1. 11-1 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Session 2: Marketing Logistics

2. 11-2 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa When we finish this lecture you should understand Why logistics (physical distribution) is an important part of place and marketing planning Why the level of customer service is a marketing strategy variable Transportation, inventory and warehousing How inventory decisions and storage affect marketing strategy The concept of distribution centres

3. 11-3 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Royal Flying Doctor Service [Click on the image to play the movie]

4. 11-4 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Exhibit 11.1 Physical distribution issues are relevant to the marketing of many services—for example the distribution airline tickets

5. 11-5 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Physical distribution focus - customer service The transporting and storing of goods to match target customers' needs with the organisation’s marketing mix 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

6. 11-6 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Royal Flying Doctor Service [Click on the image to play the movie]

7. 11-7 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Coordination of activities Activities of organisation channel system –including transporting, storing and product-handling activities Coordination of activities as one system helps to –minimise the costs of distribution –provide for a given customer service level Manager has to decide what aspects of service are most important to customers, e.g. –order delivery time –availability of products –order status information

8. 11-8 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Table 11.1 Examples of factors that affect the physical distribution service level

9. 11-9 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Figure 11.2 Comparative costs of airfreight versus rail and warehouse

10. 11-10 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Exhibit 11.2 Companies such as Hewlett-Packard can assist companies in taking a holistic view of their logistics channel

11. 11-11 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Supply chain = complete set of organisations, facilities and activities involved in procuring materials, transforming them into intermediate and finished products and distributing them Just-in-time delivery (JIT) = Reliably delivering products just before the customer needs them –Requires close coordination and information flows –Reduces handling and storing costs –Shifts greater responsibility to the supplier Electronic data interchange (EDI) = Puts information in a standardised format that is easily shared between different computer systems

12. 11-12 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Exhibit 11.4 Companies such as TNT assist companies with coordination of physical distribution decisions through electronic data sharing

13. 11-13 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Transportation = Marketing function of moving goods –Helps facilitate economies of scale in production –May limit potential target markets Choice of transportation affects customer satisfaction in terms of –pricing of product –on-time delivery performance –condition of goods on delivery

14. 11-14 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Figure 11.3 Transportation costs as a percentage of selling price for different products

15. 11-15 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Transportation choices Five major modes of transportation –Rail –Truck (road) –Ship (water) –Pipeline –Air (aeroplane) Choice of transportation mode depends on –cost and delivery speed –number of locations served –ability to handle a variety of goods –frequency of scheduled shipments –dependability in meeting schedules

16. 11-16 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Figure 11.4 Benefits and limitations of different modes of transport

17. 11-17 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Exhibit 11.6 Companies such as Federal Express make transportation choices for companies easier

18. 11-18 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Storage = The marketing function of holding goods to provide time utility –Necessary when production does not exactly match consumption of products Inventory = The amount of goods being stored Cost of storage –Goods are stored at a cost –Can be minimised and shared by distribution channel

19. 11-19 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Figure 11.6 A comparison of private warehouses and public warehouses

20. 11-20 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa Amazon.com [Click on the image to play the movie]

21. Logistics & Supply Chain Watch the DVD on Pacific Coast Feather Cushion Company Consider how Logistics and Supply Chain Management fit into the Value Chain and Marketing Mix 11-21 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa

22. Logistics & Supply Chain Read Case Study: Supply Chain Cooperation Answer the Questions at the end of the Case Study. 11-22 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: Creating and Delivering Value 5e, by Quester, McGuiggan, Perreault McCarthy By Carolin Plewa