ORGANIZATIONAL STRUCTURE THAT SUPPORTS MARKETING ACTIVITIES

Organization is thus, a mechanism through which policies are executed into actions. Marketing organization is made up of
two words – marketing and organization. Marketing organization is a framework for planning and executing decisions in
marketing activities. It is a group of marketing people working together in a coordinated manner to achieve pre-
determined marketing objectives.

Organisation as a structure in the words of Professor Wheeler is, “Internal organization is the structural framework of
duties and responsibilities required of personal in performing various functions within the company. It is the blue-prints, a
mechanism”.

According to George Terry organisation is “The establishment of effective authority relationship among selected work,
person and work places in order for the group to work together”.

In the words of Cundiff, Still and Goroni, “The marketing organisation provides the vehicle for marketing decision on
product marketing channels, physical distribution, promotion and prices”.

Marketing organisation is thus, a mechanism of dividing and then grouping together of various marketing activities and
establishing authority and responsibility among marketing personnel to ensure coordinated efforts toward achievement of
marketing goals. It is a system of relationship among various marketing functions, performed by different marketing
personnel in a coordinated manner to achieve marketing objectives.

Importance of Marketing Organization:

Marketing organization is an important framework of relations for the achievement of marketing goals.

As such the need for marketing organisation arises on account of following reasons:
i. Lack of Initiative: In the organization people lack initiative to undertake specific responsibilities on their own. They
are unable to maintain close relations amongst themselves.

Hence, they have to be brought together and specific authority and responsibilities have to be assigned.

ii. To Balance Individual Goals and Organizational Goals:

In an organization, people are guided by individual goals which are quite different from organizational goals. To reconcile
the two goals, organization became necessary. Every individual tries to balance the individual goals with the
organizational goals.

iii. To Avoid Conflict:

Organisation consists of people who have vertical or horizontal relationship. This may lead to confusion and conflict if
lines of authority and responsibility are not cleared defined. Therefore organisation of activities became essential. Each
individual should know his specific role, responsibility and authority. This will ensure proper coordination of activities in
the organization.

iv. Organization Ensures Proper Performance of Different Functions:

Marketing involves various functions and sub-functions. People in the marketing department should be clear with their
specific marketing responsibilities. Further, a balance is also to be achieved with other functional departments like
production, finance and personnel.

v. Nature of Marketing Job:

The nature of marketing job is such that it involves people in activities such as idea, innovation and behaviour of
consumer and other intermediary. The study of complex human behaviour becomes organised. A good organisation
structure ensures proper coordination and willingness to perform the complex task.

Factors Influencing Size of Marketing Organization:

1. Management’s Philosophy:
One of the major factors influencing size of marketing organization is the philosophy of the company’s management.
Management may pursue different philosophy like that of centralization or decentralization, individual action or group
action, their attitude and value judgment.
2. Type of Product:
The nature of product has significant influence on the size of marketing organization. Technical products like engineering
goods require greater explanation, hence direct selling became a better option, and this requires larger sales force and
organisation. On the other hand, fast moving goods (FMCG) can be easily sold through the distribution channel and hence
require smaller sales force and small organization.

3. Product Line:
The length of the product line organisation is a major factor determining the size of sales organisation. If the firm deals in
large number of product, it requires big size organization. To sell big variety of products, firm has to develop market
oriented organisation structure so as to cover new areas and new markets. For small number of products, func tional
organization is suitable.

4. Markets:
Markets relates to various factors like size of the market, location of the market, nature of the market, scope of the market
etc. Each of these factors influences the size of the organisation. If the markets are widely dispersed, large sales force is
required and so the size of the organisation is large and vice versa.

5. Channel of Distribution:
The distribution channel developed by a firm has a direct effect on the size of the marketing organization. Under indirect
channels, intermediaries are there, who sell the product, thus, the size of organization is small whereas, under direct
channel system, firm employees its own sales people to sell the goods, therefore the size of organization is large.

6. Needs and Requirements of the Customers:

Market, today are highly complex as there is a continuous change in the customer’s requirements and expectation from the
company. As a result as customer’s demand better facilities and new facilities, company has to accord ingly adjust its sales
organization.

7. Business Conditions and Environment:

The environment in which a unit carries out its activities also has an impact on the size of the marketing organization. The
requirement of success in that industries and the rate of changes in that industry is an important factor that decides the size
of organization.

8. Sales Activity:
The size of marketing organization depends to a large extent on the sales activity of the form. If more sales and sales
related activities are there, the size will be large and vice versa.

Structure of Marketing Organisation:

The organization structure of any firm depends mainly on its market needs and management philosophy.

As such there are two important ways in which organizations can be classified:
i. Classical classification based on classical school of thought, which divides organization as Line organization, Line and
Staff organization, Functional organization and Committee organization.

ii. Modern classification based on modern school of thought, which divides the organization on the basis of functions,
products, customers, geography or a combination of uses.

Accordingly on the basis of modern school of thought, various types of organization structure are:

TYPES OF ORGANIZATIONAL STRUCTURE

1. Functional Organizational Structure
2. Product-Based Divisional Structure
3. Market-Based Divisional Structure
4. Geographical Divisional Structure
5. Process-Based Structure
6. Matrix Structure
1. Functional Organizational Structure
One of the most common types of organizational structures, the functional structure departmentalizes an organization
based on common job functions.

An organization with a functional org structure, for instance, would group all of the marketers together in one department,
group all of the salespeople together in a separate department, and group all of the customer service people together in a
third department.

The functional structure allows for a high degree of specialization for employees, and is easily scalable should the
organization grow. Also this structure is mechanistic in nature -- which has the potential to inhibit an employee's growth --
putting staff in skill-based departments can still allow them to delve deep into their field and find out what they're good at.

Disadvantages
Functional structure also has the potential to create barriers between different functions -- and it can be inefficient if the
organization has a variety of different products or target markets. The barriers created between departments can also limit
peoples' knowledge of and communication with other departments, especially those that depend on other departments to
succeed.

2. Product-Based Divisional Structure

A divisional organizational structure is comprised of multiple, smaller functional structures (i.e. each division within a
divisional structure can have its own marketing team, its own sales team, and so on). In this case -- a product-based
divisional structure -- each division within the organization is dedicated to a particular product line.
This type of structure is ideal for organizations with multiple products and can help shorten product development cycles.
This allows small businesses to go to market with new offerings fast.

Disadvantages
It can be difficult to scale under a product-based divisional structure, and the organization could end up with duplicate
resources as different divisions strive to develop new offerings.

3. Market-Based Divisional Structure

Another variety of the divisional organizational structure is the market-based structure, wherein the divisions of an
organization are based around markets, industries, or customer types.

The market-based structure is ideal for an organization that has products or services that are unique to specific market
segments, and is particularly effective if that organization has advanced knowledge of those segments. This organizational
structure also keeps the business constantly aware of demand changes among its different audience segments.

Disadvantages
Too much autonomy within each market-based team can lead to divisions developing systems that are incompatible with
one another. Divisions might also end up inadvertently duplicating activities that other divisions are already handling.
4. Geographical Divisional Structure
The geographical organizational structure establishes its divisions based on -- you guessed it -- geography. More
specifically, the divisions of a geographical structure can include territories, regions, or districts.
This type of structure is best-suited to organizations that need to be near sources of supply and/or customers (e.g. for
deliveries or for on-site support). It also brings together many forms of business expertise, allowing each geographical
division to make decisions from more diverse points of view.

Disadvantages
The main downside of a geographical org structure: It can be easy for decision- making to become decentralized, as
geographic divisions (which can be hundreds, if not thousands of miles away from corporate headquarters) often have a
great deal of autonomy. And when you have more than one marketing department -- one for each region -- you run the
risk of creating campaigns that compete with (and weaken) other divisions across your digital channels.

5. Process-Based Structure
Process-based organizational structures are designed around the end-to-end flow of different processes, such as "Research
& Development," "Customer Acquisition," and "Order Fulfillment." Unlike a strictly functional structure, a process-based
structure considers not only the activities employees perform, but also how those different activities interact with one
another.

In order to fully understand the diagram below, you need to look at it from left to right: The customer acquisition process
can't start until you have a fully developed product to sell. By the same token, the order fulfillment process can't start until
customers have been acquired and there are product orders to fill.

Process-based organizational structure is ideal for improving the speed and efficiency of a business, and is best-suited for
those in rapidly changing industries, as it is easily adaptable.

Disadvantages
Similar to a few other structures on this list, process-based structure can erect barriers between the different process
groups. This leads to problems communicating and handing off work to other teams and employees.

6. Matrix Structure
Unlike the other structures we've looked at so far, a matrix organizational structure doesn't follow the traditional,
hierarchical model. Instead, all employees (represented by the green boxes) have dual reporting relationships. Typically,
there is a functional reporting line (shown in blue) as well as a product- based reporting line (shown in yellow).

When looking at a matrix structure org chart, solid lines represent strong, direct-reporting relationships, whereas dotted
lines indicate that the relationship is secondary, or not as strong. In our example below, it's clear that functional reporting
takes precedence over product-based reporting.
The main appeal of the matrix structure is that it can provide both flexibility and more balanced decision-making (as there
are two chains of command instead of just one). Having a single project overseen by more than one business line also
creates opportunities for these business lines to share resources and communicate more openly with each other -- things
they might not otherwise be able to do regularly.

Disadvantages
The primary pitfall of the matrix organizational structure? Complexity. The more layers of approval employees have to go
through, the more confused they can be about who they're supposed to answer to. This confusion can ultimately cause
frustration over who has authority over which decisions and products -- and who's responsible for those decisions when
things go wrong.

Essentials of Good Marketing Organisation Structure:

1. Clarity of Relationship between Line and Staff People:
While developing a marketing organization, clarity should be ensured in defining the relationship between line function
and staff function. In absence of this, conflicts may be there which will disturb the smooth functioning of the organization.
To avoid friction and inefficiency, therefore, it is necessary that proper and meaningful integration of the line and staff
function is there. Cooperative relationship between various departments and functions signifies a good marketing
organizational structure.

2. Levels and Span of Control:

Another important factor which should be seriously considered is the level in the organization and span of control. Span
of control refer to the number of subordinates being controlled by a superior. Each executive position must be clear as to
its span of control. Efforts should be made to avoid too many levels in the organization.

More levels in the organization lead to ineffective communication and thereby delay in flow of information. Greater span
of control also leads to poor control. A good marketing organization should therefore avoid too many levels.

3. Role Clarity:
A good marketing organization structure should try to maintain clarity in the job requirement of an executive. Job
requirements include factors like basic function/role of the executive, his authority and responsibility, his financial
powers, to whom he will report etc. If the executive is clear regarding his role, smooth functioning will be there in the
organization. Otherwise, ambiguity will be there, resulting in friction and inefficiency in the organization.

4. Effective Co-Ordination:
Effective coordination among various functions and departments of the organization should be ensured. The marketing
department should have effective coordination with various other departments of the organization like finance, personnel,
production, corporate planning etc. Coordination should be an essential part or a built mechanism of the organization.
5. Marketing Oriented:
A marketing organization should represent the interest of the customer within the company, which helps in long term
growth of the firm. The requirement of the consumer and the market should be taken care of. Organization should be
structured around the products and the markets.

6. Recognizing Informal Relations:

An organisational structure in general defines the horizontal and vertical relationship between the people. However, apart
from formal relationship, it is the informal relationship also which decides the success of the organisation.

Popularly known as “Grapevine” in management literature, informal relations are the invisible alliances between the
people in the organisation. These relations help in building the goodwill and team spirit, and therefore its significance
cannot be underestimated. A good marketing organisation should thus recognise both the formal and informal relations in
the organisation.

7. Flexible Structure:
A good marketing organisation should be flexible and not static or immovable. Markets are highly dynamic and therefore
the organisation should also be dynamic, adjusting to the changing needs of the markets and environment. An organisation
structure should not be rigid or watertight but flexible so that it can be easily understood and can adapt to the changes.
This will help in better response to the competitors and the customers.

8. Maintaining Balance:
The overall effectiveness in the marketing organisation calls for the balance in the activities. Whether the organisation is
big or small, attempt should be made to avoid extremes and excesses and maintain balance. In other words, nothing
should be over-emphasised in the organisation. Line and staff relationship, centralisation and decentralisation, short and
long span of control, different levels in the organisation, etc. should be balanced. This ensures smoothness in operations.

9. Perpetual Existence:
It is important for the organisation to stand the test of time and changes in the environment. It should not be such which
can be easily destroyed. Building an organisation is a complex task involving substantial investment, therefore it should
be so developed, so as to easily meet the changes in the market and adapt accordingly. This is reflected in the increasing
number of people in the organisation and their growing experience.

10. Cost Effectiveness:
Organisation should be so structured that it is cost effective. A balance between the cost and benefit should be maintained.
For this purpose all types of excesses should be avoided. Undue duplication of efforts and overstaffing should not be
there.

11. Flow of Information:
A two-way flow of information should be there in the organisation, i.e. from bottom to top and top to back. Smooth flow
of information both ways ensures better functioning in the organisation. At the same time this information should be
authentic and timely. In general, when information flow upwards it turns from specific to general and when it moves
downwards, it turns from general to specific.