Page 413 - Foundations of Marketing

380 Part 5 | Distribution Decisions

Cooperative relationships with third-party organizations, such as trucking companies,
warehouses, and data-service providers, can help to reduce marketing channel costs and boost
service and customer satisfaction for all supply-chain partners. When evaluating potential
companies to outsource to, marketers must be cautious and choose firms that are proven to be
efficient and that can help to provide excellent customer service. They also need to recognize
the importance of logistics functions, like warehousing and information technology, in reduc-
ing the physical distribution costs associated with outsourcing.
The Internet has revolutionized logistics, allowing many manufacturers to carry out
actions and services entirely online, bypassing shipping and warehousing considerations. For
example, video game and computer software manufacturers, such as Microsoft and Sony, have
both made moves away from physical goods in favor of offering an online download model for
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their products. Technological advances create new and different problems for manufacturers,
such as how to maintain a high level of customer service when customers never enter a store
or meet with a salesperson and how to deal with returns of a product that does not exist in a
physical form.
Technology, including customer relationship management systems and databases, plays
a large role in physical distribution considerations within marketing channels. It has trans-
formed physical distribution by facilitating just-in-time delivery, precise inventory visibility,
and instant shipment tracking capabilities, which help companies to avoid expensive mistakes,
reduce costs, and generate increased revenues. Information technology increases the transpar-
ency of the supply chain by allowing all marketing channel members to track the movement
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of goods through the supply chain.
Planning an efficient physical distribution system is crucial to developing an effective
marketing strategy because it can decrease costs and increase customer satisfaction. Speed
of delivery, flexibility, and quality of service are often as important to customers as costs.
Companies that offer the right goods, in the right place, at the right time, in the right quantity,
and with the right support services are able to sell more than competitors that do not. Even
when the demand for products is unpredictable, suppliers must be able to respond quickly to
inventory needs. In such cases, physical distribution costs may be a minor consideration when
compared with service, dependability, and timeliness.

Going Green

UPS: Strongly Committed to Sustainability and Efficiency

United Parcel Service—UPS for short, also nicknamed yet sturdy plastic panel sides to reduce vehicle weight
Big Brown—was an early adopter of green technology, and slash fuel consumption. In addition, UPS has teamed
testing electric vehicles during the 1930s. Today, the up with the U.S. Postal Service to track and reduce the
world’s largest package delivery firm is not only mak- carbon footprint of their transportation and delivery opera-
ing its vehicles and packaging greener, it’s also helping tions, with the dual goal of becoming greener and more
business customers develop more ecofriendly shipping efficient.
materials. Businesses can hire the UPS Eco Responsible
By switching to alternative fuels, a company that deliv- Packaging laboratory to analyze their packaging with
ers 16 million packages every working day—and many an eye toward improving sustainability while protecting
more during the hectic holiday shopping season—can products during shipping. The lab tests materials,
save money on fuel costs while being kinder to the planet. assesses recyclability, and certifies packaging that meets
UPS already has 2,500 trucks and vans that run on lique- its sustainability standards. With UPS’s assistance,
fied natural gas, compressed natural gas, or propane, or businesses can have plans for sustainable packaging
use electric or hybrid electric-gasoline engines. The com- and transportation in place before they introduce a new
c
pany recently purchased 150 trucks fitted with lightweight product.

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