Analysis Of Marketing Distribution Strategy Of Some Nigerian Companies
The analysis of marketing distribution strategiesof some Nigerian companies with case study of nestle Nigeria plc is the subject matter of this study.
Some related literature were revived like, distribution strategies, service need of the target market, how to determine the target market, how to determine the appropriate channel distribution objectives determine alternative strategies and determine the appropriate channel structure.
Nestle Nigeria plc has the staff population of 500 which include the marketing department, accountancy department etc, but marketing department is used as the sample consumer which has the population of 100. The consumer population of nestle is 5000 which was determined by Yaroyamen and had the sample size of 270. Therefore 370 questionnaires were distributed and 345 were returned.
Data were presented and interpreted using percentage table and chi-square were used in testing the hypothesis. Base on the finding it was seen that Nestle Nigeria Plc observed defects in the current distribution will enable Nestle Nigeria Plc achieve distribution strategies will enable Nestle Nigeria Plc achieve better customer serves.
1.1 Background of the Study
There is this notion that production is incomplete until the products get to the final consumer. Hence, no matter what firms do on other three marketing strategies (the three p’s) nothing happens until the goods and services are distributed.
Distribution is one of the major areas of marketing mix that concerned with the movement of goods and services from point of production to the point of consumption.
There are several definitions of distribution by different authors or marketing experts. Thus:
According to Onuoha J. K. (2004:92) distribution is defined as the flow of title to goods and services as they move along the channel of distribution from point of production to the point of consumption. It ensures that produced goods and services are made available to the consumers in their most economic manner.
Kotler and Anstrong (2004:419) defined distribution as the planning, implementing and controlling of the physical flow of raw materials, final goods and services and related information from point of origin to point of consumption to meet customers requirements at a profit.
Goods and services are delivered to the right customers, at the right place, at the right time and at the right price.
Distribution aims at gathering goods and services to reach the consumers through intermediaries. It involves not only physical movement and handling of products, but the transfer of ownership as well.
By the use of intermediaries or channel of distribution, the goods produced will get to the consumers.
The term channel of distribution is seen as all the institution or individuals that assist in exchanging goods and services as they move from one point to the other.
Apart from physical transfer of goods, it entails the transfer of title to products from one point to another.
The channel of distribution is sequentially arranged in such a way that it achieves set objectives. Such as producer – consumer – producer – retailer, consumer etc for consumer goods, while industrial is producer – industrial user, producer – industrial distributor – industrial user.
This research work deals with the analysis of marketing distribution strategies of some Nigerian companies.
Nestle food company is a company that was established in Chine in 1990 where they produce powered milk and infant formula. They manufacture their products in more than 60 countries of the world.
The manufacturing system of Nestle safeguards, sustains multifarious source, plant and planning parameters for the same item generated at various locations. The manufacturing system preserves to generate a complete picture of manufacturing operation. This involves monitoring products and element from raw materials through the finished goods stage.
Nestle food company is located in Lagos where out some of activities or functions.
Nestle has diversified from the traditional food related products, such as fairly products, break fast related products, such as fairly products, breakfast cereals or chocolate and ice cream and nutritional solution as well as beverages and bottle water.
Nestle, one of the oldest of all multinationals companies has grown from a two products company focusing on infant nutrition to one of the largest food companies worldwide.
Nestle company in other to carryout their activities and operations effectively and efficiently for the purpose of achieving its objective, they make use of different distribution strategies in order to ensure that produced goods and services are made available to its consumers.
The analysis of distribution strategies it existence in nestle company in 1990 when the company was established and stated its operation. This is because when the product were produced, the make use of different distribution strategies such as selective exclusive, and intensive distribution strategies.
This strategist helps the company to distribute the products to their customers worldwide.
Nestle food company produces mainly convenience goods such as beverages etc. since it is producing convince it employ the use of intensive distribution strategies thereby using all available out let in distributing their product world wide.
In some conditions nestle food company go into the production of shopping product and used selective distribution strategist in distributing its shopping product thereby making use of one or more outlet but less than unavailable that are willing to carry their products.
Nestle food company make use of exclusive distribution strategies occasionally and only when the produce spatiality product thereby using one or fill number of intermediaries in the distribution of its product in a defined vicinity the company all so make use of certain sales promotion such as consumer promotion trade promotion and sales force promotion which is very essential in the company sales effort to current and potential customers both in rural and Urban areas.
This sale promotion is used to generate quick response to the service provided by the marketers in distributing some of the companies product services like buy ten cartons of peak milk and get a free DVD player or buy five plates of ice cream is an example of alluring sales promotion massage. Although sales promotion is a form of short term incentive design to generate immediate product purchasing from the customers, it is expected to push sales above it present position.
In the selection of distribution channel nestle considers some certain factors such as market characteristics product characteristics company characteristics, environmental characteristics, middle men.
1.2 Statement of the Problem
According to milk muller and war on ant, a London based activist group concerned with problems of the third world (AKHTER 1994) says that nestle baby formulae controversy had a publication of a pamphlet called the baby Killer in 1974. the pamphlet claimed that third world babies where were dying because their mothers wee feeding them with infant formula that was been marketed by multinationals such as Nestle of Switzerland and united kingdom cow and gate. The aftermath of the publication led to international crises of nestle.
Since the business environment is very complex in nature the average manufactures is becoming more conscious and are therefore forced by competitors to be aware of the increasing prices inadequate distribution planning of the need in analyzing marketing distribution of an acknowledgement of its prospect
Distribution system is another problem of nestle food company because the hiring of trucks and maintenance distribution outlet this gives a lot of concern to the marketer and formed is required for effectives management. In most cases distribution personnel have little or no knowledge of strategies to embark upon at any time and also do not monitor the circulation of their product in the rural area. As a result this, they concentrate more in the urban areas not minding they competitive activities of their rivals.
Poor training of middlemen this is also a problem to nestle company because when the middlemen are not properly educated about the product, they can not be able to convince their customers to buy their products.
1.3 Purpose and Objective of the Study:
The purpose of this study is to generally analyze the distribution strategies of nestle food company with a view to identifying defects in the current distribution strategies and recommending the most appropriate distribution strategies that would enabled the company achieve its marketing objective.
The other specific objective are follows:
- To appraise the current distribution stagiest of nestle food company
- To identify the defect in the current distribution of nestle Nigerian plc.
- To established the relationship between effective distribution strategies of nestle Nigerian plc and achievement of its marketing objective
- To also established how effective distribution strategies will enable nestle achieve better customer services
- To recommend the appropriate distribution strategies that would enable nestle Nigerian plc achieve its marketing objective
1.4 Research Question:
The following struck the mind of the researcher while carrying out this research
- Is there any defect in current distribution strategies of nestle Nigeria plc
- Is there any relationship between effective distribution strategies of nestle Nigeria plc an achievement of its marketing objective
- How can the appropriate distribution strategies enable Nestle in achieving their marketing objective?
- How can a effective distribution strategies enable nestle Nigeria plc achieve better customer service.
For the purpose of this research, the following hypothesis will be stated
- Ho: effective distribution will not enable nestle food Company achieve better customer service
Hi: effective distribution strategies enable nestle food company achieve distribution
- Ho: appropriate distribution strategies will enable not Nestle Food Company in achieving marketing objective.
Hi: appropriate distribution strategies enable nestle food company in achieving marketing objective.
- Ho: to identify the defects or otherwise in the current distribution staregies of nestle company.
1.6 Significant of the Study
These involve the importance of the study and how the marketing distribution strategies will improve nestle food company consumers up coming students etc,
- This research will help the up coming students as a reference to improve on their topics or students
- It will improve better customer satisfaction. Through better distribution of the products.
- It will help the company to effectively distribution their product to their customers nation wide
- The company will benefit from this research study by achieving increase in sale volume.
- Through this research, the competitors will benefit by knowing distribution strategies which nestle company uses in distribution of their products
- It will improve customers services
1.7 Scope and Limitation of the Study
The geographical area of the study is Nigeria, China, United Kingdom and Switzerland etc. But my main focus is in Nigeria. Lagos state has undisputed number of distribution through which these products gets o the end uses.
The study is limited to nestle Food Company a major food processing company in the country. The level of participating workers in these studies the management level, senior mangers, and some selected segment of distribution staff.
Nestle Food Company that is located at Lagos state with seal branches makes sure that their marketers carry out several distribution strategies to enable the nature of their business to flourish by reaching out several individuals.
Although the scope and limitation of these study is based on the Nestle food company both in Lagos state and port Harcourt city.
It is essential to note that time and money are the greatest constrain of these study. Consequently to the limitation of time and funds, the information for these studies was mainly obtained from the internet and textbooks.
1.8 Definition of Terms
Some of the terminology used in the chapter is been defined bellows:
These is defines as examining the nature or structure of something.
Is to make a judgment about the nature or quantity of a product.
Is made up of many difficult things or parts that are connected: difficult to understands.
It is defined as promotion activities that are directed towards the consumers or households in he form of premiums offer in pack on pack and near, control money refund offer coupons.
It represents the flow of title goods and service as they move along the channel of distribution from point of production to point of consumption.
Is defined as the human activity directed at satisfying needs and wants of consumers through exchange process.
Is a careful study of a subject in other to discover new facts or information about the subject.
Is a plan that is intended to achieve a particular purpose.
It is a form of short term incentive designed to generate immediate product purchase from he consumers.
Summary of Findings, Recommendation and Conclusion
This chapter is based on the analysis and interpretation given in chapter four. Sequel to presentation of data, a lot of observations and findings emerged from the study but will be summarized for easy assessment at a glance for the purpose of recommendation and conclusion thereafter.
5.2 Summary of Findings
Based on the analysis and interpretation of data in chapter 4 of this research work, the following findings were made:
- It was ascertained that Nestle Nigeria plc was a licensed manufacturing outfit meant for the production and marketing of Nestle food related products to its numerous customers in the country for the servicing of motor engine, motorcycle engine, heavy duty engine, generators etc. Its channel of distribution starts from the Factory -> Depot -> Distributors -> Sub-Distributors -> Final Consumers.
- It was discovered that the quality of Nestle food product was very good when compared to the competing products
- The researcher discovered that the cost of transportation significantly affect the price of Nestle food related product because the firm bears the cost of transportation right from the source of raw materials (additives) to the point of delivery to distributor warehouse.
- It was discovered that most of the customers enjoy the availability of Nestle food related products. This easy accessibility to Nestle food products was a good strategy of increasing the company’s market share and its presence in the market place.
- The researcher discovered that bad road network significantly affect the demand of Nestle food related products in Lagos and Port harcourt metropolis because some of the customers cum potential customers that suppose to buy from Lagos and Port harcourt moved to other neighboring towns like Port Harcourt, Uyo, Owerri to buy due to the bad road network currently experiencing in Lagos and Port harcourt.
- From the management perspective, it was discovered that government policies adversely affect the company distribution activities. In most cases, government requires firms to pay certain levies, obtain emblems, daily ticket, yearly certificate (National/State) before such company can experience effective Marketing in an area / locality without molestation. This is a big hurdle to business growth and development of Nigerian economy.
- Finally, it was discovered of recent that environmental factors like high level of social menace and upheaval in Lagos and Port harcourt metropolis significantly affect the demand of Nestle food related products in the area because some of the distributors are relocating to a more secured and conducive neighboring towns. Another determinant is the climatic factors like the raining season; during this period there is decline in sales of food related products.
- Since Nestle Nigeria plc was licensed manufacturing outfit fpr the production and marketing of food related products in the Nigeria market there is need for its expansion internationally. The chairman and the management should start thinking of converting the firm from what I regarded as indigenous national company (entrepreneur) to a multinational public limited liability company. Its intense outlook should go beyond the nation most especially as it has been certified by various regulating bodies both locally and internationally like the Standard Organization of Nigeria and American Petroleum Institute respectively. Moreover, as a player in the product and gas industry, the firm should fully diversify into the establishment of filling stations in major cities and acquiring product well in
Nigeria and beyond.
- In order to cut-down cost on transportation, the management should at times supply directly to distributors warehouse with the consent of the depot manager after due confirmation of its payment instrument / balance as the case may be. This will help to minimize cost.
- Since it has been discovered that most of the customers enjoy the availability of Nestle food food related products, effort should be made to ensuring continuity of supply and that the distribution channels have easy access to the company’s products as at when needed.
- Since bad road network adversely affect the demand Of Nestle food product, the management of the company through its numerous direct and indirect agencies, Business Associates, Clubs, Associations, government representatives should join the masses in their quest for good road network in Nigeria for social and economic development of Nigerian business. This will help to boost demand in Lagos and Port harcourt metropolis.
- Since government policy affect demand of Nestle food related products, management should device means of negotiating properly with government or its agents for smooth and efficient marketing..
- Since the environmental factors are becoming higher each day in Lagos and Port harcourt and some other places, the firm business is affected evident in its low turnover, the firm should stand out among others/public to say NO to the social and economic menace. This will help to define the stand point of the firm and goodwill restored for increase turnover.
- Finally, the management of the firm should strive to stabilize prices of various products at least to a reasonable time with the aid of effective management of pricing functions and general improvement on pricing policy of Nestle Nigeria plc.
This study has generated an exciting package on the assessment of the distribution strategy of Nestle Nigeria plc. The researcher collected relevant data, analyze, and interpret the data, summarize its finding and recommend to the management how to sustain, maintain and improve the market share of the company and better ways of strengthening its distribution strategy.
It is pertinent to appraise and reappraise corporate distribution strategy/objectives and ensuring that organizational activities are not deviated from the attainment of goals. The researcher hope that the firm will continue to sustain its prevent levels of operations in distributing its products and even surpass it in the interest of the future.
Finally, the researcher is of the view that if the recommendations are judiciously looked into and implemented by the management of the firm it will go a long way towards improving company’s physical distribution activities, performance of field sales managers and other researchers that will like to study more on this work.
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