Importance Of Logistics In Marketing

Efficient Logistics helps marketing to satisfy customers. Some argument claim that logistics is a considerable cost of business because it increase the prime cost and price that may decrease the demand, which may decrease the overall profit. However, logistics can have a positive effect on satisfying customers and achieving marketing goal. Because efficient logistics among manufacturers, retailers and customers can reduce delivery time and provide customers better purchase experience especially in e-business, which is useful to built customer loyalty and satisfy customers’ needs (Lacoma [no date]). In addition, according to CSCMP’s definition, logistics includes “control the efficient and effective forward and reverse flow and storage of goods,”

It may be argued that the function between logistics and marketing is different. The former one is to deliver products and the general public impression of logistics is not too positive (Jackson 2011). On the other hand, marketing focus on customer management, that is making customers buy and satisfy with their purchases (Grönroos 2009). The cooperation of different departments can require more human and financial investments. However, one implementation of the idea of cooperation called Efficient Consumer Response (ECR) is successful. It is defined as “a grocery industry strategy in which distributors, suppliers and brokers jointly commit to work closely together to bring greater value to the grocery consumer” (Salmon 1993). ECR process reduces the border of some functional department such as logistics and marketing in order to decrease the unnecessary waste and increase the efficiency of connection (ibid). According to Alvardo and Kotzab (2001), ECR has had a considerable impact on the grocery industry with the support of logistics and marketing researchers and the application of ECR principles also has a huge saving potential in the future. For example, Salmon (1993) states that the value saving for the U.S. grocery industry was 30 billion dollars and there will be 10.8% added value because of the reduced price for the end

Supply chain uncertainty can cause the unavailability of products, which will cause a product shortage and reduce customer’s demand. Sometimes, marketing may cause the change of customer’s needs and short-term product shortage. The great demand in a certain period of time can also put a pressure on logistics (Lander [no date]). Therefore, a mature and proper marketing strategy is essential to keep the regular and predictable customer demand and assist logistics to focus on the efficiency (Chopra and Meindl 2013). IKEA, a furniture company with the marketing strategy includes maintaining adequate stock, providing functional design and reasonable price (Weaver 2014). The variety of furniture style is limited because these furniture come from modular design and each store has a large scale of storage to sell these stock to customers (Chopra and Meindl 2013). This supply chain strategy helps to reduce the uncertainty of logistics because of the large stock and limited variety. At the same time, the strategy also cut down the uncertainty for furniture manufacturers with the predictable order and longer contrast (ibid). Therefore, the supply and demand are both predictable, which has a positive impact on the supply chain