ABSTRACT
This study analysed the effect of sales target on marketing performance of animal feed distributors in Abia State, Nigeria. To achieve this, the specific objectives were to; examine the sales target mechanisms for the distributors; examine the effect of sales target on market share, and distributors sales volume; analyze the influence of sales target on productivity of animal feed distributors; determine how sales target affects service quality; and to ascertain factors affecting sales force target realization. The population of this study comprised the sales teams of all animal feed producing firms and feed distributors in Abia State of Nigeria. The research design used for the study was the survey method, which involved the use of questionnaire to solicit information from a group of respondents selected from the population. The probability sampling of random sampling technique was used by the researcher to select a sample of 171 respondents for the study. The analysis of data obtained from the field survey was performed according to the stated objectives of this study. All the objectives were analyzed using regression model. All analyses were done electronically using the STATA software version 8. Findings from the studied animal feed distributors revealed that the strategy applied is often determined by the sales objective pursued by the animal feed firm. While some firms pursue volume sales, some others are driven by value (naira) sales. Few others combine the two strategies. On sales calls performance of the feed distributors in the study area, it was found that most of the animal feed distributors (44%) make sales calls twice weekly while only 14% make sales calls on a daily basis. Regression result also showed that sales target exerts a positive and significant effect on market share and sales volume of the studied animal feed distributors. The study also found that sales target was a positive and significant factor that influences sales productivity of the studied animal feed distributors. With the r-square value of 0.471, it means that 47% of the variation seen in sales productivity is explained by the variation in sales target. The study recommended that an understanding of the right approach of setting such sales targets is required by sales managers. Through such understanding, sales managers will be better able to create processes and strategies that have a direct and positive effect on sales target attainment. There is also the need to allow sales people and distributors to get involved in setting individual sales goals. Having sales people involved in setting individual goals will satisfy a common need of having them buy into expecting marketing performance levels. Furthermore, the active involvement of sales people in setting their sales targets will help in setting attainable sales targets.
TABLE OF CONTENTS
Cover Page
Title Page i
Certification ii
Declaration iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables vii
Abstract ix
CHAPTER 1: INTRODUCTION 1
1.1 Background of the study 1
1.2 Statement of problem 5
1.3 Objectives of the study 7
1.4 Research Questions 7
1.5 Statement of hypotheses 8
1.6 Significance of the study 8
1.7 Scope of the study 9
1.8 Limitation of the study 10
CHAPTER 2: LITERATURE REVIEW 11
2.1 Conceptual framework 11
2.1.1 The concept of target setting 11
2.1.2 Target Commitment 12
2.1.3 Target Setting, Self-Esteem and Cognitive Action 14
2.1.4 Target-Setting Attributes 15
2.1.5 Relation of target dimensions to Performance 17
2.1.6 The Sales Environment 28
2.1.7 The Sales System 32
2.2 Theoretical Framework 38
2.2.1 Theory of Sales Force Effectiveness and Performance
(Walker, Churchill and Ford – 1977) 38
2.2.2 Expectancy theory - Vroom (1964) 39
2.2.3 Goal setting theory - Latham and Locke (1991) 41
2.3 Empirical Review 42
2.4 Summary of Literature Review 46
2.5 Gap in Literature 47
CHAPTER 3: MATERIALS AND METHODS 48
3.1 Research Design 48
3.2 Area of the Study 49
3.3 Population of the Study 49
3.4 Sampling technique 50
3.4.1 Sample size determination 51
3.5 Sources of data 51
3.5.1 Primary data 51
3.6 Validity of the instrument 52
3.7 Reliability of the instrument 52
3.8 Method of data analysis 53
3.9 Model specification 53
CHAPTER 4: RESULTS AND DISCUSSION 55
4.1 Sales Target mechanisms for feed distributors in the study area 55
4.1.1 Sales target strategies 55
4.1.2 Sales calls performance 56
4.1.3 Sales force compensation strategies 56
4.2 Effect of sales target on market share and sales volume of the animal
feed distributors 57
4.3 Influence of sales target on profitability of the animal feed distributors 58
4.4 Effect of sales target on service quality of the animal feed distributors 60
4.5 Factors affecting sales force target realization 61
CHAPTER 5: SUMMARY, CONCLUSION, AND RECOMMENDATIONS 63
5.1 Summary of Findings 63
5.2 Conclusion 64
5.3 Recommendations 65
5.4 Contribution to Knowledge 67
5.5 Suggestions for further findings 67
References 69
Appendix
LIST OF TABLES
3.1 Population of animal feed distributors in Abia State 58
4.1: Frequency distribution showing responses on the sales target
strategies for feed distributors in the study area 64
4.2: Frequency distribution showing responses on sales calls
performance of the feed distributors in the study area 65
4.3: Frequency distribution showing responses on sales force
compensation strategies for the feed distributors in the study area 66
4.4. Regression analysis showing the effect of sales target on
market share and sales volume of animal feed distributors 67
4.5. Regression analysis showing the influence of sales target on
profitability of animal feed distributors 68
4.6. Regression analysis showing the effect of sales target on
service quality of animal feed distributors 70
4.7. Multiple regression analysis showing the factors affecting sales
force target realization 71
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In 2013, about six economies out of ten speedily growing economies in the world were in Africa. However, this trend is likely to continue according to International Monetary Fund (2014) with an average annual growth in gross domestic product (GDP) of 5% in recent years. In Africa, agriculture and agro-industries accounted for more than 30% of national income on average, as well as for the bulk of export revenues. Africa depends on agriculture and about three-quarters of its population depend heavily on agriculture to secure their livelihood (Oram 2012; Connolly 2014).
As African population and consumer income continue to grow across Africa, the continent has also witnessed significant growth in the demand for livestock meat and other animal products (World Health Organization 2010). According to estimates by the USAID (United States Agency for International Development), this trend is very likely to continue over the next few years. Thus, consuming animal products and the demand for more animal feeds will be on the increase by 200% between 2010 and 2020 for some countries in the sub-Saharan parts of Africa (Obi 2003; USDA 2013).
Today, anyone considering establishing an agribusiness feed firm has to think of the market outreach, first of all, the chances of coming face to face with the customer and, of course, the chances of success of the sale, after the meeting with the customer. It is impossible to make it on the market in the conditions of an ocean of competition, which has gained control over all aspects of the economic life, without an efficient and effective sales force with clearly defined sales targets.
It is true that consumption growth has reached important levels where the consumer is has become more sophisticated from the point of view of his needs, and is capable of adopting the most useless or weird products/services, solely out of the need to prove a certain social status, or to fulfill certain personal pleasures which were inaccessible until now.
Sales teams are driven by one thing: which is beating their targets. Today, achieving sales targets has become the main goal of all organizations involved in sales and also for sales professionals. Setting sales targets is a delicate function in marketing as time is taken in determining sales goals and their impact on organizational performance and growth. When an organization clearly defines the sales targets of its sales force, it enables it to measure, challenge and improve general sales performance and overall company’s growth. Furthermore, reliable sales targets help in tracking sales progress within each period, and adjustments in sales goals to meet market and business needs. Setting sales targets is a part of the sales plan which is used in achieving the performance goals the organization sets in the marketing plan.
Efficient sales management is the difference between the success and/or failure of an organization. Therefore, not applying targets to the most significant aspect of the business can make it more difficult to achieve success. Sales are the binding force between marketing and profit and they are reflected in the sales target. Sales force are often given sales targets and these are usually expressed in terms of turnover, market share, profitability, number of new accounts, renewal of existing contracts and so on. The sales target may also be stated in monetary value, product units, or selling activities.
The ultimate goal of every manufacturing firm has always been to maximize profit and agro-based firms are not in exception. Competition in the industry has brought about innovations in terms of new product development, service delivery, customers’ relationship among others. Consequently, agro-based firms’ distributors are adopting marketing and sales techniques and strategies to sell their products and remain afloat in business. They have realized that providing quality products alone can no longer guarantee optimum results. In the competitive marketing environment, feed distributors are consistently given sales target by sales managers for their businesses to remain competitive. This has further led to aggressive sales and other marketing efforts by the distributors aimed at realizing their set sales targets. According to Stanton (2011), organizations that aspire to achieve high level of organizational success must devote attention to meaningful marketing effort in order to achieved increased sales growth. One of the well-known marketing techniques used by agro-based firms to secure customers’ patronage is through the engagement of sales force, commonly described as sales representatives.
Stanton and Spiro (2009) described the sales force as sales people who are gainfully employed to locate prospective buyers of a company’s product, convert the prospects to customers, and ensure that they are continually satisfied so that they would make repeat purchase. Considering the competitive nature of today’s Nigerian markets, the role of sales force in terms of achieving targets is very crucial to the growth and survival of the agro-based industry. Sales force demonstrates aggressive selling efforts to push the firms’ products to the market, to win favourable market response and persuade prospective customers to accept their offers.
The use of sales force in the marketing of goods and services started during the barter era. Till date, it is still used as a major tool of reaching out to the consumers of a firm’s products. Developing an effective and result oriented sales team is the most important marketing task within the organization which must incorporate the understanding of the needs and aspirations of the consumers in the market place in order to direct the firm’s offering towards satisfying such needs and wants effectively than competitors. Giles (2010) opined that most sales force fail to meet their stipulated targets because of failure to also research the markets in which they operate. Consumers are dynamic with changing taste and preferences and if firms do not adjust to these changing tastes and preferences, they begin to lose a fair share of their market share.
The Nigerian livestock sector has continued to witness rapid expansion in recent years. Thus, it has become one of the most commercialized subsectors of Nigerian agriculture (USDA 2013; Adene and Oguntade 2006). According to the Food and Agricultural Organization of the United Nations (FAO, 2009), “growing populations, economies and incomes are fuelling an ongoing trend towards higher consumption of animal feed in developing countries.” FAO forecasts that Nigerians are expected to consume two thirds more animal feed. Feed is a major component of any livestock production enterprise as it accounts for an average of 60 to 70 percent of production (Taiwo, 2009; Mafimisebi, 2002; Unang, 2003). The commercial livestock sector in Nigeria is feed dependent and requires about 1.87 million tonnes of feed per annum (Adene and Oguntade, 2006). Current high prices of animal feed coupled with occasional scarcity (Mafimisebi et al., 2002) calls for improvement in the efficiency of producing and distribution of animal feeds. Sales representative must pursue and hit their targets to sustain continued demand for animal feeds.
Laseinde (2004) had opined that animal production has developed and occupies a place of pride among the livestock enterprises due to its rapid monetary turnover. This reason has made animal feed business very attractive to small, medium and large scale Nigerian agro-based enterprises. Efficient distribution and marketing of animal feed will lead to realization of compensating income to such agro-based feed firms. However, most times, these efforts of efficient distribution have been negatively affected by failure of most sales teams in meeting with their required sales targets. According to Akinwumi and Ikpi (2010), the inefficient distribution of animal feeds has continued to becloud the livestock sector especially where some of the ingredients needed in feed formulation are obtained from overseas. The aftermath of this is the rising cost of the product to final consumers. Thus, this study has set out to examine the effect of sales force sales targets on the marketing performance and overall growth of animal feed distributors in Nigeria.
1.2 STATEMENT OF PROBLEM
Companies are increasingly losing investments and sales as consumers often resort to switching of brands for lack of consistency in quality or distribution of products by salesmen, and/or as a result of scarcity of their preferred brands of products. Marketing oriented organizations normally use a well-organized sales force to seek and reach out to their numerous consumers. Pretty many salesmen who have mastered most of the aspects of selling are unfortunately still incapable when it comes to meeting up with their sales targets. Failing to meet sales targets by the sales force team can translate to lose of revenue and growth to the firm. Generating income and revenue are the primary roles of the sales force to the firm, and having a quality sales force team in place is essential to the success, performance and growth of every business firm. The sales teams in pursuing their set targets work together in increasing brand awareness and driving sales forward (Oram 2012; Connolly 2014).
In research terms, several management fields have focused their attention on the nature and effects of sales targets. Organisational behaviour researchers (Locke and Latham, 2002), for example, have looked at the impact of assigned targets (i.e. targets set by superiors, also known as assigned goals) on performance for over 30 years. Their findings have faced criticisms. Nevertheless, this area of research is far from being conclusive as there are numerous gaps that remain to be addressed. Furthermore, not all the management literature is in favour of the use of sales targets for managing sales force and/or marketing performance (Deming, 2000).
There is a limited amount of research looking at the influence of sales target on marketing performance particularly in the area of animal feed distribution. This has created many gaps that require investigations aimed at providing management with information for decision making. These research gaps as identified by Monica and Mike (2008) may include; the impacts of sales performance targets in relationship with sales forces’ incentive pay plans and performance measures; the key issues associated with target setting processes, and the effect of a set of organisational factors (role clarity, managerial and peer support, time availability, organisational cultural risk values, participation in target setting and work discretion) on sales people’s perception of the level of difficulty of their targets.
At present, most organisations use sales targets to influence the behaviour of their sales force. The results these organisations obtain are not always the ones expected. There is often disquiet about whether sales targets have the right impact on sales men’s behaviour and marketing performance. This issue makes marketing managers question the true value of sales targets as a motivational technique. For this reason, Monica and Mike (2008) have suggested that it is important that the purpose and effects of sales targets are reviewed in order to address the problems that management professionals are encountering.
Quality management researchers and consultants such as Deming (2010) suggest that business goals are necessary for management (e.g. constancy of purpose and continuous improvement). However, sales targets established for sales representatives without a road map have effects that are opposite to the effects sought. Deming (2010) stressed that sales targets are “a fortress against improvement”. Other quality management researchers argue that set sales targets do not take into account the essential properties of the organisation as a system. This leads to detrimental results for the organisation in the long run, such as stressful work environments, low trust culture, data manipulation and financial performance losses. In sum, a conflict exists between the different research schools that have studied sales targets as mechanisms for influencing marketing performance. This lack of consensus is a hurdle for managerial practice, as it does not provide clear guidance about what to expect from the use of this technique. (Gregory, 2012).
1.3 OBJECTIVES OF THE STUDY
The main objective of this study was to ascertain the effect of sales target on marketing performance of animal feed distributors in Abia State, Nigeria.
Specifically, the aims were to;
i) examine the sales target mechanisms for the distributors
ii) examine the effect of sales target on market share, and distributors sales volume;
iii) analyze the influence of sales target on profitability of animal feed distributors;
iv) determine how sales target affects service quality;
v) ascertain factors affecting sales force target realization
1.4 RESEARCH QUESTIONS
In order to achieve the aforementioned aims and objective of the survey, relevant questions have to be asked and answered. These include:
i) What are the sales target mechanisms for the distributors?
ii) What is the effect of sales target on market share, and distributors’ sales volume?
iii) What is the influence of sales target on profitability of animal feed distributors?
iv) How does sales target affect service quality?
v) What factors affect sales force target realization?
1.5 STATEMENT OF HYPOTHESES
In order to arrive at statistical conclusion on the subject matter, the following hypotheses were tested;
HO1: There is no significant effect of sales target on market share, and distributors’ sales volume
HO2: There is no significant influence of sales target on profitability of animal feed distributors
HO3: There is no significant effect of sales target on service quality delivery
HO4: Poor sales call and credit sales do not significantly affect sales force target realization
1.6 SIGNIFICANCE OF THE STUDY
Organizations have different mission and objectives which predominantly can be observed in their strategies. Having a quality sales force in place is essential to the performance and growth of most businesses. Similarly, the sales force can make or break a business, depending on their level of professionalism, commitment, and integrity. With such objectives in mind, the outcome and recommendations of this study are immense benefit to good number of people and companies;
The result of this study will be highly useful to any sales team. It will form a commendable attempt to make visible the basic role of the sales force in achieving the growth and performance of companies. An effective sales team will be able to multiply a company’s exposure and increase customer awareness so that more people know about the company and what it has to offer. By creating a bigger audience, the sales team will also be able to create bigger revenue. Thus, management of animal feed manufacturing firms will find the result of this study very useful.
Animal feed manufacturing firms will also find the result of this study very useful. The findings of this study will make transparent to animal feed manufacturing firms some common errors made by their sales men in pursuing their sales targets which usually have a direct negative impact on the marketing performance and performance of their firms. Everyone makes mistakes, but missteps in the selling process can have serious consequences. Not only do they deprive the company of revenue, but they can erode confidence in the company among staff as well as potential customers. Thus, this study will attempt to reveal these common selling mistakes and further attempt in proffering solutions to tackle these mistakes and errors.
Furthermore, the study will explicitly reveal selling strategies employed by salesmen to meet sales targets, the relationship between salesmen’s personality and their sales performance, the effect of sales force selling strategies on organizational performance, the relationship between the achievement of sales target and the attainment of organizational growth, and the factors militating against the realization of set sales targets.
Finally, it will serve as a good reference point for future researchers in this interesting and challenging area of study.
1.7 SCOPE OF THE STUDY
This exploratory study focused on the influence of sales force set target on the marketing performance and growth of animal feed firms. Geographically, the study attempted to cover producing and marketing firms in Abia State, with particular focus in Umuahia and Aba Metropolis. Salesmen and women for these animal feed firms formed the object for the study. Animal feed marketing firms considered in this study were; Top feed, Vital feed, Premier feed, livestock feeds, Boar feeds, Supreme feeds and feed masters.
1.8 LIMITATION OF THE STUDY
The researcher was aware of the limitations and shortcomings inherent in a study of such magnitude. First of all, the research was conducted using only two locations of Aba and Umuahia in Abia State. This was majorly as a result of the inherent difficulty that was encountered in carrying out such a wide survey across the entire State. Moreover, animal feed distributors are sparsely distributed and are highly difficult to aggregate. This was a major limitation to this study. Thus, assessing the animal feed distributors in their locations was a challenge in this study. This also affected the sampling of the study as only available and assessable animal feed distributors are used in the study.
It is also necessary to reveal here that attitude of most of most animal distributors and sales representatives were a times repulsive, especially when it came to the release of vital information. Perhaps, this was out of fear that such information may get into the hands of their organization’s competitors. Such uncooperative, lukewarm and skeptical attitudes further imposed some limitations to this study. However, it is the belief of the researcher that these constraints will not in any way invalidate the findings of this study.
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