Types of Marketing Organization

Marketing managers must have knowledge of what type of marketing organization they have in place and what type of marketing organization the company actually needs. Following are the different types of marketing organization that commonly exists today:-

Functional structure of organization

The functional organization structure uses the principle of specialization based on function or role. Here, the business activities are divided into smaller groups based on specialized functional areas viz. product development, marketing research, sales promotion and advertising, distribution and customer relations. Hence, the employees in an organization with shared skills and knowledge are grouped and report to one, who has responsibility for all of the operational areas.

For example, the common departments of business firm like human resources, accounting and purchasing are organized by separating each of these areas and managing them independently of the others and all report to managing director of that firm, who has responsibility for all of the operational areas. Some of the merits and demerits of the functional organization structure are as follows:

Merits

• Functions are separated by expertise and according to the specialization; the division of work among the employees are executed.
• Strengthen specialized skills and resourcesand reduces duplication of scare resources.
• Eases communication within a particular department and promotes application of expert knowledge.

Demerits

• If the organization has a variety of different products or target markets, then this type of organizational structure can’t be beneficial.
• Lack of proper coordination among dissimilar functional groups.
• Short-term focus of routine task and promotes centralization and delay in taking decisions.

 Product-based Organization Structure

The thumb rule of this type of structure is it gives focus on specific products. In it, the business firm produces multiple products or services and organizes its marketing unit according to them. Here, the product manager develop the strategy for marketing the particular product or service and takes and executes the decisions on matters like advertising and sales promotion in consultation with the advertising, sales promotion, marketing research and publications manager. Thus, for profit maximization and customer satisfaction, a business firm can hire specialists in the marketing of specific types of productions.

For example, an executive over Kraft products would be responsible for every product under that label – dressings, meats, sauces, etc.

Some of the merits and demerits of the product organization structure are as follows:

Merits

• Organizes products by category.
• Performance of firm’s products can easily be evaluated and compared.
• Focus more on the specific products and customers.
• Reduces the operating decision-making burden of the top executive.
• Best suited to industries producing variety of products or brands.
• Primarily useful for retail companies that have stores in various cities.

Demerits

• Marketing activities may be duplicated by the different product groups.
• Can create problems for customers who purchase products across multiple product groups.
• The conflicts between the firm’s corporate objectives and the objectives of its product groups may be develop.

Customer-Oriented Organization Structure

Here, the sale organization is done on the basis of types of customers like retailers, wholesalers and institutions. The marketing manager is responsible for marketing activities for that specific group of customers. Some of the merits and demerits of the product organization structure are as follows:

Merits

• The needs and desires of each customer group is taken into account.
• Provides specialization among the employees of the enterprise.

Demerits

• Suitable only for those organizations where the needs and problems of customers are different.

Market/Territory Oriented Organization Structure

The structure is based on regional basis duties and specific areas are assigned to different persons. Here, an organization is in direct touch with local customers. It can easily identify the changing needs, habits and fashions of the customers and therefore can make necessary changes in its products within a short span of time.

Merits

• Easily identify the needs and wants of customers on regional basis.
• Save time and money by changing the products of the firm according to the needs and desires of customers.
• Enjoys all the advantages of functional type of organizations.

Demerits

• Requires employment of number of managerial personnel.
• Not fit for smaller organizations.
• Very difficult to formulate or follow an integrated policy for all regions.

Line and staff organization

According to this administrative organization, specialized and supportive marketing activities of the business firm are attached to the line of command by appointing staff supervisors and staff specialists who are attached to the line authority. The power of command always remains with the line executives and staff supervisors guide, advice and council the line executives. The required coordination between the line and staff function is managed by the executive at higher level.

Merits

• Provides expert advice from specialists.
• Relief to line executives by dividing their work with staff specialist.
• Helps in achieving effective coordination, as every official is concentrating in their own area.

Demerits

• Lack of understanding can takes place because the two commanding authorities are working at a time and it can create confusion among workers, as whose command they have to follow.