The document discusses logistics systems and physical distribution as part of marketing mix. It defines physical distribution as planning, implementing, and controlling the flow of materials and goods to meet customer needs profitably. The main costs of physical distribution include transportation, warehousing, and costs of lost sales from lack of product availability. When firms have stock shortages, customers may permanently or temporarily switch sellers or purchase substitutes. An effective physical distribution system can increase market share, create utilities, stabilize prices, improve customer service, and reduce distribution costs.

1. Amity Business School MBA Class of 2010, Semester II Distribution & Logistics Management Ms.Vandana Gupta

2. LOGISTICS SYSTEM

3. “ Physical Distribution involves planning, implementing, and controlling the physical flow of materials and final goods, from point of use, to meet customer requirements at a profit.” Kotler & Armstrong

4. MARKETING MIX PRODUCT MIX PLACE MIX PROMOTION MIX PRICE MIX PHYSICAL DISTRIBUTION CHANNELS OF DISTRIBUTION Transportation Inventory Management Materials Movement Communicating Order Processing Retailer Wholesaler Physical Distribution as a part of the Marketing Mix

5. The main constituents of Physical Distribution cost are: PDC = T + W + S Where PDC = Total Physical Distribution cost T = Total Transportation Cost W = Total Warehousing Cost S = Total cost of the sales lost due to the non availability of product at the right time .

6. When a firm runs out of Stock, customers can Permanently Switch to a new Seller for all purchases Switch to new Seller while Merchandise Is not available Purchase a Substitute Product from The same seller Wait until Merchandise is available Most desirable action Least Desirable Action What happens when a firm has stock shortages

7. Role of Physical Distribution System Increased Market Share Creation of Utilities Price Stabilization Improved consumer services Cut in Distribution costs

8. Factors Governing Logistics System Distribution Channels Component Availability Market Resource Position Product