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Marketing management Account Bites the Dust

marketing management/ Account Bites the Dust

Despite Poundstone Supply’s   existence of  more than 20 years  employees are unhappy. Why? Due to apathy? No marketing orientation? I believe the key problems are: fast turnover of employees, high cost of operation (no or negligible profit), low workers’ morale (as shown by defective products and mishandling of accounts, like double billing, slow payment and movement of products, high inventory, order backlogs, etc.) and inability to maintain big accounts (as evidenced by Hillcrest decision not to renew its yearly contract  worth $500,000).Hillcrest’s  termination of its contract may not be the key problem but it’s the most tangible symptom of an existing  big problem of the company.

The causes are: lack of inter-departmental coordination, lack of motivation, undefined orientation toward its market and misunderstanding of the company’s long term objectives. To determine the real causes of the problems Paul Poundstone  should  conduct  a market audit  among  his   customers (regardless of size of their orders)  to be done by  an independent marketing research company. An independent market audit is the only way to know the actual causes because if done by its corporate marketing department it could be subjective—the auditors  could choose their respondents to make the results

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favorable to the employees to maintain the status quo.

Another probable cause could be the operation of Murphy’s Law, which states that “ the cream rises until it sours.” In business lingo this means a manager eventually is promoted to his level of incompetence ( www.murphys-laws.com/murphy/murphy/true.html) This occurs in companies which have been in existence for some  time, like Poundstone Supply. The line managers become apathetic to the company and want  the status quo—maintain their positions and  continue getting their salaries despite their  poor or average performance. They are apathetic to   progress in technology or growth in the industry. To prevent Murphy’s Law to operate, there should be regular motivational workshops or skills-improvement seminars for all levels.

To improve interdepartmental working relationship I recommend a total overhaul of its organisational setup.  Everyone will be reoriented on the marketing concept  where all the firm’s activities should be organised to satisfy its customers at a profit . In short, a production oriented philosophy, which focuses on organizing a firm’s resources to make  products and then selling them, should be replaced by the marketing concept (McCarthy, 1975. p. 25).

Management has to transform the company into a marketing organisation – and not only as a  manufacturer of medical products. What I mean is each worker has to perform his job to ultimately satisfy the customer. For example, in the accounting department, each clerk should keep in mind that invoices and receipts should be double-checked  to make it  convenient for the customers to pay the bills and make reordering flawless. Each accounting clerk should think not only to accomplish his job for that day but to think about the happiness or contentment of their customers. Each one should realise that he is in a marketing business.

Management has to inculcate in every employee about its mission—that is to provide solutions for their customers’ clients, who are the ultimate recipients of the marketing concept orientation of the company. Seminars and workshops should be periodically held to inculcate in every department the marketing concept. Even the warehousing department should be re-oriented. Much better way is to  rename the department — such as logistical solution provider or whatever. This way stockroom personnel become solution providers — because, in the first place, they are not in the warehousing business. Right?

In theory departments should coordinate and their activities should lead to meet the overall objective of the company. But in actual practice, Kotler observes,   departmental interfaces are often characterized by deep rivalries and misunderstanding that impede the realization of the company’s objectives (p. 414). The causes of interdepartmental conflict  could be differences in opinion as to what lies in the best interest of the company, Kotler adds.

Without the marketing concept inculcated into the minds of the production  workers, for example, and given the choice they simply want to keep an average quality control. This is what is happening at Poundstone. But  the  marketing people want tight quality control to minimize complaints and returns. If the line personnel undertand what marketing concept is all about, then they would be strict in quality control themselves. The marketing concept should be practised not only in the field but inside the plant.

A production manager, on the other hand, wants economic level of inventory to reduce cost. But marketing personnel want high volume of stock so they would not run out of finished products for their clients. In case of big volume orders, the marketing department could supply right away not wait for months for the stocks.But this is not  happening.In fact they have backlogs of orders.

The production department also wants ease of production so delays would be minimized. But marketing personnel always want beautiful, smooth and durable products so there would be no complaints or returns. These conflicts could be prevented if everyone in the company would be oriented toward the marketing concept.

To solve all the key problems at Poundstone Supply I recommend the following positions to implement  the marketing concept  in a  restructured organization: A new top  position, which is below  to the president, will be the vice president for marketing. He handles the day-to-day activities of the company. Every department manager reports to the VP for marketing.

Directly under the VP will be logistics department manager, who reports to the VP . The manager handles everything related to raw materials and supplies purchasing, storing and dispatching of finished products  to customers. Under him will be logistics support supervisor  who handles daily scheduling and maintenance of  delivery vehicles.

 A new position will be corporate accounts manager who will handle big  accounts, like that of Hillcrest and two others– $50,000 and above.

Since the bulk of the company sales come from big accounts, special attention should be given to the accounts and should be maintained  at all cost. He likewise reports directly to the VP for marketing.The marketing department manager, meanwhile,  handles regular accounts or those below $50,000 monthly. Also under him will be sales, advertising and  promotions. Likewise, the finance department manager, who handles billing, collection, sourcing of funds,   reports  directly to the VP for marketing. The personnel department manager should also report to VP for marketing since attitude  or  behaviour of workers is a function  in sales growth. Motivating   all employees is not the sole  responsibility of the department manager but by the VP for marketing and the CEO himself.

Take note that the company is not really in a tight bind. The marketing department has no serious problem —  except the termination of Hillcrest account. Its growth in sales of   $50 million in 20 years  could be considered outstanding. Second its recent  sales performance  showed a  10 percent of sales  above target, which  could be exceptional. But the marketing concept calls for an overall   profit as the result of increased sales.

I  therefore  recommend  for an overhaul or a reorganization so that there should be somebody to coordinate all the departments and  at the same time listen to their problems. Here the VP for marketing would attempt to eliminate conflicts among the department heads and personnel. This way costs  could be lowered for I believe there would be no more returns or  misplacing of invoices  in the long run—thus profitability  may eventually be attained by Poundstone.

In short changing the attitude – with right motivation — of the people in the company may lead to profitability. Employees—particularly those who have been staying in the company for long–   should be given  a share of the company’s profit  for them  to work harder and  for them to help reduce operating cost.

 Poundstone should  make his employees feel that they are part of the company. It would also better for Poundstone to sell shares of stock to his employees to reward their loyalty.

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