CRAVENS

PIERCY

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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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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
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Considerations in Marketing
Organization

Matching structure
to strategic goals

Extent of need to
alter vertical
structures

Extent of process-
CONSIDERATIONS
type organizational
IN ORGANIZATION
design
DESIGN
Extent of
partnering with
other organizations

Need to integrate
value-creating activities
around customers

Impact of Internet on
organizational processes
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Alternative Organizational
Structures
Traditional
Hierarchy
Process
Overlay
Functional
Structure

Process
Structure

Functional
Overlay Horizontal
Structure
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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
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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
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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

Impact of the Internet
14-9

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
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Organizational
Design Options

Traditional designs
Marketing’s corporate role
New forms of marketing
organizations
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Traditional Marketing
Organization Designs

Functional

Matrix TRADITIONAL Product-

DESIGNS Focused

Market-
Focused
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Product-Focused
Structure
 Marketing Organization
14-13

Based on a Combination of
Functions and Products
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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, 67-93.
 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
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The Marketing Coalition

Company

Source: Ravi S Achrol, “Evolution of the Marketing Organization: New Forms for Turbulent
Environments”, Journal of Marketing, October 1991, 88.
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Selecting an
Organization Design

Organizing concepts
Organizing the sales force
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Organizing Concepts
Centralized
Formalized
Nonspecialized

BUREAUCRATIC TRANSACTIONAL

Internal External
(hierarchical) (market)
Organization Organization
of Activity of Activity

ORGANIC RELATIONAL

Decentralized
Nonformalized
Specialized
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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
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Global Dimensions of
Organizations

Issues in organizing global

marketing strategies
– Variations in business functions
– Organizational considerations
Coordination and
communication
– Strategic alliances
– Executive qualifications
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Marketing Organization Plan

Combining Product,
Geographic, and Functional
Features

Source: Philip B Cateora and John L Graham, International Marketing, 12th ed.
(Burr Ridge, IL: McGraw-Hill/Irwin, 2005), 336.
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Global Marketing Organization

Standardized
Versus
Customized
Strategies
Executive Alternative
Qualifications Organization
Forms
GLOBAL
ORGANIZING
ISSUES

Strategic Coordination
Alliances and
Communication