ABSTRACT
The
study investigated the Impact of Channel Distribution Strategy on
Organizational Performance. Specifically, it examined whether intensive
distribution strategy helps an organization to gain a sustainable competitive
advantage, increased sales and profitability.
The
study employed primary data collected from 30 employees of Nigeria Bottling
Company Plc in Lagos
state. The primary data used for the study were collected through questionnaire
administered to the respondents. The study employed descriptive statistics and
Pearson product moment coefficient of correlation. Pearson product moment
coefficient of correlation method and t-test were also employed to analyze the
relationship between intensive distribution, sustainable competitive advantage,
increased sales and profitability.
The
study recommends that the management of the Nigeria bottling company should be
aware that distribution via stockless platform is more complex solution for
physical distribution improvement than direct delivery.
TABLE
OF CONTENTS
Title
Page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
Table
of Contents vi
CHAPTER ONE
INTRODUCTION
1.1 Background of Study 1
1.2 Statement of Problem 3
1.3 Purpose of Study 4
1.4 Research Questions 5
1.5 Research Hypothesis 6
1.6 Limitations of Study 6
1.7 Scope of Study 6
1.8 Significance of Study 7
1.9 Definition of Terms 8
References 10
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction 11
2.2 Distribution Channels 15
2.3 Reasons and Functions of Distribution
Channels 16
2.4 Channel Levels 17
2.5 Channel Design Decision 20
2.6 Objectives and Constraints of Distribution 23
Channels
2.7 Types of Intermediaries 24
2.8 Managing the Marketing Channel 25
2.9 Channel Conflicts 27
2.10 Impact of Channel Conflict 28
2.11 Managing Conflicts in Distribution Channels 31
References 34
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction 35
3.1 Research Design 35
3.2 Population Study 35
3.3 Data Collection Method 36
3.4 Sampling Technique 36
3.5 Method of Data Analysis 36
3.6 Scope and Limitation of the Study 38
References 39
CHAPTER FOUR
PRESENTATION AND DATA
ANALYSIS
4.0 Introduction 40
4.1 Presentation of Data 40
4.2 Test of Hypothesis 49
References 51
CHAPTER FIVE
SUMMARY OF FINDINGS.
RECOMMENDATIONS, CONCLUSIONS AND SUGGESTIONS FOR FURTHER RESEARCH
5.0 Introduction 52
5.1 Summary of Findings 52
5.2 Recommendation 53
5.3 Conclusion 56
5.4 Suggestions for Further Research 57
Bibliography 58
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Distribution
is a stream, a flow of products and services from the producer though
intermediaries to end-users. It consists of members in the distribution
channels that gets the products from assembly line (production) to the consumer
(consumption). It includes selecting and managing the trade channels through
which the product will reach the right market at the right time and to develop
a distribution system for physically handling and transporting the product
through these channels. It also involves the actual movement of products from
one place to another.
The
Nigerian Bottling company plc came into existence in 1953 to bottle coca-cola
range of products. This includes coca-cola, fanta (orange, Lemon and
pineapple), sprite, Schweppes and Eva Table water. It sells more than
15,000,000 bottles of these products daily.
Nigerian
Bottling company is a public liability company with a fully-paid up share
capital of over 783, 740, 441 of which 41 percent is held by Molino soft drinks.
A- in trust for Leventis Nig., Plc, while Nigerian investors about 51 percent,
other foreign investors own about 8 percent of the paid-up capital. It has on
its board nine (9) directors of which Bashorun A.A., Adesanya is the chairman.
The
company has its registered office at the NBC House, behind Mainland Hotel,
Oyingbo, Ebute-Metta, Lagos and Operates from
twenty-one (21) bottling plants, thirty four (34) bottling lines, 250 depots
throughout the federation, and the country is divided into regions namely Lagos, East, North and West
for easy management of operations.
In
addition to the above, the company has in its employment more than ten thousand
(10,000) regular employees, contract workers in excess of 1,000 as well as a
fleet of 3,500 vehicles including sales tricks totaling over 2000 and 500
trailers. This company is a dominant player and infact the leader of the soft
drinks industry accounting for more than 65% of the market share.
Furthermore,
this company has subsidiaries and associates companies including Delta Glass
company Plc, producing soft drinks bottles and glass wares, crown products
limited which manufactures bottle crowns, Benin plastic company limited makes
plastic cases for bottles.
Moreover,
the company has about 400,000 customers (dealers) spread all over the
federation. It is the largest manufacturer of carbon-dioxide (Co2) gas used for
making soft drinks.
1.2 STATEMENT OF PROBLEM
In
any organization, the channel of distribution should be treated as a total unit
in order to achieve a significant competitive advantage over other firms.
This
is very important especially when the firm is planning for and designing
distribution channels.
Nigerian
Bottling Company Plc is a major player and infact the leader (has over 67
percent market share) in the soft drink industry and there have been inherent
and apparent problems with the distribution system. These problems include:
·
Conflicts among the channels of distribution
(Distributors, wholesalers, Retailers).
·
Conflicts such as between the
wholesalers and retailers.
·
Conflicts as a result of non-compliance
with zonal regulations by distributors.
·
Diversion of products by the salesmen
during peak periods/ seasons.
·
Overpricing of products by the salesmen
during peak periods/ seasons.
·
Brand assortments are not done properly.
·
The preferential treatment as well as
undue advantages given to some channel members over others by the staff/
salesmen of Nigerian Bottling Company Plc. Management of the Distribution
fleet.
1.3 PURPOSE OF STUDY
The
purpose of this study is to proffer solutions to the obvious problems inherent
in the distribution system of Nigerian Bottling Company Plc. Highlighted above
and in doing this, the following objectives shall be looked into and justice
done to them. the study shall examine the various channels of distribution in
the soft drink industry with special reference to the Nigerian Bottling Company
Plc, which is the research's case study.
It
will also discuss he various conflicts that arise among the channel members and
the causes of these conflicts as well as their impacts on the distribution
system of Nigerian Bottling Company Plc. It will ensure whether these conflicts
have any influence on the channels members themselves and the various product
lines manufactured by the company.
In
addition to the above, this research work will find out if the customers and
the consumers are getting the desired satisfaction from the company's products
in terms of quality vis-a-vis the taste.
The
study will also concern itself with the relationship between product demand,
pricing and present distribution system. It will reveal if the present
(current) distribution system has been able to meet with the demand of the
consumers and overall expectation of the company.
1.4 RESEARCH QUESTIONS
The
following question will be used in appraising the effectiveness of channels of
Distribution in NBC Plc. Data analyzed will proffer solution to this question.
1. Does
effective channel distribution have any impact on the profitability of soft
drink industries?
1.5 RESEARCH HYPOTHESIS
Effective
channel distribution has no impacts on the
Ho:
Profitability of soft drink industries
Effective channel distribution has negative impact on the profitability of soft
drink industries
Hi: Profitability of soft drink industries
Effective channel distribution has positive impact on the profitability of soft
drink industries
1.6 LIMITATIONS OF STUDY
Owing
to finance and logistic constraints, this study will only be conducted for
Lagos Region. Also, some dealers are not willing to respond thus limiting our sample
size
1.7 SCOPE OF STUDY
In
carrying out this study, Nigerian Bottling Company Plc and their dealers
(customers) were picked out of the soft drink industry to represent the
industry. The reason for the choice is because the company is a big player and
infact, markets leader in the industry (controlling more than 65% of the
market).
Nigerian
bottling Company Plc is a big firm with many bottling plants grouped under
regions throughout the federation. Because of the large size and the near
impossibility of the research work to cover the federation, this study will be restricted
to only the Lagos region comprising three (3) bottling plants namely Apapa,
Ikeja and Mushin.
1.8 SIGNIFICANCE OF STUDY
Under
the above, we want to see the importance of this study to the company and the
industry. Having analyzed problems militating against effective distribution of
products in Nigeria Bottling company Plc, the findings and subsequent recommendations
will be of immense value to the company in terms of improving on its
performance. Also, the study will have a broader relevance to the entire
industry since most of the firms operating in the industry may have similar distribution
patterns and recurring problems like that of Nigerian Bottling company Plc, the
result of the study may be used by other firms.
This
study may serve as a basis for further studies on the same topic or topics of
similar features.
1.9 DEFINITION OF TERMS
According
to supervising Route Distribution Effectiveness of Nigerian Bottling Company
Plc., (1990), the following terms to be used in this project work are defined
as follows:
Channels: A
channel is a term of merchants and agents business institutes that combine
physical movement and title movement of products in order to a create useful
assortments for specific markets.
Distribution: It
is the process of satisfying consumers and customers while generating profitable
growth.
Wholesaling: This
consists of activities involved in selling the buyers other than ultimate
consumers.
Retailing: Business
concerns or merchandises that is responsible for the selling goods and services
to final consumers.
Agent: Business
units that deals in the negotiations for the buying and selling of goods and
services.
Customer: This
refers to the wholesalers, retailers and agents. Consumer
This
refers to the final end-users in the chain of distribution.
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