Marketing Organisation (RLE Marketing)

Nigel Piercy

• Publisher: Taylor & Francis
• Year: 2014
• Print ISBN: 9781138791510
• eBook ISBN: 9781317642695
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Aimed primarily at the MBA student or those preparing for professional qualifications in the marketing field, this book analyses the process of decision making in marketing and the role of organisation. It examines:

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• The study of the organisational location and positioning of the marketing function

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• The analytical perspectives of information-processing theories of organisation

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• The relationship between structure and information

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• Organisational processes

PART I

The Organisational Dimensions of Marketing

1

Marketing and Organisational Structure

Introduction

Perhaps the major justification for undertaking this examination of the organisation of marketing is simply that the topic has received such sparse and rudimentary treatment in the received literature, and that what analysis exists is far from being recent.

In support of the first point it has been noted that this may reflect the difficulties of analysis:

It is probably because of the difficulty of delineating any really standardised marketing structure that one finds the dearth of literature on this subject, beyond the comparatively short sections which most authors give to the four generalised approaches.… We found some shortage of material on the problems of decentralisation in marketing, and the same deficiency occurs with information on delegation of authority in the marketing organisation beyond the usual platitudes. (Hayhurst and Wills, 1972)

In fact, it will be claimed later that most marketing analysis in the area of organisation has reflected the classical administrative organisational theories, with their concern for the mechanics of formal structure – the span of control, the delegation of authority and responsibility, and the definition of hierarchical levels. Indeed, the point has recently been made by other writers that:

The marketing literature has essentially ignored the study of group behavior, especially the underlying organizational interactions. Yet the necessity and importance of filling this gap is self-evident. (Nonaka and Nicosia, 1979)

The goal in this work is to make some progress beyond that level of analysis, by applying to the marketing organisation the analytical framework provided by certain of the newer contributions to organisation theory.

In addition to this argument, it is also true that the treatments of marketing organisation that do exist are relatively dated. The last major empirical works were published in 1972 (Hayhurst and Wills) in the UK, and in 1971 (Corey and Star) in the USA. There have been some smaller studies of issues like product management, and one or two sporadic attempts to introduce some integrating concepts to the relationships between marketing structures and the environment (Tookey, 1974; Nonaka and Nicosia, 1979; Weitz and Anderson, 1981), but more general treatments are lacking.

This is all the more surprising given the rapidity of environmental change facing marketing during the 1970s and 1980s, and the attacks made on the corporate role of marketing. For example, one leading analyst has concluded of the received view of the marketing organisation that:

Marketing textbooks have not caught up to how the changing corporate superstructures have affected the organisation of marketing. The new structures have diffused marketing decisions and curtailed the autonomy of marketing management … the new divisional and multilateral structures move integration outside the marketing function and give strategy to division and programme general management. (Doyle, 1979)

Other attacks are far more virulent than Doyle’s. There has, for example, been some attention directed to the idea of abandoning the ‘bankrupt’ marketing concept (Bell and Emory, 1971) and all that it implies for organising marketing activities, on the grounds that:

In the early 1950s, the marketing concept emerged and became enthusiastically acclaimed as an article of faith…. Yet it has not worked. Nor can it … the marketing concept should be either deliberately discarded or left to crumble under the weight of its own irrelevancies. (Sachs and Benson, 1980)

The organisational implications of such views have been highlighted by Haller, who suggested that ‘Marketing as we know it will disappear sometime in the 1980s. It has not kept pace with developments in other parts of the business world’ (Haller, 1980b). Haller’s conclusion was that strategic planning structures will replace the marketing department, since he claimed that: ‘The marketing concept is dead. Strategic management is the only hope’ (Haller, 1980a). However, at the same time others have referred to ‘the malaise of strategic planning’ with equal pessimism (Hunsicker, 1980).

In fact, there is some danger of taking too general, not to say too pessimistic, a view, since, for example, such disillusionment was not reflected in a recent survey of UK business school academics (Doyle and Saunders, 1980). Buell (1982) has recently described strategic planning as ‘setting the stage for marketing in large American companies’, but even the 1972 UK research (Hayhurst and Wills, 1972) made much of the ‘corporate planning backlash’ reasserting the role of general management in the face of the growing diffusion of the marketing concept. Accepting that this diffusion is itself somewhat problematic as an issue for analysis, there remains, perhaps, the need for some scepticism about the validity of the wilder and more extreme prognoses in the popular literature of marketing.

Intrinsically more interesting are suggestions that corporate marketing may be faced with a process of disintegration in response to changing needs. It has been suggested that this may involve the routinisation of short-term operational marketing activities and their separation from strategic planning tasks (Campbell and Kennedy, 1971), possibly by linking marketing development functions with technical research and development (Wills, 1974). More recently, it has been proposed that marketing might effectively divide into line sales and distribution management structures, where marketing planning moves to a staff role in the area of corporate planning (Wills, 1980a). Indeed, recent observations have suggested that there are already cases where the marketing director has been replaced by the commercial director, responsible for a wide range of non-production activities, and that the development of trade marketing departments – to deal with key distributors – within the sales organisation is changing the real role and status of the conventional marketing department (Wills and Kennedy, 1982).

Whatever conclusion is eventually reached about the changing corporate role of marketing and the development of new structural forms, there would seem justification for re-examining the marketing organisation in this present analysis on the grounds of the rapidity of change of surrounding variables. It is only very recently for instance that marketing writers have begun to recognise the problems created by the existence of many mature and declining markets in corporate portfolios, and the consequent need for different marketing approaches – which in turn have their own structural implications (Buell, 1982; Hooley et al., 1984).

However, to this argument of environmental change may be added the fact of the centrality of organisation to marketing activities, although accepting that this centrality may frequently be obscured and relatively unobtrusive. One recent study of marketing management in UK firms (Hooley et al., 1984), for example, has noted the views of managers suggesting that the harsh economic conditions of modern marketing environments have generated a recognised need for organisational flexibility, and that study linked organisational flexibility to marketing orientation.

By way of concluding this brief introduction, perhaps reference may be made to Figure 1.1. This illustration is drawn from an earlier work (Piercy and Evans, 1983), which is very much the counterpart to what is attempted in this book, and could well be read in conjunction with it. Piercy and Evans (1983) argued essentially that a useful analysis of the marketing information function is inseparable from organisational issues, in the sense that structures define dimensions like the capacity for information handling, the channels of communication and, in a rather more unobtrusive way, the barriers to information flows and to information systems development. In the latter context, marketing information has been placed in the setting of the ‘corporate environment for marketing’ (Piercy, 1983c) or the ‘corporate battleground’ (Piercy, 1984f), analysed in terms of organisational power and political behaviour. Figure 1.1 demonstrates this argument in terms of organisation structure standing between the decision maker and the environment, being linked to the strategies developed to relate to the environment and shaping corporate understanding of that environment.

Figure 1.1 Strategy, structure and information

Source: Piercy and Evans (1983).

Having developed in that earlier work the informational aspects of marketing, it is now timely to examine in more depth the related but explicitly organisational aspects. However, it should be noted that this volume does not stand alone but forms part of a trilogy. As suggested, the first book (Piercy and Evans, 1983) adopted an organisational perspective on marketing information systems, while this present work takes an information-processing view of marketing organisation and both are led from their analyses to an emphasis on the pervasive impact of power and politics. The final book in the trilogy (Piercy, 1985) applies and empirically tests the conceptual framework established in one major area of marketing decision making: resource allocation and budgeting.

Organisation in marketing

Various points explicate the organisational dimensions of marketing.

STRATEGY AND STRUCTURE

The most familiar representation of the strategy and structure debate is that developed by Chandler (1962), whose study of large US corporations’ development was based on the principle that: ‘structure follows strategy and that the most complex type of structure is the result of the concatenation of several basic strategies’ (Chandler, 1962).

The core of Chandler’s argument was: first, that the organisational structure of a company results from its growth strategy; secondly, that there is a systematic sequence of structural changes to cope with the demands of strategy; and thirdly, that structural change is stimulated by the pressures of the inefficiencies created by strategic change. In Chandler’s model, new strategies create administrative burdens, causing a decline in economic performance, which in turn stimulates the invention of a new, more appropriate structure to improve performance.

Chandler’s conclusion in studying pioneering US firms, which is of particular relevance to this present work, was:

The comparison emphasizes that a company’s strategy in time determined its structure and that the common denominator of structure and strategy has been the application of the enterprise’s resources to market demand. Structure has been the design for integrating the enterprise’s existing resources to current demand; strategy has been the plan for the allocation of resources to anticipated demand. (Chandler, 1962)

Chandler’s model has received empirical support to a greater or lesser extent internationally (Stopford and Wells, 1972), in Europe (Franko, 1974) and in the UK (Mansfield et al., 1978).

However, of some interest is an alternative finding that, although strategy is a determinant of structure, it may be that structure should itself be seen as a determinant of the strategies adopted. For instance, it will be argued later that because structure influences the perception of information about the environment, and because structure lies at the heart of organisational power and political strength, then there is a prima facie case that structure determines strategy.

Empirical work by Corey and Star (1971) arrived at the conclusion that:

Chandler has developed the theme that structure follows strategy, that when strategy changes, the organizational structure adjusts to accommodate to new directions. It must be recognized, as well, that the direction of strategy is certainly a function, in part, of the kind of organization which produces it and the balance of power within the structure. Today’s organization is an important influence molding tomorrow’s strategy which in turn shapes tomorrow’s organization. (Corey and Star, 1971)

Certainly, it has been suggested that the successful implementation of marketing strategies relies in part – and possibly in large part – on structure:

Many marketing plans fail because the planner did not consider the fact that the organization was not capable of implementing the plan. Short-range plans will require adaptation to the existing organization, whereas long-range plans may require redesigning the Organization…. The long-range planner must recognize that the organizational strategies may be the most critical part of the plan. (Hughes, 1980)

However, Hughes’ view also suggests a more complex interaction between strategy and structure.

It may be that one way of reconciling the conflict between the views advanced is simply to recognise interdependence of strategy and structure. It may also be hypothesised, however, that the alternative models are to some extent sequential. This view has some precedent:

The logical flow that ‘structure follows strategy’ is correct but incomplete. The relation is more properly stated as a strategy/structure sequence, i.e. strategy, structure, strategy. (Baligh and Burton, 1979)

While the more general relationship would seem to be that structure follows the requirements imposed by the strategy of the firm, structural change is delayed by environmental conditions (Franko, 1974) and the need for some trauma or impetus to stimulate organisational change (Chandler, 1962). In such cases, it may be that the period between major structural upheavals is characterised by structural determination of strategic actions.

However, for present purposes it may be seen that one argument for the centrality of organisation in marketing is that structure is interdependent with strategy.

STRATEGY AS STRUCTURE

Levitt (1980) has recently argued that marketing success depends primarily upon competitive differentiation, and that this differentiation may be ‘of anything’, including the structure of the marketing organisation. He argued:

The way a company manages its marketing can become the most powerful form of differentiation. Indeed, that may be how some companies in the same industry differ most from one another. (Levitt, 1980)

The case made was that organising the company, and marketing in particular, around products or markets, rather than functional tasks, provides a focus for attention, res...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• Preface
• Dedication
• Part I The Organisational Dimensions of Marketing
• Part II Marketing in the Organisation
• Part III Marketing Structures
• Part IV Organisational Design for Marketing
• Bibliography
• Index