DISTRIBUTION STRATEGIES LOGISTICS AND PERFORMANCE OF FIRMS IN PORT HARCOURT
This study was conducted on the distribution tactics, logistics, and performance of companies in Port Harcourt. The subject of the investigation was Port Harcourt’s bakeries. Therefore, only Dripples Bakery in Port Harcourt was permitted. In this study, the opinions of managers in the Marketing, Distribution, and Finance departments of four manufacturing companies chosen at random for convenience sampling were gathered using a survey research method. Primarily, questionnaires and in-person interviews were employed to obtain primary data for the study. While information gathered from textbooks, journals, and the internet served as a guide for developing hypotheses and building the questionnaire. According to the findings of the study, the majority of consumer products manufacturing companies in Nigeria have not completely realized the benefits of a well-designed and efficiently managed distribution channel system. In addition, it was determined that the product’s type and character impact its distribution intensity. For economic reasons, firms with restricted output and markets should spin off channel functions to other channel members. Similarly, manufacturing companies of consumer goods in Nigeria must employ more innovative channel strategies. E-commerce or internet-based sales are becoming a way to service a greater number of clients at a reduced price. Expanded use of electronic data exchange to monitor sales and inventory levels across the whole distribution channel is decreasing stockpiles and accelerating the response to fluctuating consumer needs. The study recommended that manufacturers make efforts to integrate their channel system, since doing so will improve the coordination of their channel functions and decrease channel conflicts. Lastly, the government should provide the infrastructure that enables the free and smooth movement of goods from the place of production to the site of consumption.
1.1 Background of the Study
Nigeria’s manufacturing industry is dominated by the consumer goods industry. According to Adirika, Ebue, and Nnolin (2001), distribution involves demand development and fulfillment, and it directly and indirectly reduces the entire cost of marketing organization. As with all other manufacturing industries, the consumer goods sector is characterized by output with poor value added. We observe processors who transform imported raw materials into final goods with minimal added value. In this industry, multinational corporations barely contribute value since they import concentrates from their parent companies, which they then transform into completed products with limited value addition. Wholesalers and distributors control the majority of the market. In reality, distributors and wholesalers account for more than half of the industry’s overall sales (Lead Capital, July 2009). Fragmentation at the retail end of the business has contributed to their dominance. The retail section lacked sufficient supermarkets and glossary stores. They are primarily comprised of roadside kiosks, tiny retailers, and eateries with relatively low sales volumes. Distribution to the retail market is impeded by the massive investments necessary for delivery trucks and the general poor road network. With the presence of multinationals, domestic and foreign enterprises, the consumer products market in Nigeria is highly fragmented.
Distribution channels have been extensively examined in the marketing literature by academics, professionals, and other agents of marketing, including manufacturing enterprises and products distribution agencies, particularly with regard to issues affecting the costs of product distribution. There may be a large financial burden associated with distribution expenses, which may have an effect on the earnings of manufacturing companies and the economy of a country like Nigeria. Many businesses fail to reach their goals while creating high-quality goods because they do not give distribution the priority it merits. Consequently, one may be inclined to ask: what is the economic value of a productive activity that fails to give the physical flow of the complete inventory the attention it warrants? Kotler (1986) asserts that uncontrolled physical distribution activities can result in high costs that have a negative impact on the quality of service provided by a business and its profit. In this situation, business efforts result in a loss or a simple break-even instead of the anticipated profit. In light of the fact that manufacturing is not complete until the goods are in the hands or within reach of the final consumer, a company’s distribution channel strategy must be meticulously analyzed, planned, and executed in order to achieve its profit goals and ensure customer happiness.
Moreover, it should be mentioned that the design and management of effective and efficient distribution channels offer substantial, sometimes unrealized chances for businesses to develop distinctive long-term strategic advantages. Providing exceptional value to end customers is now largely dependent on the performance of channel activities. Globally, businesses are increasingly identifying these opportunities in channel management and adjusting swiftly to the drastic shifts in the organization of channel activities. According to Uduji and Nnabuko (2011), marketing channels on a global scale are gaining importance for organizations seeking international expansion. Manufacturers launching products into overseas markets must determine the optimal channel structure, namely whether the product should be promoted directly or through foreign intermediaries. They recommended that marketers be mindful that channel structures in overseas markets may be vastly different from those in the home nation.
Despite the fact that distribution difficulties have become crucial to the success and prosperity of enterprises, industries, and society, education and research activities devoted to this “place element” of the marketing mix remain limited. In light of this, the purpose of this study is to evaluate the distribution channels of bakeries in Port Harcourt, Rivers state, in order to design more profitable means for bakeries to reach the market and end consumers.
1.2 Statement of the Problem
Globally, an increasing number of businesses are realizing that their conventional techniques to selecting and managing sales and distribution channels no longer work. The channels are too expensive and provide insufficient value. They satisfy neither the manufacturer’s nor the end user’s requirements. Through Nigeria, the situation is exacerbated by the weak infrastructure in which businesses operate. In support of this point of view, Nnolim (2003) asserts that the distribution system in Nigeria, i.e. the basic set-up for channeling the product of labor and capital to both intermediate and end consumers, is haphazard, cumbersome, and inefficient. A high degree of function duplication, highly atomized channel membership and operation units, arbitrary margin setting, and margin taking without the performance of the associated function, which is subsequently relocated, all contribute to the system’s expense. The added financial burden of a poor infrastructural environment in the form of a limited network of highways and rail lines, substandard roads, inadequate storage facilities, high cost and lack of access to information and a crucial, quick, and reliable communication network is also very significant. Consequently, over time, enterprises in Nigeria that manufacture consumer goods are faced with the challenge of creating and selecting methods of distribution that will assure maximum savings in distribution costs, increase product availability, and provide effective coordination of activities.
The realization that the design and management of effective and efficient distribution channels offer significant, frequently untapped opportunities for firms to create unique, long-term strategic advantages has led to a recent increase in the amount of effort devoted to achieving the aforementioned objectives. Reducing the amount of time, energy, and effort required to acquire products and services has become as significant, if not more so, than a reduction in their purchasing prices (Louis W.S. and Barton A.W, 1997). Marketing channel system decisions are among the most crucial that management must make at now. Creative, well-executed marketing channel plans are among the most potent techniques by which businesses may increase their ability to compete domestically and internationally. In an attempt to gain a competitive advantage, the majority of businesses focus their efforts and resources on business operations other than distribution, such as finance, production, research and development, and marketing components other than distribution. A rigorous evaluation and adjustment of marketing channels is long overdue for a number of businesses.
Manufacturing enterprises in Nigeria are mired in the quagmire and perplexing issues of how to offer quick deliveries to customers, maintain optimal inventory levels, minimize utilization of warehouses at the lowest carrying costs of stock, reduce total distribution costs, and maximize customer satisfaction. Manufacturers require a new template to assist them in selecting sales and distribution channels that better balance channel expenses with channel value and give the possibility of competitive advantage. All of these goals can be attained by selecting the most suitable distribution channels. This study focuses on the goal of conducting a comprehensive strategic and empirical research and investigation in order to generate applicable and pertinent answers to the aforementioned issues in bakeries.
1.3 The research’s objectives
The primary objectives of this study are to evaluate the distribution channels of consumer goods manufacturing enterprises in Nigeria and make recommendations for effective and efficient channel management. The following specific goals are deemed pertinent to the achievement and completion of the study’s primary objective.
Determine if the firm’s control over the distribution channel varies with channel length.
Examine the effect of hybrid channel conflict on distribution channel performance.
Determine the relationship between a company’s level of control and customer satisfaction with its existing distribution channel.
To investigate the effect of a distribution channel’s length on its performance.
Determine if the number of distributors in a distribution channel has an effect on the channel’s performance.
1.4 Research Questions
This study must answer a number of research issues in light of the aforementioned situation.
Exists a correlation between the length of a distribution channel and the amount of control a company exercises?
Does a hybrid channel’s conflict have any meaningful impact on its performance?
Does a firm’s level of control have a substantial impact on its satisfaction with the present channel?
Does the length of a distribution route affect its performance significantly?
Does the number of distributors within a distribution channel have an impact on the channel’s performance?
1.5 Significance of the Study
There were research on distribution channels in marketing literature in the past, but they may not have had a significant impact on consumer products distribution routes. This study provides a thorough analysis of all the elements that, when integrated, create a tangible and standard contribution to efficient and effective distribution channel management. This study’s conclusions will identify the issues with distribution channels and provide remedies for the benefit of manufacturing companies, customers, the government, and the general public. They will serve as a reference for the companies’ management in selecting distribution channels that will result in cost reduction, increased profitability, and customer happiness. This study will not only contribute to the academic community’s body of knowledge, but it will also encourage other distribution channel research.
1.6 Scope of the Study and its Limitations
Distribution Channels are the primary topic of this inquiry, which focuses on Nigerian consumer products manufacturers. The research was confined to Dripples bakery in Port Harcourt, Rivers state.
The focus of the study is on the strategy, logistics, and performance of enterprises in Port Harcourt, particularly in the Nigerian consumer products industry. The fundamental restriction of the study is the hesitancy of persons in possession of information to divulge it out of concern for compromising official secrets. In addition, the study was severely limited by the paucity of available data on the subject.
1.7 Definition of Terms
In order to facilitate comprehension of the research report, this study defines the following important concepts to eliminate any potential ambiguity.
Channel structure is the manner in which a collection of distribution jobs have been assigned to the channel participants (Rosenbloom, B, 1990).
Consumer products are final-consumer-ready items or services. They are items destined for the end-user or consumer (Onah and Thomas 2004).
The distribution channel is the route that commodities travel from the point of production to the point of consumption (Amarchard and Vavad 1997).
Distribution is the marketing function tasked with transporting products and services from the point of production to the point of consumption.
Exclusive Distribution entails restricting the number of middlemen to a minimum. It is utilized when the manufacturer wishes to preserve control over the service quality and outputs of resellers. (Kotler and Keller, 2006).
1.8 Business Description (Dripples bakery)
We devote close attention to each and every detail at Dripples bakery, which is an upscale cake manufacturer with superior quality control. Tareela Okene owns and operates the renowned Nigerian bakery Dripples, which is renowned for its production of pastries. Additionally, Dripples cake provides employment opportunities and instructs employees in the art of cake design. By supplying high-quality goods and services, Dripples bakery generates waves of enjoyment among its countless customers. The foundation of their success is their approach of providing timely and superior services.
DISTRIBUTION STRATEGIES LOGISTICS AND PERFORMANCE OF FIRMS IN PORT HARCOURT