Marketing organizational structure and design are critical to optimizing performance.
The marketing organizational structure and design involve modern marketing departments that are organized in a number of ways.
Organization charts vary from company to company. The marketing organizational structure matrix varies but some just fit better.
You were just hired as a CMO or marketing leader of a marketing department. The marketing department’s organizational structure depends on many things.
We will explore various marketing department’s organizational types and marketing organizational best practices.
Your sales and marketing organization structure must complement each other and be aligned to maximize opportunities and effectiveness.
What is the marketing organizational structure and design definition?
Organizational structure is the hierarchical organizational arrangement of lines of authority, communications, rights, and duties of an organization.
Marketing organizational structure determines how the roles and responsibilities are assigned, coordinated, and how information flows between the different levels of management.
The organizational structure matrix and organizational structure types vary too.
All marketing organizations must accommodate four dimensions of marketing activity: functions, products, customer markets, or a hybrid organizational design.
For example, if the centralized marketing organization is in the United States and your markets are global and non-homogenous. Without some level of decentralization, you are set up to fail. I suggest a hybrid model is the best approach.
When I was an international vice president of marketing, an argument could be made for a centralized marketing organizational structure.
However, like most international businesses, a centralized marketing organization structure has flaws. I used a hybrid organizational structure.
I’ll be discussing the different models and organizational structures by function in this post.
It is up to you to choose the right marketing organizational design for your business and situation.
An effective marketing organizational structure supports:
- Your strategy
- Team members
- Information flow
- Desired behavior expected by senior executives
These are the questions and an effective organization wants without unnecessarily complex org charts.
So let’s get started.
Functional specialization is an approach to deliver marketing activities that provide services like advertising, website design, content marketing, and SEO. The functional design may be less appropriate when trying to focus on activities on target markets, products, and field sales operations.
Market targets and product scope also influence organizational design. When two or more target markets exist, companies often depart from functional organizational design.
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Likewise, the distribution channels used and sales force considerations may influence the organizational structure adopted by a company.
Geographic factors often influence organizational design because of the need to make the field management structure correspond to the sales force.
Companies with multiple business activities may have corporate marketing organizations as well as business unit marketing departments.
Corporate involvement ranges from a coordinating role to a corporate staff with an influence on business unit field marketing operations. Next, the CMO and staff may participate in strategic planning for the enterprise in the SBU.
The major types of organizational design are based on:
- Combination or matrix considerations
I will discuss these in the post, followed by a discussion of corporate marketing organizations.
Functional Organizational Design
Functional design assigns departments, groups, or individual responsibilities for specific activities. these activities include SEO, content marketing, pricing, marketing research, website design, and marketing planning and services.
Depending on the size and scope of its operations, the marketing organization may include some or all these activities. The functional approach is often used when a single product or a closely related line is marketed to one target market.
For example, Snap-on tools market hand tools to professional mechanics through independent dealers and vans.
Departures from a functional organizational structure may occur under one or more of the following conditions:
- The business unit serves multiple target markets. Where the needs and requirements of the end-user in the target market are different and marketing activities must vary.
- The line or mix of products requires technical expertise due to product complexity, type of application, and other factors.
- Special marketing situations occur. Things like planning for implementing a new product, entering a new market, and developing a distribution channel.
Marketing organizational approaches address these factors, recognizing that in nearly every marketing organization, functional considerations influence the design to some degree.
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Product Organization Design
The product mix may require special attention to the company’s organizational design. New products may not receive the attention they need unless someone is assigned the responsibility for planning and coordination.
This problem may occur with existing products when a business has several products and each involves technical an/or application differences.
Organizational schemes for managing products can be categorized according to whether they are temporary or permanent. Also, whether the people involved are assigned full-time or part-time.
Several organizational approaches to product management are shown in Exhibit 1.
The choice of a product-related organization approach depends on the situation and on marketing management preferences. Factors that often influence a decision are the nature and scope of products offered.
- The amount of new product development
- The extent of coordination necessary among functional areas
- The management of technical problems previously encountered with
- new products and existing products
The functional organizational structure may use a temporary task force to manage and coordinate the development of a new product. Soon after commercial introduction, the company shifts responsibilities for the product to the functional organization. The task force’s purpose is to set the initial direction for a new product so that it will be properly launched.
Market Organization Design
When a company serves more than one target market, customer considerations become important in the design of the marketing organization. The situation often affects the structuring of the field sales organization.
Some firms appoint market managers and deploy a field sales force that is specialized by type of customer. The market manager operates much like a product manager, with responsibility for market planning, research, advertising, and sales force coordination.
Market-oriented field organizations may be deployed according to:
- Customer size
- Type of product application or use case
- Various other ways to achieve specialization according to user groups
Conditions that suggest a market-oriented design are:
- Multiple target markets being served within a strategic business unit
- Large differences and needs between and users in a given target market
- Each customer or prospect purchases the product in large volume or dollar amounts
Choosing the best design may not always be a clear-cut decision. Since many designs are influenced by a combination of functional, product, and market factors.
Organizational Design: Combination or Matrix Design
The matrix organization, in which the design emphasizes two different factors, such as products and marketing functions. This can be seen in Exhibit 2.
Field sales coverage is determined by geography, whereas the product is accomplished by using product managers. Product managers coordinate other marketing functions for their products, such as advertising, content marketing, and market research.
Other matrix designs are possible. For example, within the sales regions shown in Exhibit 2, salespeople may be organized by product type or customer group. Also, some of the marketing functions may be broken down by product category.
Combination approaches are effective and responding to different influences affecting the organization. The major difficulty with these designs is establishing a line of responsibility and authority. They often create overlaps and responsibilities and gaps in authority.
Product manager frequently complains that they lack control overall marketing functions even though they are held accountable for the results. However, Matrix approaches are popular, so they are operational advantages do exceed their limitations.
Organizing Corporate Marketing
The marketing organization is influenced by how the business is organized. Marketing may influence the corporate and business unit’s organizational structure.
You will need to determine, for your company, if any of the marketing should be centralized or decentralized.
Marketing the Corporate Role
Marketing’s corporate role varies among companies. Companies with two of them are operating units that must decide whether a corporate marketing function should be established. if so, what its role in scope should be.
In my experience, there are three possible roles in corporate marketing:
- Performing services for the company and/or its operating units
- Controlling or monitoring the performance of operating unit marketing activities
- Providing advisory or consulting service to corporate management and/or operating units
Services may include media purchases, marketing research, content marketing, SEO, website design, and other supporting activities. Control may cover pricing policies, new product planning, sales force compensation, and other monitoring control actions.
Advisory or consulting services provide professional marketing expertise such as market segmentation analysis, new product planning, positioning strategy, and marketing strategy.
With the trend towards decentralized management, businesses are moving marketing functions away from the corporate level to the business unit level. Decentralized marketing activities are more likely to occur:
- When management is moving the company toward diversification in two areas having little or no relationship to its present line businesses.
- When a new growth market adds to organizational complexity into a further proliferation of the company’s operating components.
- When the chief executive officer makes no attempt to integrate newly-acquired businesses into the company’s existing corporate structure.
- When senior management tends to focus on financial results and asset management.
- When areas other than marketing are the principal source of company strength, efficiency, and momentum.
- When senior management strongly prefers decentralizing as much responsibility as possible to the company’s operating units.
- When a company has to cut corporate staff to reduce costs.
Therefore, the corporate role of marketing is influenced by top management and the complexity of business operations. Marketing strategy development typically focuses on the business unit and product market levels. A single marketing strategy for a portfolio business unit is usually inappropriate.
Decentralized marketing should not be resolved by the elimination of the skills at the corporate level. The market-driven nature of corporate strategy requires the active participation of strategic marketing experts.
Wrap Up on Organizational Structure
Marketing organization options include functional, product, market, and combination designs. Increasingly, market considerations are driving organization design.
There are many ways organizational structure for marketing can be arranged. A B2B marketing organizational structure will be different than a B2C marketing organizational structure.
Which organizational structure is the most widely used?
The role and scope of corporate marketing are changing in many companies with multi-business operations. The importance of corporate marketing is declining in many firms, with marketing strategy emphasis instead focused at the SBU level.
Most companies use a hybrid approach to organizational design and functional responsibilities.
Tell me, how did you develop your organizational design for your marketing department? Your sales and marketing organizational structure need to be aligned with your various customer’s buying processes. A multi-channel approach is much different than an omnichannel approach and takes a different structure.
This Denver digital marketing agency organizational structure is center around design thinking and agile management processes to deliver what the customers want, not what we have.
General FAQs on Organizational Structure
What is marketing organizational design?
The leader of the marketing will need to determine the resources requires to carry out the marketing plan to reach specific goals. Marketing organizational design requires an understanding of mapping tasks to talent.
What type of marketing talent do I need for my marketing organizational structure?
Before you write, your first job description, be sure you know what resources you need. Can they be outsourced to a digital marketing agency? You and your team, under agile marketing processes, need the knowledge necessary to prioritize activities and allocate resources effectively.
Will a practical marketing organizational structure help grow my business?
Yes, if done right. Your marketing strategy, team members, information flow, and desired behavior expected by senior executives.
What is the most common type of organizational structure?
Functional organizational structures are the most common. An organizational structure of this type groups individuals by specific functions performed. Departments such as human resources, accounting, sales, marketing, and purchasing are organized by separating each of these areas and managing them independently of the others.