LOGISTICS AND DISTRIBUTION CHANNEL

LOGISTICS The process of planning, implementing and efficiently control the flow of materials, storage, in-process inventory and finished products and relevant information from the point of origin to the point of consumption, at lowest possible cost.

A series of activities that must be made to achieve objectives. Logistic chains A series of activities that must be made to achieve objectives. It is an information system. It can be as large or as small as the company wants. All activities are equally important. Information System Raw material storage Finished product storage Shopping Production Distribution Customer Service Transport

Logistics 5 rights Right Product Right place Right time Right condition Right cost

Logistics Activities Customer Services Communication Transport Inventory control Shopping Handling returns Storage Plant and warehouse location

Logistics Activites Warranties and Services Packing Reverse logistics Waste and scrap Purchase order Material handling Demand forecasting

Distribution Channel Distribution is the bridge between producers and final consumers. There are 4 stages of distribution Periodic markets Permanent markets Fragmented markets Integrated markets

History and Distribution Market Periodic Markets 1.From the origin to the middle ages. 2. Barter 3.Merchants have their fairs and markets and religious festivals. Permanent markets 1.Modern age 2.Geographic markets 3.Markets settled permanently in certain cities.

Fragmented Markets 1.Industrial revolution 2. They specialize the merchants. It eliminates the producers-traders. 3.Focused on production and distribution. Integrated Markets Crisis of 1929 Distribution structure. Producers, wholesalers,distributors

Intermediaries People and organizations that get products from manufacturers to the consumer. Own the product at the time and facilitating the transfer of ownership of the products.

Role of Intermediaries Consumer search Provider search Storage Price equilibrium Financing Services Product approach Packaging of perishable products Obsolesces & deterioration risk Promotion

Types of Intermediaries Wholesalers Purchase products for resale Commercial Products purchase for resale Retailer Agents or Brokers Never own the product but the transfer of rights

Brokers commitment with producers Determination of prices General conditions of sale Definition of geographical areas Specification of all the details

Design of Distribution Channels. It requires well organized method for designing channels that satisfy the customers and overall competition. There are 4 choices- Specify the distribution function Select the type of channel To determine the intensity distribution Select specific members of channel.

1.Specify the distribution function A channel strategy should be designed within the context of the overall marketing mix. It reviews the objectives of marketing.

2. Select the type of channel After specifying the distribution function of the overall marketing program, it chooses the most suitable for company’s product. 1.Manufacturer---------------------- Consumer 2.Manufacturer--------------Retailer–--Consumer 3.Manufacturer--Wholesaler---Retailer–--Consumer 4.Manufacturer--Wholesaler---Jobber---Retailer–-- Consumer Example of Customer Marketing channels

3. To determine the intensity distribution Intensive Distribution-these products are found everywhere. Eg- Cigarettes Exclusive distribution- granting of exclusive products distribution to a few distributors. Selective Distribution- it provides relative weakening of controls that aspires all the products. So it reduces the costs of marketing of products.

4. Select specific members of channel. Certain companies choose to distribute the product, since there are often many companies to choose from.

Factors affecting the selection of channels Market factors Type of market Number of potential buyers Geographical concentration of the market Product factors Unit value Perishability Technical nature of product Company factors Desire to control the channels Services given by the seller The ability of executives Financial resources.