Year: 2020

A key part of any business plan is the market analysis. This section needs to demonstrate both your expertise in your particular market and the attractiveness of the market from a financial standpoint.

Market Analysis

A market analysis is a quantitative and qualitative assessment of a market. It looks into the size of the market both in volume and in value, the various customer segments and buying patterns, the competition, and the economic environment in terms of barriers to entry and regulation.

How to do a market analysis?

The objectives of the market analysis section of a business plan are to show to investors that:

• You know your market
• The market is large enough to build a sustainable business

In order to do that I recommend the following plan:

• Demographics and Segmentation
• Target Market
• Market Need
• Competition
• Barriers to Entry
• Regulation

The first step of the analysis consists in assessing the size of the market.

1. Demographics and Segmentation

When assessing the size of the market, your approach will depend on the type of business you are selling to investors. If your business plan is for a small shop or a restaurant then you need to take a local approach and try to assess the market around your shop. If you are writing a business plan for a restaurant chain then you need to assess the market a national level.

Depending on your market you might also want to slice it into different segments. This is especially relevant if you or your competitors focus only on certain segments.

(i) Volume & Value

There are two factors you need to look at when assessing the size of a market: the number of potential customers and the value of the market. It is very important to look at both numbers separately, let’s take an example to understand why.

(ii) Potential customer

The definition of a potential customer will depend on your type of business. For example if you are opening a small shop selling office furniture then your market will be all the companies within your delivery range. As in the example above it is likely that most companies would have only one person in charge of purchasing furniture hence you wouldn’t take the size of these businesses in consideration when assessing the number of potential customers. You would however factor it when assessing the value of the market.

(iii) Market value

Estimating the market value is often more difficult than assessing the number of potential customers. The first thing to do is to see if the figure is publicly available as either published by a consultancy firm or by a state body. It is very likely that you will find at least a number on a national level.

If not then you can either buy some market research or try to estimate it yourself.

Methods for building an estimate

There are 2 methods that can be used to build estimates: the bottom up approach or the top down approach.

The bottom up approach consist in building a global number starting with unitary values. In our case the number of potential clients multiplied by an average transaction value.

Let’s keep our office furniture example and try to estimate the value of the ‘desk’ segment. We would first factor in the size of the businesses in our delivery range in order to come up with the size of the desks park. Then we would try to estimate the renewal rate of the park to get the volume of annual transactions. Finally, we would apply an average price to the annual volume of transactions to get to the estimated market value.

Here is a summary of the steps including where to find the information:

• Size of desks park = number of businesses in delivery area x number of employees (you might want to refine this number based on the sector as not all employees have desks)
• Renewal rate = 1 / useful life of a desk
• Volume of transactions = size of desks park x renewal rate
• Value of 1 transaction = average price of a desk
• Market value = volume of transactions x value of 1 transaction

You should be able to find most of the information for free in this example. You can get the number and size of businesses in your delivery area from the national statistics. Your accountant should be able to give you the useful life of a desk (but you should know it since it is your market!). You can compare the desk prices of other furniture stores in your area. As a side note here: it is always a good idea to ask your competitors for market data (just don’t say you are going to compete with them).

That was the bottom up approach, now let’s look into the top down approach.

The top down approach consist in starting with a global number and reducing it pro-rata. In our case we would start with the value of UK office furniture market which AMA Research estimates to be around £650m and then do a pro-rata on this number using the number of businesses in our delivery area x their number of employees / total number of people employed in the UK. Once again the number of employees would only be a rough proxy given all business don’t have the same furniture requirements.

When coming up with an estimate yourself it is always a good practice to test both the bottom up and top down approaches and to compare the results. If the numbers are too far away then you probably missed something or used the wrong proxy.

Once you have estimated the market size you need to explain to your reader which segment(s) of the market you view as your target market.

2. Target Market

The target market is the type of customers you target within the market. For example if you are selling jewellery you can either be a generalist or decide to focus on the high end or the lower end of the market. This section is relevant when your market has clear segments with different drivers of demand. In my example of jewels, value for money would be one of the drivers of the lower end market whereas exclusivity and prestige would drive the high end.

Now it is time to focus on the more qualitative side of the market analysis by looking at what drives the demand.

3. Market Need

This section is very important as it is where you show your potential investor that you have an intimate knowledge of your market. You know why they buy!

Here you need to get into the details of the drivers of demand for your product or services. One way to look at what a driver is, is to look at takeaway coffee. One of the drivers for coffee is consistency. The coffee one buys in a chain is not necessarily better than the one from the independent coffee shop next door. But if you are not from the area then you don’t know what the independent coffee shop’s coffee is worth. Whereas you know that the coffee from the chain will taste just like in every other shop of this chain. Hence most people on the move buy coffee from chains rather than independent coffee shops.

From a tactical point of view, this section is also where you need to place your competitive edge without mentioning it explicitly. In the following sections of your business plan you are going to talk about your competition and their strengths, weaknesses and market positioning before reaching the Strategy section in which you’ll explain your own market positioning. What you want to do is prepare the reader to embrace your positioning and invest in your company.

To do so you need to highlight in this section some of the drivers that your competition has not been focussing on. A quick example for an independent coffee shop surrounded by coffee chains would be to say that on top of consistency, which is relevant for people on the move, another driver for coffee shop demand is the place itself as what coffee shops sell before most is a place for people to meet. You would then present your competition. And in the Strategy section explain that you will focus on locals looking for a place to meet rather than takeaway coffee and that your differentiating factor will be the authenticity and atmosphere of your local shop.

4. Competition

The aim of this section is to give a fair view of who you are competing against. You need to explain your competitors’ positioning and describe their strengths and weaknesses. You should write this part in parallel with the Competitive Edge part of the Strategy section.

The idea here is to analyse your competitors angle to the market in order to find a weakness that your company will be able to use in its own market positioning.

5. Barriers to Entry

This section is all about answering two questions from your investors:

• What prevents someone from opening a shop in front of yours and take 50% of your business?
• Having answered the previous question what makes you think you will be successful in trying to enter this market? (start-up only)

As you would have guess barriers to entry are great. Investors love them and there is one reason for this: it protects your business from new competition!

Here are a few examples of barriers to entry:

• Investment (project that require a substantial investment)
• Technology (sophisticated technology a website is not one, knowing how to process uranium is)
• Brand (the huge marketing costs required to get to a certain level of recognition)
• Regulation (licences and concessions in particular)
• Access to resources (exclusivity with suppliers, proprietary resources)
• Access to distribution channels (exclusivity with distributors, proprietary network)
• Location (a shop on Regent’s Street)

The answer to the questions above will be highly dependent on your type of business, your management team and any relations it might have. Therefore it is hard for me to give any general tips about it.

6. Regulation

If regulation is a barrier at entry in your sector then I would advise you to merge this section with the previous one. Otherwise this section should be just a tick the box exercise where you explain the main regulations applicable to your business and which steps you are going to take to remain compliant.

The characteristics of a multidisciplinary team are as follows:

• A multidisciplinary team consists of members that have individual skills and knowledge that can be used collectively for the welfare of a particular project.
• Its work is based on shared principals
• The members learn from their peers who are equipped with some extraordinary skills of their own
• Collaboration and co-creation are the mantras of a multidisciplinary team
• All the different skill, knowledge and know-how complement each member so that they can give their best in a given situation

The advantages of a multidisciplinary team are as follows:

• A multidisciplinary team gives several perspectives for a situation.
• Different backgrounds of the members help them to gain several opinions that can prove beneficial in problem-solving
• It enables all the members to have a thorough discussion as their viewpoints are different
• A multidisciplinary team is self-sufficient as the members have different talents to face every challenge
• Although working is a challenge, but when the members practice active listening, it becomes a communication powerhouse that is equipped to handle the most difficult situations easily.
• A multidisciplinary team is creative by nature. Every member makes a viable contribution with his skill and knowledge, and all this shared knowledge inspires them to go beyond their limitations and find better solutions.
• Team members inspire and motivate everyone in their team so that they become much better
• Diversity is a great tool to create an atmosphere where the members understand and become considerate
• Multidisciplinary teams inspire and encourage innovation
• The goals are clear and specific so that there is no room for confusion
• Encourages cost-effective completion of projects

The disadvantages of a multidisciplinary team are as follows:

• The multidisciplinary team takes too much time in decision making.
• They have too many opinions, and perspectives, and these are points of conflict between them.
• As different members from different departments make up a multidisciplinary team, the comfort level and understanding between the individuals is very less.
• Poor management as everyone is trying to have the upper hand by demoralizing the efforts of others
• Disagreement and confusion are the norms of the day
• The dominant members do not allow the passive ones to work efficiently
• Gathering, storing and imparting information is delayed because some members are difficult to handle
• Communication becomes a challenge as everyone wants to show himself as the right person for the job.
• The difference between members in a multidisciplinary team causes disagreements and can harm the organization as a whole

The marketing function within any organization does not exist in isolation. Therefore it’s important to see how marketing connects with and permeates other functions within the organization. In this next section let’s consider how marketing interacts with research and development, production/operations/logistics, human resources, IT and customer service. Obviously all functions within your organization should point towards the customer i.e. they are customer oriented from the warehouseman that packs the order to the customer service team member who answers any queries you might have. So let’s look at these other functions and their relationship with marketing.

Research and development

Research and development is the engine within an organization which generates new ideas, innovations and creative new products and services. For example cell phone/mobile phone manufacturers are in an industry that is ever changing and developing, and in order to survive manufacturers need to continually research and develop new software and hardware to compete in a very busy marketplace. Think about cell phones that were around three or four years ago which are now completely obsolete. The research and development process delivers new products and is continually innovating.

Innovative products and services usually result from a conscious and purposeful search for innovation opportunities which are found only within a few situations.

Peter Drucker (1999)

Research and development should be driven by the marketing concept. The needs of consumers or potential consumers should be central to any new research and development in order to deliver products that satisfy customer needs (or service of course). The practical research and development is undertaken in central research facilities belonging to companies, universities and sometimes to countries. Marketers would liaise with researchers and engineers in order to make sure that customer needs are represented. Manufacturing processes themselves could also be researched and developed based upon some aspects of the marketing mix. For example logistics (place/distribution/channel) could be researched in order to deliver products more efficiently and effectively to customers.

Production/operations/logistics

As with research and development, the operations, production and logistics functions within business need to work in cooperation with the marketing department.

Operations include many other activities such as warehousing, packaging and distribution. To an extent, operations also includes production and manufacturing, as well as logistics. Production is where goods and services are generated and made. For example an aircraft is manufactured in a factory which is in effect how it is produced i.e. production. Logistics is concerned with getting the product from production or warehousing, to retail or the consumer in the most effective and efficient way. Today logistics would include warehousing, trains, planes and Lorries as well as technology used for real-time tracking.

Obviously marketers need to sell products and services that are currently in stock or can be made within a reasonable time limit. An unworkable scenario for a business is where marketers are attempting to increase sales of a product whereby the product cannot be supplied. Perhaps there is a warehouse full of other products that our marketing campaign is ignoring.

Human resources

Human Resource Management (HRM) is the function within your organization which overlooks recruitment and selection, training, and the professional development of employees. Other related functional responsibilities include well-being, employee motivation, health and safety, performance management, and of course the function holds knowledge regarding the legal aspects of human resources.

So when you become a marketing manager you would use the HR department to help you recruit a marketing assistant for example. They would help you with scoping out the job, a person profile, a job description, and advertising the job. HR would help you to score and assess application forms, and will organise the interviews. They may offer to assist at interview and will support you as you make your job offer. You may also use HR to organise an induction for your new employee. Of course there is the other side of the coin, where HR sometimes has to get tough with underperforming employees. These are the operational roles of HR.

Your human resources Department also have a strategic role. Moving away from traditional personnel management, human resources sees people as a valuable asset to your organization. Say they will assist with a global approach to managing people and help to develop a workplace culture and environment which focuses on mission and values.

They also have an important communications role, and this is one aspect of their function which is most closely related to marketing. For example the HR department may run a staff development programme which needs a newsletter or a presence on your intranet. This is part of your internal marketing effort.

IT (websites, intranets and extranets)

If you’re reading this lesson right now you are already familiar with IT or Information Technology. To define it you need to consider elements such as computer software, information systems, computer hardware (such as the screen you are looking at), and programming languages. For our part is marketers we are concerned with how technology is used to treat information i.e. how we get information, how we process it, how we store the information, and then how we disseminate it again by voice, image or graphics. Obviously this is a huge field but for our part we need to recognise the importance of websites, intranets and extranets to the marketer. So here’s a quick intro.

A website is an electronic object which is placed onto the Internet. Often websites are used by businesses for a number of reasons such as to provide information to customers. So customers can interact with the product, customers can buy a product, more importantly customers begin to build a long-term relationship with the marketing company. Information Technology underpins and supports the basis of Customer Relationship Management (CRM), a term which is investigated in later lessons.

An intranet is an internal website. An intranet is an IT supported process which supplies up-to-date information to employees of the business and other key stakeholders. For example European train operators use an intranet to give up-to-date information about trains to people on the ground supporting customers.

An extranet is an internal website which is extended outside the organization, but it is not a public website. An extranet takes one stage further and provides information directly to customers/distributors/clients. Customers are able to check availability of stock and could check purchase prices for a particular product. For example a car supermarket could check availability of cars from a wholesaler.

Customer service provision

Customer service provision is very much integrated into marketing. As with earlier lessons on what is marketing?, the exchange process, customer satisfaction and the marketing concept, customer service takes the needs of the customer as the central driver. So our customer service function revolves around a series of activities which are designed to facilitate the exchange process by making sure that customers are satisfied.

Think about a time when you had a really good customer service experience. Why were you so impressed or delighted with the customer service? You might have experienced poor customer service. Why was it the case?

Today customer service provision can be located in a central office (in your home country or overseas) or actually in the field where the product is consumed. For example you may call a software manufacturer for some advice and assistance. You may have a billing enquiry. You might even wish to cancel a contract or make changes to it. The customer service provision might be automated, it could be done solely online, or you might speak to a real person especially if you have a complex or technical need. Customer service is supported by IT to make the process of customer support more efficient and effective, and to capture and process data on particular activities. So the marketer needs to make sure that he or she is working with the customer service provision since it is a vital customer interface. The customer service provision may also provide speedy and timely information about new or developing customer needs. For example if you have a promotion which has just been launched you can use the customer service functions to help you check for early signs of success.

Finance department

The marketing department will need to work closely with the finance department to ensure that:

There is an adequate budget to meet the needs for research, promotion and distribution. The finance department has a whole organisation brief to ensure that all the business operates within its financial capabilities. They will want all departments to work within their allocated budgets. Like all departments, marketing may wish to overspend if profitable marketing opportunities emerge over the year. The marketing department is likely to concentrate on sales volume and building market share, while the finance department may be more focused on cash flow, covering costs and paying back investment as quickly as possible.

The channel structure in a primitive culture is virtually nonexistent. The family or tribal group is almost entirely self-sufficient. The group is composed of individuals who are both communal producers and consumers of whatever goods and services can be made available. As economies evolve, people begin to specialize in some aspect of economic activity. They engage in farming, hunting, or fishing, or some other basic craft. Eventually, this specialized skill produces excess products, which they exchange or trade for needed goods that have been produced by others. This exchange process or barter marks the beginning of formal channels of distribution. These early channels involve a series of exchanges between two parties who are producers of one product and consumers of the other.

With the growth of specialization, particularly industrial specialization, and with improvements in methods of transportation and communication, channels of distribution become longer and more complex. Thus, corn grown in Illinois may be processed into corn chips in West Texas, which are then distributed throughout the United States. Or, turkeys raised in Virginia are sent to New York so that they can be shipped to supermarkets in Virginia. Channels do not always make sense.

The channel mechanism also operates for service products. In the case of medical care, the channel mechanism may consist of a local physician, specialists, hospitals, ambulances, laboratories, insurance companies, physical therapists, home care professionals, and so forth. All of these individuals are interdependent, and could not operate successfully without the cooperation and capabilities of all the others.

Based on this relationship, we define a marketing channel as sets of interdependent organizations involved in the process of making a product or service available for use or consumption, as well as providing a payment mechanism for the provider.

This definition implies several important characteristics of the channel. First, the channel consists of institutions, some under the control of the producer and some outside the producer’s control. Yet all must be recognized, selected, and integrated into an efficient channel arrangement.

Second, the channel management process is continuous and requires continuous monitoring and reappraisal. The channel operates 24 hours a day and exists in an environment where change is the norm.

Finally, channels should have certain distribution objectives guiding their activities. The structure and management of the marketing channel is thus in part a function of a firm’s distribution objective. It is also a part of the marketing objectives, especially the need to make an acceptable profit. Channels usually represent the largest costs in marketing a product.

Think back to when you were a kid. Before tablets, smartphones, social media, virtual and augmented reality, and even the internet, things were much simpler – especially for marketers.

In the ‘80s, marketers had only a few channels in which to communicate their messages. Today, it’s more challenging than ever to know where to spend your money and keep a consistent brand message throughout. So how do you choose the marketing channels that are right for your brand?

Stick to your brand message

One of the major challenges brands face is maintaining a consistent brand message across all channels. Choosing the right marketing channel requires you to take a step back and think about your brand’s core message and where your customers absorb information. This is the single most important thing you can do when determining which channels are right for your brand.

Invest in consumer research

It’s easy to say the single most important thing is the brand and to put yourself in your customers’ shoes. But often companies are making assumptions about what they THINK customers want, which may not be reality. Primary and secondary research can give you insights into which channels your target audience is using and more importantly, how they interact with those channels. We dive deeper into methods of research here.

Do it with a purpose

Too often, brands lose sight of their message and end up wasting time and money on marketing that could be more efficiently spent elsewhere. When Pinterest first came on to the scene, for example, marketers hopped on board. But the reality is, unless you’re in the food, home improvement and goods, fitness or fashion industries, Pinterest can be a waste of valuable resources.

Create an omni-channel experience

Every channel demands a unique approach, but it is important to make sure that your brand is communicated consistently across all platforms, and the customer has the same brand experience regardless of the touch point. For example, a television advertisement will have a different strategy than a podcast, but you want them to feel the same way about the brand regardless of where they engage with the brand.

It’s okay to take risks

With so many tried-and-true methods of marketing, it can be daunting to try new media. However, if you don’t stay current or even ahead of media consumption trends, you risk falling behind or even becoming irrelevant.

A great example of this is traditional taxi companies versus the Ubers and Lyfts of the world. Using a mobile-first approach to delivering and marketing a product was a risk that has to this point paid off. Fortunately, the integration of data and digital in today’s environment means that most marketing executions are measurable. Try, learn, evolve.

Flip your marketing mindset

Long gone are the days where you have an idea, produce a product, find a distribution channel, and then market your product to sell it. Startups are now taking their idea, marketing it first, then figuring out the production and distribution once a sales funnel has been established.

• Old “sell what we make” model: build → sell → market

• New collaborative approach: market → sell → build

The way a business is structured depends on a number of factors, including size, geography, resources, departments and lines of business. In many cases, companies create their structure by combining two or more structures, creating a hybrid or matrix structure.

A customized organizational structure can help your business to run more efficiently and increase your productivity. Regardless of how you structure your organization, it’s important to ensure your employees understand how the organizational structure works, to whom they report and who reports to them.

Features of the Hybrid Structure

A matrix or hybrid structure is an organizational model that combines two or more reporting structures. It’s best suited for work environments that are dynamic, as hybrid structures can shift from project to project.

Most commonly, the hybrid structure combines the functional and product organizational structures. A functional structure is where the company is organized by what people do. For example, all marketing personnel are overseen by a marketing manager, and all sales personnel are overseen by a sales manager. In a product organization, the business is divided by lines of business, such as a baby food manufacturer having specific groups for dry snacks, jarred food and toddler meals.

In a hybrid structure, if the baby food manufacturer was establishing a new product line, it could take functional expertise from various groups such as marketing, research and development and sales to create a product launch team. Those employees would report to their functional managers as well as the project manager for the product launch team.

Benefits of Matrix Departmentalization

There are many benefits of the hybrid organization. The main advantage is that working groups get functional expertise from across the organization. The company can share highly skilled resources for different projects, maximizing the value of their employees.

The employees get to work on a variety of projects and broaden their skill sets in addition to learning new processes and systems within the company. This helps them to expand the scope of their careers within the business. In large organizations, employees may work on several projects at a time, further adding to their knowledge base.

Matrix structures are known to create company loyalty, as employees feel more invested in their position in the organization because they are contributing to multiple areas of the business. This also increases productivity and efficiency within the organization.

Disadvantages of Matrix Departmentalization

There are also some disadvantages of hybrid business models. Since employees report to two or more managers, conflicts in scheduling and priorities may arise. If both managers have equal authority, the employee may be pulled in multiple directions. The managers themselves may have a conflict about who holds the most authority and where resources should be directed. Often, the overhead costs for a matrix structure are high because there are more managers than in a functional or product structure.

If the roles and responsibilities of all employees and managers within a matrix structure are not clearly identified and communicated, there can be confusion about the projects on which people should be working. This can lead to a lack of productivity or delays in the schedule. The workload in a matrix organization is generally high, as employees have to complete their functional responsibilities in addition to their project tasks. Employees can burn out or feel overwhelmed by the amount of work they need to do.

Creating a Hybrid Structure for Your Business

When considering a hybrid structure for your business, carefully plan out the responsibilities of each employee and manager. This way, you can ensure there aren’t any redundancies or duplication of tasks. Similarly, you’ll need to ensure that employees don’t become overworked. In addition, it’s important to outline which manager has higher authority in case conflicts arise.

The organization of a sales department is usually based on the nature and size of the enterprise. No two companies have identical sales organizations, because no two have identical needs. The customers, the marketing channels, the company size, the product or production line, the practices of competitors and to personality and abilities of the personnel and different. This way numerous factors influence the individual sales departments.

The chain of command runs from the top sales executives down through subordinates. All executives exercise line authority, and each subordinate is responsible to one person on the next higher level. Responsibility is definitely fixed, and those charged with it also make decisions and take action.

In the following line organization, sales manager acts as the head of the sales department. In a big organization, he is considered as next to the top authority in the chain of command. Divisional, district, or branch managers are appointed to assist the sales manager in his sales functions. They are accountable to the sales manager directly. Salesmen (local and traveling) are appointed to assist these authorities in the selling activities.

1. Structure on Product Basis

When a number of products are to be marketed, the departmentalization of sales organization is based on the nature of the products. Each product is assigned to a department under the charge of a manager. For overall supervision, control and coordination, a General Manager (Sales) is appointed.

On product basis itself, two types of departments can be formed:

• Sales department with line authority subdivided by products (one staff officer for all the products)
• Sales department subdivided by different sales authority (one staff officer for each product).

In the first case, one line authority and staff organization has been formed for the entire sales organization. The General Manger (Sales) reports to Vice-President in charge of marketing. Six subordinates report to the General Manager (Sales). Staff authority for all the products remains with one person. But separate line authority for each product is appointed, namely sales manager, product ‘A’, and sales manager product ‘B’. Staff authority (specialist) is appointed on the basis of sales functions to be performed.

In the second case, for each product, line and staff authority are appointed separately for each product, because of the complexity and technical nature of the product. But it is not necessary always that for each product same number of staff specialist will be appointed.

Organization Structure on product basis has the following merits and demerits:

Merits

(i) Each product gets equal importance in the sales.

(ii) Advantages of specialization and division of work.

(iii) Unnecessary interference in different functions come to an end.

(iv) Easier to assign responsibility to everyone in the sales department.

(v) Comparative evaluation of efficiency of departments is possible.

(vi) The buyers get maximum satisfaction.

Demerits

(i) Difficulty in coordinating the activities of different products/departments.

(ii) Selling costs tend to be higher if the sales at the estimated level are not reached.

(iii) The operational costs will also be higher because of the larger number of employees.

Suitability

Departmentalization on the basis of product is suitable where:

(i) The number of products are many,

(ii) The prices of products are much higher to bear the expenses of different departments, and

(iii) The product are of technical nature.

2. Structure on the Basis of Customers

This type of departmentalization advisable when the nature and types of customers differ. For example, for nature and types of customers differ. For example, for industrial as well as consumer products, different departments can be formed, based on the nature of the departments can be formed, based on the nature of the costumers and the nature of the product.

In this type of structure, the staff authorities (specialist) for all types of customers are similar.

Merits

(i) Sufficient attention can be given to every category of customers.

(ii) Maximum services can be provided to the customers to their satisfaction.

(iii) Sales planning and policies can be made keeping in view of each category of customers.

(iv) Salesmen can be appointed keeping in view of the special features of the customers in each category.

Demerits

(i) The establishment expenses will be too high.

(ii) Controlling and coordination of sales activities create problem.

(iii) Market-oriented structure

(iv) The departmentalization of sales organization may be made on geographical/market basis also. The total sales territory is divided and sub-divided into segments and for each sub­division, a separate sales department is set up. The responsibility of each department is assigned to a Manager. To coordinate and control the activities of respective sub-divisions, a Gen. Manger (sales) is appointed.

3. Structure on the Basis of Market

Merits

(i) Better services can be made available to customers of individual marketing area.

(ii) New product requirements can be identified for each area.

(iii) Transportation cost can be minimized.

(iv) Necessary changes/modification in the products can be suitably made with the specific requirements of a particular market.

(v) Sales plans, policies and marketing efforts can be directed in accordance with the requirements of each market.

(vi) Marketing strategies for each market to deal with competition effectively can be formulated.

(vii) A comparative sales analysis between different zones/territories can be made possible.

(viii) Sales persons with specific qualities, belonging to particular zone, can be appointed keeping in view of the traditions existing in the particular market and can be controlled effectively.

Demerits

(i) Departmentalization of this type is too expensive.

(ii) It is difficult to coordinate the activities of different markets.

(iii) There are chances of conflicts for resources allocation and other facilities between departments.

Suitability

Territorial based departmentalization is suitable in the following situation where:

(i) The market territory is so extensive and substantial,

(ii) There are much difference in the characteristics of each market,

(iii) The products can be differentiated in quality according to market-wise, and

(iv) The total sales are much larger.

4. Structure on the Basis of Functions

In this type of departmentalization, the selling activities are divided according to the functions to be performed, such as, sales planning, management of sales personnel, sales and distribution, advertising and sales promotion, sales analysis, marketing research, etc. In this type of departmentalization, special attention is given to every aspect of the sales activities and, therefore, profits may increase.

Merits

(i) Specialization at different levels could be achieved.

(ii) The number of departmentalization may either be reduced or increased according to the needs.

(iii) Decision-making is quick as far as possible.

(iv) Easy to coordinate between sub-functions, with certain exceptions.

(v) Less expensive, compared to other types of departmentalization.

Demerits

(i) More attention on a particular product cannot be given.

(ii) Functions of sub-departments sometimes get delayed because of their dependence on the other departments.

(iii) Due to increased responsibility on the General Manager (Sales), problem of coordination may arise.

(iv) Problems like non-cooperation, difference of opinion, etc. may exist between departments.

(v) Mal-functioning of a department may affect the efficiency of the organization as a whole.

Suitability

Organization structure on functional basis is suitable in such situations where:

(i) The size of the organization is small,

(ii) There is only limited number of products, and

(iii) There are not much differences in the techniques of production.

5. Structure on Combined Basis

Many big business organizations which produce diversified products and having extensive markets use the combined type of sales department. Such a setup is essential for them to get specialization at every stage of marketing activities. Two or more types of departments (products, market or other types are combined together) are usually combined for this purpose.

Merits

(i) Careful attention to every need of the sales organization is possible.

(ii) There is advantage of specialization.

(iii) Better coordination is possible between products, sales territories, and sales functions.

Demerits

(i) Higher operating costs due to excessive specialization.

(ii) Problems of supervision and control on employees of different departments.

(iii) Problem of communication.

Suitability

The combined type of departmentalization is suitable where:

(i) The size of the sales debarment is so larger

(ii) There are extensive and substantial markets for the product, and

(iii) The company operates with a number of products.

Committee Sales Organization

The committee is never the sole basis for organizing a sales department. It is a method of organizing the executive group for planning and policy formulation; while leaving implementation of plans and policies to individual executives. The committees usually found in sales organizations include training committee, customer relations committee, personnel and merchandising committees, committee on new products, etc.

Merits

The use of committees in the sales department has many advantages:

(i) Before policies are made and action is taken, important problems can be deliberated by the committee members and are measured against varied viewpoints.

(ii) Committees promote coordination among members of the executive team.

(iii) Committees render most important service in providing focal points for discussion and for making good suggestions.

Demerits

There is wastage of time of executives, where the executives are not directly interested in the topics to be considered.

With the growth of technology, it’s crucial that you have an effective Internet marketing plan in place. Internet marketing helps you continue to grow your business. Here are seven reasons why marketing is so important.

1. Your customers are online

Internet marketing is so important because your customers are online. Considering that over 4.2 billion people are on the Internet, it’s a great opportunity for you to reach leads that are looking for your business. There are billions of people online just waiting to find your company.

People use the Internet to find all types of information. They’re constantly conducting searches to find relevant information about businesses, products, and services. By investing in Internet marketing, you’re helping your company reach those interested leads.

As a marketer, you want to reach potential customers where they live, work, shop, get information, and seek entertainment. All of this is wrapped up in one place: The Internet.

Even if you operate locally, your audience is online. That’s why organizations in the healthcare sector, like hospitals, orthopedic surgeons, and more use Internet marketing to promote their services and expand their care.

Internet marketing online is valuable to your business because it helps you connect with leads that are the most interested in your business.

2. It create two-way communication

With traditional advertising, the communication is one-way. You create a TV ad or print ad in a newspaper, and that’s it. You wait and hope that your audience will see your ad and visit your business.

So, what happens if your audience has questions or concerns? What if they want to learn more about your business, product, or service? It’s a hard task to complete when you don’t have a two-way conversation.

The importance of Internet marketing lies in the ability to create two-way communication.

You provide clients with a way to contact your business. Whenever you create a social media post, run a pay-per-click (PPC) ad, or create any form of marketing material, you create the opportunity for people to contact your business.

You can reach customers through several digital marketing channels. If someone sees your PPC ad and has questions, they can find your contact information and reach out to you. They can call, chat, or email your business with questions.

This helps you build a relationship with your audience. You get to know them and open the door of communication for them. It makes them feel more welcomed by your team and company.

This is valuable to your audience because they want to be seen as more than just a number. Customers want to be valued and know that their business matters to you. They choose companies that value them as an individual.

For example, if a consumer or a business is purchasing a brand-new HVAC system, which is a substantial investment, it’s important that they feel comfortable asking questions because it could make or break the sale.

An HVAC marketing strategy could make buyers more at ease by using social media to engage users casually and professionally. Social media would also provide consumers a convenient platform for asking questions, which could then lead to a quote request or one-on-one meeting with a salesperson.

When you have two-way communication, your audience doesn’t view it as you trying to sell them things. Instead, they will see you as a valuable source of information that helps them in the purchasing process.

By building a relationship and opening communication with your audience, you increase their likelihood of becoming customers. It also increases the chances that they will become repeat customers.

Internet marketing is important because it helps you communicate better with your audience.

3. It personalizes your audience’s experience

As we stated previously, your audience wants to feel like they matter to your business. They don’t want to just be another number. Effective Internet marketing creates a custom experience for each member in the audience.

Personalized marketing enables you to customize your audience’s experience. You can create a tailored experience that fits their interests best.

When people find your business, they’re going to come to your company for different reasons.

Some people are interested in one type of product, while others are interested in another type. Personalizing these customers’ experiences to their interests creates a better experience for them.

It’s best to create multiple, personalized marketing pieces than one, general marketing piece.

The ability to personalize your marketing strategy is why Internet marketing is so important to your business. It helps you deliver a better experience for your leads, which turns them into customers.

4. It allows you to drive quality traffic

One of the biggest hurdles with traditional advertising is obtaining interested leads.

When you use traditional advertising, you don’t know how many valuable leads you will reach. Your advertisements appear in front of interested and uninterested leads, which makes it difficult to drive an abundance of quality traffic.

Internet marketing is important because it helps you drive more qualified traffic. You reach more leads that are interested in your business. The ability to target specific leads helps you drive traffic that takes interest in your company.

You can target leads specifically by different characteristics.

Internet marketing allows you to target by demographic information, socioeconomic status, hobbies, interests, or spending habits. You can get very precise with your targeting to ensure that you’re only reaching leads you know will be interested in your business.

Effective Internet marketing will help you reach the right leads at the right time.

5. It increases your business’s visibility

When you want more people to check out your business, you must increase your business’s visibility. It can be challenging to do this through offline tactics because you don’t have much control over who sees your marketing materials.

With online marketing, you expose your business to hundreds of people.

The Internet is constantly marketing for your business. People can access your website or your social media 24/7. This means that your business is visible to your audience at all times.

In addition, you can use other digital marketing methods to reach your audience and increase your brand’s visibility. A few strategies include content marketing, social media marketing, and even video marketing.

Brand visibility means that more people are getting familiar with your business.

When people are more familiar with your business, they’re more likely to choose your business when they’re ready to convert. People choose brands they’re familiar with, so this brand exposure guides them towards choosing your business when they’re ready to convert.

6. It allows you to multitask

The importance of online marketing also includes its ability to run multiple campaigns at once. The Internet makes it easy for you to take on a high level of customers and provide them with a quality experience.

You can handle millions of customers at one time when they’re on your website. Your website can take on multiple transactions, which allows you to obtain more conversions for your business. It’s a great opportunity to grow your business.

In addition, you can run multiple marketing campaigns at once. This means you can reach leads through multiple channels at the same time, maximizing your business’s reach. You’ll earn more valuable leads by investing in Internet marketing.

7. Your competitors are doing it

If you want to remain in competition with your competitors, you must invest in Internet marketing. Your competitors are already investing in different Internet marketing methods and working to obtain new leads.

If you aren’t investing in Internet marketing, you’re falling behind your competition.

To keep up with your competitors, you must establish an effective online marketing campaign. It will help you obtain leads and prevent you from losing them to your competitors.