Modern trade and industry transportation depend largely on transport. Improved means of transportation have increased the trade by leaps and bounds. It aids in marketing functions by creating place utility to goods, helps in effectuating possession utility and contributes manufacturing process in creating form utility.
If production is regarded as the creation of utilities, there can be no objection regarding transportation as a productive activity.
Importance of Transportation
Transportation is a necessary function of marketing because markets geographical are located far from the areas of production. All goods whether manufactured in the factories or grown in the fields are not consumed at the place of their origin.
The transport is the physical means whereby goods are moved from the point of production to place of their consumption.
Transport thus plays a prominent part in the distribution of goods.
In fact, it has shaped and influenced the entire structure of distribution. Not only does transport extend the area within which goods can find purchasers but, it also affects competitive costs and the retail prices.
Related: 11 Types of Price Quotation (Widely Used in International Marketing).
Without the ‘place utility’ which transport creates, the distance factor in consumptions and the location factor in production would have been insoluble. Transport is the lifeblood of the distribution system.
Functions of Transportation
1. It has the growth of industries whose products require quick marketing. Articles like, fish, green vegetables, are carried towards various consumers quickly even in distant markets.
2. Increases the demand for goods, Newer customers in newer places can be easily contacted and products can be introduced to them. Today, markets have become national or International only because of transport.
3. It creates place utility, geographical and climate factors force certain Industries to be located in particular places. These places are far away from the markets and places. where production takes place may not have any demand for their products.
As such transport bridges the gap between production and consumption centers.
Related: Channels of Distribution: Meaning, Characteristics, Functions (Explained).
4. Of late it has started creating the time utility also. This has been made possible mainly by virtue of the improvements in the speed of transport. It now helps the product to be distributed in the minimum possible time.
5. Transport experts considerable influence upon the stabilization of the prices of several commodities. This is achieved by moving commodities from surplus to deficit areas.
This will equalize the supply and demand factors and make the price of commodities stables as well as equal.
6. It ensures the even flow of commodities into the hands of the consumers throughout the period of consumption.
7. It enables consumers to enjoy the benefits of many goods not produced locally.
This increases the standard of living, an essential factor for the development of marketing and the economy.
8. Transport intensifies competition which, in turn, reduces prices. Prices are also reduced because of the facilities offered by it for large scale production.
Thus, the advantages of large scale production are possible only due to transportation.
Related: 18 Major Advantages and Disadvantages of Supermarkets.
9. Transport increases the mobility of labor and capital. It makes people of one place migrate to other places in search of jobs.
Even capital machinery and equipment are imported from foreign countries.
Elements or Types of Transportation
The elements or types of transportation are classified into four: the way, the vehicle, the motive power used, and the terminals. The way may be natural or artificial.
Ocean provides a natural waterway while the road is a man-made track. Waterways are cheaper than land ways and Airways.
Related: Top 9 Advantages of Logistics or Physical Distribution (Explained).
Landway vehicles, water vehicles, and Airway vehicles are separated for different routes or ways.
All the methods of transport have their own merits and demerits. For example, Road Transport is cheap, safe and flexible. But it has Limited load-carrying capacity. Slow speed is another disadvantage of road transport.
Rail transport is suited for heavy and bulky commodities. It is also comparatively cheap means of transport. But the greatest demerit for rail transport is its inflexibility. Railways cannot offer door to door delivery services. It has not suitable for local transport.
Water transport is perhaps the cheapest means of transport. It is the creator of International Trade. It suffers from seasonal difficulties.
Related: Top 11 Important Functions of Wholesalers (Explained).
With the advent of air transport, distance nowadays is measured not in miles but in hours. No other form of transport can compete with Airways. It is a bone to perishable commodities. But the freight rates are comparatively very high.
This mode of transport has opted only for such valuable commodities which could afford to pay high rates. It cannot become a mass transport system.
- 9 Key Difference between Departmental Store and Supermarket
- 19 Role And Importance Of Managerial Economics (Step-by-Step)
Management Aspects of Transportation
The term transportation means handling, hauling, warehousing, inventory control, physical transportation, and delivery.
The management of this function is an important managerial activity because transportation has become one of the most costly elements of distribution.
Transportation costs represent about 20% of the total cost of manufactured goods. With the vastly expanded markets and with cost-conscious customers demanding more value in goods and faster services, the transportation problem has become more dominant.
Related: 18 Reasons and the Importance of Product Innovation (Explained).
Transportation is a prime target for cost-cutting and management economics. Management of transportation in the modern marketing language is called “traffic management“. The main considerations about deciding a particular mode of transport are Cost, speed, handling, damages, regulatory, flexibility, etc.
Weighting all these elements and coordinating them into a most reconciled form it’s not an easy job.
Thus, physical distribution is not merely a matter of getting faster delivery but it also means making sure that the Services requirements of customers are being met. This is, therefore, certainly of vital concern to the marketing manager.
Thus, now you know the transportation importance functions types management.
