Before we move on, can you please differentiate Marketing

Plan and Business Plan? If did not understand try to review

Module 5 and 6.

MANAGING MARKETING’S LINK WITH OTHER FUNCTIONAL AREAS

OVEVIEW
A strategy that delivers competitive advantage for one company
may not work at all for another. Marketing is linked to the other
functions of business and this cross-functionality impacts on
your ability to develop better marketing strategies.

LEARNING OUTCOMES

1.Understand marketing in the broader context of resource

requirements.

2.Explain some important links between marketing and other

functional areas

3.Relate marketing to the finance function

4.Relate marketing to the production function

5.Explain why people are an important resource.

ASSIGNED READING

RESOURCE REQUIREMENTS

MARKETING MANAGEMENT 1
Whether the strategy is an old one or a totally new idea,
understanding the links between the different functional areas is
important. Strategy requires goods or services to meet customer
requirements – money to start plans and meet ongoing expenses –
information about costs and revenues – skilled people to put
plans into action.

Links between marketing and other functional areas

Production and operations Capacity – flexibility – efficiency

Finance Investment capital – cash flow

Accounting Control of individual customers –

profitably of products – effective
activities

Human Resources Recruiting – training – motivating

the right staff

FINANCE FUNCTION

Capital is the money invested in a firm. The financial manager

will need to know how much money will be allocated and how much
revenue can be expected from marketing projects.

Marketing plans must work within budget constraints. Different

possible opportunities compete for capital.

Financial managers think of two different uses for capital

1. To spend on fixed assets such as facilities, equipment and

computer networks 2. Working capital being money to pay for
short-term expenses such as salaries, stock and advertising.

MARKETING MANAGEMENT 2
Capital will come from two sources: External Bank loans – sale of
company shares on the stock market

Internal Cash accumulated from profits

How quickly investors can expect profit and growth is important –

all investors look at investment opportunities on a time horizon.
Some investors will accept a short term loss if the longer-term
view is good. But the cost of borrowing this money can be a
financial burden. Reinvesting cash from profits is less expensive
than borrowing money. The firm may decide on a less costly
strategy and then expand.

PRODUCTION FUNCTION

Production capacity is the ability to produce a certain quantity

and quality of specific goods and services within a time limit.
Excess capacity can offer expansion opportunities for the
marketer but of course if the production capacity cannot meet
present needs then the “supplier out of stock” sign on the store
shelves will lead to reduced confidence in the company.
Advertising during stick out situations can waste marketing
effort.

One of the ways to overcome this supply and demand problem is to

operate a virtual company. Here the firm is primarily a co-
ordinator of stock and sales. Amazon.com holds very little in
stock – as orders come in they are routed to the various book
warehouses and sent from there. Many virtual companies are able
to apply mass customisation by tailoring their product range to
suit individual customers – but within a very broad target
market.

ACCOUNTING FUNCTION

Accounting data helps managers track where costs and profits are
coming from. Functional accounts show the purposes for which
expenditure are made. Factory cost accounting records are
organised so the managers can determine the cost of a particular
job.

MARKETING MANAGEMENT 3
Marketing costs analysis can determine if a change in the
marketing mix will improve profit, assign costs to product lines
and customer, prepare a profit and loss statement for each
customer and show which customer contributes the most to the
firm’s profitability.

Opppss! Take some rest please, watch

Your favorite Korean movie.

HUMAN RESOURCE FUNCTION

Although finance accounting and production are important, it is

people that put plans into action. Human resources are
particularly important when there is a need to implement a new
marketing plan that involves a major change in the organisation.
People affected by the change may not be under the control of the
marketing manager so good communication is crucial. Training
takes time so it is important to explain a new marketing strategy
that needs to happen and why.

Human resource issues include: recruiting and hiring new

employees, deciding how people will be compensated, deciding what
to do when a job is no longer necessary and as items that can be
important for a marketing manager to consider in decision making.
The marketing manager changes strategy to respond to changing
customer needs. This will cause major changes in production and
the human resource department.

TASK 1. REVIEW QUESTIONS

1. Discuss the links between marketing and other functional areas
by describing how production, finance, accounting and the human
resource department work together.

2. Define the term “working capital.”

3. Explain how production capacity may limit marketing

opportunities

MARKETING MANAGEMENT 4
4. Describe how people can make a valuable resource when
implementing strategic decisions that involve change.

REFERENCE BOOK

Marketing Management 512 ( Business Administration, Management

and Commercial Science, Richfield Graduate Institute of
Technology Learner Guide.

MARKETING MANAGEMENT 5