CHAPTER TWENTY Managing Marketings Link with Other Functional

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CHAPTER TWENTY Managing Marketing’s Link with Other Functional Areas For use only with Perreault/Cannon/Mc.

CHAPTER TWENTY Managing Marketing’s Link with Other Functional Areas For use only with Perreault/Cannon/Mc. Carthy or Perreault/Mc. Carthy texts. © 2008 Mc. Graw-Hill Companies, Inc. Mc. Graw-Hill/Irwin www. mhhe. com/fourps

When we finish this lecture you should 1. 2. 3. Understand why turning a

When we finish this lecture you should 1. 2. 3. Understand why turning a marketing plan into a profitable business requires money, information, people, and a way to get or produce goods and services. Understand the ways that marketing strategy decisions may need to be adjusted in light of available financing. Understand how a firm can implement and expand a marketing plan using internally generated cash flow.

When we finish this lecture you should 4. Understand how different aspects of production

When we finish this lecture you should 4. Understand how different aspects of production capacity and flexibility should be coordinated with marketing strategy planning. 5. Understand the ways that the location and cost of production affect marketing strategy planning. 6. Know how marketing managers and accountants can work together to improve analysis of the costs and profitability of specific products and customers. 7. Know some of the human resource issues that a marketer should consider when planning a strategy and implementing a plan.

Marketing and Other Functional Areas Provide Company Resources for Strategy Planning and Implementation (Exhibit

Marketing and Other Functional Areas Provide Company Resources for Strategy Planning and Implementation (Exhibit 20 -1) Resource Requirements for Marketing Strategies and Plans Finance Production & Operations Accounting Human Resources

Marketing in the Broader Context

Marketing in the Broader Context

Cross-Functional Challenges Are Greatest With New Efforts

Cross-Functional Challenges Are Greatest With New Efforts

New Product Cross-Functional Challenges © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

New Product Cross-Functional Challenges © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

The Finance Function: Money to Implement Marketing Plans Investor’s Time Horizon Is Important Investors

The Finance Function: Money to Implement Marketing Plans Investor’s Time Horizon Is Important Investors Expect a Return What Is Capital? Key Financial Issues Capital Comes From Internal and External Sources The CFO Handles Money Matters Opportunities Compete for Capital/Budgets Working Capital Pays for Short. Term Expenses

Forecasts May Become An Ethical Issue

Forecasts May Become An Ethical Issue

Other Efforts to Raise Capital Debt Financing Has Interest Cost Interest Expense May Impact

Other Efforts to Raise Capital Debt Financing Has Interest Cost Interest Expense May Impact Prices Expanding Profits May Mean Expanded Plans Winning Strategies Generate Capital

Keeping the Money Flowing Cash Flow – When Money Is Available Improve Return of

Keeping the Money Flowing Cash Flow – When Money Is Available Improve Return of Investment Marketing Mix Affects Capital Needed

Production Must Be Coordinated with the Marketing Plan Bertolli Pasta Sauce: The only leading

Production Must Be Coordinated with the Marketing Plan Bertolli Pasta Sauce: The only leading brand that goes from vine to jar in just one day.

Marketing Implications of Production Problems Slow Production Quantity Adjustments Stock-Outs Source Scarce Supply Wasted

Marketing Implications of Production Problems Slow Production Quantity Adjustments Stock-Outs Source Scarce Supply Wasted Marketing Effort Difficulty in New Product Coverage May Require Staged Distribution Need to Produce Many Product Lines May Require Outsourcing or a Virtual Corporation

Where Products Are Produced Matters Moving Production to Low-Cost Countries Task Transfer Overseas Production

Where Products Are Produced Matters Moving Production to Low-Cost Countries Task Transfer Overseas Production Has Critics

Other Issues in Production Mass Customization Serves Individual Needs Producing to Order Requires Flexibility

Other Issues in Production Mass Customization Serves Individual Needs Producing to Order Requires Flexibility Mass Customization Is Not Mass Marketing Sometimes Batched Production Is Still Necessary!

Checking your knowledge Wizard Parts Company, an auto parts manufacturer, provides its customers with

Checking your knowledge Wizard Parts Company, an auto parts manufacturer, provides its customers with production flexibility. This could help Wizard support its customers with: A. Computerized reorder capabilities. B. Electronic data interchange (EDI). C. Just-in-time delivery (JIT). D. Any of the above. E. None of the above

Accounting Data Can Help in Understanding Costs and Profits Functional Accounts Natural Accounts •

Accounting Data Can Help in Understanding Costs and Profits Functional Accounts Natural Accounts • • Formal Financial Accounting Examples: Salaries Wages Supplies Raw Materials • vs. • Purposes for Which Expenditures Are Made Examples: Milling Grinding Maintenance • Reclassify Natural to Functional • Reallocate Functional Accounts • Evaluate Profitability of Profit Centers

Cost Analysis Helps Track Down the Loser (Exhibit 20 -2)

Cost Analysis Helps Track Down the Loser (Exhibit 20 -2)

Spreading Natural Accounts to Functional Accounts (Exhibit 20 -3)

Spreading Natural Accounts to Functional Accounts (Exhibit 20 -3)

Allocating Functional Costs to Customers (Exhibit 20 -4)

Allocating Functional Costs to Customers (Exhibit 20 -4)

A More Detailed View of Costs (Exhibit 20 -5)

A More Detailed View of Costs (Exhibit 20 -5)

Profitability of Individual Customers and Whole Company (Exhibit 20 -6)

Profitability of Individual Customers and Whole Company (Exhibit 20 -6)

Checking your knowledge Bill Thomas, marketing manager at ATI Services, conducts marketing cost analysis.

Checking your knowledge Bill Thomas, marketing manager at ATI Services, conducts marketing cost analysis. He is correct when he says which of the following about marketing cost analysis: A. “Traditional accounting analysis fails to analyze the purpose of marketing costs. ” B. “Marketing costs should be allocated to general overhead. ” C. “Functional and natural accounts should usually have the same names. ” D. “Functional accounts are the categories (like salaries and raw materials) to which costs are charged in the normal accounting cycle. ” E. All of these statements are true.

Checking your knowledge Sharon Gage, marketing manager at Yellow Hat Supply, wants to calculate

Checking your knowledge Sharon Gage, marketing manager at Yellow Hat Supply, wants to calculate the cost of marketing some of Yellow Hat’s products to different target markets. Which of the following will she probably have to do: A. Reorganize some of he company’s functional cost accounts into natural cost accounts. B. Allocate personal selling expenses into general overhead. C. Reclassify all natural accounts into functional accounts. D. None of the above because it is impossible to link the costs of marketing to specific target markets.

People Put Plans Into Action People – Important Resources New Strategies Mean People Changes

People Put Plans Into Action People – Important Resources New Strategies Mean People Changes Communication Promotes Change Growth Strains Human Resources Allow Time for Training

Managing Changes One Change May Mean Several Plan Time for Changes Key Issues Marketing

Managing Changes One Change May Mean Several Plan Time for Changes Key Issues Marketing Enlivens the Firm Cutbacks Mean Planning

Interactive Exercise: Cross-Functional Decision. Making © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Interactive Exercise: Cross-Functional Decision. Making © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

You now 1. 2. 3. Understand why turning a marketing plan into a profitable

You now 1. 2. 3. Understand why turning a marketing plan into a profitable business requires money, information, people, and a way to get or produce goods and services. Understand the ways that marketing strategy decisions may need to be adjusted in light of available financing. Understand how a firm can implement and expand a marketing plan using internally generated cash flow.

You now 4. Understand how different aspects of production capacity and flexibility should be

You now 4. Understand how different aspects of production capacity and flexibility should be coordinated with marketing strategy planning. 5. Understand the ways that the location and cost of production affect marketing strategy planning. 6. Know how marketing managers and accountants can work together to improve analysis of the costs and profitability of specific products and customers. 7. Know some of the human resource issues that a marketer should consider when planning a strategy and implementing a plan.

Key Terms • • • Capital Working capital Stock Debt financing Cash flow statement

Key Terms • • • Capital Working capital Stock Debt financing Cash flow statement Production capacity Virtual corporation Task transfer Mass customization Natural accounts Functional accounts