UNIT V

Introduction

In the earlier chapters we discussed the importance of marketing. Marketing has

been developed since the industrial revolution. In the olden stage, or we may
say, production oriented stage, the job of marketing was simple. Manufacturers
produced goods or services and disposed them off. The consumers’ desires were
not taken into account. The sales managers were not included in the top
management force. In the next stage, i.e., sales-oriented stage, there were mass
appearance of personal selling and advertising was a tool to stimulate the sales.
Thus the sales managers and advertising managers were included in the top
management force. Then, in the next stage i.e., market oriented stage, the
function of marketing became important. A number of marketing activities were
performed by the marketing unit. The importance of the marketing manager also
broadened. The marketing manager participated in top level decision-making
functions. In the marketing-oriented stage, the businessmen paid more attention
to satisfy the wants of the buyers. Then, under the total marketing concept the
business is managed so as to give satisfaction of the customers through
production, which is based on the desire of the buyers. Thus the entire firm has
become a marketing organization. For instance, the production department
produces goods by meeting the customers’ preference and the finance
department helps the customer by granting credit. In short, different functions,
which were under different managers have been brought under the marketing
manager, who is to take even the policy decisions. The function of business is to
create, retain and to satisfy a profitable buyer.

Meaning of Marketing Management

The importance of marketing has been widened through many evolutionary

processes and shaped as consumer-orientation stage, in which the existence of a
firm is measured of its ability to satisfy the consumers. A producer or firm can
serve its share-holders, management and workers when the firm is successful in
its marketing.

The achievements of marketing objectives are two-fold-customer satisfaction

and profitable sale. Customer satisfaction is gained, and it greatly depends upon
the manner in which the marketing functions are organized, the marketing has
special significance in an organizational structure of a firm. Markets are not
created by God, nature or economic forces, but by businessmen.

Marketing management is the creative management function which promotes

trade and employments by assessing consumer needs and initiates research
development to meet them. It co-ordinates the resources of production and
distribution of goods and services, determines and directs the nature of efforts
required to sell profitably by maximum production to the ultimate user.
Therefore marketing management is the functional area of business
management which deals with the problems of consumers’ satisfaction.
Marketing management represents marketing concept in action. The process of
management is the set of managerial functions, i.e. planning, implementation
and control of programmes to achieve pre-determined objectives. Marketing
management, in fact, represents an important functional area of business
management efforts under which goods and services flow from the producers to
consumers.

Characteristics of Marketing Management

The important characteristics of marketing management may be obtained as

under:

1. Marketing is a specialized business function. In the early days, the selling

function did not call for any specialised skills as the sales could have
been effected on production-basis. But at present, the business
environment has undergone tremendous changes in social, economic.
Political and cultural aspects. The management of a firm, therefore, has to
develop a particular organization with a view to absorbing new ideas,
new approaches and new market demands.
2. Marketing is a social function. It requires constant interaction with the
various strata of society. It is instrumental in manipulating the factors of
production, distribution, promotion and price and also in influencing the
patterns of consumption and consumer attitudes.
3. Marketing is an integrative function.it integrates and combines the other
business functions like production, finance, personnel etc. with a view to
accomplishing the organizational objectives.
4. Marketing reflects the business mission of a firm before the public and
society.
5. It is said that change is the only basic law of economics. Marketing,
which is the art of distributing the products and services among the
various claimants, has also only one basic law, change.
6. Marketing is an universal function. It has a universality in the sense that it
can be applied to both profit-motive and non-profit motive organisations.
7. Marketing is a management function like the management of other
functions such as production, finance, personnel etc. the business
policies, strategies and programmes related to marketing are mostly of
managerial functions. These are needed to be planned, organized,
directed, coordinated and controlled so as to achieve the marketing
objectives.

Functions of Marketing Management (in brief)

1. Determination of marketing goals to be achieved.
2. Market analysis to improve sales.
3. Formulation of marketing plans, procedures, policies etc.
4. Evaluation of unsatisfied and potential customers needs and desire.
5. Organising the marketing functions and marketing mix.
6. Develop detailed sales plans and budgets.
7. Sponsors a continuing programme of market research.
8. Determination of most desirable channels of distribution.
9. Encouraging good employee relation within the organization.
10.Exercises effective marketing communication.
11.Participation in the product planning to match with demand.
12.Periodical review of over-all marketing programmes to increase the sales
volume and net profits.
13.Proper control and co-ordination of all marketing functions.
14.Evaluation of actual performance with the standard performances.
15.A plan “to do right things and not to do things rightly” that is importance
is given to demand side.

The organization forms an idea of a desired level of transactons with a

market. At any point in time, the actual demand level may be below,
equal to, or above the desired demand level. That is there may be no
demand or there may be weak demand, adequate demand, excessive
demand and so on. Thus the different levels of demand-low, equal to or
 above the required demand, lead to the right market tasks or the demand
situations. They are:
 Negative demand
 No demand
 Latent demand
 Falling demand
 Irregular demand
 Full demand
 Overall demand
 Unwholesome demand

Negative demand :

Major part of the market dislikes the product. This stage is also referred
as conversional marketing. This is an unfavourable condtion. Sometimes, a
consumer even pays a challenged in the marketing management who have to
analyse the dislikes and prepare a plan to convert the negative demand into a
positive on i.e. create a favourable demand. They have develop a plan
redesign, lower the price and include other promotional activities to create an
interest in the consumers.

No demand :

As far as certain products or services are concerned people are

indifferent towards them. Thus there is a stage of no demand; i.e. people have
no interest in getting the products. This may also be happened because they
are not found in the market or people are unaware of the product because of
lack of publicity by the firm. For instance, the book bank of a college may
possess good books written by foreigners in foreign language or English and
the students may not be interested in going through the books. Thus, there is
no demand to positive demand. This task is referred to as stimulational
marketing.

Latent demand:

Many consumers may share a strong desire for something that cannot
be satisfied by the existing products or services. The latent or hidden desire for
the products is an opportunity to the management in developing or improving
the existing products; or services. Development marketing is, thus, a process
by which the latent demand is converted into actual demand. For instance,
bike-riders have a latent desire to have self-starter in the production, produces
bikes with self-starter. A good marketer, who has has experience and
farsightedness will produce effective goods or services that will satisfy the
demand.

Falling demand:

Certain firms may find a falling tendency of demand for the products or
services. Faltering demand for the products refers to a situation in which the
demand is less than the target. For instance, private colleges may face decline
in the number of incoming students. There, the marketer analyses the
situations or finds out the causes of faltering demand and involves remarketing
through the creation of new satisfaction.

Irregular demand:

In certain organisations, seasonal demand causes the problems of idle

capacity or overworked capacity. For instance, water pumps are in greater
demand in summer and no demand in rainy season, fans have food demand in
summer, but no demand in winter etc. this type of irregular demand may be
converted into regular demand and this process, taken by the management is
known as synchromarketing.

Full demand:

Organisations face full demand for their products. But at the same time
there is a task before the marketer that he should maintain the market
demand. This is because consumer preference may be changed or competiton
may appear. Thus cost of products, sales force, consumer satisfaction etc., may
be watched continuously. It is known as maintenance marketing.

Overall demand:

Some organisations may have more demand for their products. The firm
may not be able to meet all the demands. This may be due to excessive
popularity or due to shortage of supply of raw materials. Thus the
management faces the marketing task and tries to find ways to reduce the
demand. This is known as Demarketing. This happens when prices are raised
quality is reduced, ignoring promotional measures etc. Demarketing is opposed
to marketing concept.

Unwholesome demand:

Smoking, use of alcohol, spurious drugs etc., are unwholesome. Certain

goods or services have good demand. Certain items of products may be
grouped as injurious products. In such a situation, the sales of such
unwholesome items are discouraged. This situation is known as counter-
marketing or unselling. All types of socially undesirable products or services are
counter-marketed in order to destroy the market altogether. For instance,
cigarettes, alcohol, drugs etc.

Marketing organization

Sheldon says, “ An organization is the process of so combining the work

which individuals or groups have to perform with the facilities necessary for its
execution, that the duties so performed provide the best channels for the
efficient, systematic, positive and coordinated applications of the available
effort.” All organizations have some aims and objects before them. An
organization consist of people, who run and manage them. The progress or the
development of the organization is facilitated by regulations, policies and
procedures and defining the duties and responsibilities of its members. Thus,
all organizations are made of objectives, people and procedures. They aim a
dividing the work according to importance and regrouping them into one. The
predetermined objectives are accomplished by the groups consisting of
individuals.

Marketing organization is a separate organization for the purpose of

marketing alone. It is defined as, “organization is the backbone of the
management with proper care at all levels, it is possible for the management
to attain the aimed goal.

Principles of organization

1. Clear-cut objective: An organization is created to fulfill certain goals or

aims. In order to achieve he aim and objectives it has to identify the
 activities of goals in clear, precise and complete terms free from
ambiguity.
2. Specialization and definiteness: The principle of specialization is the
division of work aiming at maximum results. The activities of a firm are
divided into many units, sub-units and suitable groupings aid in speeding
up the work. Every employee must definitely know his position in the
firm and purpose thereof, so that he realizes his responsibility and
works accordingly.
3. Delegation of authority: A clerk gets his authority from his section-head,
to whom the worker is responsible for the proper performance of the
job assigned. Therefore authority always flows downward, while
responsibility always moves upward. A clear definition of authority and
responsibility is essential. In the lack of clear definition, the management
cannot have a smooth function of work. A busy management allocates
task among the subordinates. A successful office manager never
performs the task himself, but gets the work done by others.
4. Span of control: No executive must have too many subordinates
reporting to him. If an office manager has many subordinates under him,
then control become defective.
5. Co-ordination: co-ordination is essential to bring unity of action in the
organization. Work all departments should be balanced in order to avoid
conflict or overlapping of functions, with the object of ensuring smooth
and efficient working functions.
6. Flexibility: organization must be flexible, so that it can be adjusted to
changing conditions. It must permit expansion, replacement, merger etc.
It should not be rigid.
7. Responsibility: without authority there cannot be any responsibility.
Assignment of responsibility should be coupled with authority sufficient
to carry them out. There must be parity between authority and
responsibility assigned to him.
8. Efficieny: Available human resources should be utilized to the best and
fullest capacity in order to achieve the highest efficiency through
operations.
9. Unity of command: subordinates receive instruction, proper selection,
placement and training are necessary. Organization structure must
ensure optimum use of human resources.

Marketing and sales management

By marketing, we mean, “performance of business activities that
direct the flow of goods and services from producer to consumer or
user. “By sales management, we mean, the planning, direction and
control of personal selling including recruiting, selecting, training,
equipping, assigning, routing, supervising, paying and motivating, as the
tasks applied to the personal sales force. Thus, we see that marketing is
a wider term and includes sales management.

Distinction Between

Marketing management Sales management

It is a modern concept. It is an old concept.
Its object is to satisfy consumer Its object is to maximize sales.
wants and then maximize
profitability.
Its scope is wider: Its scope is narrow:
1. Discovering needs 1. Selling
2. Obtaining demand 2. Sales promotion
3. Customer satisfaction
4. Aims repetition of orders
It includes sales management. It is a part of marketing
management
It deals with the problems of It deals with the problems of
buyers. sellers.
 Types of organization structure

Organization is the vehicle for accomplishing the goals and objectives of the
business. Organization is essential, when human beings have to collaborate
and work for a common purpose. In fact, and organization is often defined as
“a group of persons working together towards the attainment of certain
common objectives.”

When the enterprise expands, some pattern of organization should be

adopted. Generally, the following are the types of organization.

1. Military type of organization:

This is the simplest and oldest form of organization. It is also
referred as line organization, secalar or hierarchical organization. Under
this type of organization, a superior delegates authority to a
subordinate, who in turn delegates authority to another subordinate
and so on. Authority descends from the top to the bottom level, through
downward delegation of authority. Subordinates become responsible to
their immediate superiors. The topmost management has full control
over the entire field.
 MANAGING DIRECTOR

MARKETING MANAGER

AREA SALES MANAGER

SALESMEN

(OR)

MANAGING DIRECTOR

MARKETING MANAGER

AREA AREA AREA

MANAGER MANAGER MANAGER

SM SM SM SM SM SM SM SM SM

SM=SALESMAN

SUITABILITY

This form is suitable:

 If the business is comparatively small.

 If the labour management problems are easy to solve.
 If the process are easily directed
  If the work is of a routine nature.

Merits

 It is simple to work.
 It is economical and effective.
 It is easy to fix responsibility.
 It facilitates quick decisions and prompt actions.
 Quick communication is easy.
 Discipline can easily be maintained.

Demerits

 The organization is rigid and inflexible.

 It works on a dictatorial basis.
 Departmental heads act on their own whims and desire, as it is difficult
to secure co-ordination of the activities of workers and departments.
 In big business it does not operate satisfactorily.

2. Functional Type Organisation

The limitations of line organization have been removed

under this system. All types of work of the organization are grouped and
managed by the top executive. There are separate functional
department etc. Each department does its function for the entire
organization. Sales department does the function for the whole
enterprise. The functional organization. Sales department does the
function for the whole enterprise. The functional organization works
through the line organization. Functional organization is based on expert
knowledge and makes the greatest use of division of labour resulting in
high efficiency and specialization.

Merits :
 Greatest use of division of labour is possible.
 The system is based on expert knowledge.
  Functional efficiency of the worker can be maintained.
 Mass production is made by standardisation and specialization.
 Methods and operations can be standardized.

Demerits:

 Too many experts and bosses (high official) create confusion in

the mind of the worker.
 It is difficult to fix responsibility on workers.
 Discipline and morale of the workers are seriously affected,
because of contradiction orders from different experts.
 There is heavy overhead expense.

Marketing executive

MANAGER MANAGER MANAGER

(Sales) (Advertising) (Distribution)

SM SM SM SM SM SM SM SM SM

3. Line and Staff System

In this type, the organization is based on the line
organization and the functional experts advise the line officers as to the
functions of the enterprise. The line officers are the executives and the
staff officers are their adviser. Though the staff officers do not have the
power to command the line officers, their advice is generally adhered to.
The combination of organization with this expert staff forms the type of
organization line and staff. The line keeps the discipline and the staff
provides expert information. The line gets out the production and the
staff carries on research, planning, fixing standard etc. this type of
organization is suitable for large concerns. The line officers. The
underlying idea of this method is that specialized work is to be left to
experts who will give advice on specialized groups investigation,
research etc. The staff officers who have no executive position in the
concern, but are only the thinkers, while the line officers are the doers.

Merits
 This type is based on specialization.
 It brings expert knowledge of the whole concern.
 Increased efficiency of operations may be possible.
 Mass production is possible.

GENERAL MANAGER

PERSONNEL MARKETING FINANCE PURCHASING

MANAGER MANAGER MANAGER MANAGER

MANAGER M3

SM SM SM

SM SM SM

M2

SM SM SM

DEMERITS
 There arises confusion unless the duties and responsibilities are
clearly indicated by charts and office manuals.
  Advice and expert information are given to the workers through
the line officers. It is possible that the workers may misunderstand
or misinterpret.

4. Committee Organisation
Committee organization is widely used for the purpose of
discharging advisory functions of the management. Committees are
formed in different levels of organization. A committee is a group of
people who meet by plan to discuss or make a decision on a particular
subject. Because of its advantages, committee organization is preferred.
The management committee usually consists of general manager
And departmental heads to deal with current problems. A co-ordinated
plan is agreed to in a meeting. Thus group judgement is possible to
attain aimed result.
For a successful committee organization, the following hints
may be noted:
 Number of individuals is to be kept at a minimum, so as to
function effectively. If there are many members, it will cause
lengthy discussions and delayed decisions.
 The chairman of the committee must have full control over the
members, while they are in meeting.
 There must be a proper agenda, arranged in order of importance.
 All the members are to be informed before the meeting about the
points to be discussed so that they may prepare for the meeting.
 The meeting must be started on time and must end on time.

Merits
 It stimulates co-operative action.
 It can promote better understanding.
 A problem is discussed in detail and decision taken.
 It facilitates co-ordination of activities of various departments.
 Group discussion and decision will bring better results.
 It gives demographic management.
 Demerits
 Committees are expensive.
 Committee weakens individual responsibility.
 Committee may sometimes become time-consuming rather than
time-saving.
 Responsibility cannot be fixed on any person.
 It lacks secrecy.

5. Geographical Type
The structure is based on territorial or regional basis. When
business activities are expanded, the various parts of the market area
are divided into territories. The whole world into continents,continent
into regions,region into zones,zone into districts etc. This type of
organization gives importance to the consumer’s needs and desire,
especially in pharamaceutical companies.
In this way, the market is fragmented into different sales territories like
national market into regions, region into districts, district into areas as
shown in the chart next.
Salesmen are controlled by the respective district sales managers (DSM),
DSM are controlled by their regional sales manager (RSM), RSM are
controlled by the marketing executive.
This type of organization, enjoys the knowledge of likes and dislikes of
people in the particular areas. A firm can modify or alter the products,
on the basis of the needs of the buyers who are represented by the sales
manager. The competitors can be counteracted soon.

NATIONAL MARKET

REGION A REGION B REGION C REGION D

A B C A B C A B C
DIST A B C

SM SM SM
 Merits: (Geographical Type)
 Geographical type of divisions allow a manager to pay special
attention to the needs and problems of the local markets.
 Geographical type of organization provide opportunities for local
talent to be utilized.
 Geographical division helps managers to gain extensive knowledge
of diverse activities.
 This type of organization improve an organization’s relationship
with customers.

Demerits: (Geographical Type)

 This type of organization require more people to work.
 There arise communication problems.
 Cost of operations are high.
 Top managers at HO find it difficult to control and supervise the
activities in different locations.

6. Product Type
Certain companies produce different varieties of products and it is
advantageous to boost the sales on the basis of product or product
groups. A separate product manager is appointed for each product. He
attends to the production and marketing of his products. When the
market is competitive, the product type of organization with the product
manager can concentrate its attention on the performance of a
particular product or brand. Sales promotion, advertising, marketing
research etc., remain as the centralized activity for the product group.
 MARKETING EXECUTIVE

PRODUCTION PRODUCTION PRODUCITON

MANAGER MANAGER MANAGER
(SOAP) (OIL) (INSECTICIDES)

Sales Distribution Advertising Research

Manager Manager Manager Manager
(soap) (soap) (soap) (soap)

7. Market Type (consumer)

This type of organization is based on the different types of customers.
The enterprises have adopted customer-oriented marketing and thus
there arise two sets of organisations through which the needs of
customers or market are met; i.e. sub-division of markets on the basis of
government and non-government customers, industrial individual
customers, rich and poor customers and on the basis of sex, income,
taste, age etc. Thus, each section can look into the needs of each group
of consumers and facilitate their buying- wholesale section, retail section
etc.
 MARKETING EXECUTIVE

MARKETING ADVERTISING MARKETING

RESEARCH

SALES SALES SALES SALES

MANAGER MANAGER MANAGER MANAGER
(INDUSTRIAL GROUPS) (GOVT.) (INDIVIDUAL) (INTERNATIONAL)

Merits: (Consumer Type)

 This type of organization can encourage consumers with clearly defined
services.
 The sepcialists can understand the needs of a particular segment of
customers.
 This type of organization is useful to serve different type of consumer.
Demerits: (Consumer Type)
 Coordination between sales and other functions of marketing is difficult.
 More man-power is required: thus expenditure is high.

8. Matrix Type
Matrix organization is also known as grid or project
organization. Matrix organization created by merging the two
complementary oranisations, the project and functional. A team may be
set up within the existing organization, to conduct a study of a particular
product or design or to complete a specific assignment in time. A project
manager has a project team consisting of people from several functional
sections. For instance, a project team is formed to market the television,
and for this people will be drawn from different functional departments,
say, production, research, marketing, engineering etc. These specialists
are drawn from respective departments, borrowed to perform their part
in the project work. When the project work is complete, they go back
their respective departments. This type of organization is needed when
 a special type of urgent assignment of jobs or complicated job or a new
product etc. is introduced. Generally, such organization may be
temporary.

MARKETING EXECUTIVE

PRODUCTION RESEARCH ADVERTISING DISTRIBUTION SALES

PROJECT A

PROJECT B

Merits
 Specialized product knowledge is acquired.
 It is economical to draw experts from various sections.
 Expansion, improvements, diversification etc. are the result.
 The chances of success of the project are higher.
 It allows effective use of resources.

Demerits
 Administrative costs are high.
 Workers under this type have to report to tow bosses.
 There arise conflicts between functional managers and project
managers.

We may adopt any of the organization structures for organizing its

marketing operations; it should be goal-oriented and flexible. It must
have scope for possible future growth. Market conditions change very
frequently. Marketing structure should be capable of accommodating all
the changes and marketing people should be dynamic to take up various
sales job assignments and marketing challenges. The adopted marketing
organization structures should provide for the formulation of marketing
policies and programmes from the bottom to the top and every
marketing person should have an opportunity for participation in it.