CHAPTER
ONE
INTRODUCTION
Background
to the Study
Over
the years, many manufacturers have not necessary ability for direct marketing
and use brokers for economy in huge distribution, considerable decrease in work
volume. Even if there are sufficient financial facilities, use of these
facilities in main profession has more efficiency; therefore, advantages of
using distribution channel is obvious (Kotler & Armstrong, 2010). Function
of distribution companies as one of the most important distribution channels in
viewpoint of economics is to change form of manufacturers' goods into form of
consumers’ demanding goods. A distribution channel has other important tasks
besides transfer of goods from manufacturer to consumer, time saving and
connecting goods owners and customers to each other. Researches show that
having relation with customer is one of the important duties of distribution
channel which causes to keep customer, collect necessary information, new ideas
from customers and facilitate functional planning. Increase of relationship
quality with customer has external positive effect for distributor.
For
any organization to be effective there should be effective distribution channel
or process to convey finished products from the manufacturer to the final
consumers. This is because without distribution the best product will not be
delivered and the marketing mix will break down and fail. As a result of this,
firms are increasingly adopting supply chain management to reduce cost,
increase market share and sales, and build solid customer relations (Ferguson
2000). The idea of using an effective channel of distribution as a strategic
tool in purchasing of technical goods can be viewed as a philosophy based on
the belief that each firm in the supply chain directly and indirectly affects
the performance of all the other supply chain members, as well as ultimately,
overall supply chain performance. The effective use of this philosophy requires
that functional and supply-chain partner activities are aligned with company
strategy and harmonized with organizational structure, processes, culture,
incentive and people (Abell 1999).
Distribution
station comprises a group of individuals or organizations that assist in
getting the product to the right place at the right time. Distribution plays a
vital role, primarily because it ultimately affects the sales turnover and
profit margins of the organization. If the product cannot reach its chosen
destination at the appropriate time, then it can erode competitive advantage
and customer retention. The retail industry is responsible for the distribution
of finished products to the consumer as well as the public. The retail sector
comprises of general retailers (managed by individuals/families), departmental
stores, specialty stores and discount stores.
Practically,
many organizations use a mix of different channels; in particular, they may
complement a direct sales-force, calling on the larger accounts, with agents,
covering the smaller customers and prospects. The major challenge facing the
retail industry is the power of the customers or buyers. The reason for this is
that the customers are becoming increasingly knowledgeable; they are impatient,
not wanting to wait for the suppliers’ products for any period of time. This
coupled with the fact that firms are now trying to implement specific
distribution strategy or practices based upon their unique set of competitive
priorities and business conditions to achieve the desired level of performance,
this brought about an examination of effective product distribution and
organizational performance with the view to establish the strategy or practice
which has the most influence on the purchase of technical goods in Nigeria.
1.2
Statement of the Problem
Poor
road network adversely affect the effectiveness and efficiency of products
distribution in the country. This results in high rate of vehicle breakdown and
causes the products to get to the final consumers at the wrong time. The high
cost of transportation and delivery also affect the distribution strategy of a
firm. These factors increase both the production and market cost of goods and
services to the detriment of the final consumers and also affect organizational
performance.
Government
policy is generally seen as a factor that may affect the distribution strategy
of a firm. It is obvious that government contracts or appoints staff standing
taskforce who mobilizes revenue for the government or its representatives in line
with the established Law. This therefore causes problems to smooth flow of
business by demanding for tax identification number, annual official
registration, stickers, infrastructure levy during the course of business in an
area.
1.3
Research Questions
The following are
some of the questions which this study intends to answer:
i)
what is the prevalence of Effective
Product distribution and organizational performance in Nigeria?
ii)
what are the factors that are
responsible for effective product distribution and organizational performance
in Nigeria?
iii)
what are the efforts of organizations
in ensuring effective products distribution in Nigeria?
1.4 Objectives
of the Study
The
following are the objectives of this study:
i)
to identify the
prevalence of Effective Product distribution and organizational performance in
Nigeria.
ii)
to survey the factors that are
responsible for effective product distribution and organizational performance
in Nigeria.
iii)
to assess the efforts of organizations
in ensuring effective products distribution in Nigeria.
1.5 Research Hypothesis
The research hypothesis to be tested include:
Ho: There is no
significant relationship between effective products distribution and
organizational performance.
1.6 Significance
of the Study
This study seeks to examine the effective distribution and organizational
performance. It will therefore seek to enable the management
to provide consumers with the right products at the right time, right place and
at the right price which result to a substantial percentage of sales for the
company. It will also serve as a blue print of action guide to infant companies
and as a compendium of knowledge for further research work in
logistics/distribution channel management of indigenous and multinational companies
in the oil and gas industry.
1.7 Scope of the Study
This study will cover
the guidelines involved in using effective channel of distribution as a
strategic tool in purchasing technical goods. President Paints Nigeria will
therefore be used as a case study
1.8 Limitation of
the study
Time
factor is the major constraint of this research work. This research work was
made in a understanding way in order to meet the aspirations of people
interested in the field for further studies though time could not permit me to
go further.
1.9 Definitions of
Terms
The following terms were used in the course of this study:
Distribution: the act of giving or delivering something to people
Organizational
performance: comprises the actual output or results of an organization as
measured against its intended outputs (or goals and objectives).
Product:
an article or substance that is manufactured or
refined for sale
REFERENCES
Abell, L. (1999) Cited in Piercy, N. (2002), Market-Led
Strategic Change, 3rd edition,
Oxford: Butterworth-Heinemann.
Ferguson, R.H(2000) Business
Logistics Management, 3rd ed. Englewood
Kotler,
P. J., & Armstrong, G. M. (2010). Principles
of marketing: Pearson Education.