Marketing 333

Chapter 11Distribution:

Customer Service and Logistics

The Place Component of the Marketing Mix:

• Channels of Distribution

• Logistics– Materials

Management– Physical

Distribution

Components of the Logistics Strategy• Inventory

Management• Transportation• Warehousing• Merchandise

Handling• Order Processing• Packaging

The Output of Physical Distribution is Customer Service

• Customer Service Level

• Trade-offs of costs service sales– Total cost

approach

Coordinating Logistics Activities

Better Information-EDI and Internet

Supply Chain Management

JIT

Reducing Conflict

Sharing and Shifting

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11-4

Inventory Management• Major cost component• Management of stock at various

stages of the distribution channel• Customer service depends on

inventory management– Reduces out of stocks

The Transportation Function Adds Value to a Marketing Strategy

• Facilitates economic development and exchange

• Represents a significant cost

• Regulation

The Transporting Function

11-5

Modesof

Transportation

Water

Air

Rail Truck

Pipeline

The Storing FunctionReduces stock-outs

Varies by channel system

Costs

Rapid Response

11-6

Exhibit 11-511-7

Comparing Private and Public Warehouses

Adequacy

Control

Fixed Investment

CharacteristicsPrivate

Highly adequate

High

Very high

Flexibility Low

Public

May not be convenient

Low managerial control

No fixed investment

High

Type of warehouse

Unit CostHigh if volume is lowVery low if volume is very high

Low

Merchandise Handling• Labor versus

equipment• Types of

equipment

Order processing/procurement• Orders from

customers• Orders to

suppliers• Errors increase

costs

Packaging• Protection• Communication• UPS codes