Amity International Business School

International Strategic Marketing

Session Twenty Six
Logistics
Sandeep Bhasin
Asst. Professor
AIBS, NOIDA
sbhasin@amity.edu
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Amity International Business School

Objectives
Channel objectives and constraints and terminologies; Channel innovation

References:
Global Marketing Management, Page 422 - 430

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Amity International Business School

Channel Functions
Information
Promotion
Contact

Matching
Negotiation
Physical Distribution

Financing
Risk taking

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Amity International Business School

Channel Behavior and Conflict

The channel will be most effective when:
each member is assigned tasks it can do best.
all members cooperate to attain overall channel goals and satisfy the
target market.
Focus on individual goals leads to conflict
Horizontal Conflict occurs among firms at the same level of the
channel.
Vertical Conflict occurs between different levels of the same channel

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Amity International Business School

Channel Objectives
Understanding Customer Characteristics
Industrial Products
Mass Market Products

Understanding Product Characteristics

Standardization
Perishability
Bulk
Service Requirement

Middleman Characteristics
Understanding Cherry-Pickers

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Amity
InternationalDecisions
Business School
Channel
Design

Analyzing Consumer Service Needs

Setting Channel Objectives & Constraints

Identifying Major Alternatives

Intensive
Distribution

Selective
Distribution

Evaluating the Major Alternatives

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Exclusive
Distribution

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Logistics
Involves entire supply chain
Increasing importance of logistics
effective logistics is becoming a key to winning and keeping
customers.
logistics is a major cost element for most companies.
the explosion in product variety has created a need for improved
logistics management.
information technology has created opportunities for major gains in
distribution efficiency

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Amity International Business School

Goal of Logistics Systems

Provide a Targeted Level of Customer Service at the Least Cost.

Maximize Profits

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Amity International Business School

Logistics Functions

Order Processing
Warehousing
Inventory Management
Transportation
Design system to minimize costs of attaining objectives

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Amity International Business School

Supply Chain

The connected chain of all of the business entities, both internal and external to
the company, that perform or support the logistics function

Supply Chain Management

A management system that coordinates and integrates all of the activities

performed by supply chain members into a seamless process, from the
source to the point of consumption, resulting in enhanced customer and
economic value

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

Benefits of Supply Chain Management

Supply chain oriented companies commonly report:
Lower inventory, transportation, warehousing, and packaging costs

Greater supply chain flexibility

Improved customer service

Higher revenues
Increased performance and profitability

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

Logistics

Supply
Chain
Team

Logistics Information System

The process of strategically managing the efficient flow and storage

of raw materials, in-process inventory, and finished goods from point
of origin to point of consumption.

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

Sourcing & Procurement

Production Scheduling
Order Processing
Inventory Control
Warehouse & Materials Handling
Transportation
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Amity International Business School

Channels of Distribution
An organized network of agencies and institutions which, in combination,
perform all the activities required to link producers with the users to
accomplish the marketing task
The American Marketing Association

Distribution is the physical flow of goods through channel. Channels are

coordinated groups of individuals or firms that adds utility to a product or
service

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

Channel Objectives
The purpose of marketing channels is to create utility for customers

Place: Availability of products/ brands

Time: Availability of product when desired by the customers
Form: The product is processed, prepared, and ready to use
Information: Product features and benefits

Cokes leadership position is based on its ability to put Coke within an arms
reach of desire. Thats called as PLACE UTILITY in Marketing

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

A Case in Point
A international manufacturer of construction products that emphasized the
speedy service provided by a sales force in radio-equipped station wagons
made a mistake of offering too much service in the USA. The company prided
itself on the fact that maximum of two hours elapsed between the receipt of
customer order from a construction site and the actual delivery of the
product.
Although the customers gave a high score for service to the manufacturer,
the manufacturer soon realized that they were at a serious cost-disadvantage
against the competition.

Source: Global Marketing Management, Seventh Edition, Pearson

Sandeep Bhasin, Assistant Professor (Marketing)
Amity University, NOIDA, UP - INDIA

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Amity International Business School

Channel Design and Customer Characteristics

Number of Customers
Geographic Distribution of Customers
Monthly Household Income
Shopping Habits
Customer reactions to different selling methods

These characteristics differ from region to region and country to country

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

Channel Design and Product Characteristics

Product Standardization
Perishability
Service requirements
Unit Price

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

A Case in Point
In 1991, Anderson Consulting assisted Moscow Bread Company in improving
distributing bread in the Russian capital. In Russia, the consumers stand in
queue every morning to gat their share of fresh bread. For the manufacturer
a lot of time was spent on paperwork which was resulting in distribution of
stale bread.
Anderson Consulting found that as much as 1/3rd bread produced was
wasted.
The consulting firm came with a simple solution: Plastic Bags to keep the
bread fresh. This extended the shelf life of the bread by over 600%

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

Distribution Channels
Mail Order/ Door-to-Door/ Manufacturers own stores

Manuf. Sales
Force

Retailer

Wholesaler

Retailer

C&F Agents
Manuf. Sales
Force

Consumer

Manufacturer

Agent

Retailer

Wholesaler
Sandeep Bhasin, AssistantWholesaler
Professor (Marketing)
Amity University, NOIDA, UP - INDIA

Retailer
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Marketing flow: Forklift Trucks

Physical Flow
Supplier

Transporters

Manuf.

Transp.

Dealers

Transp.

Custmr

Title Flow
Supplier

Manuf.

Dealers

Custmr

Payment Flow
Supplier

Banks

Manuf.

Banks.

Dealers

Banks.

Custmr

Manuf.

Banks/
Transp.

Dealers

Banks/
Transp.

Custmr

Information Flow
Supplier

Banks/
Transporters

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Source: Operations Management - 5th Edition, Roberta Russell & Bernard W. Taylor, III

Amity International Business School

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Amity International Business School

Role of Marketing Channels

Gathering information about potential and current customers,
competitors, and other forces in the marketing environment
Develop and disseminate persuasive communications to stimulate
purchasing
Negotiate and reach agreements on price and other terms
Place orders with the manufacturers
Acquire funds to finance inventories
Assume risks connected with carrying out channel work
Oversee actual transfer of ownership

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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Amity International Business School

Channel Alternatives
Types of Intermediaries:
Selling a Satellite Radio

As part of Original equipment - a tie-up with

automakers
Selling through Auto-dealers
Rental Car companies
Specialized radio dealers
Company stores
Online retailers
Mail-order
Mass Merchandisers
Sandeep Bhasin, Assistant Professor (Marketing)
Amity University, NOIDA, UP - INDIA

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Amity International Business School

Channel Alternatives
Number of Intermediaries:
Exclusive Distribution
Selective Distribution
Intensive Distribution

Sandeep Bhasin, Assistant Professor (Marketing)

Amity University, NOIDA, UP - INDIA

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