Marketing Ch. 11

Front 1

physical distribution/logistics

Back 1

transporting, storing, and handling of goods in ways that match target customers’ needs with a firm’s marketing mix

Front 2

benefits of more efficient PD

Back 2

an organization can increase its profits, cut prices, improve service, or achieve some combination of all three

Front 3

how customers think about PD

Back 3

customers think about physical distribution in terms of the customer service level--how rapidly and dependably a firm can deliver what the customer wants, they tend to care about their own needs, not about how the product was moved or stored

Front 4

logistics experts/specialists (ex. Penske)

Back 4

Penske can handle order fulfillment and inventory management in addition to transportation; Its expertise in logistics can help firms reduce large inventories and other distribution costs while improving the level of customer service provided

Front 5

PD and consumers

Back 5

PD is invisible to most consumers, many take it for granted; only notice it if something goes wrong or they have special needs

Front 6

physical distribution concept

Back 6

all transporting, storing, and product-handling activities of a business and a whole channel system should be coordinated as one system that seeks to minimize the cost of distribution for a given customer service level

Front 7

to implement PDC...

Back 7

1. decide what service level to offer 2. take into account order processing, inventory management, shipping, storage, and returns 3. find lowest total cost for service level

Front 8

total cost approach

Back 8

evaluating each possible physical distribution system and identifying the total costs of each alternative system

Front 9

total cost approach (cont.)

Back 9

all of the costs—including transportation, inventory, packing and damage—are identified and considered for each possible PD system; there are so many possible combinations of physical distribution functions in each PD system that identifying all the alternatives is sometimes difficult

Front 10

supply chain

Back 10

the complete set of firms, facilities and logistic activities involved in procuring materials, transforming them into intermediate and finished products, and distributing them to customers (may involve more firms than a distribution channel)

Front 11

JIT (just-in-time) inventory

Back 11

necessitates close coordination and a cooperative relationship between all channel members, many times an increased number of participants contributes to the final product with JIT

Front 12

EDI (electronic data interchange)

Back 12

sets a standard, by putting information in a structured format that allows suppliers and customers to access each other’s computer systems. requires trust (to share info.), standards and protocols to link information. brings buyers and suppliers closer together

Front 13

ethical issues in PD

Back 13

false info. on availability of products, expectations of delivery times, intentional delays of order confirmations, shifting inventory holding burden

Front 14

transporting function

Back 14

the marketing function of moving goods. Transporting gets products to the right place at the right time, thereby adding value to a marketing strategy

Front 15

transportation cost

Back 15

transportation is a much higher percentage of the selling price for inexpensive goods, its a lower percentage for products that have a higher per-unit value

Front 16

transportation by rail

Back 16

can move large loads at low cost, but somewhat slow and limited by tracks

Front 17

transportation by truck

Back 17

most flexible as far as where it can go, also very fast, but the most expensive (75% of all US consumer goods go by truck at some point)

Front 18

transportation by water (boat)

Back 18

wide variety of goods and very cheap, can go international, but also very slow (can't use for perishables)

Front 19

transportation by air (plane)

Back 19

fastest delivery method, but also expensive and limited to where it can go (many times a truck needs to accompany it)

Front 20

piggybacking

Back 20

more than one transportation method used to get a product where it needs to go (can be helped by things like loading truck trailers directly onto trains, etc.)

Front 21

storing function

Back 21

the marketing function of holding goods so they’re available when they’re needed. Storing is necessary when production does not evenly match consumption and it can increase the value of goods by making them more available when customers want them

Front 22

storing allows...

Back 22

pricing to be more steady; producers to manufacture larger quantities of a product and to take advantage of economies of scale; increased variability and thus, flexibility within the channel

Front 23

storing costs

Back 23

interest expense/opportunity cost; storage facilities and maintaining them; handling costs; damage to products in inv; risks like theft/fire; inv. could become obsolete

Front 24

private v public storing facilities

Back 24

Private warehouses: storing facilities owned or leased by companies for their own use; Public warehouses are independent storing facilities offering all the storing and regrouping activities of a company’s warehouse, but they are open to many firms

Front 25

distribution center

Back 25

a special kind of warehouse designed not so much to store products, but rather designed to speed the flow of goods and avoid unnecessary storing costs