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