Physical Distribution in Marketing
Chapter
9
Chapter 2 Physical
Distribution
•
Physical
Distribution
Chapter
Plan
Chapter 2 Physical
Distribution
•
Concept
&
Definition
•
Logistics
•
Relation
with
other Marketing Mix
Variables
•
Importance
of
Physical
Distribution
•
Components
of
Physical
Distribution
Definition
Chapter 2 Physical
Distribution
•
Physical
distribution ‘involves planning,
implementing
and
controlling
the
physical
flows
of
materials
and final
goods from
place
of
production
to the
place
of end
use
to
satisfy buyers
‘
needs.’’
–
Philip
Kotler
Logistics
Chapter 2 Physical
Distribution
•
Logistics management includes both
physical distribution
and
physical
supply
Relation with Marketing
Mix
Chapter 2 Physical
Distribution
A.
Product-physical
Distribution
•
FMCG- Mass
Distribution
•
Perishable product- shortest
distri.
B.
Price-Physical Distribution
•
Reciprocal
Relationship
C.
Promotion-Physical
Distribution
–
Grab
the market
potential
Objectives of Physical
Distribution
Process
Chapter 2 Physical
Distribution
1.
Total Cost
Concept
2.
Customer Service Concept
a.
Time
b.
Dependability
c.
Communication
d.
Convenience
e.
Accuracy
Objectives of Physical
Distribution
Process
Chapter 2 Physical
Distribution
3.
Distribution Cost-
service
trade
offs
•
Achieve right balance between
them
•
Flexibility is important in balancing the
cost
and
service
Component of Physical
Distribution
Chapter 2 Physical
Distribution
1.
Order Processing
2.
Transportation
3.
Warehousing
4.
Material Handling
5.
Inventory Management
and
Control
Order
Processing
Chapter 2 Physical
Distribution
a.
Verifying customers’
credibility
b.
Checking
for any
outstanding
payment
c.
Monitoring
stock
level
d.
Preparing invoice
e.
Arranging transporter
f.
Sending
the
consignment and
information
Selection of the transportation
mode
Chapter 2 Physical
Distribution
1.
Suitability
or
nature
of
product
2.
Affordability
3.
Availability
4.
Customers’ specifications
5.
Competitor’s transportation
mode
Warehousing
Chapter 2 Physical
Distribution
•
Type of
warehouse
1.
Private
warehouse
2.
Public
warehouse
3.
Distribution
warehouse
4.
Bonded
warehouse
5.
Mother
depot
–
Number and Size of
Warehouses
Warehousing
Chapter 2 Physical
Distribution
•
Location
–
Availability of basic facilities such as
electricity, water, labour, transport
etc.
–
Space
–
Roads
–
Government rules and
regulations
Warehousing
Chapter 2 Physical
Distribution
•
Layout
1.
Proper lighting, ventilation, and
fire
precaution
2.
Protection from temperature, moisture,
etc
3.
Security
arrangement
4.
Space
arrangement
Warehousing
Chapter 2 Physical
Distribution
•
Storage
Methods
–
Optimum use of
space
–
Ease
in storing and
picking
–
Accurate identification of
material
–
Possible to follow
FIFO
–
Provision for fast moving
items
Material
Handling
Chapter 2 Physical
Distribution
•
Involves placing
and
positioning of
material
to
facilitate movement and
storage
•
Common equipments
are
conveyors,
bucket Elevators, hoists,
lifts,
cranes,
forklifts, trolleys, dumpers, trailors,
trucks
Inventory Management &
Control
Chapter 2 Physical
Distribution
•
Major
tool to cost
reduction
objective
•
Just –in
–time
–
Reliability of
suppliers
–
Close
communication between suppliers and
customers
–
Attention to
quality
–
Adequate storage facilities and
transportation
options
Economic Order Quantity
(EOQ)
Chapter 2 Physical
Distribution
•
At EOQ
Ordering Cost=Carrying
Cost
•
EOQ
=Square route
(
2AP/CU)
– Where, A= annual demand in units
B= Ordering Cost per
Order
C= Carrying
Cost
U= Unit
Price
Summary
Chapter 2 Physical
Distribution
•
Physical
Distribution
is
highly co-related
with
other variables
of
marketing
mix
•
Order
processing, transportation,
warehousing, material handing and
inventory management
and
control are
important components
of
physical
distribution
Summary
Chapter 2 Physical
Distribution
•
Material handling involves decision on
placing
and
positioning
of
material to
facilitate
their
movement
and
storage.
•
Inventory control
is a
major
tool for
cost
reduction,
JIT and EOQ are
useful
techniques
“Like”
us on
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http://www.facebook.com/welearnindia
“Follow” us on
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http://twitter.com/WeLearnIndia
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Physical distribution in marketing involves the planning, implementation, and control of the physical flow of materials and goods from production to end-use to meet buyer needs. This process includes logistics management, components like order processing, transportation, warehousing, and inventory management, and objectives such as cost management and customer service. Balancing distribution cost and service trade-offs is crucial for achieving efficiency in physical distribution.
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Presentation Transcript
Chapter 9 Physical Distribution Chapter 2 PhysicalDistribution
Chapter Plan Concept & Definition Logistics Relation with other Marketing Mix Variables Importance of Physical Distribution Components of Physical Distribution Chapter 2 PhysicalDistribution
Definition Physical distribution involves planning, implementing and controlling the physical flows of materials and final goods from place of production to the place of end use to satisfy buyers needs. Philip Kotler Chapter 2 PhysicalDistribution
Logistics Logistics management includes both physical distribution and physical supply Chapter 2 PhysicalDistribution
Relation with Marketing Mix A. Product-physical Distribution FMCG- Mass Distribution Perishable product- shortest distri. B. Price-Physical Distribution Reciprocal Relationship C. Promotion-Physical Distribution Grab the market potential Chapter 2 PhysicalDistribution
Objectives of Physical Distribution Process 1. Total Cost Concept 2. Customer Service Concept a. Time b. Dependability c. Communication d. Convenience e. Accuracy Chapter 2 PhysicalDistribution
Objectives of Physical Distribution Process 3. Distribution Cost- service trade offs Achieve right balance between them Flexibility is important in balancing the cost and service Chapter 2 PhysicalDistribution
Component of Physical Distribution 1. Order Processing 2. Transportation 3. Warehousing 4. Material Handling 5. Inventory Management and Control Chapter 2 PhysicalDistribution
Order Processing a. Verifying customers credibility b. Checking for any outstanding payment c. Monitoring stock level d. Preparing invoice e. Arranging transporter f. Sending the consignment and information Chapter 2 PhysicalDistribution
Selection of the transportation mode 1. Suitability or nature of product 2. Affordability 3. Availability 4. Customers specifications 5. Competitor s transportation mode Chapter 2 PhysicalDistribution
Warehousing Type of warehouse 1. Private warehouse 2. Public warehouse 3. Distribution warehouse 4. Bonded warehouse 5. Mother depot Number and Size of Warehouses Chapter 2 PhysicalDistribution
Warehousing Location Availability of basic facilities such as electricity, water, labour, transport etc. Space Roads Government rules and regulations Chapter 2 PhysicalDistribution
Warehousing Layout 1. Proper lighting, ventilation, and fire precaution 2. Protection from temperature, moisture, etc 3. Security arrangement 4. Space arrangement Chapter 2 PhysicalDistribution
Warehousing Storage Methods Optimum use of space Ease in storing and picking Accurate identification of material Possible to follow FIFO Provision for fast moving items Chapter 2 PhysicalDistribution
Material Handling Involves placing and positioning of material to facilitate movement and storage Common equipments are conveyors, bucket Elevators, hoists, lifts, cranes, forklifts, trolleys, dumpers, trailors, trucks Chapter 2 PhysicalDistribution
Inventory Management & Control Major tool to cost reduction objective Just in time Reliability of suppliers Close communication between suppliers and customers Attention to quality Adequate storage facilities and transportation options Chapter 2 PhysicalDistribution
Economic Order Quantity (EOQ) At EOQ Ordering Cost=Carrying Cost EOQ =Square route ( 2AP/CU) Where, A= annual demand in units B= Ordering Cost per Order C= Carrying Cost U= Unit Price Chapter 2 PhysicalDistribution
Summary Physical Distribution is highly co-related with other variables of marketing mix Order processing, transportation, warehousing, material handing and inventory management and control are important components of physical distribution Chapter 2 PhysicalDistribution
Summary Material handling involves decision on placing and positioning of material to facilitate their movement and storage. Inventory control is a major tool for cost reduction, JIT and EOQ are useful techniques Chapter 2 PhysicalDistribution
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