EVALUATION OF DISTRIBUTION CHANNEL OF CONSUMER GOODS (CASE STUDY OF NESTLE PLC, PORT HARCOURT)

ASTRACT

This research on Evaluation of Distribution Channel on Consumer Goods (A case study of Nestle Food Plc), is a very critical study for the food industry. This study focused on the task of carrying out a thorough strategic and empirical research and investigation that would come up with practical and   solutions to the problems of challenges of how to design, select and manage distribution channels that will ensure maximum savings in distribution costs, enhance product availability and effective co-ordination of channel activities. In carrying out this task, attempts were made to: 1. Determine whether there is any significant relationship between distribution intensity and cost of distribution in Nestle Food Plc. 2. Ascertain whether the higher is a brand’s level of distribution intensity, the higher is the manufacturers support programs for his customers. 3. Find out whether co-ordination of marketing functions is best achieved through vertical integration or competitive markets. 4. Determine whether it is more profitable to the manufacturer of Nestle Food Plc to by pass the wholesaler and sell directly to the retailers and finally to determine whether more sales volume will be achieved by selling through sales agency or manufacturer’s representatives. Survey research method was adopted to sample opinion of managers in the marketing, distribution and finance departments of Nestle Food Plc. for this study. Questionnaires and oral interviews were the main instruments used in collecting in collecting primary data for study. While secondary data was obtained from text books, journals and materials from the internet. The primary data were used in analysing the research questions and testing the research hypothesis. Data were analysed through the use of tables, simple percentages, charts and means. Multiple linear regression, t-test and Z-test were used as appropriate in testing the research hypothesis.

TABLE OF CONTENTS

Title Page ﾿ i

Project Assessment ﾿ ii

Declaration ﾿ iii

Certification ﾿ iv

Dedication ﾿ v

Acknowledgements ﾿ vi

Table of Contents ﾿ vii

List of Tables ﾿ xi

Abstract ﾿ xii

CHAPTER ONE

INTRODUCTION ﾿

1.1 ﾿ Background of the Study ﾿ 1

1.2 ﾿ Statement of the Problem ﾿ 2

1.3 ﾿ Objectives of the Study ﾿ 4

1.4 ﾿ Research Questions  ﾿ 4

1.5 ﾿ Research Hypotheses ﾿ 5

1.6 ﾿ Significance of the Study ﾿ 5

1.7 ﾿ Scope of the Study ﾿ 6

1.8 ﾿ Operational Definition of Terms ﾿ 6

CHAPTER TWO

REVIEW OF RELATED LITERATURE ﾿

2.1 ﾿ Background of the Study ﾿ 7

2.2 ﾿ The Concept of Distribution In Marketing ﾿ 8

2.3 ﾿ Distribution Channel Structures ﾿ 11

2.3.1 ﾿ Channel Service Levels ﾿ 13

2.4 ﾿ Marketing Flows ﾿ 13

2.5 ﾿ Challenges of Distribution Channels ﾿ 14

2.6 ﾿ Marketing Distribution Structure ﾿ 16

2.6.1 ﾿ Management of Distribution Structure ﾿ 21

2.7 ﾿ Designing the Channel System ﾿ 22

2.7.1 ﾿ Developing Channel Strategy and Consideration ﾿ 25

2.7.2 ﾿ Channel Functions ﾿ 27

2.8 ﾿ Conflict: Definition in Marketing Channel ﾿ 30

2.9. ﾿ Channel Conflict ﾿ 30

2.10 ﾿ Innovation in Relationships with Final Demand ﾿ 31

2.10.1 ﾿ Innovation in Channel Relationships ﾿ 33

CHAPTER THREE

METHODOLOGY

3.0 ﾿ Research Methodology ﾿ 36

3.1 ﾿ Research Design ﾿ 36

3.2 ﾿ Source of Data ﾿ 36

3.3 ﾿ Population of the Study ﾿ 36

3.4 ﾿ Sample Size Determination ﾿ 37

3.5      Method of Data Collection ﾿ 38

3.6 ﾿ Validity of Instrument ﾿ 38

3.7 ﾿ Reliability of Instrument ﾿ 38

3.8 ﾿ Method of Data Analysis and Presentation ﾿ 38

CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA GENERATED

4.1 ﾿ Data Presentation ﾿ 39

4.1.1 ﾿ Return Rate of Questionnaire ﾿ 39

4.1.2 ﾿ Distribution of Respondents by Sex ﾿ 40

4.1.3 Companies Distribution and Support Services ﾿ 41

4.14: Relationship between Distribution Intensity and Cost of Distribution ﾿ 43

4.1.5: Relationship between Programs and Distribution Channel Level ﾿ 45

4.1.6 ﾿ Co-Ordination of Marketing Function via Vertical Integration or

 Competitive Market ﾿ 47

4.1.7 ﾿ Profitability of Direct Sales to Retailers ﾿ 49

4.1.8 ﾿ Impact of Company’s Trade Force on Sales Volume ﾿ 52

4.2 ﾿ Test of Hypotheses ﾿ 53

4.2.1 ﾿ Test of Hypothesis ﾿ 53

4.2.2 ﾿ Test of Hypothesis Two ﾿ 54

4.2.3 ﾿ Test of Hypothesis ﾿ Three ﾿ 54

4.2.4 ﾿ Test of Hypothesis ﾿ Four ﾿ 56

4.2.5 ﾿ Test of Hypothesis Five ﾿ 57

CHAPTERFIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1 ﾿ Summary of Findings ﾿ 59

5.2 ﾿ Conclusion ﾿ 59

5.3 ﾿ Recommendations ﾿ 59

REFRENCES

APPENDIX

QUESTIONNAIRES

LIST OF TABLES

Table 4.1:Return Rate of Questionnaire ﾿ 39

Table 4.2: Level of Distribution Channel used by Company ﾿ 41

Table 4.3: Nature of Product Delivery to Customers ﾿ 42

Table 4.4: Support Services rendered by companies to their channel members ﾿ 42

Table 4.5: Control Measures on Channel Members ﾿ 43

Table 4.6: Distribution Intensity and Cost Distribution ﾿ 44

Table 4.7: Manufacturer’s Support Programs and Distribution Channel Levels ﾿ 45

Table 4.8: Vertical integration/ Competitive Market Impact on Marketing Function Coordination ﾿ 47

Table 4.9: Profitability of Direct Sales to Retailers ﾿ 49

Table 4.10: Impact of Company’s sales Force on Sales Volume ﾿