THE IMPACT OF INTENSIVE DISTRIBUTION STRATEGY ON MARKETING OF CONSUMER GOODS

(A CASE STUDY OF DOTMALL NIGERIA LIMITED)

ABSTRACT

The aim of this research study is to examine The Impact of Intensive Distribution Strategy on Marketing of Consumer Goods using Dotmall Nigeria Limited as a case study.

To achieve the above stated objective both primary and secondary sources or data collection which include the use of questionnaires to elicit information, and review of textbooks, journals, internet sources etc. were used. Statistical tools such as frequency distribution, simple percentage tables and the Chi-Square (x2)were used.

The findings in the hypotheses tested showed that; the company uses an intensive distribution strategy for the distribution of its products. Convenience goods must be made available at every point where they can get them, and at all times; bad roads and poor storage facilities are factors that impede effective distribution of goods and services.

Based on these findings, organizations should ensure a proper definition of roles, right and responsibilities of channel members as the conflict of interest among these members could greatly affect the marketing of the company’s products; Careful study must be carried out by organizations to ensure the right distribution strategy is selected for the tight type of product(s) to avoid putting a square peg in a around hole.

TABLE OF CONTENTS

Title Page                                                                                                       i

Certification                                                                                                  ii

Dedication                                                                                                     iii

Acknowledgement                                                                                       iv

Abstract                                                                                                         v

Table of Content                                                                                          vii

CHAPTER ONE:  INTRODUCTION

1.1       Background of the Study                                                                1

1.2       Statement of the Problem                                                                3

1.3       Objectives of the Study                                                                   4

1.4       Significance of the Study                                                                5

1.5       Research Questions                                                                         6

1.6       Research Hypotheses                                                                      7

1.7       Scope of the Study                                                                           8

1.8       Limitations of the Study                                                                 8

1.9       Definition of Terms                                                                         9

CHAPTER TWO: LITERATURE REVIEW

2.0       Introduction                                                                                      11

2.1       The Conceptualization of Distribution                                         11

2.2       The Objectives of Distribution                                                      14

2.3       Choosing A Channel of Distribution                                            16

2.4       Distribution Strategy/Intensity of Channel                                  19

2.5       Distribution Channel for Consumer Goods                                 23

2.6       Importance of Physical Distribution                                             27

2.7       Major Components of Physical Distribution                               28

References                                                                                        37

CHAPTER THREE: RESEARCH METHODOLOGY

3.0       Introduction                                                                                      38

3.1       Research Design                                                                               38

3.2       Sources of Data                                                                                39

3.3       Data Collection Instrument                                                                        39

3.4       Sampling Method                                                                             40

3.5       Population and Sample Size                                                           40

3.6       Method of Data Analysis and Procedure                                     41

3.7       Restatement of Hypotheses                                                                        42

3.8       Administration of Questionnaire                                                   43

CHAPTER FOUR:  DATA PRESENTATION AND ANALYSIS

4.1       Introduction                                                                                      44

4.2       Analysis of Personal Data from Questionnaire                           45

4.3       Analysis of Data from Questionnaire                                           49

4.4       Test of Hypotheses                                                                          56

CHAPTER FIVE: SUMMARY, CONCLUSION AND

RECOMMENDATIONS

5.1       Summary                                                                                           66

5.2       Conclusion                                                                                        69

5.3       Recommendation                                                                             69

Bibliography                                                                                     71

Questionnaire                                                                                   73

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

The aim of marketing as a set of individual and organizational activities is to ensure that consumer wants, needs and preferences are appropriately and properly satisfied in order toensure customer/consumer satisfaction and at the same time achieve the goals of the individual or organization. Marketing ensures that goods and services are not only produced, but also ensure that these goods are made available to the consumers at the right time, place and in the right quality.

The goal of marketing is achieved through the marketing mix elements – Product, Price, Promotion, and Place (distribution). Marketing ensures that these marketing mix elements combined in the right proportion, at the right time, and in the right sequence in order to meet the requirement of the target market.

Distribution which is one of the marketing mix elements is the subject of this study. The major aim of distribution is to ensure that goods and services move from the points of production to the points of consumption. This involves not only the physical movement and handling of products, but also the transfer of title as well. It is important to point out that distribution is a broad concept.

Agbonifor et al (1998), defined distribution as ”the flow of title to goods and the movement of those goods from point of production to the point of consumption.”

Kotler (2008) defined distribution as “involving tasks of planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirement at a profit.” He stated further that distribution as a resource in marketing is used to make the product available at the right place and in the amount that the target group wants it.  Without distribution systems, organizations would expend more of their funds or trying to build their own infrastructure for reaching customers.

It is necessary to mention that distribution is made of two broad aspects namely; channel of distribution often referred to as marketing channel or trade channel, and physical distribution (logistics). A definition of physical distribution is same as earlier stated according to Kotler. Channel of distribution refers to the pathway or course taken in the transfer of title to a product as well as the individuals and institutions that participate in the distribution of goods from points of production to the point of consumption.

Firms adopt different distribution strategies in the marketing of their products. They may use exclusive, intensive, or selective strategy. It should be noted that the strategy selected depends on the firm and the nature of its products.

In the past, physical distribution typically started with products at the plant and then tried to find low-cost solutions to get them to the customers. However, today’s marketers prefer customer-centered logistics thinking, which starts with the market place and works backward to the factory, or even to source of supply. Therefore, as the world market is becoming more and more competitive, a firm that wants to be successful must carefully plan its distribution policy to ensure that goods not only are available, but are able to set to the right customers at the right time and place, and at the right quantity and quality.

1.2    STATEMENT OF PROBLEM

The following may be identified as problems associated with distribution of consumer goods and services, using Dotmall Nigeria Limited as a case study:

ü Many organizations do not have a well-structured distribution policy that could help in the effective distribution of their products.

ü Companies also especially small scale businesses fail to associate effective distribution program with the successful marketing of their products.

ü Also, many organizations face the problem of selecting the right distribution strategy for their products.

ü The distributors in most cases face the problem of conflict of interest thereby, neglecting the fundamental purpose of distribution to their own profit interest.

ü Inappropriate definition of responsibilities and rights between firms and their distributors has also affected effective distribution of consumer goods.

ü More prominent among the problems facing effective distribution in Nigeria is the issue of bad transportation facilities, e.g. transportation, warehousing etc.

1.3    OBJECTIVES OF THE STUDY

The objective of any distribution strategy is to ensure that goods and services get to the customers at the right time, place, quantity, and in the right quality. The objectives of this study are as follows:

ü To find out the effect of ill-structured distribution policy on effective distribution of consumer goods.

ü To examine the extent to which effective distribution policy affects the success of a marketing program.

ü To evaluate the how a distribution strategy at a particular time affects the effective distribution of consumer goods and services.

ü To examine how conflict of interest in the distribution channels affect the distribution program.

ü To examine the effect of ambiguous definition of rights and responsibilities on effective distribution of goods and services.

ü Lastly, the objective of this study is to assess the effects of bad roads and inadequate storage facilities on the effective distribution of goods.

1.4    SIGNIFICANCE OF THE STUDY

The major significant of this research work is to the researcher. This is because the research work: is required in partial fulfillment of the requirement for the award of the Bachelor of Science (Bsc) in Marketing.

The research work is also of great significance to the case study as a source of eliciting information for the best combination of the promotional mix strategies.

Also, the research work is of great significance to the distributing sub – sector or firms in order to realize the importance of effective distribution policy and strategies in the present complex and dynamic business world.  This is the ideology behind the slogan, “Production is not completed until the goods get to the final consumers”.

The research work will also reveal to the firms and organizations involved in distribution, variables that can help to improve effective distribution.

Lastly, the research work will ultimately criticize the past work of different scholars in order to validate their assertions on the subject matter. Findings shall determine if such assertions shall be accepted or refuted.

1.5    RESEARCH QUESTIONS

This research work will seek to answer questions related to problems that have been stated earlier on in this chapter. The questions are as follows:

ü What is the effect of ill-structured distribution policy on effective distribution of consumer goods?

ü To what extent has the effective distribution policy affects the success of a marketing program?

ü What is the effect of each of the distribution strategy on the effective distribution of consumer goods and services?

ü How has conflict of interest in the distribution channels affect the distribution program?

ü What is the effect of ambiguous definition of rights and responsibilities on effective dis1ribution of goods and services?

ü What are the effects of bad roads and inadequate storage facilities on the effective distribution of goods?

1.6    RESEARCH HYPOTHESIS

Hypotheses are tentative statements about the relationship between two or more variables. For the purpose of this study, the following hypotheses will be tested:

The Null Hypothesis (Ho) and the Alternate Hypothesis (Hi)

HYPOTHESIS 1

Ho:    The number of channel members in the distribution chain does not have any impact on marketing of consumer goods.

Hi:     The number of channel members in the distribution chain has an impact on marketing of consumer goods.

HYPOTHESIS 2

Ho:    Successful distribution strategy does not depend on selecting the right distribution channel.

Hi:     Successful distribution strategy depends on selecting the right distribution channel.

HYPOTIIESIS 3

Ho:    There is no significant relationship between distribution distance and the volume of sales.

Hi:     There is a significant relationship between distribution distance and the volume of sales.

1.7    SCOPE OF THE STUDY

This research project is mainly concerned with the impact of intensive distribution strategy on marketing of consumer goods, with Dotmall Nigeria Limited as the case study. Questionnaires shall be distributed to the staff of the company in their various departments and top personnel. The scope of the study will also be limited to the company’s head office at Ikorodu, Lagos State.

1.8    LIMITATIONS OF THE STUDY

These are the major factors that inhibit the research work. Among other things are the following:

The inability to accurately complete the questionnaire, and the difficulty in comprehending what is actually required stands as hindrances to the research work.

The lack of financial aid also stands as a bottleneck to the progress of this research work. In as much as virtually all companies engaged in one form of distribution or the other are unevenly dispersed around the town, it becomes a tedious task if not impossible for the researcher to go round all the companies in the country to make enquiry.