Functions of Marketing Logistics
As marketing logistics is the combination of marketing and logistics, the functions of marketing logistics are interrelated with the elements marketing logistics system.
Simply, by combining the 4Ps of the marketing mix, the marketing logistics aims at achieving optimum customer satisfaction. It involves the planning, implementation, and control of 4Ps and transportation, warehousing, and so forth activities ultimately to achieve customer service.
The functions of marketing logistics (relationship) can be understood by the below picture.
Individually moving to the functions of marketing logistics, as,
The first important function of marketing logistics is to deliver the right product to the right customer. The delivery of the product involves understanding the customer’s demand, making the product they want, and delivering in the time customers requested.
Serving the right prodcut is the function as well as one essential element of the marketing logistics. Since the customers need to vary individually, their logistics need also, so the logistics manager should consider the customer’s logistics need while delivering the product or he may also opt for third party logistics (3PL).
Price is the essential factor of the product as such it ultimately brings value to the product. Among the first 4Ps of the marketing mix, the price is the only element that drives profit to the business firm.
While pricing the product, the marketing logistics should set a fair, reasonable, right price for the product. Since the pricing decision is affected by various factors. Once should clear study the cost involves in production, customers expectation, customers spending power-habit, shipping distance, marketing activities cost, etc.
However, the marketing logistics aims at setting the right price which is fair to everyone.
In marketing activities, promotion is an unforgettable task. Promotion is an interesting topic in marketing logistics. Once the product is introduced in the market, the products need to be known to target customers, the promotional activities need to be applied.
Marketing logistics ensures the better coordination of marketing materials i.e. promotional materials (advertising, personal selling, sales promotional, etc) and better performance of these entities to make possible the adequate sales of the firm’s offerings.
Transportation is the important element of marketing logistics which participates in the movement of products to the geographically scattered areas. A firm may use its own transportation means or hire others on contract.
In general, a firm may choose one of these five modes of transportation, mentioned below,
i. Railway Transportation: Railway is the important inland transportation carrying a huge quantity of products from one place to another at least possible rate. Since it requires the acquisition of sufficient land and a massive investment of capital, it is normally owned and controlled by the government in all countries of the world.
The advantages of railway transportation are,
- It is faster than other means of transportation.
- It is more economical.
- It is suitable for long-distance trade within the country.
The disadvantages of railway transportation are,
- It causes unnecessarily delays at terminals,
- It involves a high degree of risk of theft, dacoit, or pilferages.
ii. Highway Transportation: Road transportation is called highway transportation. The countries which have most of the areas covered by land usually use this means of transportation by using trucks, containers, etc.
Certain merits of highway transportation are,
- Door to door delivery of products by exporters or suppliers is possible,
- It eliminates the transshipment problems,
- It is less risky in terms of losses and damages of products,
- Means of highway transportation such as trucks and containers are frequently available in the cities,
- It is more flexible compared to other transportation systems.
Demerits of highway transportation are,
- It is not suitable for long-distance trade since it is more expensive compared to railway transportation,
- It is not suitable for bulky and high volume business,
- It suffers from short-haul (stops) traffic problems.
iii. Water Transportation: Water transportation uses two water bodies are sea and the ocean. Water transportation is the means of connecting the link of geographically separated markets via water. The major means of water transportation are ships, steamers, and boats.
Advantages of water transportation,
- It is the cheapest means of transportation,
- It can deliver bulky cargoes and a huge quantity of products,
- It can be used for long-distance trade.
Disadvantages of water transportation,
- It causes the slow distribution of products, it may take several months to deliver products from one country to another,
- It may involve a high degree of transshipment problems,
- It involves a greater degree of damages or losses due to the perils of the water.
iv. Pipeline Transportation: Pipeline transportations are used for transporting liquid products like natural gas, coal gas, petroleum products, crude oil, water, etc. For example, Saudi Arabia has used pipelines to import clean drinking water from the Black Sea.
Advantages of pipeline transportation,
- It is more suitable and safer for the distribution of liquid products,
- It avoids unnecessary traffic problems in the country,
- It is faster than tankers and saves time in delivery of the products as it uses the straight delivery system,
- It is less expensive than other transportation methods because it uses fuel and takes short time in products delivery.
Disadvantages of pipeline transportation,
- It is not suitable for the delivery of all types of products,
- It can be conveniently located as other means of transportation.
v. Air Transportation: Air transportation is the transportation done by airplanes. It now getting popular day by day, especially for foreign trade.
Merits of air transportation,
- It assures quick delivery of products,
- It is the safest means of transportation,
- It involves fewer custom formalities,
- No transshipment is required in this means of transportation.
Demerits of air transportation,
- It is quite an expensive means of transportation, it is estimated that air transportation is expensive by four times than highways and six times expensive than railway transportation.
- Products carrying capacity of air transportation is significantly less than other means of transportation.
Warehousing is the use of warehouses. Warehousing is also one of the important functions of marketing logistics. A warehouse is a place where products are used to store before distributing them to the customers whenever or wherever needed.
Hence warehousing is the specialized system and process of storing surplus products for future use. Warehousing today emphasis on product movement rather than product storage and holds significant importance in modern marketing.
There are mainly three types of warehouses,
i. Private Warehouse: Private warehouses are owned, managed, and controlled by the owner of the products, usually wholesalers. These wholesalers generally use their warehouses for personal purposes, not for rental.
ii. Public Warehouse: Public warehouses are for public benefits. These warehouses can be owned and managed by individuals, firms, companies, public bodies like dock authorities, railway authorities, municipalities, government, etc. according to the relevant law of the country. All interested parties can use the public warehouse upon the payment of rent.
iii. Bonded Warehouse: A bonded warehouse is one where the imported products are stored before the payment of duties by the importers. After the duties are paid, products are released from the bonded warehouse and transferred to the duty-paid warehouse.
Inventory Management and Control
Inventory management is concerned with the decision regarding keeping the right size of the stock of products at the right time and manages all necessary efforts for this. It focuses on balancing the cost of carrying, ordering inventory from suppliers, and managing other inventory costs to achieve customer satisfaction with minimum cost.
Inventory accumulation is expensive, yet availability is essential to having satisfied customers. Effective inventory decision includes the following elements:
- Inventory turnover, i.e. number of times the inventory is carried by the company to sales.
- Economic order quantity (EOQ)
- Incorporating uncertain demand, i.e. calculating lead time (the gap between two orders).
Order processing constitutes the communication linkage that stimulates a marketing logistic system into action. In order words, order processing regards all those activities involved in collecting, checking, and transmitting sales-order information.
It is the handling of all paperwork associated with the sale of products and services offered by an organization. The major aspects of order processing are listed as follows:
- Filling out an order form by a salesperson or customer and transmitting it to the warehouse constitutes an order.
- Preparing the bill of lading, checking credit, and carrying out the order makeup order processing.
- Order filling from warehouse inventory stocks and delivery of the products complete the order cycle.
Material handling is the activity to make products stored, safe, and available to make deliver target customer in the best possible way. It is also called the physical handling of the products.
Proper material handling plays an important role to achieve greater customer satisfaction. Both manual and mechanical means are used for material handling. The characteristics of products determine to a large extent how they will be handled.
A variety of equipment is used to handle a wide range of products – size, shapes, volumes, and weights. The most popular material handling equipment includes trucks, conveyors, and cranes. Their proper use can minimize losses from brokerage and spoilage.
Customer Service (Right Place Distribution)
The ultimate goal of the marketing logistics functions is to serve the right customer, deliver the right prodcut to the right customer, to his right location i.e. place.
All the above functions of marketing logistics are concerned about making the process of logistics the best possible that ultimately ensures serving the right customer and getting satisfaction and the best response from the customer.
Once all the above eight functions of logistics are appropriately managed and implemented there is no doubt the marketing logistics does not perform the task it promised.