Managing Product Movement Tutorial

In this part of the Principles of Marketing Tutorials, we explore the decisions involved in moving product fro the marketer to the customer. In addition to enlisting the assistance of retailers and wholesalers to make products available to customers, marketers also face additional concerns when trying to meet their distribution objectives.

We begin this tutorial, by first examining how physical distribution decisions often involve analyzing the trade-off between the service level the marketer offers to customers versus the costs associated with providing these services. Next we examine the three major tasks marketers or their distribution service providers may need to carryout in order to ship products to customers. These tasks include:

In some cases, the marketer will take on the responsibility of carrying out some of these functions, while other tasks may be assigned to distribution service providers. Whether handled by the marketer or contracted to others, these functions are crucial to having a cost-effective and efficient distribution system.

It is worth noting that while most physical distribution is concerned with moving tangible products, some of the issues covered here are also applicable to intangible products, such as services and to digital products.

Trade-off Analysis: Service-Level vs. Cost