The modern effective marketing organization is the product of a long evolution.
To have an effective marketing orgainzation you need to understand your strategy first. Remember structure follows strategy. So don’t get the cart in front of the horse.
Concerned with the effectiveness, productivity, efficiency or excellence of organizations is a subject that motivates many CEOs. They periodically look at their organizational structure including their marketing organization for improvements.
Over the years, marketing has evolved from a single sales function to a complex group of activities. Often not always well-integrated with other functional departments and non-marketing activities.
Organizational effectiveness is particularly important in marketing operations. The organizational structure involved the interactions with the external environment and among various internal business functions.
Companies realign their organizations to:
Organizational changes include the use of advanced information systems to:
75% of marketers say their lack of skills and impacting revenue in some way. 74% say it is contributing to marketing and sales misalignment, according to a marketing skills Gap survey conducted by Focus (@Focus).
When Lou Gerstner took over the CEO position at IBM, I recall that he handed out airline tickets to all the top management. Their task was to visit our top customers and find out how IBM could do better.
He wanted IBM to become customer focused and improve the customer experience. This required a reorganization of the functional departments to support the customer-centric strategy. And it worked.
And this post I’ll be examining several organization design issues including alternative design concepts, features, and limitations of each.
Marketing Organization Design Issues
Several important issues influence the design of marketing organizations.
- The use of outsourced marketing agencies to perform certain marketing activities
- Vertical structuring of the organization
- Horizontal relationships
- Improving response time between decisions and results
- Defining and analyzing the operating environment
Internal and External Organizations
Marketing organization design should include consideration of the trade-offs between performing marketing functions within a company. It must also consider arranging with external organizations to perform the functions.
For example, manufacturers agents may perform the sales function. Contractual arrangements may also be made for advertising, digital marketing, marketing research, and SEO. Services are available to perform marketing functions in local, regional, national, and international markets.
Internal marketing departments provide more control of activities, easier access to other departments, in greater familiarity with company operations. The commitment of the people to the organization is often higher since they are part of the corporate culture.
The limitations of internal marketing departments include:
External companies offer specialized skills, experience, and flexibility in adapting to changing conditions. These firms may have a lower cost than an organization that performs the functions internally.
Having services performed outside the organization also has limitations, including:39% of CMOs say they do not have the right people, tools, and resources to meet their marketing objectives, according to a report by Accenture. Click To Tweet
Coordination of relationships, determination of operating responsibilities, and good communications are essential to the effective use of external companies. Outsourcing your marketing strategy and activities can have many benefits.
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The vertical structure shows how marketing organizational departments are linked together by reporting relationships. Vertical design issues include reporting relationships, departmental grouping, and vertical information linkage.
Reporting relationships indicate who reports to whom in the organizational hierarchy. Departmental grouping considers how employees are signed responsibilities. Groupings maybe according to function, geography, product, market, or combinations of these factors.
Vertical information linkage and ccross-functional communications among departmental participants.
Various techniques facilitate information transfer, including:
I believe the organizations of the future in the digital age will have fewer levels of the traditional organization. The typical large business in 2025 will have less than half of the levels of management of its counterparts today. These flat organizations will have no more than one-third of the managers of today and will be information base.
Information databases, processing, and artificial intelligence technology will move information rapidly up and down and across the organization. Levels of management can be eliminated since they function primarily as information relays rather than a decision maker and leader.
The many companies, including marketing management, is under pressure to reduce operating costs. Eliminating department of levels and increasing the number of people supervised reduce staff size. The span of control will be much greater in the future.
Let me give you an example. The Innovative information system at Mrs. Fields Cookies to operate with a much larger span of control than McDonald’s. Mrs. Fields retail store managers have direct access to the president through the information system.
The traditional concern in organizational design has been the vertical structure. Research findings indicate that horizontal relationships are very important to achieve organizational objectives.
Coordination between cross functional departments such as research and development and marketing department is accomplished by various means including:
A major concern in horizontal relationships is improving interaction with customers in the field. Many companies have restructured their sales and marketing departments to move closer to their customers.
Electronic manufacturer, previously organized on a functional basis. It changed and set up separate operating divisions, each with its own sales and engineering departments.
A logistical company, successful revamp of its sales force among industry lines. Its now reorganizing its warehouse and customer service activities on a geographic basis. This helped them ensure more familiarity with customers by area.
These actions indicate marketing executives continuing concern about the part organizational effectiveness. Organizational change will occur more frequently in the future as businesses respond to market turbulence and competitive pressures.
Speed of Response
The design of a marketing org. affects its ability to respond quickly. The advantages of doing things faster than the competition is clearly established in various kinds of businesses.
The Gap has special skills in moving women’s apparel from design to the store. It takes weeks instead of months. This has allowed the Gap to market new designs ahead of its competition.
Organizations that can do things faster are more productive and competitive. We see this in the advancement in supply chains and the evolving application of blockchain.
Defining and Analyzing the External Environment
The environment impacts an organization in several ways. Management may expand the number of positions and departments to cope with increasing market complexity.
The uncertainties in the external environment are created by instability, variability, dispersion, turbulence, and resource constraints. Rapidly changing customer needs created by the turbulent business environment requires organizations to adapt to customer requirements. One organization for maybe more adaptable than another.
External pressure requires organizational adjustments to cope with no conditions. Turbulent environments can create new organizational changes. Flexibility and adaptability and organization structure are important capabilities.
Organizational responses to environmental uncertainty include:
- Creating additional positions and departments
- Performing buffering and boundary spanning roles by units that work with environmental elements
- Performance of specialized functions within departments in integration between departments
- Adoption of looser, free-flowing, in adaptive internal organizations
- Selection of structures, management process, and strategies used by other organ industry members
- Expanding planning and environmental forecasting activities
Wrap Up About the Effective Marketing Organization
Modern marketers and marketing leaders must have a clear understanding of how their actions impact organizational design and goals. They are expected to continually expand their digital knowledge and capabilities.
They must be able to manage increasingly complex technology integrations, and create strategies and campaigns that directly affect the bottom line.
In my experience working with hundreds of clients, I have learned the opportunity is everywhere. Especially for unique and innovative companies that bring real value to the customer.
With all the opportunities, it can be overwhelming for a company. They must adapt to changing market conditions and increasing demand by building a scalable infrastructure capable of effectively accommodating growth.
When was the last time you reviewed your marketing organization?
And don’t forget to share this with a friend.