Logistics in the Organization

   Logistics Support Marketing

   The marketing concept is a "marketing management philosophy" which holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. Thus, the marketing concept is a "customer-driven" perspective which holds that a business exists to meet customer needs. The relationships between logistics and the three critical elements of the marketing concept (customer satisfaction, integrated effort/systems approach, and adequate corporate profit). Logistics plays a key role in each of these elements in several ways.

   The "four P's" of the marketing mix require that for a firm to be successful, any marketing effort must integrate the ideas of having the right product, at the right price, publicized with the proper promotion, and available in the right place. Logistics plays a critical role particularly in support of getting the product to the right place.

   1. Product

   Product refers lo the set of utilities/characteristics that a customer receives as a result of a purchase.

   2. Price

   Price is the amount of money that a customer pays for (he product or service offering. Some of the Items that should be factored into price include discounts for buying in quantities or for belonging to a certain class of customers, discounts for prompt payment, rebates, whether inventory is offered on consignment, and who pays delivery costs.

   3. Promotion

   Promotion of a product or service encompasses both personal selling and advertising. Whereas increasing advertising expenditures or the size of the direct sales force can have a positive impact on sales, there is a point of diminishing returns. A point exists where the extra money being spent does not yield sufficiently high increases in sales or profits to justify the added expense.

   4. Place

   Place is the key element of the marketing mix with which logistics interfaces directly. Place expenditures support the levels of customer service provided by the organization. This includes on-time delivery, high order fill rates, consistent transit times, and similar issues. Customer service is an output of the logistics system. On the other hand, when the organization performs well on all the elements of the marketing mix, customer satisfaction occurs.