Marketing logistics value: Managing the 5 P's
In order to position logistics in its proper role in today's business environment, logistics leaders will have to do a better job of communicating, or marketing, logistics. The time for lamenting the lack of interest in logistics from senior management is over, and the time to become proactive is here. The logistics story will be understood when all logistics leaders begin to take the marketing initiative and the successes of the discipline are recognized. Logistics executives are eager to be considered important players in the corporate game. They want to be involved in important decisions, to do something meaningful for the company, and to be recognized by their peers as members of a winning team. However, it seems that sales, marketing, and manufacturing enjoy the focus of management attention. Why? Let us suggest that logistics executives have done a poor job of marketing logistics within the organization.
This concept of "marketing" logistics borrows from the traditional concept of marketing. In other words, identify your customers, identify their needs, and combine the firm's resources to meet those needs. However, the concept of logistics marketing goes a little further. The purpose of this paper is to introduce the concept of the 5 P's and to provide the logistics executive with a framework for its implementation. The following discussion will focus on product, price, place, promotion, and people as elements of the logistics marketing mix.1 A model showing the relationships among these five elements can be seen in Exhibit 1. PRODUCT The logistics executive does not have the traditional "product" to market. The logistics product is service, which can be different depending on the customer group. The first step, then, in logistics marketing is to identify the customer. Research has shown that logistics executives have multiple customers, both internal and external to the firm, and that the needs of these customers can be different.2 Internal customers, like marketing and manufacturing, might require superior logistics service on customer and plant deliveries. Senior management, as an internal customer, might require lowest possible logistics cost so the impact on the firm's bottom line can be minimized.3 The logistics executive must clearly understand how logistics influences other functions such as marketing and manufacturing. Logistics cannot be managed in a vacuum and the logistics executive must make the effort to thoroughly understand and appreciate the challenges being faced by the other functions.
The logistics needs of external customers are constantly growing and changing. The logistics executive must be sensitive to this, along with being aware of what is driving these changes. Most external customers are not traditional consumers but individuals in other organizations who are having their performance measured on certain goals. Logistics service offerings to these industrial customers must include not only the goals and requirements of the providing firm but also the goals of the receiving firm.
These customer requirements will drive the service, or product, offerings from logistics. Customers will no longer accept assembly line types of service offerings, or the "one size fits all" mentality. They expect logistics to be able to develop and implement service bundles that specifically meet their needs. This job shop mentality is what endears logistics to both internal and external customers.4
Traditional logistics services would include order fill, on-time delivery, zero damage, and accurate invoicing. These are how firms competed with one another and gained competitive advantage. This is no longer the case. Today, these logistics services can be called "reliability" services. Customers expect 100 percent conformance at all times. Doing them well will not gain a firm business but performing them poorly will cost a firm market share. For example,...
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