ABSTRACT
The study focuses on efforts of physical distribution management on marketing performance of Nigeria breweries plc. In the course of the study, three objectives formulated were to: examine the effects of transportation cost on product availability; ascertain the effect of channel of distribution on product price and examine the effect of distribution channel on sale volume. Primary data (questionnaire) was used to generate data for the study. In this regard, 120 copies of a well-structured questionnaire were given out and 90 were properly filled and returned. Ordinary Least Squares (OLS) was used to test the three hypothesis formed. After the analysis it was concluded that market share was significant at 1% and positively affects profitability. Based on this, the recommendations made were: Brewers should work out appropriate budgets to enhance effective transportation, so as to maintain product availability since transportation cost is a major factor in this regard; breweries should endeavour to adopt best distribution channels (strategies) that form each market segment so as to promote sales in the various segments; breweries should adopt channel strategies that would promote efficiency without adding to price unnecessarily.
TABLE
OF CONTENTS
Tittle
Page i
Declaration
ii
Certification
iii
Dedication
iv Acknowledgement
v
Table
of content vi
List
of Tables vii
List
of Figures ix
Abstract x
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study 1
1.2
Statement of Problem 3
1.3
Objectives of the Study 4
1.4
Research Questions 4
1.5
Significance of The Study 5
1.6
Scope of The Study 5
1.7
1.8 Limitations of The Study 6
1.8
Definition of Terms 6
CHAPTER TWO
REVIEW OF RELATED
LITERATURE
2.1 Conceptual Framework 8
2.1.1 Evolution of Physical Distribution 8
2.1.2 Concept of Physical Distribution Management 9
2.1.3 Channel
Decisions In Relation To Marketing Strategy 11
2.1.4 The
Importance of Middlemen 12
2.1.5 Key decisions
in channel management 14
2.1.6 Types of distribution system 16
2.1.7 Marketing
to Middlemen 20
2.1.8 Power
and Conflict in Distribution Channels 20
2.1.9 The
Total Distribution Concept 22
2.1.10 The Components Of The Total Costs Attached To
Physical Distribution 23
2.1.11 Importance of Physical Distribution 24
2.1.12 A System Approach 26
2.1.13 Protective Packaging and Materials Handling 30
2.1.14 Components of
Logistics System 31
2.1.15 Interrelationship between Transportation and
Logistics 33
2.1.16 Transport Costs
and Goods Characters in Logistics 33
2.1.17 The Effects of Transportation on Logistics
Activities 34
2.1.18 The Role of Transportation in Service
Quality 35
2.2 Theoretical Framework 35
2.2.1 The Push and Pull Product Distribution Model 35
2.2.2 The Theory of Distribution 38
2.2.3 Structure –Conduct-Performance Theory 39
2.3 Empirical Framework 39
2.4 Brief History of Nigeria Brewery Enugu 42
CHAPTER THREE
RESEARCH
METHODOLOGY
3.1
Research Design 43
3.2
Study Area 44
3.3
Population Of The Study 44
3.4 Sample Size and Sampling Technique 45
3.5
Sources Of Data 46
3.6 Data Collection Instrument 46
3.7 Model
Specification 47
3.8 Validity 47
3.9 Reliability 48
CHAPTER FOUR
DATA ANALYSIS PRESENTATION AND DISCUSSION
4.1 Socio
Economic Characteristics of Respondents 49
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary 63
5.2 Conclusions 63
5.3 Recommendation 65
References 66
Questionnaire 68
LIST OF TABLES
4.1 Distribution of Respondents by Age 49
4.2 Distribution of Respondents by Marital
Status. 50
4.3 Distribution of Respondents According To
Household Size 51
4.4 Distribution of Respondents According to
Business Size 52
4.5
Distribution of Respondents by Level of Education 53
4.6
Distribution of Respondents According To Business Experience 54
4.7 Distribution of Respondents According to
Monthly Income 55
4.8
Distribution of Respondents According to Transportation Cost 56
4.9 Distribution of Respondents According to
the unit price of
57
consumer product carried.
4.10 Distribution of Respondents on the Extent
Distribution strategies 58
enhances Product Availability.
4.11 Distribution of respondent according to
likely problems encountered 59
in the use of distribution
strategies
4.12 Determinant of Profitability among
Wholesalers and Retailers that 59
adopt distribution strategies
more in Abia State.
4.13
Regression result on the determinants of marketing performance 60
in Beer Industry
LIST
OF FIGURES
Figure 1 A direct marketing system and a marketing
system with intermediaries 13
Figure 2
Number of warehouse 24
Figure 3 Push and pull strategies 36
CHAPTER
ONE
INTRODUCTION
1.1 Background
to the Study
Production is the
creation of goods and services. The goods and services can be produced in
factories, industries, firms or companies. Production is not complete until the
products gets to the final user or consumer. This can be done through the
distribution process which is said to complete the production cycle (Howard
John A. 2005).
The distribution activity
is equally referred to physical distribution management (PDM). Marketing
logistics and material management. Physical distribution system includes;
transportation, material handling, order processing, inventory control,
warehousing and packing into a complete distribution strategy (Smriti Chand,
2012).
McCarthy, described
distribution as the situation and use of marketing specialist middlemen,
transportation and storage agencies to provide target customers with place and
possession utilities. Distribution channel is regarded as a bridge that spans
various gaps between producers and customers (McCarthy, 2006)
Kottler (2000) on his own
stated that physical distribution is defined as the planning, implementing and
controlling of the physical flows of materials and final goods from point of
origin to point of use to meet customers’ needs at a profit. It is concerned
with the efficient movement of raw materials from the suppliers to the factory
site, where they are processed into finished products and passed to the final
consumers.
The procedure of getting
the right quantity of the right product to the right place at the right time
and at the least cost is no simple job, because companies like the brewery
industries with the great diversity of customer spread over vast geographical
areas must integrate the systems components to avoid dissonance. As stated
earlier there is a gap in the firm of place and time between manufacturer and
the ultimate consumer for whom the manufacturer is producing and this gap can
only be bridged by distribution.
Many problems are confronting the
distribution system of brewery industries. These problems range from lack of
channel members to physical distribution problems such as lack of adequate
transportation warehousing facilities and lack of sophisticated method of
communication. The continuous increase in the cost of transportation due to
decoration of our roads, high cost of vehicles and spare parts and currently
increase in price of petroleum products poses a serious problem in the
effective coverage of territories in the distribution of beer both in rural and
urban areas in the country.
In the area of inventory,
modern management is rarely practiced; this is partly caused by insufficient
storage facilities and inappropriate storage facilities and inappropriate
storage methods which invariably result to high rate of spoilage, breakage and
waste of products.
So in the light of these
marginal of problems and the fact that there are so many brands of beer in the
market from which the consumer has to choose form with little or no different
among them in terms of quality and other characteristics. It then follows that
there is a need for the individual brewing firms to manage the physical
distribution and engage in proper manipulation of other marketing mix variables
in order to keep afloat in the present day competitive beer market in Nigeria.
In this study, I am
considering the physical distribution management from the point of view of Nigeria
Breweries plc. Ninth Mile, Enugu State.
1.2 Statement
of Problem
There is a common
problems in the brewery industries which hampers the effective and efficient
movement of their products from point of production to the final consumers,
this is the problem of physical distribution which if not attended to be a
barrier to a company’s effort to satisfy its customers as well as meeting its
marketing goals and objectives.
A well modeled
distribution channel is basically a pre-requisite for proper integration of the
activities that will eventually leads to attainment of the organizational goal.
When the consumers are not well linked through an organizational distribution
channel, the problem of where, when and at what price the company’s products
will be available will be difficult to ascertain.
The price of production
of the Nigerian breweries plc tends to be higher in towns far from the location
of the plant and it is also known that the ware house in the plant location are
often overstocked whereas the products experience sporadic shortage.
The problems to be
addressed include:
1. Do
Nigerian breweries plc. have a warehouse outside their plant location
2. Do
they have sufficient number of fictional distributing vans
3. Do
Nigerian breweries have dependable source of raw materials.
1.3 Objectives
of the Study
The main objectives of
this study is to analyze the effects of physical distribution management in the
beer industries of Nigerian breweries Plc. However, the study also seeks to
achieve the following specific objectives which are to:
i.
Ascertain the effect of
effective distribution channel on sale.
ii.
Examine the effect of
transportation cost on product availability.
iii.
Examine the effect of channel of distribution on product price
1.4 Research
Questions
Key
research questions for this study will include:
i.
How does transportation
cost enhance product availability?
ii.
How does distribution
channel affect sale volume?
iii.
How does channel of
distribution affect product price?
1.5 Research
Hypothesis
The hypothesis to be tested in the course
of this study are stated as follows:
H01:
transportation cost does not enhance product availability
H02:
distribution channel has no significant effect on sales growth.
H03: channel
of distribution has no significant effect on the cost efficiency of the
enterprise.
1.6 Significance
of The Study
The study of channels of
distribution of brewery industries and its associated problems would be of
benefits to brewery industries and Nigerian brewery plc in particular.
This research is aimed at
finding the suitable situation that will guide the members of the industries in
designing effective and efficient channels of distribution to effectively reach
the target consumers. The research is also aimed at providing Nigerian Breweries
Plc. management with important and identified variables that are necessary to
the development of good channels.
The alarming state of
physical distribution cost in the brewery industries made this study more
significant as the research tends to determine the possible way of reducing the
cost and providing effective and efficient solution to the problems of physical
distribution management.
The result I believe will
also enhance my knowledge and that of other future researchers on the relevance
of physical distribution management in any industry and brewery industries in
particular.
1.7 Scope
of The Study
This study shall be
carried out in the beer industries on Nigerian Breweries plc Enugu using
distribution and marketing department as a case study which will constitute the
respondents to administer questions.
1.8 Limitations
of The Study
This study as a matter of
fact is supposed to be thorough and elaborate without persimmon but the following
problems were encountered.
a. Financial
Constraints: a successful conduct of this work depends on finance which was not
forth coming considering the present economic readily of the day.
b. Time:
The time frame given for the completion of this project work is short and had
to be combined with other academic responsibility such as attending lectures,
reading and preparing for exams.
c. Distance:
The distance to the information centre.
d. Attitude
of the respondents
1.9 Definition of Terms
The following terms used
in this work are defined as follows:
CHANNEL STRATEGY: This is
the adoption of an appropriate means of distribution that will serve
efficiently and effectively from the available distribution options.
EFFICIENT AND EFFECTIVE:
This means being able to achieve a company’s goals and objectives as at when
required at minimum expenses.
LOGISTICS: This implies
to the procurement of souring of raw materials to the production unit, movement
of the finished goods to the warehouse then to the distribution intermediate before
the final consumer.
PHYSICAL DISTRIBUTION:
This involves all the activity in satisfactorily and profitably moving of raw
materials and finished goods from point of origin to point where they satisfy
consumer needs.
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