Customer Service and Cost Reduction

By | February 13, 2012

A company cannot reduce the cost of distribution by performing cheap distribution functions. The overall cost has to be reduced that is compatible with the firm’s objective and does not neglect the customer satisfaction. In marketing management main aim is to provide best customer services and earn maximum profit.

Factors which influence the decision of warehouse location are:

(i) Type of the product: If the product is perishable, the warehouse must be located nearby to reach as early as possible to avoid spoilage to perishable goods.

(ii) Transportation cost: Chooses a location that generates lowest transportation cost.

Proximity to markets: Warehouse must be located near the markets.

(iii) Rent: Rent of the warehouse should be reasonable.

(iv) Supply: Warehouses must be located near some residential area from where labour can be hired.

(v) Taxes: Taxes should not be very high.

(vi) Competition: Must remember the element of competition while choosing the warehouse.



What would be the most likely mode of transportation for the following products and why?

(i) Soft drinks

(ii) Coal

(iii) Refrigerator

(iv) Industrial Plant and Machinery

(v) Industrial Chemicals

(vi ) Potato Chips

Soft drinks: It is a consumer good that requires extensive distribution so roadways would be the most likely mode of transportation.

(ii) Coal: It is an industrial good and is bought in bulk. So Railways would be the most likely mode of transportation.

(iii) Refrigerators: It is heavy product and can be transported to showrooms via roadways.

(iv) Industrial Plant and Machinery: It is a heavy and bulky product, it can be moved through railways.

(vi) Industrial Chemicals: They can be transported via pipelines. It is economical and easy mode to transport them.

(vi) Potato Chips: They are fast moving consumer goods which should be available everywhere which requires extensive distribution. So Roadways would be the most likely mode of transport through customer satisfaction. Physical distribution activities have to balance between cost reduction and customer services. It is key to provide standard level of services to customers at lowest possible prices.

What is the significance of marketing logistics in Marketing Management? Outline its role for a Mumbai based toilet soap manufacturer producing several nation brands.

Marketing logistics of goods in marketing management has a great significance. It is of immense importance as it helps to handle various important activities like transportation, inventory maintenance and if these activities are performed efficiently channel members can earn healthy profits, raise market share, and improve customer service.

– Efficient physical distribution system enables the availability of the products when and wherever required by the customer. It creates time utility and place utility and maximizes the sale of the product.

– Firm can offer better services and attract more customers, which will lead to increase in sales volume.

– Products are now available at the distant places from the area of production.

– It enables smooth movement of goods. It provides competitive strength. Inefficient physical distribution will lead to loss of customers.

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