Lecture Basic Marketing: A global-managerial approach: Chapter 12 - William D. Perreault, E. Jerome McCarthy

When you finish this chapter, you should: Understand why physical distribution (logistics) is such an important part of Place and marketing strategy planning; understand why the physical distribution customer service level is a key marketing strategy variable; understand the physical distribution concept and why it requires coordination of storing, transporting, and related activities;...

Chapter 12:    Distribution Customer Service and Logistics For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 12 Objectives When you finish this chapter, you should 1.  Understand why physical  distribution (logistics) is such  an important part of Place and  marketing strategy planning 2.  Understand why the physical  distribution customer service  level is a key marketing  strategy variable 3.  Understand the physical  distribution concept and why  it requires coordination of  storing, transporting, and  related activities.  12­2 4. See how firms can cooperate  and share logistics activities  to improve value to the  customer at the end of the  channel 5. Know about the advantages  and disadvantages of the  various transporting methods 6.  Know how inventory  decisions and storing affect  marketing strategy 7. Understand the distribution  center concept 8. Understand the important new  terms For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Understanding Physical Distribution Total Cost of PD Costs ($) Inventory Cost Lost Sales Transporting Cost 0 90% Customer Service Level Exhibit 12­1 12­3 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Coordinating Logistics Activities ???? ???? ???? ???? ???? 12­4 Sharing and Shifting Reducing Conflict JIT Chain of Supply Better Information-EDI and Internet For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Transporting Function Rail Truck Modes of Transportation Air Pipeline 12­5 Water For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Storing Function Price Stability Flexibility Costs Specialized Function 12­6 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Comparing Private and Public Warehouses Type of warehouse Characteristics Public Private Fixed Investment Very high No fixed investment High if volume is low Very low if volume is very high Low High Low managerial control Adequacy Highly adequate May not be convenient Flexibility Low High Unit Cost Control Exhibit 12­6 12­7 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Terms Physical Distribution (PD) Logistics Customer Service Level PD Concept Total Cost Approach Chain of Supply Electronic Data Interchange Transporting Pool Car Service Diversion in Transit 12­8 Containerization Piggyback Service Freight Forwarders Storing Inventory Private Warehouses Public Warehouses Distribution Center JIT For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill ... McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Transporting Function Rail Truck Modes of Transportation Air Pipeline 12 5 Water For use only with Perreault and McCarthy texts © The McGraw-Hill... storing, transporting, and  related activities.  12 2 4. See how firms can cooperate  and share logistics activities  to improve value to the  customer at the end of the  channel 5. Know about the advantages ... Low managerial control Adequacy Highly adequate May not be convenient Flexibility Low High Unit Cost Control Exhibit 12 6 12 7 For use only with Perreault and McCarthy texts © The McGraw-Hill