Aguilar, Airalyn V.

Balabala, Reivin T.
Jala, Jacqueline M.
Manalo, Renzo L.
Palulan, Carlo A.
Papa, Angelica B.
Ustaris, Vince Jimwell M.
Ustaris, Vince Jimwell M.
• Logistics is concerned with the storage and transportation
of goods and information from the place of origin to the
place of consumption.
• Logistics refers to the interrelation and management of
all the activities involved in making products and raw
materials available for manufacturing and in providing
finished products to customers when, where, and how they
are desired.
  Marketing Logistics in
Industrial Marketing

 Physical Distribution and

Customer Service
• It is the physical distribution side of the logistical function
that interacts with the customer’s physical supply system.
• To support the customer’s manufacturing process, suppliers
must develop the logistical capability to respond to their
needs.
• Failure to provide timely inputs the production process
can cost thousands of dollars in lost production.
Two categories:
• Physical Supply
- (also called materials management) involves all
those activities necessary to make production inputs (raw
materials, component parts, and supplies) available to the
manufacturing process.
• Physical Distribution
- encompasses those tasks necessary to deliver the
completed product to customers or channel intermediaries.
• Products are used as inputs in the manufacture of other end
products, buyers normally face a wide range of problems,
including storage, stock control, order processing, and
traffic management.
• Suppliers of component parts frequently face challenging
logistical performance demands from their customers.
• Suppliers of heavy equipment are more concerned with the
problems of meeting scheduled delivery dates than with
the maintenance of a finished goods inventory and,
therefore, tend to have relatively low logistical service
requirements.
• The objective of an efficient physical distribution system is
to minimize the costs involved in storing products and
moving them from the point of production to the point of
purchase within a specified level of customer service.

Two Essential Variables

1. total distribution costs
2. the level of service provided to customers
• The total-cost approach to logistics management is based
on the premise that a firm should consider as a lump sum
the costs of all the activities involved in physically moving
and storing materials and products when it attempts to
establish specific customer service levels.
• Cost trade-offs are not limited to any specific activity.
They occur among all logistical activities.
Palulan, Carlo A.
The major subsystems include
1. Warehousing
2. Inventory control
3. Materials handling
4. Order processing
5. Transportation
 Warehousing
The warehousing subsystem seeks to develop and maintain
a steady flow of products. In effect, warehousing serves as
a valve to regulate the flow of products through a
marketing channel.
Inventory
The inventory control subsystem seeks to minimize the
working capital tied up in inventory while providing the
specified level of consumer service. Order timing and order
quantity are two major inventory control decisions. The
major costs are the inventory carrying cost and the order
processing cost.
 Order Processing
The order processing subsystem seeks to ensure that orders
are received, handled and filled accurately, reliably and
speedily. Activities include order receipt, credit approval,
preparation and collection of accounts receivable, etc.
Transportation
The transportation subsystem is concerned with moving
products through time and space.
• A marketing channel is the series of interdependent
marketing institutions that facilitate transfer of title to a
product as it moves from producer to ultimate consumer
or industrial user.
• A channel’s vertical dimension (length) is determined by
the number of types of participants in the channel.
• There are no intermediaries in the most direct channel (a
zero-level channel). This gives producers greater control
over their products distribution.
• Intermediaries stand between the producers and final
buyers in indirect channels.
• A channel’s horizontal dimension (width) is determined by
the number of participants of anyone type on the same
level in the channel.
• The channel objectives are conditioned by the particular
characteristics of customers, products, middlemen,
competitors and environment. The firm has to select
particular firms to work with or find business firms willing
to work with it. It has to periodically evaluate the
performance of individual channel members against their
own past sales and other channel members’ sales.
• A channel is a type of social system in which each member is
expected to fulfill certain roles and perform certain functions.
In carrying out -their specialized roles and functions, channel
members’ may cooperate conflict and compete with one
another.
• Conflicts can be functional or dysfunctional.
• Vertical Marketing Systems (VMS) represent a major step
towards resolving dysfunctional conflict. In contrast to a
traditional channel that focuses mainly on the independence of
channel members a VMS focuses on their interdependence.
• A Horizontal System (HMS) involves cooperation between two
or more organizations on the same level of distribution to
accomplish a common goal.
• Information - The collection and dissemination of marketing
research information about potential and current
customers, competitors and other actors and forces in
the marketing environment.
• Promotion - The development and dissemination of
persuasive communication about the offer designed to
attract customers.
• Negotiation - The attempt to reach final agreement on
price and other terms so that transfer of ownership or
possession can be affected.
• Ordering - The backward communication of intentions to buy
from the marketing channel members to the manufacturer.
• Financing - The acquisition and allocation of funds required
financing inventories at different levels of the marketing
channel.
• Risk Taking - The assumption of risks connected with carrying
out the channel work.
• Physical Possession - The successive storage and movement of
physical products from raw materials to the final
customers.
• Payment - Buyers paying their bills through banks and
other financial institutions to the sellers.
• Title - The actual transfer of ownership from one
organization or person to another.
Jala, Jacqueline M.
• Marketing control provides the means of testing whether
the desired goals and results are actually being achieved
or not.
• It is an on going monitoring of the marketing activity in all
aspects.
• Marketing control involves gathering information on
marketing performance and comparing the achieved
performance against the planned or budgeted
performance using predetermined standards and
yardsticks.
In designing a control system, the following steps are involved:
• Starting with the predetermined objectives.
• Setting clear measures of performance.
• Defining the levels at which different controls are to be
active.
• Developing an effective monitoring system to provide the
feed back to the different levels.
• Choosing the tools and techniques of control.
• Observing, analyzing, interpreting and evaluating the
variance.
• Developing a mechanism that can correct existing activity
so as to achieve the predetermined norm/objective.
 Compare actual Variance
Measure
performance to within
actual Continuous
Establishment performance acceptable
performance
of standards limits
performance
standards

Variance exceeds
acceptable limits

Take corrective
Re-evaluate
action
Tools And Techniques Of
Marketing Control
• Marketing audit is a continuous, systematic and objective
study of the total marketing efficiency of the firm.
• Marketing audit is concerned with the long-term business
interests and challenges of the firm rather than the short-
term achievements.
• Marketing cost analysis helps in reducing the
marketing costs:
• identify costs of performing specific marketing
functions/activities
• throws up alternative ways of performing these
functions/activities
• provides an evaluation of relative cost benefits of
various alternatives to improve the market
• Credit has two dimensions:
i. the interest on the money involved in credit
transaction and
ii. the risk of bad debts
• Market share analysis can be utilized for
evaluating the market/business performance of a
firm:
• for setting targets for the firm
• for developing long term sales forecasts for the firm
• Ratio analysis seeks to measure the effectiveness
and profitability of the various marketing functions
and activities by the use of certain ratios.
• Ratio analysis focuses attention on relative figures:
 Return on Investment (ROI)
 Return on the Net Worth (RONW)
 Inventory to Turnover Ratio
• Budgetary control essentially involves preparation
of control statements at specified intervals of time,
showing the budgeted figures, the achieved
figures and the variance.
• Main aspects to be controlled through the
budgetary control device:
• Sales volume
• Sales expenses
• Profits
Balabala, Reivin T.
Papa, Angelica B.
• is “the art of successfully persuading prospects or
customers to buy products or services from which
they can derive suit-able benefits” – Irving Shapiro
 Sales Management
Career Sales Path Path

Sales Trainee

Senior Sales Sales Supervisor

Representative

District Sales
Manager

Territory Sales
Specialist Regional Sales
Manager

National
National Sales
account sales
Manager
representative
• Recruiting and Selecting Sales Representatives
• Desirable characteristics include enthusiasm, intelligence, confidence, and
courtesy.
• should display knowledge about his/her company, the sales territory, products
and services, competitors and buyer behaviour
• Primary Selection Criteria
• Motivation
• human relations and skills
• job knowledge
• Personal Interviews
• Multiple and Panel Interviews
• Patterned or Structured Interviews
• Realistic Job Previews
• Centralized Staffing
- more expertise available
- more sources of candidates
can be explored
- selection process tends to
be more objective
- leads to more uniform
quality across the firm
- wastes less of the field
manager’s time
• Decentralized Staffing
- no relocation problem
- less elaborate, less costly
selection procedures
- better adjustment of recruit
to local environment
- sales rep from local area
more likely to be accepted
by local customers
- looks better to community
• determines the types of salespeople needed
• determines specific requirements for the
salesforce
• performs:
 job analysis
 job description
 job specification/qualification
Job analysis
- study of the job by observing and surveying
what people actually do in the job
Job Description
- formal description of:
 characteristics of the job
 duties
 responsibilities of a specific position
 working condition
Job Specifications
- individual traits and characteristics required
to perform the job well
• internal
 current employees
 promotions
 transfers
• competitors
• non-competing organizations
• advertisements
• schools and colleges
• employment agencies
• walk-in applicants
Aguilar, Airalyn V.
• Motivating Sales Representatives
Financial incentives alone are not enough to satisfy most
sales representatives. Sales representatives also need to
satisfy personal needs and achieve personal goals. Sales
managers need to understand their sales representatives
motives and goals, with a view to creating an organizational
climate that allows their sales personnel to satisfy their
personal needs.
 STEPS ELEMENTS

Prepare for negotiating Gather information on buying organization and competitors;

know where each party stands.
Arrange for favorable negotiating atmosphere.
Use graphs and charts where possible.

Establish attitudes Define problem and sub-problems. Discuss negative and

positive aspects.
Express degree of commitment.

Conduct negotiations Focus on both parties’ interests.

Ask questions, avoid statements. Break issues into subparts.
Have alternatives for solving problems. Be prepared to stand
your ground.
• Directing “is concerned with stimulating members of
the organization to undertake action consistent with
the plans”.
• Directing is generally perceived to be synonymous
with motivating.
• Motivation theories are generally divided into two
groups:
• content theories, which describe the internal drives or
needs of individuals
• process theories, which describe the reasoning
processes involved in motivation
• Developed by Abraham Maslow and Frederick Herzberg.
• Maslow discussed a hierarchy of needs and hypothesized
that individuals progressed through physiological, safety
and security social, esteem, and self-actualization levels of
needs. The hierarchy’s ultimate need, self-actualization, is
defined as involving fulfilling one’s true potential and
growth, that is, being all that one can be.
• Herzberg theorized that people are not motivated by
salary, work conditions, job security, and other external
considerations, but instead are motivated by achievement,
recognition, responsibility, advancement, and growth
opportunities, that is, feelings of self-accomplishment.
• One popular process theory is expectancy theory, which is expressed
by the formula
Motivation = E-P x P-Q x valence
Where:
E-P = a person’s perceived probability of performing a task given he or she
puts in the effort to do so
P-Q = a person’s perceived probability of obtaining an outcome
(such as a re-ward) given that he or she does perform the task
Valence = the anticipated value (satisfaction or dissatisfaction) one
perceives he or she will obtain from an outcome

• Another process theory, attribution theory, holds that individuals are

motivated or demotivated as a result of their perceptions regarding
who is in control or responsible for their actions.
• It stipulates that those who perceive themselves to be in control tend
to be motivated, while those who perceive someone else to be in
control are not motivated.
Manalo, Renzo L.
• Straight Salaries, Commissions, and Bonuses
• Commissions and Bonuses as Motivators
• Secrecy versus Openness in Pay Differentials
 METHOD INDUSTRIAL PRODUCTS CONSUMER PRODUCTS

Straight Salary 14% 12%

Straight Commission 19% 21%

Salary plus Commission 28% 26%

Salary plus Bonus 26% 32%

Salary plus Commission plus 10% 5%

Bonus

TOTAL 100% 100%

• Use Appropriate Motivational Frills