Chapter 19

Managing
Marketing’s
Link with Other
Functional
Areas

Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved

19-2

1. Understand why turning a marketing plan into

a profitable business requires money,
information, people, and a way to get or
produce goods and services.
2. Understand the ways that marketing strategy
decisions may need to be adjusted in light of
available financing.
3. Understand how a firm can implement and
expand a marketing plan using internally
generated cash flow.
4. Understand how different aspects of
production, capacity, and flexibility should be
coordinated with marketing strategy planning.
19-3

5. Describe how marketing managers and

accountants work together to analyze the
costs and profitability of specific products
and customers.
6. Understand how information systems
enable marketing strategy.
7. Know some of the human resource issues
that a marketer should consider when
planning a strategy and implementing a
plan.
8. Understand important new terms
19-4

Resource Requirements for

Marketing Strategies and Plans

Production & Information Human

Finance Accounting
Operations Systems Resources
19-5
19-6
19-7

What Is
Investor’s Time Capital? The CFO
Horizon Is Handles Money
Important Matters

Key
Investors Financial Opportunities
Expect a Compete for
Return Issues Capital/Budgets

Capital Comes Working

From Internal Capital Pays
and External for Short-Term
Sources Expenses
19-8
19-9

Debt Financing Interest

Has Interest Expense May
Cost Impact Prices

Expanding Winning
Profits May Mean Strategies
Expanded Plan Generate Capital
19-10

Cash Flow – When

Money Is Available

Improve Return of
Investment

Marketing Mix Affects

Capital Needed
19-11
19-12

Slow Production
Quantity Stock-Outs
Adjustments

Wasted Marketing
Source Supply
Effort

May Require
Difficulty in New
Staged
Product Coverage
Distribution

Need to May Require

Produce Many Outsourcing or a
Product Lines Virtual Corporation
19-13

Moving
Overseas
Production to
Task Transfer Production
Low-Cost
Has Critics
Countries
19-14

Producing to Mass
Order Customization
Serves
Requires Individual
Flexibility Needs

Mass
Customization
Is Not Mass
Marketing

Sometimes Batched Production Is Still Necessary!

19-15

Wizard Parts Company, an auto parts

manufacturer, provides its customers with
production flexibility. This could help Wizard
support its customers with:

A. Computerized reorder capabilities.

B. Electronic data interchange (EDI).
C. Just-in-time deliver (JIT).
D. Any of the above.
E. None of the above.
19-16

Natural Accounts Functional Accounts

• Formal Financial • Purposes for Which

Accounting Expenditures Are
• Examples: vs. Made
Salaries • Examples:
Wages Milling
Supplies Grinding
Raw Materials Maintenance

• Reclassify Natural to Functional

• Reallocate Functional Accounts
• Evaluate Profitability of Profit Centers
19-17
19-18
19-19
19-20
19-21
19-22

Bill Thomas, marketing manager at ATI Service, conducts

marketing cost analysis. He is correct when he says
which of the following about marketing cost analysis:

A. “Traditional accounting analysis fails to analyze the

purpose of marketing costs.”
B. “Marketing costs should be allocated to general
overhead.”
C. “Functional and natural accounts should usually
have the same names.”
D. “Functional accounts are the categories (like salaries
and raw materials) to which costs are charged in the
normal accounting cycle.”
E. All of these statements are true.
19-23

Sharon Gage, marketing manager at Yellow Hat Supply,

wants to calculate the cost of marketing some of Yellow
Hat’s products to different target markets. Which of the
following will she probably have to do:

A. Reorganize some of the company’s functional cost

accounts into natural cost accounts.
B. Allocate personal selling expenses into general
overhead.
C. Reclassify all natural accounts into functional
accounts.
D. None of the above because it is impossible to link the
costs of marketing to specific target markets.
19-24

Aids
Security
Strategy

Information
Technology

Ties Firm Align with

Together Strategy
19-25

People – Important
Resources

New Strategies Mean

People Changes

Communication
Promotes Change

Growth Strains
Human Resources

Allow Time
for Training
19-26

One Change
Plan Time for
May Mean
Changes
Several

Key
Issues

Marketing
Cutbacks Mean
Enlivens the
Planning
Firm
19-27
19-28

1. Understand why turning a marketing plan into

a profitable business requires money,
information, people, and a way to get or
produce goods and services.
2. Understand the ways that marketing strategy
decisions may need to be adjusted in light of
available financing.
3. Understand how a firm can implement and
expand a marketing plan using internally
generated cash flow.
4. Understand how different aspects of
production, capacity, and flexibility should be
coordinated with marketing strategy planning.
19-29

5. Describe how marketing managers and

accountants work together to analyze the
costs and profitability of specific products
and customers.
6. Understand how information systems
enable marketing strategy.
7. Know some of the human resource issues
that a marketer should consider when
planning a strategy and implementing a
plan.
8. Understand important new terms
19-30

1. capital 10. natural accounts

2. working capital 11. functional accounts
3. stock 12. enterprise resource
4. debt financing planning (ERP)
5. cash flow statement systems
6. production capacity
7. virtual corporation
8. task transfer
9. mass customization