A study on Lo­gis­tics Man­age­ment

Economic Challenger - - CONTENTS - - N. Srini­vasku­mar

The length and num­ber of chan­nel mem­bers varies from prod­uct to prod­uct, sit­u­a­tion to sit­u­a­tion and or­ga­ni­za­tion to or­ga­ni­za­tion. The clas­si­fi­ca­tion of the chan­nel of distri­bu­tion can be done based on the length or the num­ber of mid­dle­man in­volved in mov­ing the prod­ucts from man­u­fac­turer to buy­ers. Chan­nel de­sign should be­gin with the fi­nal buyer and work back­ward to the man­u­fac­turer and the fi­nally se­lected chan­nel must be to­tally ap­pro­pri­ate to the ba­sic ob­jec­tives of the or­ga­ni­za­tions’ mar­ket­ing pro­gramme. The chan­nel struc­ture must be flex­i­ble enough so that the use of one chan­nel de­sign doesn't re­sult in clo­sure of doors for other de­signs.

Mar­ket­ing chan­nels can be viewed as sets of in­ter­de­pen­dent or­ga­ni­za­tions in­volved in the process of mak­ing a prod­uct or ser­vice avail­able for use. Mar­ket­ing chan­nels not only sat­isfy de­mand by sup­ply­ing goods and ser­vices at the right place, right quan­tity, right qual­ity for right price but they also stim­u­late de­mand through pro­mo­tional as­pects.

Dis­tribut­ing Buyer prod­ucts be­gins with the man­u­fac­turer and ends with the ul­ti­mate Buyer. Be­tween the two there is usu­ally at least one mid­dle­man - a re­tailer. In the distri­bu­tion chan­nel the last mid­dle­man is a re­tailer. He is also the last link be­tween the pro­ducer and the Buyer. The re­tailer is di­rectly in con­tact with the ul­ti­mate buyer. It is be­lieved that the re­tailer may gen­er­ally

in­flu­ence Buyer brand choice by ex­ag­ger­at­ing the band/prod­uct at­tributes of a spe­cific brand, specif­i­cally in case of not

so pop­u­lar brands. In other words, the re­tailer may sup­port some brand or dis­favour some de­pend­ing upon his own re­la­tion­ship with the brand mar­ket, or the mar­gin avail­able from the spe­cific brand con­cerned. When the re­tailer sup­ports a brand the pos­si­bil­ity of success of that brand is high, un­less the brand it­self is of in­fe­rior qual­ity.

In to­day's econ­omy most man­u­fac­tur­ers sell their prod­ucts through a host of mar­ket­ing in­ter­me­di­aries per­form­ing a va­ri­ety of func­tions and bear­ing a va­ri­ety of names. The var­i­ous agen­cies in­volved in per­form­ing th­ese func­tions are called chan­nel mem­bers.

Mar­ket­ing chan­nels re­duce the Buyer's search, wait­ing time, stor­age and other costs by less­en­ing their involvement. Mar­ket­ing chan­nels are used where the prod­ucts are fre­quently pur­chased in small quan­ti­ties and the Buy­ers are very scat­tered over very large area. Chan­nel de­sign is also af­fected by the char­ac­ter­is­tics of mid­dle­man who are avail­able on the chan­nel line. A cre­ative and well-ex­e­cuted mar­ket­ing chan­nel pro­vides some of the more po­tent means by which man­u­fac­tur­ers en­hance their abil­ity to com­pete do­mes­ti­cally and in­ter­na­tion­ally. In the busi­ness world, Buy­ers them­selves dis­cover many in­flu­ences and prob­lems en­coun­tered by Buy­ers through the spon­ta­neous sug­ges­tions.

The Buyer can ob­tain in­for­ma­tion from any of sev­eral sources. Th­ese in­clude: 1. Per­sonal sources Fam­ily, friends,

neigh­bors. 2. Com­mer­cial sources Ad­ver­tis­ing, Sales

peo­ple, Pack­ag­ing. 3. Pub­lic sources Mass Me­dia, Buyer

rat­ing or­ga­ni­za­tions. 4. Ex­pe­ri­en­tial sources Han­dling, ex­am­in­ing

us­ing the prod­uct. The re­la­tion­ship be­tween the Buyer's ex­pec­ta­tions and the prod­ucts per­ceived per­for­mance de­pends on whether the prod­uct meets ex­pec­ta­tions there by sat­is­fy­ing the Buy­ers or falls short of ex­pec­ta­tions and mak­ing the Buyer dis­sat­is­fied.

Un­der­stand­ing the Buy­ers’ needs, wants and buy­ing be­hav­iour is at the heart of de­liv­er­ing suc­cess­ful prod­ucts to the mar­ket place.

In a vast coun­try like In­dia char­ac­ter­ized by marked in­ter-re­gional dif­fer­ences in phys­i­cal, cli­matic, so­cio-eco­nomic and cul­tural features which may, in no small mea­sure, lead to per­cep­ti­ble re­gion-to-re­gion vari­a­tions in the Buyer be­hav­iour, the in­ter-re­gional ho­mo­gene­ity as­sump­tion may not be real­is­tic.

Buyer be­hav­iour con­cen­trates on un­der­stand­ing the at­ti­tudes, at­tributes, be­liefs, val­ues, norms of the Buy­ers and it analy­ses the way the Buyer con­sciously or un­con­sciously fol­lows any of th­ese. Buy­ers do not make de­ci­sions in vac­uum. Their pur­chases are strongly in­flu­enced by cul­tural, so­cial, per­sonal and psy­cho­log­i­cal fac­tors.

One of the key el­e­ments of chan­nel de­sign is fig­ur­ing out how many sales out­lets should be es­tab­lished in a given ge­o­graphic area and what kind of par­tic­i­pa­tion in the mar­ket­ing flows is re­quired from each of the out­lets so that needs of the ex­ist­ing, po­ten­tial and past Buy­ers may be ad­e­quately served.

Good hu­man re­sources prac­tice can also mo­ti­vate or­ga­ni­za­tional mem­bers to do out­stand­ing work. It is ba­si­cally a method of de­vel­op­ing po­ten­tial­i­ties of em­ploy­ees so that they get max­i­mum sat­is­fac­tion of their work and give their best ef­forts to the or­ga­ni­za­tion.

The need for in­de­pen­dent dis­trib­u­tors is grow­ing through out the world be­cause of in­creased cost of sales, large Buyer base, large quan­tity pro­duc­tion of stack­able items, sales in small quan­ti­ties and need for rapid and timely de­liv­ery of prod­ucts. New mar­ket­ing op­por­tu­ni­ties are emerg­ing in In­dian mar­ket in­volv­ing wider use of distri­bu­tion net­work for han­dling dif­fer­ent range of prod­ucts. The bud­gets and lib­er­al­iza­tion in the re­cent years have sig­nif­i­cantly boosted the dis­trib­u­tors' in­come.

The Buyer mar­ket is fast in­creas­ing which re­quires a large net­work of chan­nel distri­bu­tion. The so­cial changes such as small fam­i­lies, late mar­riages are some of other fac­tors that are ne­ces­si­tat­ing more mid­dle­man. The need for sup­ply­ing prod­ucts as nearer to the Buyer as pos­si­ble is as­sum­ing greater sig­nif­i­cance be­cause of in­creased num­ber of work­ing women and more ur­ban­iza­tion.

Eco­nomic devel­op­ment, which is the fo­cus of many de­vel­op­ing coun­tries, is also caus­ing in­crease in the busi­ness.

Added to the above eco­nom­ics ori­ented ex­pla­na­tions for the growth of ex­is­tence of chan­nel struc­ture fac­tors like tech­no­log­i­cal, cul­tural, ge­o­graph­i­cal, so­cial and po­lit­i­cal also have in­flu­ence on the mar­ket­ing chan­nel length and struc­ture. Im­proved tech­nol­ogy in in­for­ma­tion and com­mu­ni­ca­tion is also re­sult­ing in the in­crease in the chan­nels of distri­bu­tion. Lat­est im­prove­ments in com­mu­ni­ca­tion tech­nol­ogy are fa­cil­i­tat­ing elec­tronic data stor­ing and ex­change among the chan­nel mem­bers. New meth­ods of trans­port, freight han­dling and co­or­di­nated meth­ods of trans­port­ing have pro­duced a num­ber of new model com­bi­na­tions in­clud­ing con­tain­ers on ships, which did not ex­ist ear­lier. The com­puter rev­o­lu­tion has made pos­si­ble new man­age­rial models vi­tal to the suc­cess­ful man­age­ment of lo­gis­tics and other mar­ket­ing ac­tiv­i­ties.

The start­ing point of good distri­bu­tion sys­tem is to study what the Buyer wants and what the com­peti­tors are of­fer­ing. The com­peti­tor's char­ac­ter­is­tics also in­flu­ence the chan­nel strat­egy. A prod­uct may be the best in the world but it will be of lit­tle use un­less it reaches the Buyer where he wants and when he wants. In all cases where Buy­ers are in­volved the mid­dle­man are nec­es­sary


"Distri­bu­tion Chan­nels in Buyer Durables " by Agar­wal J.K. - Lok Udyog - Jan - Feb 1979. "Mar­ket­ing Man­age­ment " by Philip Kotler Mil­le­nium Edi­tion Loudon, D.L. and A.J. Della Bitta, "Buyer Be­hav­iour Con­cepts and Ap­pli­ca­tions", Mc Graw - Hill book Co., New York; Sec­ond Edi­tion, pp. 380-430. Stern­thal B. and Craig, C. S. " Buyer Be­hav­iour - An in­for­ma­tion per­spec­tive", Pren­tice Hall of In­dia, Fourth Edi­tion. John, A Howard and Sheth, N. Ja­gadish "The the­ory of Buyer be­hav­iour", John Wil­ley and Sons, Incl., New York; Fifth Edi­tion, pp. 193215.

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