ABSTRACT
This
study analyzed in details the effect of logistics management on marketing
performance of water packaging enterprises in Abia State Nigeria. The study
examined the cost implication of logistics management, performance of the
enterprise and determinants of performance. Fifty (50) water packaging
enterprises were selected from the major cities of the state. Descriptive
(tables, frequencies and charts) and inferential (cost and returns, multiple
regression) statistics were adopted in the data analysis. The result showed
thata mean of 9 years indicates that these enterprises have been in existence
for a minimum of this period. The result revealed further that 74% of the water
packaging enterprises in Abia State are located in the urban centers while 26%
in the rural centers. Majority (50%) of the enterprises were medium-scaled, 30%
large scaled and 20% small-scaled. Given that 62% of the managers had tertiary
education, this implies that a very high level of literacy (ability to read and
write) abides in the study area.The study shows that 96% of the water
packaging enterprises in the study area made use of distributive systems while
only 4%. The cost share among these components shows that 61% of the total
logistics management budget was spent on transportation with 21% and 18% spent
on warehousing and inventory control respectively. Estimated gross revenue of N 800,000, total cost of N
486,215 and net return of N
313,785 were received. A profitability ratio of 0.40 indicates that 40% of the
total revenue received was accounted for by net revenue showing that water
packaging enterprises in Abia State are profitable.An R2 shows that
76% of changes in the performance (profit) of water packaging enterprises were
accounted for by the explanatory variables included in the model while 24% was
accounted for by random disturbances in the model. Performance of the
enterprises was positively influenced by turnover and business experience of
the managers at 5% significant level respectively and negatively influenced cost
of operation, age of the enterprises and government charges at 1%, 5% and 10%
significant levels respectively.The result of the probit regression showed that
logistics management was positively related to size of firm, location of firm
and demand for the product and negatively related to cost of logistics and
distance to the target market. The correlation result showed a strong positive
relationship between logistics management and performance of the water
packaging enterprises at 5% level of significance. It was recommended that water
packaging enterprises should ensure that their transportation system is
efficient and affective so as to guarantee place and time utility of their
products, warehouse management must be given special consideration. This may
involve the engagement of commercial warehouses that will ensure momentum and
profit boost;these enterprises are also advised to ensure an efficient
inventory control system as this has the capacity of enhancing sales and
turnover; Government should review their charges on these enterprises and
thereby reduce the unnecessary burden on them.
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 Background
of the study
1.2 Statement of the problem
1.3 Research question
1.4 Objectives
of the study
1.5 Research hypothesis
1.6 Significance of the study
1.7 Scope of the study
1.8 Limitations of the study
CHAPTER
TWO
LITERATURE REVIEW
2.1 Concept
of logistics in the business world
2.2 Definition
of marketing logistics
2.3 Meaning of logistics in marketing
2.3.1 Perspectives of logistics
2.4 Physical distribution
2.4.1 Components of physical distribution
2.5 Distribution
strategies
2.5.1 Element of
distribution
2.5.1.1 Physical
distribution
2.5.1.2 Warehouses
and warehousing
2.5.2 Channel management
2.6
Features of logistics management
2.6.1 Logistic
in the economy: A macro perspective
2.6.2 Cost
associated with logistics performance
2.6.3 Transportation management
2.6.3.1 Product factors in mode selection
2.6.3.2 Market
factor in mode selection
2.6.4
Warehouses as a component in physical distribution
2.7 Role
and relevance of logistics in marketing
2.7.1 Geographical
spread of goods
2.8 Impact of logistics and physical distribution
on profit maximization
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1 Study area
3.2 Sampling technique
3.3 Sources of data
3.4 Method of data analysis
3.4.1 Model specification
CHAPTER FOUR
RESULTS AND DISCUSSION
4.1 Socio-economic characteristics of the respondents
4.2 Logistics Management Components and
Distributive System of Packaged Water Enterprises in Abia State
4.3 Cost Implication of Logistics Management by
Water Packaging Enterprises
4.4 Performance of Water Packaging Enterprises
in the Study Area
4.5 Determinants of Performance of Water
Packaging Enterprises
4.6 Factors affecting logistics management
adoption of the water packaging firms
4.7 Effect of logistics management on
performance of water packaging firms
CHAPTER FIVE
SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary
5.2 Conclusion
5.3 Recommendations
References
QUESTIONNAIRE.
LIST OF TABLES
Table
1 Frequency Distribution of Firms
According to Business Age
Table
2 Frequency Distribution of
Businesses According to Location
Table
3 Frequency Distribution of
Businesses According to Scale of Operation
Table
4 Frequency Distribution of Businesses
According to Capital Structure
Table
5 Frequency Distribution of
Businesses According to Union Membership
Table
6 Frequency Distribution of Firms
According to Managers Level of Education
Table
7 Frequency Distribution of Firms
According to Managers’ Business Experience
Table
9 Frequency Distribution of the
various Logistic Management Components adopted
by Package Water Enterprises in Abia State.
Table
10 Performance of Water Packaging
Enterprises in the Study Area
Table 11 Determinants of Performance of Water
Packaging Enterprises in Abia State.
Table12. Factors affecting logistics management
adoption of the water packaging firms
Table
13 Effect of logistics management on
performance of water packaging firms
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
At
present, logistics plays a very important role in organizations. Due to the
highly competitive environment, organizations have tried with their utmost
endeavor to deploy brand new strategic approach within their own organizations
so as to generate a higher competitive edge. Logistics plays key role in
supporting organizations as they strive for more efficient management systems
(Sheridan, 1993; Wallenburg, 2005). As in the business practices, the
inefficient logistics system together with the inefficient internal management
would disable the organization to respond to the needs of customers with the
lowest price at the shortest feasible time frame including the quality level
which does not meet customer expectation and would lead the organizations to
the competitive disadvantage situation against their rivals. With a broad range
of manufacturers and distributors for our customers to choose from, they can
choose to purchase the products from the manufacturers and distributors who are
capable to offer products which match their specified quality at the lowest
prices and be delivered on time (Stalk and Hout,1990; Azzone and Masella, 1991;
Adobor & McMullen, 2007).
Logistics is becoming a major factor of
differentiation in the market, as referred to by Bowersox et al. (2002)
and Gunaseakaran and Ngail (2003). In the current competitive climate, there is
strong pressure, on one hand, to operate in product and service
differentiation, and on other hand, operate on the price factor allowing its
reduction. As Melnyk et al. (2009) mentioned, logistics can manage these
aspects, constituting a strategic or value-creation tool.
Thus, logistics in intra-organizational
and inter-organizational functions is a prominent activity in companies, since
this plays an important role in supply management, both internally and
externally.
In the literature, various empirical
studies, such as Ellingeret al.
(2000), show that logistics is a strategic vector in companies’ organization
and influences their performance, namely in terms of service quality and
overall profitability. In parallel with its internal importance, logistics also
has an impact on effectiveness and profitability, as mentioned by Mentzeret al. (2001) and Fugate et al.
(2010). The management of logistics activities has become a valuable way of
securing competitive advantage and improving organizational performance (Li et al.2006).
Logistic is the management of the flow of
goods between the point of origin and the point of consumption in order to meet
some requirements, of some customers or corporations, the resources managed in
logistics can include physical items, such as food, materials, animals, equipment
and liquids, as well as abstract items, such as time, information, particles, and
energy. The logistic of physical items usually involves the integration of
information flow, material handling, production, packaging, inventory,
transportation, warehousing, and often security.
Marketing performance has become important
tool globally for any organization to remain in competitive market environment
and was stronger. Aremu and Lawal (2012) sees performance as a pattern of
resource allocation decisions made throughout an organization. This
encapsulates both desired goals and beliefs about what are acceptable and most
critically unacceptable means for achieving them. Marketing performance must
focus on delivering greater value to customers and the firm at a lower cost (Chiliya
et al., 2009). Owomoyela et al, (2013)
also see marketing performance as a way of providing quality product that
satisfies customers needs, offering affordable price and engaging in wider
distribution and back it up with effective promotion performance. Marketing
performance is a prerequisite of industry’s ability to strengthen its market
share and minimize the impact of the competition.
Successful logistic management and
marketing performance are achieved by utilization of installed capacity in productivity,
commitment, specialization in business strategy, organizational growth through
increase in output, more market share, product quality, organizational
effectiveness and efficiency etc. it enhances organizational relationship with
the external environment.
Small and Medium Enterprises (SMEs)
operators (like bottled water company) need to provide a quality product with
good packaging in wider distribution and back it up with effective promotional
strategy in order to survive the pressure from global market competitive
environment.
Bottled water is drinking water that is
packaged in a plastic or glass water bottles. Bottle water may be carbonated
water. Size range from small single serving bottles to large carboys water
coolers. Water is one of the most vital natural resources of all life,
development and the environment (Perlman, 2009; Hofwegen, 2007; Chovwen et al, 2009; Butterworth and Soussan,
2001). This underscores its inclusion as one of the vital components of the
Millennium Development Goals (MDGs) of the United Nations.
Globally, packaged drinking water have
continued to stake its claim to consumer share of throat as demand rose in view
of the fundamental values of purity, quality and reliability leading to a leap
in its market by 6% in 2007, with bottled water volumes reaching 206 billion
liters in that year and with a 7.9% compound annual growth rate in the year
2002-2007. In 2010, world’s bottled water industry experienced a growth rate of
4% to exceed $99 billion (Market line, 2011). The market is expected to expand
by more than 27% in the five- year period ending 2015 to generate more than
$126 billion in revenue. Indeed. There is high market potential for improved
packaged water across the globe.
1.2 Statement of the problem
One
of the major functions of logistic management on marketing performance on water
packaging enterprises is to effectively plan for distribution of goods and
service delivery (drinking water) to the consumption point (customers) and at
the right time. However, the state of infrastructure and bad logistic
management of some water packaging enterprises in Abia State has caused a
serious challenge to the enterprise. Due to the poor condition of our major
road, the cost of moving our goods to different part of Abia State especially
in Umuahia municipal and Aba regions becomes very high. Another problem is
that, there is difficult to measure logistics success and there is difficult to
show contribution of logistics to the company and the value-added created by
means of logistics. We have to take into a consideration many different data,
sources and measures. But logistics effectiveness is more than only costs and
cost reduction. According to Bhagwat and Sharma (2009), analysis of logistics
performance is among the main challenges faced by today's companies. Other
challenges include, for example, customer service, strategic partnerships,
inventory management and logistics flow management, reducing cycle times and
geographical coverage along with flexibility (Li et al, 2006).These challenges arise mostly from the
decentralization of production systems, leading companies to move towards the
development of basic skills and the need to implement efficient and effective
management of logistic activities.
Although, the packaged water industry has
grown exponentially, it is yet to fully maximize it potentials in terms of
logistics management to consumers and low cost of production. Only in a
simplest marketing system will a producer sell directly to the final consumer.
It is in view of this that this study considers it imperative to look at the
effect of logistic management on the marketing performance of water packaging
enterprise in Abia State.
1.3 Research
question
The
following questions will be answered in line with the objectives of the study:
i.
what are the socio-economic
characteristics of the packaged water producers in the study area?
ii.
what are the various
logistic management components for marketing packaged water among water
packaging enterprises in the study area?
iii.
what is/are the cost
implication of logistics management by water packaging enterprises with respect
to transportation, warehousing and inventory cost?
iv.
what are the performance
of water packaging enterprises in the study area with respect to profit and
productivity?
v.
are there factors that
influence adequate logistic management by the water packaging enterprises in
the study area?
vi.
What are the factors that
affect logistic management among the firm?
vii.
What are the effect of
logistic management in the performance of water packaging firms?
1.4 Objectives of the study
The broad objective of this research work
is to examine the effect of logistic management on the marketing performance of
water packaging Enterprises in Abia State, Nigeria. The specific objectives are
to:
i.
examine the
characteristic features of packaged water enterprises in the study area;
ii.
ascertain the various
logistic management components for marketing packaged water among water
packaging enterprises in the study area;
iii.
evaluate the cost
implication of logistics management by water packaging enterprises with respect
to transportation, warehousing and inventory;
iv.
evaluate the performance
of water packaging enterprises with respect to profit and productivity in the
study area;
v.
analyze the determinants
of performance of water packaging enterprises in the study area;
vi.
estimate the factors
affecting logistics management among the firms;
vii.
determine the effect of
logistics management on performance of water packaging firms;
1.5 Research hypothesis
The hypotheses of the study are:
HO1: There is no significant
relationship between the factors that influence logistic management it the
study area.
HO2: There is no significant
relationship that exist between the promotional strategies to adopt by water
packaging enterprises in the study area.
1.6 Significance of the study
This study will be useful to many sectors
of the economy, as little research has been done on this area. Also logistic
management on marketing performance on water packaging enterprise will increase
if the research recommendations are judiciously implemented. The research will
help the operation of water packaging enterprises not only in Umuahia and Aba
metropolis but Nigeria in general.
Water packaging enterprises in Abia State
adopts intensive as well as selective, logistic strategies. Intensive involves
using all the available outlets while selective involves using a limited number
of outlets in a geographical area to market her products. That’s why
organization effort should aim at helping an employee to acquire basic skills
required through training etc to make effective sales and distribution of its products
so as to maintain a large market share as well as business growth. Therefore,
logistic management and effective marketing performance plan is needed in every
marketing organization (water enterprise) for profit making.
The primary aim of being efficient and
effective is to get loyal customers at low marketing costs. The needs to
sustain consumer loyalty in the face of market, uncertainties have led to wars
of wit among supply chains in the marketing system. To the consumer, logistic
management may mean getting his commodities at the lowest price while from the
producer’s perspective: it may imply selling at the highest price. To reconcile
these differences in perspectives, companies must not only create high absolute
value, but value also high relative to competitors at a sufficiently low cost.
This is only possible to the extent to which firms can reduce wastage in their
marketing operations.
The outcome of this study will generate
interest and data for accessing portable water production and distribution in
the study area. These data will be specifically useful or justifiable to many
people such as:
i.
The
marketer: Goldrick et al., (2006) assert that effective logistic management system
exposes and make it easy for customers to get what they want (water) at the
right time, place and from the right source. Thus, the study of what logistic
management strategy to adopt to increase distribution of goods and services
will help the marketer realize his mistakes of the past.
ii.
The
company: Water packaging enterprises will find
this research, finding guide valuable, this is because the finding will enable
them know their deficiencies and how to correct them.
iii.
Future
researchers: Future researchers will also benefit
a lot from the study, this is because, they may likely want to expand or change
their strategy, this work will serve as a stepping stone for them.
In addition, a study of this will also be
useful to policy makers, investors, and regulatory agencies such as National
Agency for Food Drug Administration and Control (NAFDAC), Standard Organization
of Nigeria (SON) in taking informed decisions on quality and price control
issues with respect to packaged water. Apart from its useful purpose as a
reference to researcher, the study will reveal in-death analytical exposition
that would lead to increased interest in logistic management.
1.7
Scope of the study
This study is limited to the effect of
logistic management on the marketing performance of packaged water in Abia
State Nigeria with particular reference to Aba and Umuahia metropolis.
1.8 Limitations
of the study
The study recorded some limitations. Some
of these limitations are uncooperative attitude of the respondents. Some
workers in the company were unwilling to supply the needed information due to
how confidential and sensitive the data are. Lack of adequate finance to fund
the research work as to visit many places was a major setback. Furthermore,
time was a major challenging factor to the researcher, as a student, he was
faced with class lectures, and assignments which adversely affected the
researcher’s work.
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