Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Distribution Customer
Service and Logistics
Text © The McGraw−Hill
Companies, 2002352 Chapter 12
ConclusionThis chapter deals with logistics activities and how
they provide timeand placeutility to improve value to
the customer. We looked at the customer service level
and why it is important.
We emphasized the relation between customer serv-
ice level, transporting, and storing. The physical
distribution concept focuses on coordinating all the stor-
ing, transporting, and product handling activities into a
smoothly working system—to deliver the desired service
level and customer value at the lowest cost.
Marketing managers often want to improve service and
may select a higher-cost alternative to improve their mar-
keting mix. The total cost approach might reveal that it is
possible bothto reduce costs and to improve service—per-
haps by identifying creative new distribution alternatives.
We discussed various modes of transporting and
their advantages and disadvantages. We also discussed
ways to reduce inventory costs. We explained why dis-
tribution centers are an important way to cut storing
and handling costs, and we explained how computer-
ized information links—within firms and among
firms in the channel—are increasingly important in
blending all of the activities into a smooth-running
system.
Effective marketing managers make important strat-
egy decisions about physical distribution. Creative
strategy decisions may result in lower PD costs while
maintaining or improving the customer service level.
And production-oriented competitors may not even un-
derstand what is happening.Questions and Problems- Explain how adjusting the customer service level
could improve a marketing mix. Illustrate. - Briefly explain which aspects of customer service you
think would be most important for a producer that
sells fabric to a firm that manufactures furniture. - Briefly describe a purchase you made where the cus-
tomer service level had an effect on the product you
selected or where you purchased it. - Discuss the types of trade-offs involved in PD costs,
service levels, and sales. - Give an example of why it is important for different
firms in the chain of supply to coordinate logistics
activities. - Discuss some of the ways computers are being used
to improve PD decisions. - Explain why a just-in-time delivery system would
require a supplier to pay attention to quality con-
trol. Give an example to illustrate your points. - Discuss the problems a supplier might encounter in
using a just-in-time delivery system with a customer
in a foreign country. - Review the list of factors that affect PD service level
in Exhibit 12-2. Indicate which ones are most likely
to be improved by EDI links between a supplier and
its customers. - Explain the total cost approach and why it may
cause conflicts in some firms. Give examples of how
conflicts might occur between different depart-
ments.- Discuss the relative advantages and disadvantages of
railroads, trucks, and airlines as transporting meth-
ods. - Discuss why economies of scale in transportation
might encourage a producer to include a regional
merchant wholesaler in the channel of distribution
for its consumer product. - Discuss some of the ways that air transportation can
change other aspects of a Place system. - Explain which transportation mode would probably
be most suitable for shipping the following goods to
a large Los Angeles department store:
a. 300 pounds of Maine lobster.
b. 15 pounds of screwdrivers from Ohio.
c. Three dining room tables from High Point,
North Carolina.
d. 500 high-fashion dresses from the fashion district
in Paris.
e. A 10,000-pound shipment of exercise equipment
from Germany.
f. 600,000 pounds of various appliances from
Evansville, Indiana. - Indicate the nearest location where you would ex-
pect to find large storage facilities. What kinds of
products would be stored there? Why are they stored
there instead of some other place?