Marketing Strategy in Logistics

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VILNIUS GEDIMINAS TECHNICAL UNIVERSITY
BUSINESS MANAGEMENT FACULTY
DEPARTMENT OF INTERNATIONAL ECONOMICS AND BUSINESS MANAGEMENT

COURSE WORK ON MARKETING STRATEGY IN LOGISTIC SECTOR

Prepared by st. S.Druskinis, TVMu-07

Checked by lect. N. Ambrusevič

Vilnius

2008

Introduction

MARKETING AND LOGISTIC INTERFACE

The interface between logistics and marketing is critical to the delivery of customer service. Practitioners and researchers have long recognized the importance of customer service in achieving customer satisfaction. Indeed, organizations often succeed or fail depending on their levels of customer service.

However, achieving outstanding customer service levels is complex and challenging because it involves interfunctional co-ordination, especially between the logistics and marketing functions. Without the successful link of logistics and marketing customer services, the firm may be unable to meet customer expectations, resulting in a dissatisfied customer or a lost sale. Logistics customer service activities provide place, time, and form utility, by ensuring the product is at the right place, at the time the customer wants it, and in an undamaged condition. Marketing customer services facilitate possession utility by creating awareness of the product, offering a mechanism such as price, by which the buyer-seller exchange can take place, and often offering follow-up service and warranty on the product. Interfunctional co-ordination is important since outstanding customer service requires all of the above activities. Logistics is usually concerned with satisfying the supply of the customers’ needs and wants in the marketing channel (or a distribution channel or a supply channel), while marketing usually focuses on satisfying the demands of customers’ needs and wants in the same marketing channel. For example, a couple of essential inbound and outbound contributions of the logistics activities in a marketing channel are the procurement of materials and components from the suppliers, and the physical distribution of the finished goods to the customers. Other fundamental logistics activities are transportation, warehousing, inventory management and material handling. In addition, the marketing activities contribute to the promotion and sales activities in a marketing channel. Other typical marketing activities are public relations, sales promotions, merchandising, pricing, communication, and financing incentives. Altogether, marketing activities and these logistics activities may be seen as a chain of interdependent activities that complement each other in order to facilitate the exchange process between the buyers and the sellers that are involved in the upstream and downstream activities in a marketing channel. Accordingly, marketing and logistics contain a sequence of conflicting activities such as procurement, promotion, sales, and distribution.

PROBLEMS AND TOPICALITIES

Traditionally, marketing consists of two separate but interconnected principal parts, namely the stimulation of demand and the satisfaction of demand. On the one hand, a principal part of the marketing activities strives to obtain a demand for something that is offered in the marketplace. On the other hand, the other principal part of the marketing activities strives to service or match the obtained demand in the market place. The interdependence between logistics and marketing may be seen as mutual and strongly interdependent. For example, a marketing activity may be dependent on the logistics activities in a marketing channel, and vice versa. The malfunctioning of one activity may imply the well functioning of other activities in a marketing channel. Therefore, the satisfaction of supply and the satisfaction of demand of customers’ needs...
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