Managing Product Movement

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. In this section we examine the tasks that must be carried out in order to physically move products to customers. In some cases the marketer will take on the responsibility of carrying out some 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.

In this part of the Principles of Marketing Tutorials we explore the movement of product 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 provide an in-depth examination of three major tasks that the marketer or distribution service providers may need to carryout in order to ship products to customers. These tasks include:

  • Ordering and Inventory Management
  • Product Storage
  • Transportation

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