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

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
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

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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