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PHY DIST & THE PRODUCT COMPONENT Stock-out Product Substitution Packaging & Material Handling New Products Wider Product Line vs. Standardization Length.

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Presentation on theme: "PHY DIST & THE PRODUCT COMPONENT Stock-out Product Substitution Packaging & Material Handling New Products Wider Product Line vs. Standardization Length."— Presentation transcript:

1 PHY DIST & THE PRODUCT COMPONENT Stock-out Product Substitution Packaging & Material Handling New Products Wider Product Line vs. Standardization Length of the Product Life Cycle

2 PHY DIST & THE PRICE COMPONENT QUANTITY DISCOUNTS Transportation TL/LTL; CL/LCL Other logistics costs FOB ORIGIN different prices in different areas; DELIVERED PRICING: Quoted price includes transportation to purchaser’s receiving dock UNIFORM DELIVERED PRICING: same price for all purchases in a specified area RESULTS IN (1) Phantom Freight (2) Freight Absorption

3 PHY DIST AND THE PROMOTION COMPONENT Logistics is not a neutral factor in promotion Need to coordinate with different aspects of promotional strategy Inventory levels Push vs. Pull Order size: ability to ship in small quantities

4 PHY DIST & THE PRICE COMPONENT DELIVERED PRICING ADVANTAGES Expand geographical areas Simplifies usage of suggested list price Easy to quote price (favored by salesperson) Better control of distribution by manufacturers DISADVANTAGES Manufacturer does not receive the same amount for each purchase Location “mix” of customers can change

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