MarketingManagement.pdf

markets. They must analyze where their market is going and what new products their

company should offer to this market. 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 activ-

ity is organized to meet the needs of distinct customer groups rather than focused on

marketing functions, regions, or products per se.

Many companies are reorganizing along market lines and becoming market-

centered organizations.Xerox has converted from geographic selling to selling by in-

dustry, as has IBM, which recently reorganized its 235,000 employees into 14 cus-

tomer-focused divisions. Hewlett-Packard has set up a structure in which salespeople

concentrate on businesses within individual industries.

Several studies have confirmed the value of market-centered organization. Slater

and Narver created a measure of market orientation and then analyzed its effect on

business profitability. They found a substantial positive effect of market orientation

on both commodity and noncommodity businesses.^10

Product-Management/Market-Management Organization

Companies that produce many products flowing into many markets tend to adopt a

matrix organization. Consider DuPont.

■ DuPont DuPont was a pioneer in developing the matrix structure (Figure

6-10). Its textile fibers department consists of separate product managers for

rayon, acetate, nylon, orlon, and dacron; and separate market managers for

menswear, women’s wear, home furnishings, and industrial markets. The

product managers plan the sales and profits of their respective fibers. Their

aim is to expand the use of their fiber. They ask market managers to estimate

how much of their fiber they can sell in each market at a proposed price. The

market managers, however, are more interested in meeting their market’s

needs than pushing a particular fiber. In preparing their market plans, they

ask each product manager about the fiber’s planned prices and availabilities.

The final sales forecasts of the market managers and the product managers

should add to the same grand total.

Companies like DuPont can go one step further and view their market managers

as the main marketers, and their product managers as suppliers. The menswear mar-

ket 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 sys-

tem would force DuPont product managers to become more efficient. If a DuPont

product manager cannot match the “arm’s length pricing” levels of competitive sup-

pliers, then perhaps DuPont should not continue to produce that fiber.

A matrix organization would seem desirable in a multiproduct, multimarket com-

pany. The rub is that this system is costly and often creates conflicts. There is the cost

part five

Managing and

Delivering Marketing

(^688) Programs
Rayon
Acetate
Nylon
Orlon
Dacron
Product
Managers
Market Managers
Men's wear Women's wear
Home
furnishings
Industrial
markets
FIGURE 6-10
Product-/Market-Management
Matrix System