Welcome to our newsletter for November 05 - January 06.

This issue looks at how marketing function structures need to evolve with changing market and customer needs.

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Dianne Davis
Principal and Managing Director

www.davismarketing.com.au

Many marketing departments are still structured around either function or product (or a hybrid of the two).

A typical “functional” structure is:

Another increasingly common structure is based around a semi-decentralised model, with a small centralised marketing team and decentralised marketing resources in the business / product areas. In this structure, product area marketers often dual report to the central function and product management, but frequently with prime reporting responsibility to the product area (example below):

Decentralised marketing resources typically drive business development-sales efforts, direct marketing campaigns and tailored relationship marketing strategies, calling on the central function for specific corporate-level services (e.g. brand management, market research, marketing supplier management).

Common pitfalls with the semi-decentralised model are duplication of effort and expenditure, brand inconsistency, sub-optimal use of suppliers and lack of a broader organisational overview and vision.

But these traditional structures (and any variations thereof) are not especially well-equipped to meet the two principal challenges for marketing in the future:

a) Anticipating and meeting customer/client needs (i.e “understanding the customer experience”)

b) Identifying and rapidly capitalising on opportunities for product, service, channel and branding
    innovations.

This is because of, in our view, a number of inherent deficiencies in traditional structures:

- They are built around internal operating needs and structures not the actual customer/client   experience

- They place a heavy reliance (even with access to external suppliers) on full-time internal resources   being inherently creative and innovative

- They endorse – in most instances - a hierarchical structure, encouraging a “top-down” approach and   culture (making it difficult for ideas to be generated from all levels)

- They consign the marketing function to a very defined area of operation, inhibiting the required   agility and flexibility to act quickly or to venture “outside the square”

- The centralised part of the marketing function is often too removed from the coalface to spot genuine   opportunities for innovation, while marketers working in the line can lack the bigger picture   perspective required to understand the utility of product and service innovations for the wider   organisation.

Marketing structures of the future must be able to incorporate and embrace the following needs:

• How can we move quickly to meet customer /client needs and expectations?

• What structure will best enable our organisation to seize new market opportunities

• What must we do to be agile and fast moving?

We consider that the optimal marketing model of the future, will be based around the belief and practice that:

• The customer-client experience for each organisation will drive the type and scope of “marketing”   activities, initiatives and ultimately resources – mapping the customer experience, therefore,   is a fundamental first step in determining what activities and skills are essential

• It is everyone’s job (not just Marketing) to identify new opportunities and innovations – but   Marketing can nourish and steward this ethos

• The scope of Marketing’s responsibility (and its size and structure) will evolve continually to reflect   changing customer-client needs and opportunities

• The best product/service/branding opportunities will be prioritised and fast tracked by applying predictive modelling tools and streamlining decision- making by senior management

• To maximise flexibility, people will be hired for marketing roles not jobs in relation to specific projects and initiatives (and these may be outsourced to strategic partners & consultants, undertaken by internal resources seconded from other parts of the organisation, or resources hired in from outside). Marketing’s role will be as a project coordinator at the centre.

The diagram below illustrates the marketing structure of the future:

Growing concerns around email security and delivery, will see an increasing number of companies outsource their e-mail services, according to technology market research firm, Radicati

Radicati estimates that currently there are some 856 million hosted e-mail accounts, with this number projected to exceed 1.4 billion by 2009.

In 2005, 69% of all e-mail accounts worldwide are outsourced, with the majority of them being ISP/Web mails (64% of the total).

But the kinds of companies using hosted e-mail services is set to change. While 64% of "hosted business e-mail" users are small businesses, a greater percentage of medium and large businesses in the future will also utilise hosted e-mail.

Faced with the growing complexity and rising costs of maintaining e-mail internally, "mid-sized” organisations are increasingly frustrated with managing security concerns on their own, and trying to respond to growing demands for e-mail archiving and regulatory compliance.

Dianne Davis was quoted in BRW (22 September edition) on a feature article on marketing and innovation.

Dianne was also quoted on law firms & branding in the Australian Financial Review (28/10/05).