Ans. MARKETING LOGISTICS
The
word 'logistics' is derivative of a French word 'loger' which means the art of
transport, supply and quartering of troops. Essentially a military concept, it
is now commonly applied to marketing management. Fighting a war requires the
setting of an objective, and to achieve this objective meticulous planning is
needed so that the troops are properly deployed and the supply line consisting,
inter-alia, weaponary, food, medical assistance, etc. is maintained. Similarly,
the plan should be such that there is a minimum loss of men and material while,
at the same time, it is capable of being altered if the need arises. As in the
case of fighting a war in the battle-field, the marketing managers also need a
suitable logistics plan that is capable of satisfying the company objective of
meeting profitably the demand of the targeted customers.
OBJECTIVES OF
MARKETING LOGISTICS
The
basic objective of an ideal logistics system is to ensure the flow of supply to
the buyer:
i)
in correct quantity,
ii) at desired location,
iii) at required time,
iv) in usable condition, and
v)
at the lowest cost
This
implies that a6mi will aim at having a logistics system which maximizes the
customer service and minimizes the distribution cost. However, one can
approximate the reality by defining the objective of logistics system as
achieving a desired level of customer service i.e., the degree of delivery
support given by the seller to the buyer. This comprises such elements as (a)
speed of delivering normal orders, (b) speed of meeting emergency or
non-anticipated order, (c) care in packing and handling distribution, (d)
degree and speed of replacing defective goods, and (e) provision for sales
services and maintenance of inventory, Thus, logistics management starts with
ascertaining customer need till its fulfillment through product supplies and,
during this process of supplies, it considers all aspects of performance which
include arranging the inputs, manufacturing the goods and the physical
distribution of the products. However, there are some specific objectives to be
achieved through a proper logistics system. These can be described as follows:
Improving customer
service : As you know, the marketing concept assumes that the
sure way to maximize profits in the long run is through maximizing the customer
satisfaction. As such, an important objective of all marketing efforts,
including the physical distribution activities, is to improve the customer
service.
An
efficient management of physical distribution can help in improving the level
of customer service by developing an effective system of warehousing, quick and
economic transportation, and maintaining optimum level of inventory. But, as
discussed earlier, the level of service directly affects the cost of physical
distribution. Therefore, while deciding the level of service, a careful
analysis of the customers' wants and the policies of the competitors is
necessary. The customers may be interested in several things like timely
delivery, careful handling of merchandise, reliability of inventory, economy in
operations, and so on. However, the relative importance of these factors in the
minds of customers may vary.
Reduce total
distribution costs: Another most commonly stated objective is
to minimize the cost of physical distribution of the products. As explained
earlier, the cost of physical distribution consists of various elements such as
transportation, warehousing and inventory maintenance, and any reduction in the
cost of one elements may result in an increase in the cost of the other
elements. Thus, the objective of the firm should be to reduce the total cost of
distribution and not just the cost incurred on ally one element. For this
purpose, the total cost of alternative distribution systems should be analyzed
and the one which has the minimum total distribution cost should be selected.
Generating additional
sales
: Another important objective of the physical distribution system in a firm is
to generate additional sales. A firm can attract additional customers by
offering better services at lower prices. For example, by decentralizing its
warehousing operations or by using economic and efficient modes of
transportation, a firm can achieve larger market share. Also by avoiding the
out-of-stock situation, the loss of loyal customers can be arrested.
Creating time and
place utilities: The physical distribution system also
aims at creating time and place utilities in the products. Unless the products
are physically moved from the place of their origin to the place where they are
required for consumption, they do not serve any purpose to the users. Similarly,
the products have to be made available at the time they are needed for
consumption: Both these purposes can be achieved by increasing the number of
warehouses located at places from where the goods can be delivered quickly and
where sufficient stocks are maintained so as to meet the emergency demands of
the customs. Moreover, a quicker mode of transport should be selected to move
the products from one place to another in the shortest possible time. Thus,
time and place utilities can be created in the products through an efficient /
system of physical distribution.
Price
stabilization: Physical distribution may also aim at achieving stabilization in
the prices of the products. It can be achieved by regulating the flow of the
products to the market through a judicious use of available transport
facilities and compatible warehouse operations. For example, in the case of
industries such as cotton textile, there are heavy fluctuations in the supply
of raw materials. In such cases if the market forces are allowed to operate
freely, the raw material would be very cheap during harvesting season and very
dear during off season. By stocking the raw material during the period of
excess supply (harvest season) and made available during the periods of short
supply, the prices can be duly stabilized.
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