1.

1 MARKETING AND ECONOMIC ACTIVITY

Marketing is one of the important segments of the economy of a country and through this
area of economic activity, goods and services flow from producers or suppliers to consumers
with a view to satisfying the needs and wants of the latter. Its importance in the field of
business has substantially gone up due to the shift in the emphasis from Production to
Distribution, which has taken place in the last two to three decades.

Marketing essentially comprises two important tasks: i) Identifying what goods and services
consumers require, and

ii) Providing the same to them in the places where they are needed and at prices that the
consumers are willing to pay.

The above is primarily due to the obvious fact that “Goods and Services in International
Trade are not traded on as is where is basis but the same have to be made available at
those places or points where there exists a demand and at times when the same are needed
and at prices the consumers are willing to pay. This mission must be accomplished at a
profit to the entrepreneurs who are engaged in it.” '

The management of flow of goods and services from suppliers to buyer thus assumes an
important place in marketing function. This is more so due to the prevailing fierce competitive
International Trading environment in which the supplier has to operate. Understanding fully
the intricacies involved in international trade and having made commitments by accepting
the order from the buyer, the supplier must ensure that the venture not only turns out
profitable to him, but also establishes his credibility with the buyer with a view to furthering
his business interests by way of not only getting repeat orders from a regular buyer but also
that such a satisfied buyer helps him in getting orders from other potential buyers.

Export Marketing has thus to be viewed as a specialised activity due to the complexities
involved in it. Having secured an export order after a great deal of effort and cost, the
achievement of the supplier depends largely on the successful execution of the same in
terms of timely delivery.

1.„2„ IMPORTANCE OF DISTRIBUTION ”IN MARKETING STRATEGY

In today‟s business environment which is characterised by abundance of consumer products

and services and where business enterprises of all sizes and interests compete vigorously
within a complex marketing system, the success of selling depends, to a great extent, on
how the activities of marketing are carried out in the most effective manner possible. This is
owing to the fact that successful businesses of today, are market-oriented and depend upon
the effectiveness of their Marketing Programme for how well they meet the needs of their
markets.

An overall Marketing Strategy involves developing a combination of inputs that will help in
the achievement of desired output. It is against this background that the various inputs of
strategy formulation are related to various elements of the Marketing Mix, consisting of two
main types, namely, Production Element and Distribution Element. While the production
element comprising 4 Ps (Product, Price, Place and Promotion) aims at creating „Form
Utility‟ by taking such marketing decisions as Product Line Variety, Design, Style, Colour,
Brand, after Sales Service etc., the Distribution Element, which is one key area of the
Marketing Mix, is concerned with distribution channel fixation and making arrangements for
physical movement of the goods and services to create „Time and Place Utility‟. A channel of
distribution is nothing but a selected set of intermediaries engaged in effective movement of
finished products from the source of origin to the ultimate destination or to the consumers.
The other issue in distribution is concerned with Physical Distribution involving a number of
activities, such as, Freight, Transportation, Warehousing, Material Handling, Packaging and
Packing, Market Forecasting and Customer Service.

Physical Distribution or Logistics Management encompasses the tasks involved in planning,

implementing and controlling the physical flows of materials and finished goods from points
of origin to points of use to meet the needs of consumers at a profit. Thus such activities are
concerned with the creation of time and place utility and thereby adding to the intrinsic value
of the product. The utility of a product does not merely depend upon its form but also on its
placement at the point of need at the right time. A Marketing Process is said to be complete
as soon as:

i) The goods have been produced and priced to satisfy the identified needs of a segment of
buyers

ii) Channels of Distribution have been fixed for their supplies to consumers

iii) An awareness has been created among the buyers about the availability of goods through
information facilitation, and

iv) Arrangements are made for physical movement of the goods at the place and time
indicated by the buyer.

From the above, it is clear while customer satisfaction is of paramount importance, at the
same time it has also to be ensured that the Marketing Process should be prohtable to the
seller.

Thus with a view to fully implementing the marketing concept, it becomes imperative to
produce a product that meets customer needs and make arrangements for physical
movement of the product in a convenient and effective manner. There are misconceptions
that only the production process is concerned with creation of value and the distribution
process is considered to add costs rather than value. However, experience shows that
utilities of four types, namely

i) Form Utility

ii) Place Utility

iii) Time Utility, and

iv) Possession Utility

add value to a product.

1.3 “LOGISTICS”-ORIGIN OF THE TERM AND ITS RELEVANCE T0 INTERNATIONAL

TRADE

Logistics or Physical Distribution refers to the art of managing the flow of products or
materials from producer or supplier to the customer or user and is thus concerned with
creation of time and place utility.

The word “Logistics” has been drawn from the verb „Loger‟ and is French in origin.1t is a
military term meaning the Art of Transport, Supply and Quartering of Troops. Essentially a
military concept, which refers to the arrangements to be made for achieving a given
objective, e.g., for fighting a war, a meticulous planning is needed so that the troops are
properly deployed and the supply line consisting of, inter-alia, Weaponry, Food, Medical
Assistance etc. is maintained.

Likewise, the plan should be such that there is a minimum loss of men and materials and
while at the same time capable of being altered if the need arises.

The association of this term with trade in general, and International Trade in particular,
pinpoints to the need of working out a strategy for managing the flow of materials and
products from the source of origin to ultimate user with time and cost efficiency. It is some
time now since Peter Drucker described physical distribution management as the last great
frontier for cost reduction.

Marketing Logistics, Physical Distribution and Materials Management

Marketing Logistics, Physical Distribution and Materials Management are the terms used
interchangeably in a business world and are usually taken as one and the same. However,
there exists marked distinction in the scope of activities covered by these terms. Physical
Distribution or Marketing Logistics involves Planning, Implementing and Controlling the
Physical Flow of material, final goods and related information from point of origin to point of
consumption to meet customer requirements at a proht. Whereas, distribution is the addition
of time, place and ownership utilities to goods. It also includes transportation of goods from
the point of original or intermediate production to the place of sale or further fabrication and
their actual sale or transfer into the possession of the ultimate buyer in this sense,
distribution includes a number of fields of specialized management such as Sales,
Advertising, Financing, Traffic Management and Warehousing. So far as materials
management is concerned, it refers to the how of materials from raw material receipt through
manufacturing and processing stages to supply of finished goods.

1.4 OBJECTIVES OF LOGISTIC

The main objective of logistics is to bring product and consumer together with 3 RS. namely :

i) Right quantity of goods at the

ii) Right place/point at the

iii) Right time for the least cost

These 3 R‟s have a very close link with the commercial framework of International Trade,
which consists of the following five elements, viz.

i) A contract of sale/purchase between a seller and a buyer

ii) A product or commodity which after suitable packaging will constitute the cargo

iii) A transport contract which depends upon the terms of delivery

iv) Documentation of cargo ownership or document of title

V) Payment of purchase and freight

The importance of a Logistic System lies in the fact that it leads to ultimate consummation of
the sale/purchase contract. Mere promises from the seller‟s side with regard to supply of
contracted products, at competitive prices may not
satisfy the buyer because the latter is interested in actual performance. Hence from the
supplier‟s side, delivery of goods has to be undertaken at the place or point as per the terms
of contract, since the same is essential with a View to fulfilling the commercial and legal
requirements. In the event of failure to comply With the stipulated supply period, the seller
may not only lose his sales proceeds, but may also be liable for legal punishment if the
sales contract so specifies. Needless to say that better delivery schedule followed by timely
dispatch of document of title is a good promotional strategy not only from the point of view of
creating credibility but also for ensuring flow of repeat orders from the buyers.