Marketing Chapter 11 "Distribution Customer Service and Logistics"

Logistics (Physical Distribution)
– transporting, storing, and handling of goods in ways that match target customer’s needs with a firm’s marketing mix
– both within individual firms and along a channel of distribution
Customer Service Level
– how rapidly and dependably a firm can deliver what they, the customers, want
Trade-offs
– among physical distribution costs, customer service level, and sales
Physical Distribution Concept
– all transporting, storing and product-handling activities of a business and a whole channel system should be coordinated as one system that seeks to minimize the cost of distribution for a given customer service level
Total Cost Approach
– involves evaluating each possible physical distribution system and identifying all of the costs of each alternative
Electronic Data Interchange (EDI)
– an approach that puts information in a standardized format easily shared between different computer systems
Transporting
– marketing function of moving goods
– railroads – large loads moved at low cost
– transporting function must fit the whole strategy
Containerization
– grouping individual items into an economical shipping quantity and sealing them in protective containers for transit to the final destination
– containers = approximate size of a semi-truck
– allows for items to be shipped around the world through simplified and enhanced distribution
Piggyback Service
– loading truck trailers/flatbed trailers carrying containers – or railcars to provide both speed and flexibility
– one transportation unit is carried on the back of something else.
Storing
– function of holding goods so they’re available when needed
– inventory – the amount of goods to be stored
– JIT cuts inventory costs
Private warehouse
– storing facilities owned/leased by companies for their own use
Public warehouse
– independent storing facilities
Distribution Center
– a special kind of warehouse designed to speed the flow of goods and avoid unnecessary storing costs
Brand Extension
– start putting brand name of a well-known products on other related/unrelated products
Example: Diet Pepsi, Cherry Pepsi, Diet Coke

Risks: brand extension could erode the value of your brand (brand equity) if it is associated with unsuccessful products (Chrystal Pepsi/ Coca-Cola clothing)

Inventory
– How much is enough?
– less inventory is not always better (Walmart), stores should never have empty shelves, and needs to have enough inventory to satisfy customers
– just because something is not easily measurable, does not mean that it isn’t important!
– Walmart is on a downhill slope
Value of Retailers
– convenience – product assortment in one spot
– product selection – variety of products
– special services – (free gift wrapping)
– fairness – (impacts customers when you treat them fairly)
– helpful information – (where items are located)
– prices – worthy of product’s value
Six Modes of Delivery in U.S.
1. Rail
2. Truck
3. Air
4. Pipeline – liquids: oil, etc.
5. Boat
6. Digital
Grocery Stores
a proprietor/grocer takes customer’s list and goes around the store, picks up the items, rings up the items, bags the items, and hands to customers
– vanished because of supermarkets
Supermarkets
– customer walks around and picks up their own stuff
– much bigger than grocery stores
– wider array of products than grocery stores