Storage or Warehousing: Important Marketing Function

Storage or Warehousing: Important Marketing Function

Storage or Warehousing:

A warehouse may be defined as a place used for the storage or gathering of goods. The function of storage can be carried out successfully with the help of warehouses used for storing the goods. Storage is an important marketing function, which involves holding and preserving goods from the time they are produced until they are needed for consumption. Usually, there is a time breach between the production or procurement of goods and their sale or utilize. It may be because of unbalanced demand for products such as in the case of clothes/ garments or Jackets or there may be an unbalanced supply because of seasonal products such as in the case of agricultural products (rice, wheat, cotton, etc.).

Term storage may refer to storage building (warehouse) and premises or the goods in the stock (stock, inventory). It involves making proper arrangements for retaining goods in the perfect state without losing properties and qualities until these are needed by the ultimate consumer and taken to the market. Logistics service companies operate in this business providing warehousing services to their customers. In simple words, storage is the process of preserving goods from the time they are produced until they are needed for consumption.

Causes for storage include:

  • customer service, ensuring the availability of products
  • unreliable supplier
  • minimization of order and supply costs;
  • availability of raw materials for only some part of the year
  • economic production batches
  • production’s intermediate storage
  • raw materials increase pressure in the price

In order to keep the flat flow of products in the market, there is a need for appropriate storage of the products.

Benefits from Warehouses:

Regular production: Raw materials need to be stored to enable mass production to be carried on continuously. The storage of goods, therefore, from the time of production to the time of consumption, ensures a continuous flow of goods in the market.

Time utility: A warehouse creates time utility by bringing the time gap between the production and consumption of goods. Storage is necessary for some period for the performance of other marketing functions.

Store of surplus goods: Basically, a warehouse acts as a store of surplus goods which are not needed immediately. Some of the goods e.g., woolen garments, have seasonal demand. To cope with this demand, production on a continuous basis and storage becomes necessary.

Price stabilization: It helps in the stabilization of prices by adjusting demand and supply. Warehouses reduce violent fluctuations in prices by storing goods when their supply exceeds demand and by releasing them when the demand is more than immediate productions.

Minimization of risk: Warehouses provide for the safe custody of goods. Perishable products can be preserved in cold storage. Storage protects the quality of perishable and semi-perishable products from deterioration.

Functions of Storage –

  1. To preserve goods that are produced only during a particular season but are demanded throughout the year, eg., agricultural goods.
  2. To preserve goods that are produced throughout the year but demanded during a particular season. E.g. crackers, umbrellas, etc.
  3. To enable businessmen to make speculative gains, i.e., to wait and sell at a higher price.
  4. To protect goods from pests and insects.
  5. To ensure smooth production and distribution.

Further, there is a need for storage of sufficient accumulation of goods to protect against unavoidable delays in delivery or to meet out contingencies in the demand. In the procedure of marketing, the purpose of the storage is performed by dissimilar agencies such as manufacturers, wholesalers, and retailers.