Distribution Strategies Logistics and Performance of Firms in Port Harcourt (Case Study of Bakery in Port Harcourt)
CHAPTER ONE
Objectives of the study
This study has the major objectives of evaluating the distribution channels of consumer goods manufacturing firms in Nigeria with a view to making appropriate recommendations for effective and efficient distribution channel management. The following specific objectives are considered relevant to the achievement and realization of the major objective of this study.
- To find out whether the control exerted by the firm on the distribution channel depends on the length of the channel.
- To examine the influence of hybrid channel conflict on distribution channel performance.
- To determine the relationship between the control exerted by a firm and satisfaction with its existing channel.
- To examine the influence of the length of a distribution channel on the channel’s performance.
- To find out whether the number of distributors in a distribution channel influences the channel’s performance.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Theoretical framework
Postponement and Speculation Theory
Marketing channel structure can be determined based on where inventory should be held to enable the channel members provide appropriate service level and at the same time achieve adequate return to channel members. The principle involved in determining the marketing channel based on the above conditions is what is known as postponement/speculation theory. (Nebo, O.G., 2011).
By this principle, efficiency can be achieved in the marketing channel system through the postponement of changes in the form and identity of the product to the latest possible point in the marketing process and also postponement of changes in the inventory location to the latest possible point in time. By moving differentiation nearer to the point of purchase, postponement principles achieve the efficiency of the distributive functions through reduction of risks and uncertainty costs. It also reduces the cost of physical distribution by producing and sorting only when purchase is certain and also by sorting products in large lots and in relatively undifferentiated state.
If one views postponement from the point of view of the distribution channel as a whole, it may be seen as a device for individual institutions to shift the risk of owning goods to another. The manufacturer who postpones by refusing to produce except to order is shifting the risk forward to the buyer. The middleman postpone by either refusing to buy except from a seller who provides next day delivery (backward postponement) or by purchasing only when he has made a sale (forward postponement). The consumer postpones by buying from those retail facilities which permit him to take immediate possession directly from the store shelf. Further, where the consumer first contracts a number of stores before buying, the shopping process itself may be seen as a process of postponement, a process which advertising seeks to eliminate (Louis P. Bucklin, 1966). In synopsis, therefore, postponement is an organizational concept whereby some of the activities in the supply chain are not performed until customer’s orders are received. Companies can then finalize the output in accordance with customer preferences and even customize their products. Meanwhile, they can avoid building up inventories of finished goods in anticipation of future orders. Moreover, transportation between warehouses and factories can be avoided by shipping products directly to the customer rather than keeping them in stock even though this may lead to smaller sized shipments over longer distances. As a result, postponement is often more relevant when products are more sensitive to inventory than transport costs (e.g higher value added products with large product variety. Additionally, lead time constraints may limit the possibility to perform postponement activities while still assuring delivery windows that meet customer’s willingness to wait (R.I.Van Hock, 2011)
Speculation on the other hand stipulates that changes in form and identity should be made at the earliest possible time in the marketing process in order to reduce the marketing costs (Louis P. Bucklin, 1966). This means that risk is assumed by the channel institution instead of shifting them away. According to Nebo (2011: 45), speculation is a way of achieving reduced costs through economies of large scale production by changing form at the earliest possible time. It could also achieve reduced costs through the elimination of frequent orders and also through the reduction of stock outs and its attendant cost in the form of consumer dissatisfactions and possible brand switching. He went further to say that speculative principles work in the distribution of convenience goods where indirect and long channels are used and cost of holding household goods tend to be relatively high.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter focuses on the approach and methods adopted in obtaining data for the study. It describes the methodology employed, tools and processes adopted in generation, presentation and interpretation of data gathered. Other aspects incorporated in the design include the population of study, the determination of sample size, the methods for questionnaire distribution, the methods for data analysis and the description of operational variables.
Research Design
Research design according to Abdellah and Levine (2013) deals with how the subject will be brought into the scope of the research and how they will be employed within the research setting to yield the required data. It is an outline or a scheme that serves as a useful guide to researcher in his efforts to generate data for his study.
This study is based on a descriptive research design aimed at solving the problems of distribution channels, towards profit leveraging in selected manufacturing companies in Nigeria. The collection of data from the Marketing, Distribution and Finance departments of the manufacturing firms by use of questionnaire and interviews was aided by the design that also contributed to elimination of doubts and biases.
Sources of Data Collection
Data for the study were obtained from primary sources. However, it should be noted that the review of related literature which include other research works, the publications in journals, textbooks, monographs, unpublished thesis from institutions of higher learning and work places including libraries and distribution centers, official releases in bulletins and manuals and the internet provided the guideline in stating the hypotheses and also aided the construction and design of the questionnaire and oral interviews. The questionnaire, personal interview and observations served as primary sources of data collection.
Area of the Study
Rivers State, also known simply as Rivers, is one of the 36 states of Nigeria. According to census data released in 2006, the state has a population of 5,198,716, making it the sixth-most populous state in the country. Its capital and largest city, Port Harcourt, is economically significant as the centre of Nigeria’s oil industry.
Population of Study
A study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description (Prince Udoyen: 2019). In this study the study population constitute of workers at Dripples bakery in Port Harcourt, Rivers state.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter focused on the presentation, analysis and interpretation of data generated through questionnaire.
Data Presentation
Data collected in the course of this study via the questionnaire research instrument is presented and discussed descriptively using frequency and percentage tables, charts, mean and standard deviation.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
Introduction
This research was designed to evaluate the distribution channels for consumer goods in the manufacturing industry in Nigeria. This chapter therefore presents a summary of the findings, conclusions and recommendations of the study.
Conclusion
Based on the findings of the research enumerated above, the following conclusions are drawn.
- Bakeries in Nigeria adopt multi-channel distribution strategy. Dripples bakery uses many portfolios of channels to reach the market. However, it was observed that these channel approaches need to be improved upon in order to achieve the much needed customer satisfaction and lower cost objectives: bearing in mind that distribution intensity influences the manufacturer’s support programs and cost of distribution
- From the interviews conducted and questionnaire administered, it was seen that most of the bakery firms are trying to be innovative in distribution channel system. However, there is still room for improvement as many have not embraced the use of the internet or e-commerce in their operations.
Recommendation
Having made a thorough research and stated the findings as above, it is necessary to make recommendations aimed at ameliorating some shortcomings observed in the distribution strategies logistics in Nigeria.
- Consumer goods manufacturing companies in Nigeria should analyze and restructure their sales and distribution approaches by performing activities in new ways which increase value to customers and reduce costs. Manufacturers can gain competitive advantage by;
- Determining which activities are valued by the end customers.
- Identifying new ways to perform high value sales and distribution activities so that they increase customer satisfaction.
- Assessing alternative approaches to sales and distribution which lower costs and working capital investments throughout the total channel.
- Consumer goods manufacturing companies should strive to embrace or adopt innovations in their channel management. E-commerce or sales through the internet is becoming a means to serve larger numbers of customers at much lower costs. Improved logistics and delivering time by FedEx and UPS are reducing the requirement for local warehousing. Broader acceptance of electronic data interchange to monitor sales and inventory levels throughout the total channel is reducing inventories and speeding response to changing customer requirements.
- Manufacturing firms should strive to adopt an ideal distribution intensity that is commensurate with their level of activity or operation. Such level of intensity that would make a brand available widely enough to satisfy but not exceed target customers’ needs because over saturation increases marketing costs without providing benefits.
- Business executives should analyze ways to avoid the wrong use of the power in the channel and also seek alternatives to equilibrate the power in the distribution channel. This is because the use of the power for a member of the distribution channel can interfere with the performance of other members of the channel.
- For the overall channel to operate effectively, manufacturers must support their distributors or wholesalers especially in the provision of selling tools and related training in order for them to effectively perform the customer/product matching activity. Other areas they may support include finance and logistic functions.
Suggestion for Further Studies
Based on the limitations and delimitations of the study, the researcher was able to access the distribution channel of consumer goods in the manufacturing industry in Nigeria and made recommendations for improvement. Another area for which further study may be needed is evaluation of distribution channels for industrial goods in Nigeria.
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