How does physical distribution relate to channel policy and how do they affect one another?
Selling directly to the consumer through the mail, by telephone or door-to-door is becoming the distribution-marketing approach of choice in markets with insufficient and/or underdeveloped distribution systems.
Physical distribution, or Place, must integrate with the other 'P's in the marketing mix. For example, the design of product packaging must fit onto a pallet, into a truck and onto a shelf; prices are often determined by distribution channels; and the image of the channel must fit in with the supplier's required 'positioning'.
Distribution channels are important because they affect sales, since if it's not available it can't be sold. Most customers won't wait. Distribution also affects profits and competitiveness since it can contribute up to 50 percent of the final selling price of some goods.
This affects cost competitiveness as well as profits since margins are squeezed by distribution costs. Delivery is seen as part of the product influencing customer satisfaction. Distribution and its associated customer service play a big part in relationship marketing.
Decisions about physical distribution are key strategic decisions. They are not short term. Increasingly it involves strategic alliances and partnerships which are founded on trust and mutual benefits. We are seeing the birth of strategic distribution alliances. You can see Southwestern Bell in the Hall Of Fame explain how marketing marriages provide new ways of getting products and services in front of customers.