Choosing the right organizational structure types will boost profits.

The choice of organizational structure types involves finding a good structure and environmental match. The match is influenced by the complexity of the environment, the unpredictability, and the interconnectedness of the environment.

The functional organizational structure types also involve selecting the best organizational form to boost profits. This is based on structural characteristics, reporting relationships, and outside factors.

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The key role of the sales force in many organizations makes it a central part of the marketing organization design. Marketing interaction with the other functional units is also an important factor in organizational design and marketing department.

Working with hundreds of companies, I found that there are five dimensions of marketing that need to be accounted for. These include:

  • Customer market segments
  • Products
  • Distribution channels
  • Communication channels
  • Geography

Which ones will have primarily program management responsibilities and budget accountability? Which ones will be supported by the leadership team? And how will their efforts be integrated and aligned?

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The design of the marketing structure is influenced by market and environmental factors. The characteristics of the organization and the marketing strategy use.

Organizational Structures

Sound organizational structure types have several characteristics:

  • The design should correspond to the strategic marketing plan. For example, if the plan is structured around markets or products and services, then the marketing structure should reflect the same emphasis.
  • The coordination of tasks and activities are essential to your implementation of plans. Both within the marketing function and with other company and business unit functions. The more specialized marketing functions become, the more likely coordination and communications will be hampered.
  • Specialization of marketing activities leads to greater efficiency and performing the functions. For example, product or application specialization in a field sales force will enable salespeople to provide consultative assistance to customers.
  • The organization should be structured so that responsibility for the results will correspond to a manager’s influence on results. While this objective is often difficult to fully achieved, it should be a prime consideration and designing the marketing organization.
  • One of the real dangers in a highly structured and complex organization is a loss of flexibility.

Some of these characteristics conflict with others. For example, specialization is expensive if carried to the extremes.

The cost of having different sales reps on the same account must be weighed against the benefits obtained. This can cause confusion with the customer. Thus, the organizational design represents an assessment of priorities and balancing of conflicts.

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Structure Environment Match

Matching the organization design to its markets and competitive environment should contribute to organizational effectiveness. A framework for analyzing the structure environment match is shown in Exhibit 1.

marketing organizational structure types

It uses factors of the market and environmental complexity, interconnectedness, and predictability. This indicates organizational designs for each constituency.

Interconnectedness refers to the degree to which the organization, intermediaries, and markets function as an organized and integrated system. A predictable environment does not change rapidly. Marketing relationships with buyers are routinized, and the organization is in direct contact with the environment.

Decentralization offers many benefits for coping with a complex multi-product market environment. A decentralized marketing organization reduces the problems created both by a large organization and by environmental complexity.

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The management challenge is to coordinate and integrate the activities of the company. Organizational units (e.g., market, product)  that have independent marketing activities are appropriate for a decentralized organizational design.

Selecting an organization designed for each of the situations shown in Exhibit 1 represents a set of trade-offs. An important first step in choosing an organizational structure or modifying an existing design is identifying the situation.

This is a critical step. Exhibit 1 provides a useful framework for organizational analysis. When used in conjunction with management’s assessment of corporate culture, available staff, and cost-benefits. The framework should make the selection of an effective organizational design easier.

Type of Structure

Organizational Structures

How marketing activities are organized influences strategy implementation. Since implementation may involve the usage context that combines two of the structures, trade-offs are involved.

The organization structure adopted may hinder or facilitate the implementation of certain activities and tasks. For example, the bureaucratic form should help the implementation of repetitive activities such as inbound marketing leads and qualifying those leads.

Once management analyzes the tasks to be performed in the environment, it must determine its priorities. Are the objective performance and short-run run efficiency or adaptability and long-term effectiveness?

Activities in a different category should be structured differently whenever feasible. Some firms appear to be moving in this direction. Reduction in corporate staff, the shifting of more planning and decision-making authority, and product managers.

The increased use of ad hoc task force to deal with specific markets and problems. These indicate a shift toward more decentralized and flexible structures.

The corporate culture may also have an important influence on implementation. For example, the implementation of new strategies may be more difficult in highly structured, bureaucratic organizations.

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Organizing the Salesforce and Type of Structure

In many companies, the sales force represents a large portion of the people in the marketing organization. The sales department can be structured on its own with functional managers.

Because of this, organizing the sales force is often the central part of the marketing organization design. Designs that correspond to variations and product offerings and customer needs should be examined.

Organizing Multiple Sales Channels

Expanding the sales organization may include major account programs, telemarketing, and or email marketing programs. These require consideration as to how to organize.

The key issue is whether to establish separate organizational units or, instead, to combine two or more channels into one unit. For example, should the national account salespeople be placed into a separate organizational unit or assigned to field sales unit?

When sales channel activities are related independent of the field sales force, a separate channel organization is appropriate. This occurs when major account managers or sales development representative provide all contacts with assigned accounts.

An example is the assignment of low-volume accounts to sales development representative. The more likely situation is the customer is contacted by both field personnel and other channels. These multiple contacts require coordination between salespeople and marketing. The creation of independent sales channel organizations implicates the combination of selling activities.

It is imperative that marketing and sales remain on the same page. An essential requirement is a customer relationship management system which is often integrated with the marketing automation platform.  Examples of these systems are, Infusionsoft, HubSpot, Eloqua among others.

Coordinating Major Account Relationships

Coordinating key account relationships illustrate several multi-channel issues. The creation of a major account program requires the assignment of account responsibility to account manager. When the customer has several purchasing locations, coordination of selling and service activities is necessary.

Several alternatives are available including:

  • Assigning key accounts to top sales executives
  • Creating separate corporate divisions
  • Establishing a separate major account sales force

Factors that influence the choice types of organizational type include:

  • The number of major accounts served by the organization
  • The number of different geographical contact within an account
  • The organizational level of contact
  • Customer sales and service function to be performed.


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Marketing Interactions with Other Functional Units

Marketing professionals are often involved in coordinating the functional areas of the business. Examples include new product planning, distribution channel coordination, and pricing analysis.

Several primary guidelines regarding inter-functional interactions  include:

  • Effectiveness may be improved by developing organizational structures and processes to move resources faster across departments with strong resource dependencies
  • Promising coordination mechanisms are formalized operating rules and procedures and horizontal resolution of conflicts. However, resolving conflicts may decrease efficiency.
  • Communication between functions are enhanced by defining departmental tasks and objectives, and when formal operating rules and procedures are used.
  • There is mixed support that higher conflict occurs when higher levels of interaction or resource flows exist between marketing and other functional areas

It is been my experience and with these insights into marketing’s organizational relationships that allow the company to be successful.

As you develop your alternative organizational structure types you must consider functional capabilities and the environmental factors.

Wrap Up on Organizational Structure Types

Selecting the organizational structure types is an essential part of developing and implementing ineffective functional unit. Get it wrong and it can cost you a lot of conflict and money.

You will want to lead a high-performance team that will be accountable, agile, and aligned.

How did you develop your organizational structure types for your marketing department?

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General FAQ

What is the best organizational structure for a firm in this business?

Every company and every situation is different and it takes a thorough understanding of all factors involved to determine the best structure.

What do you mean by organizational structure?

Organizational structure determines how the roles, power, and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management.

Why do we need organizational structure?

The organizational structure guides all employees by laying out the official reporting relationships that govern the workflow of the company. A formal outline of a company’s structure makes it easier to add new positions in the company.

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