UNIT 5

Marketing organisational structures:

Marketing organization structures distribute and oversee marketing operations, procedures and strategies
within a business. These structures define and organize employee job roles, including who they report
to, and outline the processes a business can use to achieve success
Marketing organization structures are a fundamental part of every business because they
clearly define operations and responsibilities for employees. Choosing a marketing
structure that is a good fit for your business can have a positive impact on your team's
ability to meet business goals.
Marketing organization structures help employees understand their role within the
company they work for. These structures can also act as a guide for employees to know
what resources are available to them and which team members handle which
responsibilities. Marketing organization structures also can provide a visual workflow
that explains how the business operates, the job tasks within the business and how they
contribute to its success and where or who makes business decisions. Before constructing
a marketing organization structure, a business should consider:
 Chain of command: Chain of command refers to the hierarchy of relationships
within a business. This means defining who answers to who within departments
while making business-related decisions, and it maps out who holds authority and
who is accountable for the overseeing, executing and approving of tasks.
 Span of control: Span of control clearly defines who manages each department or
division and what responsibilities those departments or divisions handle.
 Centralization or decentralization: A centralized business allows one or two
individuals to make final decisions, whereas a decentralized business has a team or
department in charge of making final decisions.

Types of Marketing Organisational structures:

Functional Type Organisation:

The limitations of line organisation have been removed under this system. All types of
work of the organisation are grouped and managed by the top executive. There are
separate functional departments for major functions of the enterprise; example personnel
department, purchase department etc. Each department does its function for the entire
organisation. Sales department does the function for the whole enterprise. The functional
organisation works through the line organisation. Functional organisation is based on
expert knowledge and makes the greatest use of division of labour resulting in high
efficiency and specialization.
Merits:
1. Greatest use of division of labour is possible.
2. The system is based on expert knowledge.
3. Functional efficiency of the worker can be maintained.
4. Mass production is made by standardization and specialization.
5. Separation of mental and manual functions is possible.
6. Methods and operations can be standardized.
Demerits:
1. Too many experts and bosses (high officials) create confusion in the mind of the
worker.
2. It is difficult to fix responsibility on workers.
3. Discipline and morale of the workers are seriously affected, because of contradictory
orders from different experts.
4. There is heavy overhead expense.

Line and Staff System:

In this type, the organisation is based on the line organisation 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 advisers. Though the staff officers do not have
the power to command the line officers, their advice is generally adhered to.
The combination of organisation with this expert staff forms the type of organisation-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 organisation is suitable for large concerns.
The line officers give orders, decisions etc., to subordinates in consultation or guidance
with the staff 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 positions in the concern, but are only the
thinkers, while the line officers are the doers.
Merits:
1. This type is based on specialization.
2 It brings expert knowledge of the whole concern.
3. Increased efficiency of operations may be possible
4. Mass production is possible.
Demerits:
1. There arises confusion unless the duties and responsibilities are clearly indicated by
charts and office manuals.
2 Advice and, expert information are given to the workers through the line officers. It is
possible that the workers may misunderstand or misinterpret.

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 organisation gives importance to the consumer‟s needs and desire, especially
in pharmaceutical 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 organisation 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 sales manager. The competitors can be counteracted soon.

Merits (Geographical Type):

1. Geographical type of divisions allow a manager to pay special attention to the needs
and problems of the local markets.

2. Geographic type of organisation provide opportunities for local talent to be utilized.

3. Geographic division helps managers gain extensive knowledge of diverse activities.

4. This type of organisation improve an organization‟s relationship with customers.

Demerits (Geographical Type):
1. This type of organisation require more people to work.

2. There arise communication problems.

3. Cost of operations are high.

4. Top managers at HO find it difficult to control and supervise the activities in different
locations.

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 organisation 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. (Fig. 3.5)

Market Type (Consumer):

This type of organisation 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., subdivision 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. A firm may have
different groups of customers, who have different needs and problems. Thus, each
section can look into the needs of each group of consumers and facilitate their buying-
wholesale section, retail section etc. (Fig. 3.6)

Merits (Consumer type):

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

Matrix Type:
Matrix organisation is also known as grid or project organisation. Matrix organisation is
created by merging the two or more complementary organisations, say, purchase section
and sales section. A team may be set up within the existing organisation, 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 to their respective
departments. This type of organisation is needed when a special type or urgent
assignment of jobs or complicated job or a new product etc., is introduced. Generally,
such organisation may be temporary.

Merits:
1. Specialized product knowledge is acquired.

Z It is economical to draw experts from various sections.

3. Expansion, improvements, diversification etc., are the result.

4. The chances of success of the project are higher.

5. It allows effective use of resources.

Demerits (Matrix type):

1. Administrative costs are high.

2. Workers under this type have to report to two bosses.

3. There arise conflicts between functional managers and project managers.

We may adopt any of the organisation 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
organisation 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.

Factors affecting Global marketing Organization

Factors involved in international marketing environment are broadly classified into three categories as
stated in the figure given below. This environment regulates organizational activities in such a way that
it becomes favorable for the entrepreneurs to identify the threats and opportunities lying ahead.

The three factors that have a major impact in the marketing environment are given below −

Global factors

The global factors that are outside of the control of individual organizations, but that can affect the way
that businesses operate can be considered as the global factors affecting the international marketing
environment. These factors include cultural and social influences, legal issues, demographics, and
political conditions, as well as changes in the natural environment and technology.
Some major organizations involved in this level of international marketing are the UNO, World Bank,

Culture:

All cultures have their own unique sets of customs and taboos. It is important for marketers to learn
about these customs and taboos so that they will know what is acceptable and unacceptable for their
marketing programs. For example, in Japan, the number four is considered unlucky, and products
packages containing four items are avoided by many consumers. In Middle Eastern countries where
Islamic law is strictly observed, images displaying the uncovered arms or legs of the female body are
considered offensive. and the WTO.

Culture is complex, and fully appreciating its influence takes significant time, effort, and expertise.
Various features of a culture can create an illusion of similarity, but marketers need to dig deeper to
make sure they truly understand the people and environments in which they work. Even a common
language does not guarantee similarity of interpretation. For example, in the U.S. we purchase “cans” of
various grocery products, but the British purchase “tins.” In India, where English is one of a number of
officially recognized languages,

Language

As suggested above, the importance of language differences cannot be overemphasized, and there are
nearly three thousand languages in the world. Language differences can be a challenge for marketers
designing IMC campaigns, product labels, brand and product names, tag lines, and so on. Finding a
single brand name that works universally in terms of pronunciation, meaning, and "ownability" is a
monumental challenge. Of course, correct and grammatical use of language in marketing
communication is essential for a product, brand, or company to be viewed as credible, trustworthy, and
of high-quality.

Language gains complexity when a country has more than one officially recognized language. To
illustrate, in Canada, national law requires that labels include both English and French. In India and
China, more than two hundred different dialects are spoken. India has more than twenty officially
recognized languages. Mainland China's official spoken language is Standard Mandarin, and several
autonomous regions have designated other additional official languages. Meanwhile in Hong Kong and
Macau, Cantonese Chinese, English, and Portuguese are the official languages.

Domestic factors

Factors related to the personal affairs or internal affairs of a country that affect the economy of the
country participating in the international marketing are considered as domestic factors. These include
the political scenario and the approach by the government and its attitude towards international trade,
business ethics, availability and quality of infrastructure, raw-materials, and other technological and
ecological factors.

The level of participation by governmental bodies at the central and state level in a country is one of the
major factors that the fate of marketing environment.
Organizational factors

The internal factors that influence the decision-making process in a company are considered as
organizational factors.

These include the events, factors, people, systems, structures and conditions inside the organization that
are generally under the control of the company. The internal environment influences the organizational
activities, and also the attitudes and behavior of employees. Changes in the leadership style inside the
organization can also have a profound impact on the organization.

Marketing environment is changing rapidly. Every factor, right from the domestic level, organizational
level, to the global level is interrelated.

Geographic Description of Market

Geographical analysis is when a business divides its market on the basis of geography. There are several
ways that a market can be geographically divided. Here, an organization decides the marketing
strategies or approaches that would make international marketing possible in a specific geographic
market on the basis of the climate, lifestyle, location, and language of that region. Geographic markets
differ in size depending on location.

There are three major ways to divide a market on the basis of Geography −

 Population density
 Climate
 Language

Each of these components can further be sub divided. For example, a regional geographic market can
be subdivided as nations, metropolitan areas, rural areas, suburban areas, urban areas, or on regional
basis with respect to size, population density, etc.

Digital Marketing
Marketing is not just selling or promoting goods or services in real market but also in virtual market
i.e. internet world. This virtual market is digitally connected with the whole world. The digital
marketing is the sky under which the target customers are approached with interactive marketing for
products and services to promote brands, build performance and increase the reach by converting the
leads into customers to retain them. Digital marketing is personified by an extensive selection of brand
marketing tactics, which mainly use the Internet as a hub for promotional intermediate, in addition to
other media vehicles.

Today we can distinguish between a market place and a market space. The marketplace is physical, as
when one goes shopping in a store; market space is digital, as when one goes shopping on the Internet.
Digital Marketing has many advantages for both consumers and businesses, including convenience,
savings, selection, personalization, and information. For example, on-line shopping is so convenient that
30 percent of the orders generated by the Web site of REI, a recreational equipment retailer, are logged
 from 10 P.M. to 7 A.M., sparing REI the expense of keeping its stores open late or hiring customer
service representatives. However, the digital market space is also bringing pressure from consumers for
lower prices and is threatening intermediaries such as travel agents, stockbrokers, insurance agents,
and traditional retailers. To succeed in the digital market pace, marketers will need to reorganize and re-
define themselves.

DIGITALIZATION
Digitalization is to make available anything regarding products or services available
through integration of digital technologies using internet to the customers.

Digital marketing is the tool to promote the products or services produced by the industry to the
ultimate customers. It is a broader spectrum that refers to several promotional techniques organized to
reach customers through digital technologies. It is also personified by an extensive selection of products
or services leading brand marketing tactics, which mainly use Internet as a hub for promotional
intermediate, in addition to other media vehicles like TV, Radio and Newspapers.

In 1990s the concept of “Digital Marketing” was said to be used. Then it was going under dormant
phase and again was active in 2000. From 2000 to 2010 digitalization in marketing became more
prominent. The swift evolution of digital media has twisted new prospects and avenues for advertising
and marketing.

Digital marketing activities are:

 Search Engine Optimization (SEO)

 Search Engine Marketing (SEM)
 Campaign Marketing
 Content Automation
 Content Marketing
 Display Advertising
 E–Books
 E-Commerce Marketing
 E-Mail Direct Marketing
 Influencer Marketing
 Optical Disks And Games
 Social Media Marketing
 Social Media Optimization
 It is customer centric approach based on inbounds logistic which is the fundamental concept of
digitalization.

CUSTOMIZATION
When any company deals its customer on preference basis or provide individually
differentiated products or services on acceptable and affordable prices and delivery channels for
each customer, then this is termed to be Customization.

By going online, companies enable consumers to become presumes, self-producing consumers who
can essentially design their own goods. Companies have also acquired the capacity to interact
individually with each customer by personalizing messages, products, and services.

“The combination of operational customization and marketing customization has been called
customerization.”

E-Customization
Market when went to online the customers understanding was more customized than ever. To
understand the consumers or customers was fundamentally required as to boost marketing through
digitalization. This developed the concept for e-customization.

Good marketers know their target customers inside out and upside down. They are able to put a
microscope on their buyers. Understanding internet customers is even more important, as the
geographic, demographic and cultural spread is often more spacious. Internet customers also have
various attitudes, characteristics and perception to both attaining information and buying online. Above
to it, the same person may both think and behave differently on internet than in physical market.
Therefore, overall e-marketers have to keep a nice vigil on their internet based customer.

Online customers are changing. Not only do they talk back, they now shout back and even bite back if
brands break their promises. Today‟s customers have unlocked „brand control‟ from marketers and set
up their own brand discussions. Although they are still time-compressed and information-fatigued, they
have found a new energy fuelled by Web 2.0 which allows them to fulfil their age old desire to
communicate about what interests or concerns them.

UNDERSTAND THE VARIOUS CHANGING MARKETING PRACTICES IN DIGITAL

WORLD

Although digital marketing is similar to traditional marketing, it is helpful to understand the

fundamental characteristics that discriminate this scenario from the traditional marketing environment.
Digitalization is the ability to characterize a product, or at least some of its benefits, as digital bits of
information. Digitalization allows marketers to use the internet to share out, promote and sell those
features apart from the physical item itself. India post, for example, has developed web-based software
that allows clients and business consumers to track their own packages from starting point
to destination.
 Distributed over the Web at very low cost, the online tracking system adds value to post office
delivery services. Distribution can be enhanced for users who have broadband access to
the internet, because broad band‟s faster connections allow streaming audio and video and other new
technologies.

In addition to providing distribution effect, digitizing part of a product‟s features allows new
combinations of features and services to be created quickly and inexpensively. For example, a Fortis
that keeps a customer history of their patients in database can e-mail that customer when the next
meeting with doctor is due. Digital features are easy to mix and match to meet the demands
of individual.

The growth of the Internet presents exciting opportunities for marketing products to both consumers
and organizations. Computers and computer peripherals, industrial supplies, and packaged software are
the leading business purchases online. Consumer products account for a small but growing percentage
of Internet transactions, with books/music/video, toys/video games, and consumer electronics among the
fastest-growing online consumer purchases.

Through e-marketing, companies can provide products, including goods, services, and ideas, that
offer unique benefits and improve customer satisfaction.

The online marketing of goods such as computer hardware and software, books, DVDs, CDs, toys,
automobiles, and even groceries is accelerating rapidly. Dell Computer sells more than $56 billion worth
of computers and related software and hardware, about half of that amount through its website. Flipkart
has established an effective model for online auto sales by helping consumers find the best price on their
preferred models and then arranging for local delivery. However, low profit margins owing to
customized deliveries have challenged the ability of firms to deliver tangible goods.

Services may have the greatest potential for online marketing success. Many websites offer or
enhance services ranging from home and car buying assistance to travel reservations and stock trading.
At Century 21‟s website, consumers can search for the home of their dreams anywhere in India, get
information about mortgages and credit and tips on buying real estate, and learn about the company‟s
relocation services. Indian Railways are increasingly booking Train Ticket via their websites. IRCTC,
for example, now books 70 percent of its passenger revenue online.

Besides the public relations from the perspective of the legacy media such as radio and print media,
today‟s publicity is before anything digital. The digital publicity is sensitive to emotions and consists of
an audience that is constantly emerging together with the technologies that are facilitating the
connections. Digital publicity is multifaceted ill that the organization communicates with its audiences
and the audiences interact among themselves.”

This has given rise to the concept of public unmanageability due to the difficulty of controlling the
social media conversations and the treatment of the organization by the same media. As a result,
organizations have devised new strategies to tackle these control difficulties in order to form and
maintain relationships with the public. These strategies are embedded in the communication practices of
the organization. Additionally, it is now not clear where the boundary between the environment and the
organization lies. The organization‟s belief in its interaction with public and other stakeholders has
changed significantly.

Previously there were clear boundaries between what was considered private and what was
considered public. It was possible to hide from publicity. Things have changed. No one knows any
longer where privacy ends and where publicity begins when it comes to organizations. Companies must
submit to the assumption that whatever they do, any thought, movement, or intention can be public the
very same day. On the other hand, publicity itself never ends. Companies themselves cannot dictate
what local publicity is and what broader publicity is. As the border between public and private blurs, all
business activities are potentially public. Companies themselves cannot decide what activities will be
publicized. Organizations live in glass cubes, and they have lost control forever. Publicity has become a
continuum.

E-MARKETING

E-marketing is where one company can satisfy customer needs by anticipating, identifying and
customizing in proper manner. The process to market through intern is e-marketing. It is
more personalised than to be general.

ONLINE VALUE PROPOSITION (OVP)

The value proposition which is termed to be online value proposition is actually which has certain
advantage of being online. It includes convenience, interactivity, immediacy, swiftness, easygoing as
well as cheapest to purchase, quicker to buy and better online experiences. It is more informative and
explorable.

Six Cs of customer motivation to help define the OVP (Chaffey, 2004):

Here are a few OVPs that appear to match the strap lines:
 Autotrader – The biggest and best car site on the planet – [Link]
 Boosey and Hawkes – A world of music – [Link]
 EasyJet – The web ‟ s favourite airline (which suggests cheapest tickets) –[Link]
 Flickr – Share your photos. Watch the world. – [Link]
 Kelkoo – Compare. Buy. Save. – [Link]
 MUtv – The television channel dedicated to Manchester United – [Link]
 [Link] Find the keywords you need to succeed online [Link]/
 YouTube – Broadcast yourself – [Link]
 Interestingly, Amazon use the line „Top Seller ‟ instead of their previous „ Earth ‟ s
biggest selection at competitive prices ‟ – [Link]

Digital marketing strategy

Marketing strategy is to penetrate the products or services in the consumers mind through various
media vehicles. It is after sale concept to motivate the customer to re use the company product or
services through fitting the positive image of the company in customers mind. For that internet based
strategy has to be followed for digitalization and customization. Digital marketing strategy generates
leads based on principles of traditional marketing, using the opportunities and challenges offered by
technology and the digital medium.

Customer-centric thinking to facilitate the flooded information through user friendly websites is a
successful digital marketing strategy. The advent of new technologies means the digital marketing
strategist of today is offered not only a plethora of new tactical possibilities, but also unprecedented
ways of measuring the effectiveness of chosen strategies and tactics.

Marketing Control
1. Annual Plan control
2. Profitability control
3. Efficiency Control
4. Strategic Control
Annual Plan Control:
In this method, annul plans are prepared for various activities. Each plan includes setting objectives
(expected results or standards), allocating resources, defining time limit, and formulating rules, policies
and procedures. Annual plan control relates to sales. Periodically (mostly annually) the actual results are
measured and compared with standards to judge whether annual plans are being (or have been)
achieved.
Depending on the degree of difference between the planned and the actual results, causes are detected
and suitable corrective actions are undertaken. Thus, it contains checking ongoing performance against
annual plan and taking corrective action. Figure 1 shows five measures of annual plan control.
Measures (Evaluation Tools) of Annual Plan Control:
Following five measures are used in annual plan control:
1. Analysis of Different Sales:
Analysis of different sales contains measuring and evaluating different sales (total sales, territory- wise
sales, distribution channel-wise, product-wise sales, customer-wise sales, etc.) with annual sales goals.
Targets are set for different types of sales and actual sales of different categories are compared to find
out how far company can achieve its sales goals.
2. Analysis of Market Share:
Here, market share is used as base for measuring, comparing, and correcting results. Market share is a
proportion of company‟s sales in the total sales of the industry. It helps to know how well the company
is performing relative to its close competitors. Thus, the performance is assessed against expected
market share and competitors‟ market share.
It involves considering three types of market shares:
i. Overall market share
ii. Served market share
iii. Relative market share
3. Analysis of Market Expenses-to-Sales:
This type of control checks marketing expenses. It ensures that the firm is not overspending to achieve
its annual sales goals. Different marketing expenses are watched in relations to sales.
Normally, company considers five components to calculate expenses-to-sales ratios and compares
them with standard ratios to find out how far expenses are under control, such as:
i. Sales force-to-sales ratio
ii. Advertising-to- sales ratio
iii. Sales promotion-to-sales ratio
iv. Marketing research-to-sales ratio
v. Sales administration-to-sales ratio
Marketing managers needs to monitor these expenses in relation to sales. If the expenses fall beyond
permissible limits, it should be taken as a serious concern and needed steps are taken to keep them under
control.

4. Financial Analysis:
Financial control consists of evaluating sales and sales-to-expense ratios in relation to overall financial
framework. It means net profits, net sales, assets, and expenses are studied to find out rate return on total
assets, and rate of return on net worth.
Financial analysis determines firm‟s capacity of earnings, profits, or income. Attempts are made to find
out factors influencing firm‟s rate of return on net worth. Here, various ratios are calculated such as
profit margin ratio (net profits + net sales), asset turnover ratio (net sales + total assets), and return on
assets ratio (net profits + total assets), financial leverage (total assets + net worth) and return on net
worth (net profits – net worth). Profit margin can be improved either by cutting expenses and/or
increasing sales.
5. Analysis of Customer and Stakeholder Attitudes:
The measures of annual plan control discussed in former part are financial and quantitative in nature.
Qualitative measures are more critical because they give early warning about what is going to happen on
sales as well as profits.
Manager can initiate precautionary actions to minimize adverse impacts of forces on the future
outcomes. Under this tool, customers‟ attitudes are tracked to project the way they will react to the
company‟s offers. Alert company prefers to set up a system to monitor attitudes of customers, dealers,
and other participants.
Base on their attitudes, preference and satisfaction, management can take early actions. This tool is
preventive in nature as adverse impact on the future results can be prevented by advanced steps. Market-
based preference scorecard analysis is used to measure (score) attitudes of customers and other
participants. Such analysis reflects actual company‟s performance and provides early warnings.
Measuring Customers’ Attitudes:
Here, a firm tries to measure attitudes of customers by using various methods like, complaints and
suggestions, customer panels, customer survey, etc. It provides details about new customers created,
existing customers lost, dissatisfied customers, relative product quality, relative service quality, target
market awareness, target market preference, and other valuable information.
Measuring Stakeholders’ Attitudes:
It consists of measuring or recording stakeholders‟ attitudes. It shows the pattern of stakeholders‟
preference, attitudes, and overall response toward company and its offers. Stakeholders include
suppliers, dealers, employees, stockholders, service providers, etc. They have critical interest and impact
on company‟s performance.
Without their cooperation and contribution, a company cannot realize its goals. When one or more of
these stakeholders register dissatisfaction, management must take suitable actions. Methods used to
track attitudes of customers can also be used for measuring attitudes of stakeholders.
Profitability Control:
In this method, the base of exercising control over marketing activities is the profitability. Certain
profitability (and expenses) related standards are set and compared with actual profitability results to
find out how far company is achieving profits. Profitability control calls for measuring profitability of
various products, channels, territories, customer groups, order size, etc. It provides necessary
information to management to determine whether products, channels, or territories should be expanded,
reduced, or eliminated.
Process of Marketing-Profitability Analysis:
Systematic and logical process is used for analysis of profitability.
It involves:
1. Identifying Functional Expenses:
It consists of determining expenses to be incurred for the marketing activities like salaries, rents,
advertising, selling and distribution, packing and delivery, billing and collection, etc.
2. Assigning Function Expenses to Marketing Entities:
Simply, expenses of particular head (for example, salary or advertising) are associated with different
entities like products, channels, territories or customers groups.
3. Preparing Profits and Loss statement:
A profit and loss statement is prepared for each type of products, channels, territories, etc., to evaluate
their relative performance. Based on relative performance in form of profitability, management can
decide on products, channels or territories to be expanded, reduced or eliminated.
For example, a firm has five products, like A, B, C, D, and E. If profit and loss statement shows
that:
(1) Product C is more profitable, and therefore, it must be expanded;
(2) Product B is poor, and, therefore, it must be reduced;
(3) Product D is making loss, and therefore, it must be eliminated, and
(4) Product A and product E are satisfactory, and therefore they must be maintained. In the same way, it
can be applied to different territories and segments.
Table 1 shows how to prepare profit and loss statement for different products.
4. Taking Action:
On the basis of the profit and loss statement, necessary actions can be directed.
Actions include one or more of followings:
i. Expanding product(s)
ii. Reducing product(s)
iii. Eliminating product(s)
iv. Reducing any of the expenses
v. Increasing sales, etc.

Efficiency Control:
This control, particularly, concerns with measuring spending efficiency. While profitability control
reveals the relative (in relation to different entities like products, territories, channels, etc.) profits a
company is earning, the efficiency control shows the ways to improve efficiency of various marketing
entities like sales force, advertising, distribution, sales promotion, and so forth.
Sometimes, a post of marketing controller is created to work out a detailed programme to measure and
improve efficiency of expense-centered marketing activities. Here also, in order to evaluate efficiency
level of different marketing activities, the efficiency standards (of ideal performance) are set and are
compared with actual performance.
Efficiency control can improve efficiency of marketing department in two ways – one is, improving
ability of various marketing activities to contribute more in reaching the goals, and the second is,
reducing expenses or wastage.
Types of Efficiency Control:
Figure 2 shows major types of efficiency control. Main types of efficiency control involve controlling
sales force efficiency, advertising efficiency, sales promotion efficiency, distribution efficiency, and
marketing research efficiency.

1. Sales Force Efficiency Control:

To measure efficiency of sale force (salesmen), certain key indicators/criteria are developed. A manager
has to make a lot of calculations and paperwork.
Common criteria used to measure and evaluate the sales force efficiency include:
i. Average number of sales calls per salesman in a day
ii. Average sales calls time spared per contact
iii. Average revenue generated per call
iv. Average costs incurred per call
v. Entertainment cost per calls
vi. Percentage of orders per specific number of calls, i.e., how many orders have been received from 100
calls made
vii. Number of new customers created during specific period
viii. Number of customers lost in a given period
ix. Contribution of salesmen in total sales, revenue, and profits
x. Sales force costs as percentage of total sales.
Questionnaire, discussion, inspection, observation, salesman‟s report, etc., methods are used for the
purpose. However, most companies use salesman‟s report. A unique computer-based programme or
software can also be developed for speedy and accurate measurement of sales forces efficiency on a
regular basis. Simply, actual performance of sales force is compared with these criteria to find out
deviation, and, accordingly, necessary actions are taken.
This measurement of sales force efficiency can provide satisfactory answers of following
questions:
i. What is role/contribution of sales force in selling efforts?
ii. Who are the most efficient, less efficient and inefficient sales people?
iii. Which are reasons responsible for poor efficiency of sales force?
iv. What can/should be done to improve efficiency?
2. Advertising Efficiency Control:
Advertising is the most expensive among all the promotional tools. Major part of promotion budget is
consumed by advertising alone. So, it is extremely necessary to find out efficiency level of advertising
efforts. A company sets advertising goals (standards) and compared actual contribution of advertising to
decide how far advertising has been capable to fulfill firm‟s expectations. Advertising efficiency control
mainly involves measuring cost efficiency or contribution efficiency.
Practically, it is difficult to measure the exact contribution of advertising efforts/costs. Systematic tools
can be developed to measure impact of advertising qualitatively – in forms of increasing awareness,
changing attitudes, and creating brand loyalty – and quantitatively – in forms of impact on sales and
profits. Survey of dealers and customers can be made to collect needed data.
Common criteria used for measuring advertising efficiently include:
i. Advertising cost per thousand target customers reached by a specific media vehicle, for example,
television medium.
ii. Percentage of audience who read, noted, or saw message from print media.
iii. Customer opinion on advertising contents and effectiveness.
iv. Measurement of pre-post (before-after) advertising impact on attitudes of people toward the product.
v. Number of inquiries generated by advertising.
vi. Cost per inquiry.
vii. Media suitability.
viii. Impact of advertising on personal selling, sales promotion, public relations, publicity, and
distribution.
ix. Need and performance of advertising agency, etc.
Manager can compared efficiency of advertising programme with internal as well as external standards
to judge comparative efficiency. He must find out causes leading to inefficiency.
One or more of following actions are initiated:
i. To changes advertising objectives and policies.
ii. To change advertising message.
iii. To change advertising media.
iv. To change media scheduling and frequencies.
v. To change and/or train the staff.
vi. To change advertising agency.
vii. To change advertising budget, etc.
3. Sales Promotion Efficiency Control:
This control is exercised by sale manager. Sometimes, sales promotion manager is also appointed to
deal with the issue. Sales promotion efficiency measures the impact of sales promotion efforts on sales,
profits, competitiveness, and consumer satisfaction. Such efforts include offering a wide range of short-
term incentives to stimulate buyer interest and consumer trial. Sales promotion is, no doubt, costly, but
it seems essential. Here, manager tries to measure costs and impact of each of sales promotion tools.
Normally, sales promotion tools are applied at three levels – customer level, dealer level, and sale force
level.
Common criteria used for measuring sales promotion efficiency include:
i. Percentage of total sales promotion expenses to sales.
ii. Costs of display, sample, coupons, and other tools per unit selling price.
iii. Number of inquires generated due to display, demonstration, other such incentives.
iv. Joint and individual impact of various tools on dealer interest, consumer purchase, and
competitiveness.
Analysis of costs and contribution of sales promotion tools helps in selecting the most cost- effective
sales promotion tools to use. A firm can reduce unnecessary costs and/or can improve contribution of
each of the tools of sales promotion. It helps design suitable sales promotion strategies in term of costs,
level of sales promotion, timing, and types of techniques at each of the levels.
4. Distribution Efficiency Control:
In an average, distribution costs account for 20 to 30 per cent of selling price. By a suitable distribution
network, company can improve its profitability on one end and consumer satisfaction on the other end.
Therefore, it is necessary to review or assess the entire distribution system periodically. Distribution
efficiency control measures how far company‟s distribution system is efficient to achieve marketing
goals.
Common criteria used for the purpose include:
i. Percentage of total distribution costs per unit price.
ii. Percentage of physical distribution (warehousing, inventory, ordering, transportation, communication,
insurance, etc.) costs per unit price.
iii. Percentage of channel members‟ (wholesalers, retailers, agents, etc.) costs per unit price.
iv. Costs and contribution of direct v/s indirect channels.
v. Potentials of using online marketing, network marketing, and by retailing chains.
vi. Assessing costs of marketing channels in relation to services they offer to the company as well
consumers.
Distribution efficiency gives valuable information to select the most cost-effective distribution option
and sub-options. Company can minimize distribution costs and/or improve profits and competitiveness.
In the same way, it can increase consumer satisfaction, too.
5. Marketing Research Efficiency Control:
Marketing research is process of gathering, analyzing, and interpreting data relating to any marketing
problem. Due to dynamic nature of marketing environment, a company needs data on various relevant
variables time to time. Marketing research is an expensive option. It is imperative for a firm to know
how far marketing research efforts and costs are instrumental in achieving marketing goals. It provides
necessary details to improve research policies and practices.
Common criteria used to measure marketing research efficiency include:
i. Annual budget of marketing research department.
ii. Costs of research projects conducted in a year.
iii. Effectiveness of tools and methods used for collecting and analyzing data.
iv. Usefulness of findings of marketing research in decision-making.
v. Relative advantages of company‟s research department v/s professional research firms, etc.
Strategic Control:
Strategic control implies a critical review of overall marketing effectiveness in relation to broad and
long-term objectives and firm‟s response to marketing environment. It deals with assessing firm‟s
ability to define and achieve marketing goals, and response pattern to environment. Normally, strategic
control verifies company‟s long-term performance with reference to the close competitors. Here, entire
marketing system is reviewed to judge firm‟s overall strengths and weaknesses. It answers the question:
How far is the firm capable to exploit emerging marketing opportunities and face challenges and
threats?
Methods or Tools:
As shown in Figure 3, four tools are used for strategic control – the marketing effectiveness review, the
marketing audit, the marketing excellence review, and the ethical and social responsibility review. Let‟s
discuss each of them.
1. The Marketing Effectiveness Review:
It involves a review of overall marketing performance. It helps finding effectiveness of several business
plans in term of sales growth, market share, and profitability. Attempts are made to detect causes for
good-performing marketing department and poor-performing department.
Common criteria:
Some criteria are used to review marketing effectiveness.
They include:
i. Company’s Customer Philosophy:
It shows company‟s approach toward customers.
ii. Integrated Marketing Efforts:
It shows the way company integrates efforts of all divisions and departments for achieving marketing
goals.
iii. Marketing Information:
It studies company‟s policies and practices to collect, use, and disseminate critical information on a
regular basis.
iv. Company’s Strategic Orientation:
It shows company‟s broad and long-term plans for survival and growth. It also indicates firm‟s long-
term plans for profits, sales, and expansion.
v. Operational Efficiency:
It shows how efficiently a company managing its current operations.
vi. Public Relations Practices:
It shows company‟s policies and practices to establish, maintain, and improve relations with various
publics, which have direct interest in the company‟s operations, and whose cooperation seems critical in
achieving marketing goals.
Here, we have considered only six criteria. As per need, more criteria can be developed and used for the
purpose.
A special instrument can be developed by using these criteria to measure marketing effectiveness. The
instrument (a type of questionnaire or form with questions and certain number of options or intensity in
each of the questions) is filled by managers of marketing and various other departments.
On the basis of this instrument, controller can calculate score of each managers of each of the
departments. Level of scores received by manager or department clearly indicates the effectiveness of
particular manager and/or department. Accordingly, each department is awarded class like excellent,
very good, good, fair, or poor. Necessary actions can be taken on the basis of performance.
2. The Marketing Audit:
Another alternative tool for critical review of overall marketing performance is the marketing audit.
Audit means to examine systematically. It is systematic examination/investigation of all critical aspects
of marketing department.
Philip Kotler defines: “A marketing audit is a comprehensive, systematic, independent, and periodical
examination of a company‟s marketing environment, objectives, strategies, and activities with a view to
determine problem areas and opportunities, and recommending a plan of action to improve the
company‟s marketing performance.”
Key characteristics of marketing audit have been discussed below:
i. Comprehensive:
The marketing audit covers all the major marketing activities of a business unit.
ii. Systematic:
It is a systematic examination of all marketing operations. It is a well-planned and orderly task. All
aspects are audited minutely. It indicates corrective actions to improve firm‟s marketing performance.
iii. Independent:
Marketing audit is conducted objectively (bias-free) or neutrally. It includes self-audit, internal, or
external audit. However, the external audit is considered as the best one.
iv. Periodical:
The marketing audit should be conducted regularly to detect problems and avoid crisis.
v. Purposive:
Its purpose is to find out marketing problem areas and opportunities. It recommends actions to improve
company‟s marketing performance.
Key Issues or Decisions of Marketing Audit:
A detailed plan is prepared to conduct marketing audit.
The main decisions/issues of marketing audit include:
i. Deciding on marketing audit objectives (why).
ii. Deciding on marketing audit responsibility (who).
iii. Deciding on data to be collected (what).
iv. Deciding on respondents (whom).
v. Deciding on time (when and how long).
vi. Deciding on areas of marketing audit (Where).
vii. Deciding on intensity of examination (How much).
viii. Deciding on methods and tools (how)
ix. Deciding on audit report format
x. Deciding on actions to be taken on the basis of report.
Components of Marketing Audit:
The marketing audit examines six major components of company’s marketing operations, such
as:
a. Marketing Environment Audit:
It examines impacts of micro and macro factors of marketing environment. Macro marketing
environment consists of demographic, economic, environmental (ecological), technological, political
and cultural factors. Micro marketing environment includes market segments, customers, competitors,
dealers, suppliers, facilitators, and general public‟s.
b. Marketing Strategy Audit:
It examines company‟s business mission, marketing goals and objectives, resources capacity, and
marketing strategies.
c. Marketing Organisation Audit:
It examines suitability of marketing organisation (structures) to implement marketing operations
effectively. It includes level, relations, authority- responsibility, communication, facilities, organisation
manual, etc.
d. Marketing System Audit:
It examines major systems like marketing information and research system, marketing planning system,
marketing control system, new product development system, etc.
e. Marketing Productivity Audit:
It examines company‟s profitability for different products, territories, and channels. It also examines
cost-effectiveness for various operations.
f. Marketing Function Audit:
It examines marketing mix elements such as product, price, promotion (advertising, sales promotion,
personal selling-sales force, publicity, and public relations), and distribution. For each of the
components, appropriate auditing questions are designed to examine how effectively the company is
performing. All relevant respondents like customers, suppliers, managers, dealers, etc., are interviewed
using these questions.
Finally, the auditor prepares marketing audit report. The audit report contains individual and joint
evaluation of main audit components (marketing areas). It detects strengths and weakness, and
recommends actions for improving marketing performance.
3. The Marketing Excellence Review:
This is more or less similar to market effectiveness review. But, here, some excellently performing
business units are taken as the base for evaluating firm‟s performance. Here, performance is reviewed
relatively.
The marketing excellence review is used to judge how excellently the company is performing with
reference to high performing business units. A special instrument with adequate number of criteria and
appropriate scaling can be developed to judge poor, good or excellent performance.
Criteria used for the purpose include:
a. Market/customer orientation
b. Market segmentation
c. Product quality
d. Quality of services
e. Approach toward competition
f. Integration and alliance
g. Approach toward dealers
h. Dealing with other stakeholders
i. Social responsibility and national services, etc.
Depending on result of the marketing excellent review, necessary actions are taken. Company‟s actions
mainly include undertaking all possible steps to reach the level of excellently performing business units.
4. The Ethical and Social Responsibility Review:
This review/verification decides whether firm‟s marketing policies and practices are ethically and
socially true. Ethics are moral principles, norms, or standards of right or wrong. Every business unit has
social responsibilities toward a number of stakeholders.
In same way, marketing practices should be ethical with reference to moral norms, standards, and
values. Company‟s products, policies, and practices should not have adverse impact on customers, other
stakeholders, and larger interest of society. Thus, here company tries to assess its ethical and social
responsibility. As per need, necessary actions are taken.
Criteria used to review social and ethical responsibility include:
a. Clear definitions of illegal, immoral, and antisocial activities.
b. Company‟s active efforts to practice, promote, and disseminate moral principles and to hold its
employees fully responsible to observe them in practice.
c. Company‟s direct contribution for social welfare of people.
d. Fulfilment of social responsibility toward various parties.
e. The adherence to all laws and regulations in force.
f. Use of business ethics in areas of product, price, promotion and distribution.
On the basis of ethical and social review, company can evaluate its performance in this regard and, if
necessary, appropriate actions are taken.
Consumer Forum

The consumer movement in India has led to the formation of various organisations which are
locally called consumer forums or consumer protection councils. They guide consumers on how to
file a case in the consumer court. They also represent an individual consumer in the consumer
courts. These organisations also help spread awareness among people and receive financial aid
from the government for doing so.
'Consumer Protection Councils' help the consumers in the following ways:
These councils guide the consumers on the method of filing cases in the consumer court.
They also create awareness among the people regarding their rights as consumers.
They also get aid from the Government for the same purpose.
Following are the consumer protection councils -
(1) Consumer Education And Research Center (Gujarat)- CERC is a recognised consumer
organisation by the Government of India and Government of Gujarat. It is dedicated to the cause of
consumer protection, environment protection, investor protection and public health and safety issue.
(2) Bureau Of Indian Standards- BIS is the National Standard Body of India established under
the BIS Act 2016 for the harmonious development of the activities of standardization. The Product
Certification Schemes of BIS aims at providing Third Party assurance of quality, safety and reliability of
products to the customer.
(3) Federation Of Consumer Organisation In Tamil Nadu-Cuddalore District Consumer Protection
Organisation is a not-for-profit organisation based in Tamil Nadu which aims to protect the interests of
consumers through campaigning, to educate consumers on their rights to legal redressal and to hold
workshops and training for consumer activists.
(4) Mumbai Grahak Panchayat-Mumbai Grahak Panchayat (MGP) is perhaps the largest voluntary
consumer organisation in India with a membership of 24,500 families. It has been engaged in activities
of consumer protection and education for the last 33 years. Its unique collective group buying system
provides a best practice model for sustainable consumption
(5) Consumer Voice (New Delhi)-VOICE is an acronym for Voluntary Organisation in Interest of
Consumer Education which has pioneered the protection of consumers in India. Based in New Delhi, the
organisation has championed consumer education in the country since 1983.
(6) Legal Aid Society (Kolkata)- Legal Aid Services, West Bengal (LASWEB), one of the pioneering
legal aid offering civil society organizations in India, empowers the poor and the disadvantaged with
varied legal entitlements. Functioning since 1980 as an organic collective of retired judges, practising
lawyers and social activists.
(7) Akhil Bhartiya Grahak Panchayat-The Pioneer of Indian Consumer Movement, Grahakteerth
Hon. Shri Bindumadhav Joshi is the founder of this organization. Inspired by him, Dr. Vijay Lad
registered this organization. Grahaktirth Hon. Bindumadhav Joshi is the founder president of Akhil
Bhartiya Grahak Panchyat, Freedom Fighter and Ex Minister.
(8) The Consumers Eye India.-The Consumer Guidance Society of India (CGSI) is a Non-Profit
consumer organization established in India in 1966 to protect and educate the Indian consumer about
sub-standard products and services, adulterated foods, short weights and measures, spurious and
hazardous drugs, exorbitant prices, endemic shortages leading to black marketing and profiteering,
unfulfilled manufacture guarantees, and a host of other problems
(9)United India Consumer's Association- Consumers Association of India (CAI) is a membership-
based organisation with 8,000 registered members all over India. Its main objectives are: spreading
consumer awareness; empowering consumers and teaching them their responsibilities and rights as
consumers. CAI regularly conducts seminars, workshops and training programmes and publishes
various consumer guides on a variety of topics, which are of interest to consumers.

Consumer Rights:
Right to Safety
Means right to be protected against the marketing of goods and services, which are hazardous to life and
property. The purchased goods and services availed of should not only meet their immediate needs, but
also fulfil long term interests.
Before purchasing, consumers should insist on the quality of the products as well as on the guarantee of
the products and services. They should preferably purchase quality marked products such as
ISI,AGMARK, etc

Right to be Informed
Means right to be informed about the quality, quantity, potency, purity, standard and price of goods so
as to protect the consumer against unfair trade practices.
Consumer should insist on getting all the information about the product or service before making a
choice or a decision. This will enable him to act wisely and responsibly and also enable him to desist
from falling prey to high pressure selling techniques.

Right to Choose
Means right to be assured, wherever possible of access to variety of goods and services at competitive
price. In case of monopolies, it means right to be assured of satisfactory quality and service at a fair
price. It also includes right to basic goods and services. This is because unrestricted right of the minority
to choose can mean a denial for the majority of its fair share. This right can be better exercised in a
competitive market where a variety of goods are available at competitive prices

Right to be Heard
Means that consumer's interests will receive due consideration at appropriate forums. It also includes
right to be represented in various forums formed to consider the consumer's welfare.
The Consumers should form non-political and non-commercial consumer organizations which can be
given representation in various committees formed by the Government and other bodies in matters
relating to consumers.

Right to Seek redressal

Means right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers. It
also includes right to fair settlement of the genuine grievances of the consumer.
Consumers must make complaint for their genuine [Link] a times their complaint may be of
small value but its impact on the society as a whole may be very large. They can also take the help of
consumer organisations in seeking redressal of their grievances.

Right to Consumer Education

Means the right to acquire the knowledge and skill to be an informed consumer throughout
[Link] of consumers, particularly of rural consumers, is mainly responsible for their exploitation.
They should know their rights and must exercise them. Only then real consumer protection can be
achieved with success.