Logistics and Marketing were born not only to understand each other, but to enhance each other. And it is that, strange as it may seem, there are still many companies that have not internalized the importance of both departments working hand in hand, in constant communication and cooperation. For those skeptics, we are going to analyze some of the key points in which Logistics and Marketing can excel if they cooperate or fail if they each work on their own.
Logistics, Marketing and the ‘Four P’
Marketing schools have been teaching the concept of the Marketing Mix and the Four P’s for decades; that is, four fundamental aspects that marketing is responsible for. We are going to review them underlining the importance that logistics has in each one of them.
The marketing department has to deal with a huge number of variables to determine the price of the products and transportation has to be among them. To know the cost of a product you need to know how much it will cost you to put it in the hands of the customer, which often involves a not insignificant part of the final price.
The growing importance of logistics is such that it increasingly influences the very definition of the product. The packaging, for example, determines what the product is like, its size, what containers it is sold in, how many units are sold in different boxes or models, etc. This also affects the price of the product.
To this must be added the needs that may be implicit in the product itself: expiration time, conservation needs, etc. Which are reflected in the packaging and which determine the logistical needs.
How will advertising affect our sales? What quantity of product do we estimate that we are going to sell in each place and on each date? What areas have been most permeable to promotions? The difference between an advertising campaign being a success or a failure may reside in the fact that the public is going to buy our product but it is impossible for them because we have had a stock out due to poor forecasting or we have not responded in time to a success above than expected.
Point of sale (Placement)
The task of selecting the places where our product is to be sold and distributed again has an impact on logistics. The more points of sale we have, the more complex our system will be and the more we will have to invest -more product in stock in stores, more shipments, smaller batches, perhaps more warehouses…-. A new example of the need to have logistics to make these decisions.
In addition, advances in logistics are redefining the point of sale. E-commerce, telephone applications, deliveries at convenience points… Omnichannel is transforming the point of sale and the technology applied to logistics and the supply chain are changing the rules of the game. More and more companies base their strategic advantages on their use of logistics and transportation.
Other Common Logistics and Marketing Battles
The fields of collaboration are not exhausted in the 4Ps of Marketing. Let’s see some more examples:
To sell we need, logically, to have our product at the points of sale. And, for something so simple, we need to have efficient inventory management, which can get a bit complicated. It will be essential for us to know how much merchandise we have in the different points, to know how long it takes to supply them, etc. For this process to flow we will need collaboration between Logistics and Marketing.
In the same way, knowing the demand in real time will give us an advantage so that Marketing knows which products are working better and which are worse in order to react accordingly and as soon as possible.
Closely related to the previous point, having transparent traceability of our logistics processes allows us to refine our sales. Not only for offering better customer service in the event of a query or incident, but also for knowing in more detail and in real time the status of inventories and when more product will arrive at each destination. These points are essential to maintain sufficient stock and avoid stock breaks.
In the 4Ps we have talked about the necessary relationship between Logistics and Marketing for advertising campaigns. However, it is not only in these periods that both departments must collaborate to find out how much product they will need in each destination. Marketing must refine its knowledge of its customers and their reactions, of how and how much they buy throughout the year -and even within each week and each day- so that Logistics can act accordingly. Logistics can provide tools to help Marketing know the demand in real time and can adjust and adapt its forecasts.
Brand image and positioning
There are more and more leading companies that make their logistics strategy a value for their brand. Either because of the speed of deliveries, because of the free returns, because of the large number of points of sale available, etc.
In a similar way, having good logistics influences the perception of the brand by customers. Especially in the last part, the final delivery to the customer. E-commerce is causing innovations in last-mile delivery and in the forms of delivery to individuals and, once again, it can be said that these new options are part of the value offer that is made to buyers.
At first, the close relationship between two disciplines that from the outside might seem opposed may seem paradoxical. The world of logistics, busy with the most material part, and the marketing teams, involved in campaign designs, ideas for new products, etc. However, we have seen how much of their day-to-day work these departments must share so that the efforts of both are transformed into benefits for the entire company. If logistics in your company is still considered a department with little to do with marketing, your first task is to banish that idea of: “You dedicate yourself to selling and I dedicate myself to transporting”.