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11,Basic Marketing,A Managerial Perspective,3rd Australasian edition,First level bullet,Second level bullet,Third level bullet,Click to edit Master title style,Copyright 2001 McGraw-Hill Book Company Australia Pty Ltd McCarthy et al. Basic Marketing 3rd Aust edn,13,Chapter 11,Customer Service, Logistics,and Distribution,Logistics and Physical Distribution Customer Service,The transporting and storing of goods to match target customers needs with the organisations marketing mix,Both within individual organisations and along a channel of distribution,Customers think of physical distribution in terms of the customer service level,how rapidly and dependably a company can deliver what the customer wants,There are trade-offs among physical distribution costs, customer service levels and sales,Trade-offs Among Physical Distribution Costs, Customer Service Level, and Sales,Total cost of,physical distribution,Inventory cost,Lost sales,Transporting cost,Customer Service Level,(% of customers served within some time periodsay 4 days),0,90%,0,Cost ($),Coordination of Physical Distribution Activities,All transporting storing and product-handling activities of an organisation and a channel system should be coordinated as one system to:,minimise the costs of distribution,for a given customer service level,Simply focusing on individual costs may increase total costssince a total system is involved,Requires that the manager decide what aspects of service are most important to customers,Examples: order delivery time, availability of products, order status information,Examples of Factors that Affect Physical Distribution Service Level,(A),Advance information on product availability,Time to enter and process orders,Backorder procedures,Where inventory is stored,Accuracy in filling orders,Damage in shipping, storing and handling,Order status information,Examples of Factors that Affect Physical Distribution Service Level,(B),Advance information on delays,Time needed to deliver an order,Reliability in meeting delivery date,Complying with customers instructions,Defect-free deliveries,How needed adjustments are handled,Procedures for handing returns,The Chain of Supply,The complete set of organisations, facilities and logistic activities involved in procuring materials, transforming them into intermediate and finished products and distributing them,Just-in-time deliveryreliably getting products there just before the customer needs them,requires close coordination and information flows,reduces handling costs,reduces storing costs,shifts greater responsibility to the supplier,a small problem can cause big effects,Electronic data interchange (EDI) puts information in a standardised format easily shared between different computer systems,Transporting,Marketing function of moving goods,Helps facilitate economies of scale in producing goods,produce in large quantities where it is inexpensive to produce, and then ship products to customers,Choice of transportation affects customer satisfaction in terms of:,pricing of product,on-time delivery performance,condition of goods on delivery,Choice ofTransportation Modes,Five major modes of transportation:,Rail,Truck (road),Water,Air,Pipeline,Choice of transportation mode depends on:,Cost,Delivery speed,Number of locations served,Ability to handle a variety of goods,Frequency of scheduled shipments,Dependability in meeting schedules,The Storing Function,The marketing function of holding goods to provide time utility,Inventory is the amount of goods being stored,Goods are stored at a cost,Examples of Storing Costs,Warehouse expense,Capital needed to pay for inventory,Product damage,Losses due to theft,Obsolescence,Specialised Storage,Distribution Centre,Special kind of warehouse designed to speed the flow of goods to avoid unnecessary storing costs,Speeds bulk breaking to reduce inventory carrying costs,Helps to centralise control of physical distribution activities,
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