The Impact of Marketing Logistics on Corporate Profitability in the Brewery Industry

The Impact of Marketing Logistics on Corporate Profitability in the Brewery Industry

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2.1     OVERVIEW OF MARKETING LOGISTICS

According to Bower Sox, (1978:10) logistics is the process of managing all the activities required to strategically move raw material parts and finished inventory from suppliers, between enterprises and to consumer.

Ronald Ballen Year (1973:6) says that marketing and controlling of all moveable activities facilitates product flow from the point of raw material acquisition to the point of final consumption as well as the attendant information flows.

Haskelt etal put it this way, logistics creates places and times utility in goods and services. Place utility is created primarily by transportation; time utility is created by the storage of goods and presents availability of service.

According to Ani (1997:40) marketing logistics is concerned with the function of the physical transfer of goods. It is synonymous with the physical distribution respect of marketing. Logistics with two activities namely

  • Movement of goods from one place to another including storage when necessary.
  • Condition of customer demand with supply of goods, which can be made available to meet it.

Transportation, inventory control warehousing and supply scheduling are all intergral components of a logistics system and the guiding is to provide the correct variety of goods to wholesalers and retailers.

2.2              COMPONENTS OF MARKETING LOGISTICS:

The number of components or elements in a firms marketing logistics system to a large extent depends on the type of business it is engaged in and overall logistics effort.   A firm tht is engaged only in distribution may not have as many components as another which deeply involved in production and marketing.

While some firms management perceives the scope of marketing logistics narrowly others may see it as a major tool for achieving and sustaining customers patronage and therefore put efforts and financial resources into its development and operative.

The elements of marketing logistics contained in the figure below are representative of the firms which are   engaged in full manufacturing and marketing logistics as a major competitive strategy.

The component of marketing logistics according to Olakuninori (1999:29) is divided into two:

  • Major Activities
  • Supporting Activities

Major activities includes:

  • Inventory management
  • Order processing
  • Transportation

Supporting activities includes:

  • Product forecasting
  • Production scheduling
  • Customer services
  • Production acquisition
  • Facility location
  • Warehousing
  • Protective packaging
  • Material handling
  • Maintenance

All these activity areas have to be effectively blended by organization for improved customer satisfaction.

2.3        TRANSPORTATION:

Olakunori (1999:34) defines transportation as the means by which goods are moved from one point to the other in order to create time and place utilities. It helps to bridge the gap between producer or suppliers and consumers or the industrial users of their products.

The importance of their production in our economy cannot be over emphasized, Olakinori collaborated this when he noted in his book marketing logistics management that the mobility of people and materials today have become one of the greatest needs that have to be adequately satisfied in our economy. Hence transportation is popularly referred to as the engine of the economy.

Poor transportation managements greatly jeopardize the source of material, parts and finished goods, including men, skyrocket the cost of production and blunt the competitive edge of the physical distribution activities of the firm.

Kolter believes that marketers need to take in their company transportation decision the choice of transportation carriers affects the pricing of the manufactures products delivery, performance and condition of the goods which they arrived where they will be transferred to the customer satisfaction.

Various modes of transportation in Nigeria includes:

ROAD: Vehicles used in road transportation includes trunks, bus, cars motorcycles. It is the most available in the country. It is door to door delivery service and have right of landing advantage.

RAIL: Its vehicles are train motor rail. It has the ability to carry bulky items at relatively low cost. In Nigeria it is very low and not accessible to people.

AIR: It has its speed and comforts its advantage, but it is very expensive and restricted to a few large city in the country

WATER: the vehicle used are canoes, boats, ships, ferries. It specialized in the movement of bulky low value freight to a long distance. It is the most important mode of transporting international products.

PIPELINE: it is used for transporting liquid and it is strictly under the control of the government of Nigeria at the proper time for the least cost of customers services requirement.

2.4     DISTRIBUTION:

According to Malcathy (1988:201) distribution is all activities involved in movement of a finished product from the point of production to point of consumption, which encompasses many range of activities. Such activities as warehousing, transportation, inventory control, orders processing. Distribution increases product availability because it can be used by marketing management to improve the match between benefit by customers and those offered by the organization.         

In the view of Shewe (1987:53) distribution is the process of making sure that the products is available where and when it is needed. This activity Shewe believe provides time and place utility.

According to Stanton (1981:31). The distribution function is the marketing management function whose responsibility is to select and manage the trade channel through which the products will go. He went further to suggest that the marketing management task is also a distribution system for physical handling and transporting the produced products through the channel of powerful instruments within the managerial system due to the fact that it forms one of the components of the marketing mix.

It is on this note therefore that efforts should be made towards maintenance of consistency in the marketing programme for a product as far as distribution policies are concerned.

2.5     INVENTORY MANAGEMENT:

Schewe (1987:459) defines inventory management as a way of safeguarding against liability to meet demand directly from the assembling line.

Kolter (1996:44) believes that inventory decision involves knowing both, when to order and how much to order for such decision normally depends on when order company’s balances and risk of running out of stock against the cost of caring too much. And in doing this the company needs to balance its order processing cost.

Olakunori (1998:65) noted that inventory apart from being the means of providing the material for production and finished goods for satisfying the needs of customers, inventones constitute a large portion of the investment of any manufacturing and marketing firms. He went further to state that the availability and economic control of inventories are vital to the achievement of the important goods of consumers satisfaction and company’s profitability.

A firms approach to inventory management is much depended on the type of inventory it keeps. Inventory can be classified into four groups or product for reshipping. He noted that warehousing is a broader concept than storage because it involves more activities than storage which is marketing activity that involves holding and preserving products from the time of their production utilities sales are made.

In the view of Ani (1998:25) warehouse are for the provision of storage of space for goods. Pending on ward movement to the customers.

FUNCTIONS OF WAREHOUSING INCLUDE:

  • Protection
  • Enemies maintenance of the inventories

While the importance includes:

  • The variability in the rate of demand through the time of production and transportation.
  • Finished goods permit amount production schedule and marketing activities.

2.6           THE PLACE OF LOGISTICS IN MARKETING

Marketing logistics is receiving on increasing attention from scholars, manufacturers cand marketers today. This is as a result of the significant role it has been formed to play manufacturing and marketing. It facilitates the effective and efficient movement, storage and control of materials and finished goods in order to provide the much needed time place and possession utilities fr the satisfaction of consumers. The physical distribution aspects of marketing logistics helps to ensure the geographical spread of finished goods while industries are generally localized or concentrated in few industrial layouts or cities, the consumers of their products are scattered over wide geographical areas. Efficient transportation as an aspect of physical distribution can give a company’s product a competitive edge over other companies products which are produces nearer consumers.

Olakunori (1999:16) noted that a major ‘luck” in business today is to be at the right place at the right time.

MANAGEMENT OF PRODUCTION INPUT

Sourced and managed carefully, wrong or defective      input may be obtained and the cost of production may          damages and other problems may also result from this,           thereby resulting in the shortage of goods to meet         consumer’s needs. Marketing logistics lays much         emphasis on sourcing and control of production. Input in     order to ensure that finished products gets to consumers at competitive prices at the right time and in the conditions       desired by them.

STABILIZATION OF PRICES

Well management logistics systems can greatly help to stabilize the prices. By finest determining the expected price or the price affordable to consumers. A logistician can work backwards to control the cost of production so as to ensure that his final price is always stable, despite rises in the cost of production input.   Defective sourcing transportation storage and management of the inventory of material and finished goods can lead to wide variation and frequent changes in prices situations which discourage or retard in Nigeria. In the country today, the prices of Agricultural products vary considerably between places and seasons. Olakunoni (1999:17) noted that effective storage, packaging transportation and information management (elements of marketing logistics) would greatly help to correct this abnorminal in the market.

AVAILABILITY OF MATERIAL AND FINISHED GOODS AT THE RIGHT TIME AND PLACE.

According to Olakunori, the efficient planning and co- ordination of marketing logistics activities would enable raw materials to be available at the right time and place so as to ensure that production runs and schedules are not disrupted. He noted further that a good marketing logistics operation would have ensured   that an adequate quantity of goods were available at the stores the time it was being advertised for sales.

PROVISION OF CAREER OPPORTUNITIES

This article was extracted from a Project Research Work Topic

THE IMPACT OF MARKETING LOGISTICS ON CORPORATE PROFITABILITY IN THE BREWERY INDUSTRY (A CASE STUDY OF NIGERIA BREWERY PLC ENUGU)

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