Transcript Basic Marketing, 13th edition

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.
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
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
0
90%
Customer Service Level
Exhibit 12-1
12-3
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Coordinating Logistics Activities
Sharing and Shifting
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12-4
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
Truck
Rail
Modes
of
Transportation
Air
Pipeline
12-5
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
12-6
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 12-6
12-7
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
12-8
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