organizations Extent of process- type organizational design Considerations in Marketing Organization Matching structure to strategic goals Impact of Internet on organizational processes Need to integrate value-creating activities around customers

14-5 Alternative Organizational Structures Traditional Hierarchy Functional Structure Process Overlay Functional Overlay Process Structure Horizontal Structure

14-6 The Challenge of Integration  Integration problems  Marketing’s links to other functional units  Additional approaches to effective integration – relocation/design of facilities – personnel movement – reward systems – formal procedures – social orientation – project budgeting

14-7 Illustrative Example: Johnson Controls  Executives from marketing and sales meet frequently, collaborate on promotions, take training courses together, make sales calls together, share information freely  Customer visits often involve executives from sales, marketing, engineering and design working togther  Johnson’s teamwork philosophy extends to alliances and underpins its product development strategy

14-8 Illustrative Example: GE’s Philosophy “One clear message in our approach is the value of the borderless culture which breaks down the horizontal barriers between functions and the vertical barriers between organizational levels. This means that employees are encouraged to collaborate with others and given considerable freedom to turn their creativity into productivity.” Source: Robert Nardelli, GE, 1993

14-9 Impact of the Internet on Organization  New managerial roles and practices are mandated by the Web – fast access to information from any location and remotely – accelerated trend towards flatter organizations – virtual team-working across geographical and organizational boundaries – new approaches to supplier relationship management (SRM) and customer relationship management (CRM) – managing and controlling outsourcing of more business processes and activities to specialist suppliers

14-10 Organizational Design Options  Traditional designs  Marketing’s corporate role  New forms of marketing organizations

14-11 TRADITIONAL DESIGNS Functional Matrix Product- Focused Market- Focused Traditional Marketing Organization Designs

14-12 Product-Focused Structure

14-13 Marketing Organization Based on a Combination of Functions and Products

14-14 Organizational Transformation  Hybrid organization forms  Designs linked to value strategy and core capabilities  Vital role of data networks  Shared information and decision making Source: George S. Day, “Aligning the Organization to the Market,” in Reflections on the Future of Marketing, Donald R. Lehmann and Katherine E. Jocz, eds. Cambridge, MA: Marketing Science Institute, 1997,

14-15 New Forms of Marketing Organization  New marketing roles – Chief relationship officer, chief knowledge office, chief customer officer  Transforming vertical organizations through managing processes  New organizational forms – networked organizations – the marketing coalition company – venture marketing organizations

14-16 The Marketing Coalition Company Source: Ravi S Achrol, “Evolution of the Marketing Organization: New Forms for Turbulent Environments”, Journal of Marketing, October 1991, 88.

14-17 Selecting an Organization Design  Organizing concepts  Organizing the sales force

14-18 TRANSACTIONALBUREAUCRATIC ORGANICRELATIONAL Centralized Formalized Nonspecialized Internal (hierarchical) Organization of Activity External (market) Organization of Activity Decentralized Nonformalized Specialized Organizing Concepts

14-19 Organizing the Sales Force  Organizing multiple sales channels – personal selling – Internet-based channels – telesales – direct marketing  Coordinating major account responsibilities – Key account management – Global account management

14-20 Global Dimensions of Organizations  Issues in organizing global marketing strategies –Variations in business functions –Organizational considerations  Coordination and communication –Strategic alliances –Executive qualifications

14-21 Marketing Organization Plan Combining Product, Geographic, and Functional Features Source: Philip B Cateora and John L Graham, International Marketing, 12 th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2005), 336.

14-22 GLOBAL ORGANIZING ISSUES Standardized Versus Customized Strategies Alternative Organization Forms Executive Qualifications Strategic Alliances Coordination and Communication Global Marketing Organization