Page 277 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes 14.4.2 Significance of Marketing Logistics

The importance of a logistics system lies in the fact that it leads to ultimate consummation of the
sales contract. The buyer is not interested in the promises of the seller that he can supply goods
at competitive price but that he actually does so. Delivery according to the contract is essential
to fulfilling the commercial and legal requirements. In the event of failure to comply with the
stipulated supply of period, the seller may not only get his sale amount back, but may also be
legally penalized, if the sales contract so specifies. There is no doubt that better delivery schedule
is a good promotional strategy when buyers are reluctant to invest in warehousing and keeping
higher level of inventories. Similarly, better and/or timely delivery helps in getting repeat orders
through creation of goodwill for the supplier.
Thus, as effective logistics system contributes immensely to the achievements of the business and
marketing objectives of a firm. It creates time and place utilities in the products and thereby helps
in maximizing the value satisfaction to consumers. By ensuring quick deliveries in minimum
time and cost, it relieves the customers of holding excess inventories. It also brings down the
cost of carrying inventory, material handling, transportation and other related activities of
distribution. In nutshell, an efficient system of physical distribution/logistics has a great potential
for improving customer service and reducing costs.

14.4.3 scope of the marketing logistics

The development of interest in logistics after industrial revolution and World War II contributed to
the growth in scope of logistical activities. The following areas are the major scope of logistics:

l z Demand Forecasting
l z Distribution Communication

l z Inventory Control
l z Material Handling
l z Order Processing
l z Part & Service Support
l z Plant and Warehouse side selection

l z Procurement
l z Packaging
l z Salvage & Scrap disposal
l z Traffic & Transportation

l z Warehousing & Storage
l z Time & Place Utility
l z Efficient Movement to Customer
l z Return Goods Handling
l z Customer Service

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