Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Distribution Customer
Service and Logistics
Text © The McGraw−Hill
Companies, 2002340 Chapter 12
and then mailed them to Pepperidge Farm’s bakeries. Now the company has instant
networked data sharing between sales, delivery, inventory, and production. Many of
the company’s 2,200 drivers use hand-held computers to record the inventory at
each stop along their routes. They use the Internet to transmit the information into
a computer at the bakeries—so that cookies in short supply will be produced. The
right assortment of fresh cookies is quickly shipped to local markets, and delivery
trucks are loaded with what retailers need that day. Pepperidge Farm now moves
cookies from its bakeries to store shelves in about three days; most cookie produc-
ers take about 10 days. That means fresher cookies for consumers and helps to
support Pepperidge Farm’s high-quality positioning and premium price.^11
In summary, using computers to share information and coordinate activities is
helping some firms and channels compete successfully for customers and increase
their own profits.Most of the ethical issues that arise in the PD area concern communications
about product availability. For example, some critics say that Internet sellers too
often take orders for products that are not available or which they cannot deliver
as quickly as customers expect. Yet a marketing manager can’t always know precisely
how long it will take before a product will be available. It doesn’t make sense for
the marketer to lose a customer if it appears that he or she can satisfy the customer’s
needs. But the customer may be inconvenienced or face added cost if the marketer’s
best guess isn’t accurate. Similarly, some critics say that stores too often run out of
products that they promote to attract consumers to the store. Yet it may not be pos-
sible for the marketer to predict demand, or to know when placing an ad that
deliveries won’t arrive. Different people have different views about how a firm
should handle such situations. Some retailers just offer rain checks.
Some suppliers criticize customers for abusing efforts to coordinate PD activities
in the channel. For example, some retailers hedge against uncertain demand by
telling suppliers that they plan to place an order, but then they don’t confirm the
order until the last minute. They want to be able to say that it wasn’t an order in
the first place—if sales in the store are slow. This shifts the uncertainty to the sup-
plier and reduces the retailer’s inventory costs. Is this unethical? Some think it is.
However, a marketing manager should realize that the firm’s order policies can
reduce such problems—if the cost of providing the service customers want is higher
than what they will pay. In other words, this may simply be another trade-off that
the marketer must consider in setting up the PD system.^12Ethical issues
may arise
Transporting costs can be a large part of the total cost for heavy products that are low in value, like sheet aluminum. But the cost of
transportation adds little to the total cost of products—like pharmaceuticals—that are already valuable relative to their size and weight.