Logistics and marketing: concept, foundations and areas of interaction

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

An effective enterprise management system is characterized by a flexible organizational structure. This property is due to a number of reasons, including environmental factors that require prompt changes in terms of integration processes in a certain market segment. For this reason, there is a need to combine the concepts of logistics and marketing, which have many interrelated elements that reveal aspects of the functioning of the enterprise.

Essence of concepts

By a broad examination of the subjects that the fields of study of logistics and marketing deal with, it becomes obvious that they are practically united by the target objects of management and coordination. If in one case channels, methods and configurations of supply are provided, then in the second - sources and end users of the supply object. In the same timethere are different conceptual representations of the relationship between logistics and marketing in the context of doing business.

For example, as a derivative of this relationship, a methodology can be understood, in accordance with which ways will be found to optimize the activities of an enterprise within the direct marketing management. Another approach assumes that marketing tools as such will help optimize logistics processes by expanding its structure through a comprehensive analysis of product movement channels from the production line to the consumer.

In both cases, a complex system of many components is considered, with which both logistics models and marketing research tools can interact in one way or another. The following structural and functional blocks can be included in the basic set of elements of such a system:

• Market research.
• Assortment formation.
• Setting pricing rules.
• Advertising.
• Sales organization.
• Service.

Also, in the basics of marketing and logistics, management functions are naturally considered, involving the introduction of such structural components as planning, organization, control and development strategy. Depending on the level of the enterprise, the list of these components may change in the direction of reduction or expansion. For example, international marketing systems will necessarily take into account monetary and financial differences,factors of customs issues, nuances of international law, etc.

Bases for relationship

During the activity of the enterprise, different structural divisions function, performing their specific tasks. Logistics may affect the technological processes of the marketing department, financial services, control and production systems. Why is it the interrelationship between logistics and marketing that stands out?

To answer this question, one should turn to the basic tasks that an enterprise solves through marketing tools:

• Conduct market research.
• Analysis of consumer requests.
• Determining the range of goods.
• Planning and strategizing market behavior.

Tasks related to analytical activities and direct research, the marketing service solves in isolation from logistics. In the first two paragraphs, the interests of logistics are only indirectly affected and it cannot affect them systematically.

However, the formation of the assortment already lays down organizational requirements for the future design of the logistics model. For example, for a specific product, it is necessary to organize channels for providing raw materials, inventory management schemes and solve the problems of transportation to the market. Regarding the fourth point, logistics and marketing can interact on the platform of the service delivery service being developed.

In other words, strategic marketing tasks will be solved through logistics. But there is also feedback, in which a list of factors is determinedto identify opportunities for promotion and marketing of products. The same development of a market strategy cannot be considered without potential opportunities, taking into account logistics resources.

Differences in the functions of logistics and marketing departments

Despite the pronounced points of interaction, the management and coordination of various aspects of the enterprise's activities should be divided into marketing and logistics functions. Directly marketing functions include the following:

• Research. Again, purely analytical activities are supposed to determine the company's positioning, target market segments, product features, pricing policy, etc.
• Product release decision. The feasibility of producing and releasing a new product is also assessed within the marketing zone.
• Definition of resource sources. Another example of the performance of the marketing function, although in this case, logistics costs should also be taken into account, which may be associated with transportation costs, storage of material and technical resources, etc.
• Management of the production process. This example shows the possibilities for combining marketing, logistics and enterprise management. The management process is implemented by making responsible decisions, however, the basis for them will be logistical capabilities and marketing analysis.

Of course, there are functions that are directly related to the field of logistics. These include all activitiesassociated with the design, technical organization and operation of channels for the delivery, marketing and distribution of raw materials and goods. And this is only a part of the tasks that are conditionally solved in isolation by the logistics department.

Sales approach of marketing logistics

Fulfillment of deliveries is considered as a result of using a logistics model built taking into account marketing tools. This is a technological task, which from the point of view of marketing is understood as customer service. The logistics infrastructure itself, without taking into account market demand and developing criteria for assessing the attractiveness of a product in a particular segment, is of no use.

The concept of interaction between logistics and marketing is expressed as a mechanism for balanced customer service, taking into account psychological factors related to the field of market research.

Based on the foregoing, we can formulate the concept of marketing logistics as a marketing approach. Its difference from conventional sales marketing support lies in the comprehensive focus on the product in the overall context of production management.

Sales and sales processes are presented as a means of communicating with a potential client based on the study of his request, but also with the ability to flexibly change the parameters of the offer. Thus, logistics and marketing allow you to clearly define the criteria for the requested product with its content and at the same time control the quality of the sale of goods at all stages. Serviceand the supply service is in a controlled position with respect to marketing data and can be quickly adjusted thanks to the possibilities of change and logistics models already at the technical level.

Marketing base for logistics design

Marketing tools lay the foundation for the commercial activities of the company, establishing guidelines for the technical stages of the organization of trade. From the point of view of the formation of logistics links, this toolkit can act in several directions:

• Regarding consumers. The demand for products and services is being studied.
• Regarding the development of measures to meet customer demand.
• Regarding suppliers. Possibilities of suppliers are being studied, carried out
• control and monitoring of measures for their development.

At the stage of developing a commercial project within an enterprise, marketing and logistics perform a key function in drawing up a plan for organizing and managing information flows in the operational and strategic period. As prerequisites for the effective organization of the management scheme, the following factors are distinguished:

• Affordable demand for targeted goods among consumers.
• The need for the products and services offered.
• The company has sufficient economic, organizational and technological resources.

Marketing can provide the expected result in terms of fulfilling its function only under the condition of a comprehensive analysis of the market, taking into account also the possibilitiessuppliers. Only in this case, it is possible to speak of an enterprise as focused on a logistics development model, in which it is possible to achieve end-to-end management of the flow of goods and resources in a highly competitive environment.

Logistics in the implementation of marketing strategies

Entrepreneurial activity at the present stage exists in conditions of uncertainty. Marketing, in turn, acts as a means of timely adaptation to changing conditions, and one of the objects of change is the logistics model of the enterprise. In this context, the role of logistics in marketing is not always correctly assessed by managers, who may set goals incorrectly when solving strategic problems.

Therefore, the marketing department, as a conditional author of the development strategy, should set priorities as flexibly as possible, objectively assessing the capabilities of the enterprise structure, taking into account the need for further adaptation. One of the indicators of potential resources that may be required for possible changes is precisely the logistics system.

As an example of the implementation of the adaptation model, we can cite Russian companies that regularly face the challenge of entering new market areas. Effective assistants in the implementation of such plans are logistics and marketing, which at the same time deal with their own issues. In particular, the marketing department develops a program for the formation of an assortment for a new market, predicts the optimal characteristics of products and developsservice policy.

In terms of logistics, it deals with the development of supply, marketing and distribution networks, keeping in mind the maintenance of the maximum level of service. As you can see, although both functional structures work in parallel, their tasks complement each other, allowing you to effectively achieve the common goal of integration into a new trading environment.

Interaction of marketing logistics with finance and production

The logistics system that an enterprise uses to develop strategy and implement it interacts with several functional areas, including production administration and financing. In the course of planning, it is logistics that determines the conditions of production, and sometimes technological support. In terms of financing, such functions as a control system, development of an information system, budget planning will be important.

With the interconnected consideration of logistics, marketing and finance, criteria for cost analysis, processing conditions and order entry will also be set. Administration and financing are closely related to the development of budget control systems, the resources of which can be spent on logistical tasks. This may be the arrangement of a warehouse for the storage of goods, the organization of a transport network, the choice of equipment, etc.

Factors of production activities are related to logistics in terms of scheduling production releases, sales forecasts, order processing schemes, generaldispatching, quality control, etc. And this is not to mention the basic tasks of organizing external and internal communication infrastructure, which is de alt with by production logistics. Marketing is not directly related to these schemes, but it determines an equally important subject-assortment orientation of production that affects the implementation parameters of the same logistics model.

For example, the wider the range of products, the more acute will be the tasks of the logistics department in the development of systems for material support and organization of flows at all stages of production. Depending on the requirements of strategic tasks, the assortment can be formed both taking into account possible difficulties in the production, delivery and distribution of goods, and without them.

Interaction areas of logistics and marketing

In the context of the correct organization model, the problems that arise when merging the interests of logistics and marketing tasks should be solved by the department that is responsible for cross-functional coordination. The transition from the control of individual functions to an integrated management system naturally causes a violation of functional boundaries in the workflows of different services. There is an effect of intrusion into conditionally alien areas, which creates the preconditions for conflicts.

Key in terms of conflict resolution will be maintaining a balance between the concept of separation of powers and the tactics of effective communication between logistics and marketing departments in sales, wheretools for expanding sales areas and attracting investments are extremely important. A clear definition of the areas and positions of these factors of organizational and managerial activity will help to maintain this balance.

Thus, marketing takes direct control of supply and demand, while also dealing with methods of service differentiation. Logistics, in turn, performs the functions of developing and managing the mechanisms for implementing the company's proposals.

Distribution logistics and marketing

Coordination of operations performed by different departments of the corporate environment is also a tool for balancing different services in achieving common strategic goals. In ensuring this condition, the function of distribution and coordination of production processes within the enterprise is important. The employees of the distribution logistics department take the greatest part in the development of this scheme. Marketing in this case is a managed object in the processes of interorganizational logistics coordination.

Introduced a new managed distribution function, which solves the tasks of the logistics department and related services. For example, the same marketing with the sales department can become sources of certain "values" when creating a model for coordinating actions.

Conclusion

With all the differences between the corporate departments of large companies, they should all be guided by common goals and objectives. The factors of interaction between services in the management of logistics and marketing are explained by the similarity of interests, but closemerging when coordinating the actions of different departments often becomes a cause for conflict.

Properly developed strategy and model of its implementation helps to prevent possible organizational problems. And often, from the point of view of the effectiveness of coordination of services, it is not the tools for creating an organizational model that come to the fore, but the mission of the company, in the definition and implementation of which not only material and technical, but also socio-psychological factors of business processes are taken into account.