TABLE OF CONTENT
Title Page - - - - - - - - - - i
Declaration - - - - - - - - - ii
Certification - - - - - - - - - iii
Dedication - - - - - - - - - - iv
Acknowledgement - - - - - - - - v
Table of Content - - - - - - - - vi
List of Tables - - - - - - - - - vii
Abstract - - - - - - - - - - viii
CHAPTER ONE
1.0. INTRODUCTION - - - - - - - 1
1.1. Background of the Study - - - - -- - 1-6
1.2. Statement of the Problems - - - - - - 6-7
1.3. Objectives of the Study - - - - - - 8
1.4. Research Questionnaire - - - - - - 8-9
1.5. Research Hypotheses - - - - - - 9
1.6. Scope of the Study - - - - - - - 9
1.7. Significance of the Study - - - - - - 9-10
1.8. Limitations of the Study - - - - - - 10-11
1.9. Definition of Terms - - - - - - - 11
CHAPTER TWO
2.0. Review of Related Literatures - - - - - 13
2.1. The Concept of Distribution Channel - - - - 12-14
2.2. Structure of Distribution Channel - - - - - 14-15
2.2.1. Channel for Consumer Goods - - - - - 15-17
2.2.2. Channel for Industrial Products 17
2.3. Channel Dynamism 18
2.4. Channel Function 21
2.5. Motivating the Channel member 23
2.6. Evaluating Channel Members Performance 26
2.7. Channel Conflict and Competition 29
2.7.1. Types of Conflicts 21
2.7.2. Causes of Channel Conflict 31
2.7.3. Solutions to Channel Conflicts 32
CHAPTER THREE
3.0. Research Methodology 34
3.1. Research Design 34
3.2. Area of Study 34
3.3. Population of the Study 35
3.4. Sample Size Determination 35
3.4.1. Sampling Technique 36
3.5. Source of Data 36
3.5.1. Primary Source of Data 36
3.5.2. Secondary Source of data 37
3.6. Instruments for Data Collection 37
3.6.1. Design and Administration of Questionnaire 37
3.7. Data Analysis Technique 38
3.7.1..Significance of Test 39
CHAPTER FOUR
4.0. Data Presentation, Analysis Interpretation 41
4.1. Questionnaire Distribution and Collection 41
4.1.1. Distribution of the Respondents 41
4.2. Data Presentation and Analysis 43
4.3. Test of Hypothesis 51
4.3.1. Hypothesis One 52
4.3.2. Hypothesis Two 53
4.3.3. Hypothesis Three 54
CHAPTER FIVE
5.0. Summary of Findings, Conclusion and Recommendation 56
5.1. Summary of Findings 56
5.2. Conclusion 59
5.3. Recommendation 60
Appendix
Questionnaire
References
LIST OF TABLES
Table 4.2.1. Responses to Whether Multi-Distribution Channel
Enhances Market Penetration
Table 4.2.2 Responses to Whether Multi-Distribution Channel
Influences the development of Customer Relationship
Table 4.2.3. Responses to whether market enlargement is determined by the existence of multi-Distribution
Table 4.2.4. Responses to whether Multi-Distribution Channel Enhances Customer Satisfaction
Table 4.2.5. Responses to whether Multi-Distribution Channel Enhances Competitive Advantage Over Rivals
Table 4.2.6. Responses to Whether Customer Loyalty is Sustained by the Existence of Multi-Distribution Channel
Table 4.2.7. Responses to Whether Multi-Distribution Channel Enhances Profitability
ABSTRACT
The study examined the effect of Multi-Distribution as Market Penetration Startegy of Promasidor Foods Nigeria Limited in the dsitribtuio of its Cowbell Milk brand. The channel members in Aba and Umuahia were chosen as the target respondents. A survey method was adopted to elicit the required information from the target respondents through the use of a well structured questionnaire. The questionnaire was specifically structured in a likert rating scale with the highest response variable (strongly agree) attracting five (5) points on the scale while the Lowest response variable (strongly disagree) attracted one (1) point on the scale. The empirical analysis was carried out using Pearson product coefficient of correlation (r) and the three (3) research hypotheses were tested with the application of T-statistic (student T-test). Te finding from the test of hypothesis revealed that there is a strong significant positive correlation between multi-distribution channel of cowbell milk and its market penetration which formed the basis for the rejection of the null hypothesis (Ho) and acceptance of the alternative hypothesis (Hi). Therefore, it was recommended for regular evaluation of the multi-distribution strategy of cowbell milk in accordance with professional ethics to determine its effectiveness in meeting the desired objective and identify weakness, so that corrective action can be taken.
CHAPTER ONE
1.0. INTRODUCTION
1.1. BACKGROUND OF THE STUDY
The current marketing emphasis on market penetration by firms’ borders on the adoption of multi-distribution channels geared towards making the products conveniently available for customers who want to buy them. For consumer goods, two aspects of availability must be considered. The first is to attain the desired level of coverage in terms of appropriate retail outlets because retailers differ in their sales volume while manufacturers need to weigh the relative importance of each retailer on the basis of its percent of shares within the product category in question. The second important aspect of availability for consumer products is the one way to measure performance is the products positioning within the store and one way to measure performance is the percentage available shelf or display space devoted to the brand, weighted by the importance of the store. Firms can assess their market penetration or coverage by measuring how often consumers in the target market are called on by distributor sales people and by the time required to fill and deliver an order (Mulins, 2011).
According to Lamb et al (2006), multi distribution channels involve a set of interdependent organizations that ease the transfer of ownership as products move from producer to business users or consumers.
Market and competitive factors also influence a firm’s ability to achieve a desired level of market penetration and availability for its products. When demand is limited or when the brand holds a small relative share of the total market, wholesaler or retailers will to carry it may be difficult to find (Walker, 2009). To remain competitive through increased market penetration, the firm may have to offer extra incentives and inducements in order to achieve an adequate land of product availability. However, a brand strong competitive position makes it easier to attain extensive retail coverage. It is obvious that distribution constitutes an important element in the marketing mix of the firm and the manufacturer has to decide on channels or routes through which the product will flow from the factory or firm to the potential consumers. In the past, Nigerian firms were very few and concentrated in the distribution of European manufactured goods. There was no competition as supply was always at equilibrium with demand. Thus, the use of a single distribution channels was, most viable to firms which prevailed till the late 1950s when local manufacturing firms began to spring up.
Furthermore, the late 1980s and early 1990s witnessed an upsurge in number of imported goods as well as locally manufactured ones. This led to an increase in competition and proliferation of customer segments. Given this scenario, customer satisfaction became the only tool for continued existence and competitive advantage.
In order to reach the target customers, there arose the need for an improved channel system which necessitated the adoption of the multi distribution channel structures range from two to five levels. The simplest is a two-level structure in which goods and service directly from the manufacturer or service provider to the consumer. Two-level structures occur in some industries where consumers are able to order products directly from the manufacturer and the manufacturer fulfils the orders through its own physical distribution system. In three-level channel structure, retailers serve as intermediaries between consumers and manufacturers by ordering the products directly from the producer/manufacturer and sell them directly to the consumers. A fourth-level is adopted when manufacturers sell to wholesalers rather than to retailers. In a four-level channel structure, retailers order goods from wholesalers rather than manufacturers and sell them to the final consumers. A five-level channel structure emerges with a manufacturer’s agent, who serves as an intermediary between the manufacturer and wholesaler. This distribution channel mainly comprises the manufacturer, agent, wholesaler, retailer and consumer levels (Gale, 2002). Firms that adopt multi-distribution channels strategy normally have their products positioned at the customers various points of purchase and this in most cases influences the customers, initial trial and subsequent adoption of such products. Kolter (2009) posited that companies gain three important benefits whenever they add more channels which include:
i. Increased market coverage
ii. More customised selling
iii. Lower channel cost
The suitability of strategy and the relative weight given to global and local brands in the product portfolio varies with the structures of the industry and the firms own resources and capabilities. Business may have to develop different strategies or new business models to serve not only the few wealthy customers in the target market but also the mass market. Market penetration starts with the entry strategy, which has to provide access to local resources, such as distribution networks and access to local business and authorities (Klaus, 2006).
In addition, the channels of distribution selected by a firm play a vital role in the process of market penetration. Well chosen channels constitute a significant competitive advantage; while poorly conceived or chosen channels can doom, even superior product availability is an important objective of all distribution channels. The appropriate degree of availability varies with the characteristics of the products and the target customers, particularly the products importance to those customers and the amount of time and effort they will expend, to obtain it. Because of their proximity to the market place, middlemen are often relied on for fast accurate feedback of information about things such as sales trends, inventory levels, and competitor’s actions. A high level of channel feedback is particularly important of firms in highly competitive industries characterized by channels in product technology or customer performances (Sherman, 2008). However, not withstanding how well a manufacturer administers its channel system for effective and efficient market penetration, some amount of channel conflict is inevitable. Some of these conflicts are essential if members are to adapt to change. Preferably, conflict show result in more effective and efficient channel performance, provided it does not become destructive in the long run of achieving the ultimate goal of market penetration. Therefore, this study is specifically designed to evaluate the effect of multi-distribution channel on market penetration strategy of firms with particular reference to Cowbell Milk, a product of Promasidor Foods Nigeria Limited, Abia.
1.2. Statement of the Problem
The market environment in recent times has been characterized with series of problems due to its complexity and the activities of channel members. In developing countries like Nigeria, the means of getting goods and services to the final consumers or users is through a single channel which has limited the level of market penetration by firms. According to Ogunsanya (2000), this process is inefficient, especially due to the tendency of channel members to create scarcity through which they enrich themselves, as a matter of fact, they take to hoarding and advocate price increase. This in the long run leads to increased prices and low sales volume to the manufacturer. Also, the unscruptous activity of middlemen which is usually associated with multi-distribution channels remains a great challenge. The poor communication and transportation networks that characterized the character pose a great difficulty to successful penetration of firms in the target market, especially rural areas where demand for consumer goods are relatively high. Inevitably, disagreement among channel members can occur for several reasons, including incompatible goals, unclear rights, and responsibilities, misperceptions and poor communication. The challenge is not to eliminate it, but to manage it better and its management has become very problematic due to the existence of diverse interest.
Moreso, there are legal constraints on how much and what kinds of power can be used to resolve conflicts or control channel members actions. However, this is most apt to be the case when the firm uses an exclusive or selective distribution strategy or attempts to dictate how the channel intermediary will perform in the marketing of the product. Considering these scenarios, this study is intended to determine the effectiveness of the multi-distribution channels in enhancing the market share of Cowbell Milk through a sustainable market penetration.
1.3. Objectives Of the Study
The overall objective of the study is to evaluate the effect of multi-distribution channel on market penetration strategy of Cowbell Milk. However, the study is designed to achieve the following specific objectives:
i. To examine the impact of multi-distribution channels on market penetration of Cowbell Milk
ii. To determine how multi-distribution channels influence the development of customer relationship
iii. To find out how multi-distribution channel affect the market share of Cowbell Milk
iv. To determine the effect of multi-distribution on hoarding and continuous price increase by channel members.
1.4. Research Questions
The study is being guided by the following research questions:
i. Does a multi-distribution channel affect the market penetration of Cowbell Milk?
ii. Does multi-distribution channel influence the development of customer relationship?
iii. What effect does multi-distribution channel has on hoarding and indiscriminate increase in price being associated with channel members?
1.5. Research Hypotheses
The following null hypotheses are formulated for the study:
Ho1: There is no significant correlation between multi-distribution channel and market penetration of Cowbell Milk.
Ho2: There is no significant correlation between multi-distribution channel and development of customer relationship.
Ho3: There is no significant correlation between multi-distribution and market share of Cowbell Milk.
1.6. Scope of the Study
The scope of the study is limited to marketing activities of firms, with specific reference to the multi-distribution channel as a tool for market penetration.
1.7. SIgnificance Of the Study
The study will primarily help the management of Cowbell Milk know how viable its multi-distribution channel has been in terms of penetrating the target market. It will equally serve as tool in informing the average manufacturer on the options of distribution channels open to them. Also, the recommendations of the study, if properly implemented will help in proffering lasting solution to the lingering problem prevalent in the Nigerian distribution system. More importantly, the study will enable potential researchers in the subject matter acquire in indebt knowledge of multi-distribution channel as practiced by most manufacturing firms and other interested persons who wish to broaden their knowledge on the aspects of marketing mix. It will equally provide government to come to terms with the major problems associated with multi-distribution channel and consequent formulate policies to improve the system.
1.8. Limitations OF the Study
In the course of the study some difficulties were encountered due to some unavoidable factors. First and foremost, the time frame within which the study is expected to be completed is short considering other academic work needed to be done. This no doubted affected the thoroughness of the work done. The financial involvement for the collection of the required data for the analysis posed a great challenge to the study. Also, the paucity of materials in the area of study necessitated additional costs in order to meet the academic requirement.
1.9. Definition of Terms
Distribution: Movement of goods and services from one place to another.
Marketing Mix: The basic areas of marketing which include price, product, promotion and place.
Hoarding: Storage made, in order to be sold at a future time and at a Higher Price. This usually causes scarcity.
Channel Members: There involves all the intermediaries involved in the distribution of goods and services from points of product of use and ultimate consumption. They include the agents, wholesalers, retailers, jobbers etc.
Customized Selling: Ability to prepare on mass basis, communication and distribution to meet each customer’s requirement.
Customer Segment: it means grouping or classifying the customers according to some unique characteristic such as age, income, area of residence etc.
Insensate Price Increase: Outrageous and, mindless increase of the prices of goods.
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