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

Strategic Marketing

Chapter 14

DesigningMarket-DrivenOrganizations

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

14-3

Designing market-driven organizationsDesigning market-driven organizations

* Trends in organization designTrends in organization design

* Organizing for market-driven strategyOrganizing for market-driven strategy

* Marketing departmentsMarketing departments

* Structuring marketing resourcesStructuring marketing resources

* Organizing for global marketing and Organizing for global marketing and global customersglobal customers

14-4

Designing market-driven organizationsDesigning market-driven organizations

* Procter and GambleProcter and Gamble

* Global restructuring to improve innovation and Global restructuring to improve innovation and competitivenesscompetitiveness

* Global business units for products and market Global business units for products and market development units to tackle local market issuesdevelopment units to tackle local market issues

* Change agents appointed to work across Change agents appointed to work across business unitsbusiness units

* Virtual innovation teams work through intranetVirtual innovation teams work through intranet

* Organization design supports clear strategies so Organization design supports clear strategies so all business disciplines can work togetherall business disciplines can work together

14-5

Trends in organization design (1)Trends in organization design (1)

* The New OrganizationThe New Organization

* Traditional structuresTraditional structures* Centralized, vertical, “command and control”Centralized, vertical, “command and control”

* Organizational design shiftsOrganizational design shifts

* InnovationInnovation

* The knowledge-based workerThe knowledge-based worker

* Managing cultureManaging culture

* Collaborative workingCollaborative working

* Informal networksInformal networks

* Organizational diversity and external relationshipsOrganizational diversity and external relationships

14-6

Organization costsOrganization costs

* Cadbury Schweppes - world’s largest Cadbury Schweppes - world’s largest confectionery businessconfectionery business

* Restructuring at cost of $900 millionRestructuring at cost of $900 million

* Organizational structure has become too Organizational structure has become too complex with too many overlapscomplex with too many overlaps

* Organizational costs account for 20% of Organizational costs account for 20% of turnover - compared to 12% at competitorsturnover - compared to 12% at competitors

* Reorganization is central to regaining Reorganization is central to regaining competitivenesscompetitiveness

14-7

Trends in organization design (2)Trends in organization design (2)

* Managing organizational processesManaging organizational processes

* Organizational agility and flexibilityOrganizational agility and flexibility*ZaraZara

*ToyotaToyota

* Employee motivationEmployee motivation* ““MySpace Generation”MySpace Generation”

14-8

Alternative Organizational Structures

TraditionalHierarchy

FunctionalStructure

ProcessOverlay

FunctionalOverlay

ProcessStructure

HorizontalStructure

14-9

Process-based organizational structureProcess-based organizational structure

Processes that define valuee.g. knowledge management, CRM

Processes that create valuee.g. new product development,innovation

Processes that deliver valuee.g. logistics, customer service,value chain relationships

Specialist resource groups support processManagers e.g. functional departments,business units, external collaborators

ProcessLeadership

Resource Group Leadership

Coordinationmechanismsto linkprocess andresourceleadership

14-10

The Toyota wayThe Toyota way

* Pillar IPillar I

*ChallengeChallenge

*Kaizen - continuous improvementKaizen - continuous improvement

*Genchi Genbutsu - go and see for Genchi Genbutsu - go and see for yourselfyourself

* Pillar IIPillar II

*RespectRespect

*TeamworkTeamwork

* EMEM22 - Everything Matters Exponentially - Everything Matters Exponentially

14-11

The MySpace GenerationThe MySpace Generation

* Lives online - social networking sites are a way Lives online - social networking sites are a way of lifeof life

* Children of the babyboomersChildren of the babyboomers

* Ambitious, demanding and question Ambitious, demanding and question everythingeverything

* Work/life balance is very importantWork/life balance is very important

* Expected to be the highest maintenance Expected to be the highest maintenance workforce in history and the most high-workforce in history and the most high-performingperforming

* ““You raised them, now manage them”You raised them, now manage them”

14-12

Organizing for market-driven strategy (1)Organizing for market-driven strategy (1)

* Strategic marketing and organization Strategic marketing and organization structurestructure

* Aligning the organization with the marketAligning the organization with the market

* Informal lateral integrationInformal lateral integration

* Integrating mechanismsIntegrating mechanisms

*Full customer alignmentFull customer alignment

14-13

Customer-based front-end organizationCustomer-based front-end organization

Senior Management

Back-end Units Customer-basedFront-end Units

Product customers Solutions customers

Internal linkages

Shared planning and metrics

Mediationfrom thecenter

14-14

Organizing for market-driven strategy (2)Organizing for market-driven strategy (2)

* Marketing functions versus marketing processesMarketing functions versus marketing processes

* Marketing as cross-functional processMarketing as cross-functional process

* The challenge of integrationThe challenge of integration

* Marketing’s links to other functionsMarketing’s links to other functions* Finance/accountingFinance/accounting* OperationsOperations* SalesSales* R&DR&D* Customer serviceCustomer service* Human resource managementHuman resource management

* Approaches to achieving effective integrationApproaches to achieving effective integration

14-15

Marketing departmentsMarketing departments

* Centralization versus decentralizationCentralization versus decentralization

* Integration or diffusionIntegration or diffusion

* Contingencies for organizingContingencies for organizing

* Evaluating organizational designsEvaluating organizational designs

14-16

TRANSACTIONALBUREAUCRATIC

ORGANIC RELATIONAL

Centralized FormalizedNonspecialized

Internal(hierarchical)Organizationof Activity

External(market)Organizationof Activity

DecentralizedNonformalizedSpecialized

Organizing Concepts

14-17

Structuring marketing resources (1)Structuring marketing resources (1)

* Structuring issuesStructuring issues

* Functional organizational designFunctional organizational design

* Product-focused designProduct-focused design

* Product/brand managementProduct/brand management

* Category managementCategory management

* Venture teamsVenture teams

* New product teamsNew product teams

* Market-focused designMarket-focused design

* Matrix designMatrix design

14-18

TRADITIONALDESIGNS

Functional

Matrix Product-Focused

Market-Focused

Traditional Marketing Organization Designs

14-19

Product-Focused StructureProduct-Focused Structure

14-20

Marketing Organization Based on a Marketing Organization Based on a Combination of Functions and ProductsCombination of Functions and Products

14-21

Structuring marketing resources (2)Structuring marketing resources (2)

* New marketing rolesNew marketing roles

* New marketing specializationsNew marketing specializations

* Venture marketing organizationsVenture marketing organizations

* Partnering with other organizationsPartnering with other organizations

* Networked organizationsNetworked organizations

14-22

New organizational structure for marketingNew organizational structure for marketing

Vice Presidentof Marketing

Director ofProduct

Management

ChiefCustomer

Officer

CustomerService

CustomerDatabase

MarketingResearch

14-23

The Marketing Coalition CompanyThe Marketing Coalition Company

Source: Ravi S Achrol, “Evolution of the Marketing Organization: New Forms for TurbulentEnvironments”, Journal of Marketing, October 1991, 88.

14-24

Organizing for global marketing and Organizing for global marketing and global customersglobal customers

* Organizing for global marketing strategiesOrganizing for global marketing strategies

*Business functionsBusiness functions

*Organizational issuesOrganizational issues

*Coordination and communicationCoordination and communication

* Organizing for global customersOrganizing for global customers

*The growth in global retailersThe growth in global retailers

*Global account management structuresGlobal account management structures

14-25

Global account management at MicrosoftGlobal account management at Microsoft

* Single executive/team in charge of single Single executive/team in charge of single customer and all global needscustomer and all global needs

* Restricted to customers by revenue size but Restricted to customers by revenue size but also willingness/ability to partneralso willingness/ability to partner

* Senior managers encouraged to develop Senior managers encouraged to develop relationships with senior managers at global relationships with senior managers at global accountsaccounts

* Global business managers work across Global business managers work across business units, functions and organizationsbusiness units, functions and organizations