Managing Product Movement

Customer Knowledge

Inventory management can be fine-tuned to respond to customer’s needs.  As a marketer learns more about a customer they begin to observe trends in how and when purchases are made.  Combining customer knowledge with forecasting techniques allows the marketer to better estimate product demand and inventory requirements.  As we discussed in the What is Marketing? Tutorial, the key to understanding customers is to have in place a customer relationship management (CRM) system that tracks all customer activity and allows for data mining activities that analyze customer information in order to identify patterns in customer activity.

Channel Relationships

While the marketer who uses channel members to sell consumer products has access to information for their immediate customers (e.g., resellers) they often do not have access to sales and customer behavior information controlled by the party selling to the final consumer (e.g., retailer).  Knowing the demand patterns at the final consumer level can give marketers good insight into how the reseller may order.  Developing strong relationships with the holder of consumer information can result in the reseller sharing this information with the marketer.  In fact, as we noted in the Distribution Decisions Tutorial, some retailers allow marketers direct access to real-time, store-level inventory information so the marketer can monitor how products are selling in stores and be in a position to respond quickly if inventory needs change.

Physical Product Handling

An often overlooked area of inventory management involves the actions and skills needed to prepare a product to move from one point to another.  Some products require special attention be given to ensure the product is not damaged during shipment.  Such efforts must be carefully balanced against increased costs that arise (e.g., stronger packaging) in order to provide greater protection to products.  Because of this, many marketers will accept the fact that some small level of damage to occur during the distribution process.