Market management organization and other relevant types

Many companies sell their products to different markets. Canon sells its fax machines to consumer, business and government markets. US Steel sells to the railroad, construction, and public utility industries. When customers fall into different user groups with distinct buying preferences and practices, a market management organization is desirable. A market manger supervises several market managers also called market development managers, market specialists or industry specialists. The market managers draw on functional services as needed. Market managers of important markets might even have functional specialists reporting to them.

Market managers are staff (not line) people, with duties similar to those of product managers. Market managers develop long range and annual plans for their markets. Their performance is judged by their market’s growth and profitability. This system carries many of the same advantages and disadvantages of product management systems. Its strongest advantage is that the marketing activity is organized to meet the needs of distinct customer groups rather than being focused on marketing functions, regions, or products. Many companies are reorganizing along market lines and becoming market centered organization. Xerox has converted from geographic selling to selling by industry, as have IBM and Hewlett-Packard.

In a customer management organization, companies can organize themselves to understand and deal with individual customers rather than with the mass market or even market segments.

Matrix management organization: Companies that produce many products flowing into many markets may adopt a matrix organization. DuPont was a pioneer in development the matrix structure.

Before being spun off, DuPont’s textile fibers department consisted of separate product managers for rayon, acetate, nylon, orlon and Dacron; and separate market managers for men wear, women’s wear, home furnishings and industrial markets. The product managers planned the sales and profits for their respective fibers. They asked market managers to estimate how much of their fiber they could sell in each market at a proposed price Market managers, however, were generally more interested in meeting their market’s needs than pushing a particular fiber. In preparing their market plans, they asked each product manager about the fiber’s planned prices availabilities. The final sales forecast of the market managers and the product managers should have added up to the same grand total.

Companies like DuPont can go one step further and view the market managers as the main marketers, and their product managers as supplier. The men wear market manager, for example, would be empowered to buy textile fibers from DuPont’s product managers or, if DuPont’s price is too high, from outside suppliers. This system would force DuPont product managers to become more efficient. If a DuPont product manager could not match the arm-length pricing levels of competitive suppliers, then perhaps DuPont should not continue to produce that fiber.

A matrix organization would seem desirable in a multi-product, multi-market company. The problem is that this system is costly and often creates conflicts. There is the cost of supporting all the managers. There are also questions about where authority and responsibility should reside.

Matrix management gained advocates because companies provide the context in which a matrix can thrive – flat, lean organizations focused around business processes that cut horizontally across functions.

Corporate divisional organization: As multi-product multi-market companies grow, they often convert their larger product or market groups into separate divisions. The divisions set up their own departments and services. This raises the question of what marketing services and activities should be retained at company headquarters. Divisional zed companies have reached different answers to these questions.

No Corporate Marketing: Some companies lack a corporate marketing staff. They do not see any useful function for marketing at the corporate level. Each division has its own marketing department.

Moderate Corporate Marketing: Some companies have a small corporate marketing staff that performs a few functions, primarily (1) assisting top management with overall opportunity evaluation, (2) providing division with consulting assistance on request, (3) helping divisions that have little or no marketing and (4) promoting the marketing concept through out the company.