The Evaluation Of The Influence Of Distribution Strategies In The Marketing Of Petroleum Product (A Case Study Of NNPC Aba Depot)

Project and Seminar Material for Marketing

The Evaluation Of The Influence Of Distribution Strategies In The Marketing Of Petroleum Product (A Case Study Of NNPC Aba Depot)


This is a study on the evaluation of distribution strategies in the Marketing of petroleum product, a case study of N.N.P.C Aba Depot. To get to the root of the material, questionnaire was administrated to the subjects and their responses, along with other data gathered from library research study formed the bedrock of this paper.

This study is divided into five chapters for case of presentation with each chapter discussing specific issues as shown in the table of contents. Chapter one is the introductory chapter encompassing such issues as the background, scope and limitation of study, significance of the study of problem, theoretical frame work. And chapter two is review of relevant literature, chapter three is research methodology used, while chapter four is data presentation and analysis of the findings made in chapter four. Chapter five we made a summary of the findings, conclude and postulated some recommendation for the value of effects of distribution strategies in the marketing of petroleum products.

Table Of Content

Preliminary Page(s)

  • Title Page
  • Approval Page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table Of Contents

Chapter One

1.0 Introduction

  • 1.1 Background Of The Study
  • 1.2 Statement Of The Problems
  • 1.3 Objective Of The Study
  • 1.4 Research Questions
  • 1.5 Significance Of The Study
  • 1.6 Scope Of The Study
  • 1.7 Limitation Of The Study
  • 1.8 Definition Of Terms

Chapter Two

2.0 Literature Review

  • 2.1 Definition Of The Concept Of Strategy
  • 2.2 The Distributional System
  • 2.3 Characteristics Of Channel
  • 2.4 Channels Decision
  • 2.5 Management Of Channels
  • 2.6 Evaluating Channel Members
  • 2.7 Physical Distribution
  • 2.8 The Total System Concept Of Physical Distribution:
  • 2.9 The Physical Distribution System:

Chapter Three

3.0 Research Methodology

  • 3.1 Research Design
  • 3.2 Method Of Data Collection:
  • 3.3 Sample Size
  • 3.4 Population Of The Study
  • 3.5 Method Of Data Collection

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Presentation Of Data
  • 4.2 Data Analysis
  • 4.3 Interpretation Of Results

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusions
  • 5.3 Recommendations
  • Reference
  • Appendix
  • Questionnaire

Chapter One

1.0 Introduction:

Elementary part of economics states that production is not complete until finished products gets to the final consumer, be it firms or individuals. Similarly, the most important of any producer is to satisfy the want of this target market at a profit. The producer can not achieve these if the product does not get to the intended users. Again, marketing activities do not end with the production of goods and services.

These products are supposed to be made available to the final consumer at affordable price, pale and form to ensure utility. Distribution provides the missing links as can be seen above. This also utility. Distribution provides the missing links as can be seen above. This also underscores the importance of distribution in any productive activity, (Rosenberg L.G. (1977).

The world of business is competitive and for any producer to survive, it must adopt its own distribution strategy that will suit its own product.

1.1 Background Of The Study:

Distribution strategy is the smooth design for the movement of goods to the consumer. Distribution has two major tales that are physical and channel of distribution. Physical distribution is the movement of flow of products from the points of distribution to consumer. Channel of distribution on the other hand, is the flow of title (ownership) of goods from producers to consumers.

In adopting a particular distribution strategy, a firm hopes to achieve certain stated objectives, which include profit maximization, large volume sales, market shares satisfaction of the firms various publics, backing, good will and so on. Adoption of a particular strategy can be likened to a traveler who has an option of air, land and sea modes of transport.

These various methods have their attendants costs benefits and strategy so it is left for a firm to screen out the alternative distribution that will suit the firm before choosing one because such a decision is purely economic since it can determine the success or the failure of such a business unit. Its distribution system is an important management function that takes time to build and can not be changed in a hurry. This makes it rank importance to department like engineering, research, manufacturing, and field sales personnel in an organization.

In Nigeria, there has been a problem of shortage or even non- availability of petroleum products, which we consider one of the worlds largest producers of the commodity. The producers clear their hands from the crisis

passing the bulk to the channel. This shows the scarcity of petroleum products could be caused by different factors.

1.2 Statement Of The Problems:

Distribution is one aspect of the marketing function that can make a business unit. It is really a difficult task firms undertake in order to get their product to the reveal the mystery that surrounds the scarcity and non- availability, of this commodity which Nigeria produces and exports. It is an obvious statement if it is said that petroleum is one commodity that is the mainstay of the Nigerian nation. The Nigeria National Petroleum Corporation (NNPC) has sounded it loud and clear that its refineries are in full operation

except for one or two impediments that brig about the scarcity and increase in price of the product in recent times. The cause of the scarcity therefore falls on the channel of

distribution of the product. At times the distribution of the product is mainly done by Mobil Nigeria, Agip Nigeria Limited, ELF Oil Nigeria Limited, Texaco Nigeria Limited, Total Oil Nigeria Limited and other multinationals. These are also small โ€“ scale private markets and are totally independents of the N.N.P.C. This project therefore seeks to know how distributional strategies are formulated and implemented by petroleum markets. This is in view of knowing how the products move from the refineries where the product is produced and plant and it will be based on.

1.3 Objective Of The Study:

The objective of this study would be clear and precise. The purpose is to find out how distributional strategies are formulated and put in practice by its distributions. It would also try to establish the relationship that exists between the distributional strategies and the product characteristics.

It will also find out the cause of conflict in the distribution channel and how the unique nature of the products influences the distribution strategies decision. This work will also go further to out line the functions which should be included in the total cost approach to physical distribution.

The work would also try to find out time factor of distribution of these products right from the refineries where these products is been manufactured, and whether the market location is a determinant of the distribution strategy to be adopted by these multinational marketers of these product.

1.4 Research Questions:

One important thing a research of this nature need to achieve is to empirically prove the subject matter of the study. This is order to give direction to the readers, other

researchers and planners do so as to elicit what the research is all about. It therefore becomes necessary to formulate some research question on which the conclusion would be based and are as follow:

  1. Does your organization achieve any advantage as a result of the use of the role of distributional strategy in the operation?
  2. To what extent does distributional strategy in the industry depends on management policies?
  3. Is it possible that proper distribution strategy will reduce wastageโ€™s, huge amount of money lost through accidents in industries.
  4. What roles does the marketers play in the use of distributional strategy.

1.5 Significance Of The Study:

A great cost can be incurred of an organizations plan is faulty or its execution is improper. A concerned planning and proper execution will answer the achievement of a firms stated objectives. This work outlines some of the need for proper analysis of different strategies so that a firm can choose that which suits or favours it best that will move its products to the right places, at the right time and at the least cost possible.

The presenter believes that it can improve the distribution practice of petroleum marketers and also change the performance of channel members. The findings are expletive with invaluable looks of designing and assessing the effectiveness of distribution activities. It will also attempt to show the total effect of distribution strategy on corporate existence the channel of distribution. A firm that is equipped

with the source of channel conflict will be in a position to establish a more cordial relationship with the channel members than the firms that lacks total knowledge of the source of channel conflict.

1.6 Scope Of The Study:

This project in its best would try to examine the strategies employed or used by multinational petroleum marketers in getting the product to the final consumers. That is the study is conducted towards the examination of appropriate strategies used by multinational petroleum marketers, especially those based in Aba depot.

1.7 Limitation Of The Study:

This work is based on the distribution strategies adopted by petroleum marketers. The strategies to view and discuss are based on the direct, indirect and dual channel strategies. There is no gain saying that these firms are the

undisputed leaders in the marketing of petroleum products. The work could not cover all firms that market petroleum products like smaller independent marketers especially the new ones that are created.

This firms were chosen because in their unique and outstanding characteristics they include Texaco Limited, Unipetrol Nigeria Limited, Mobil Nigeria Limited, Elf Oil Nigeria Limited, Total Nigeria Plc, and Ap Nigeria Plc. This difference makes the generalization and subsequent adoption of the findings limited.

Again, the time frame of this work is a limitation there is also the perceived uncompromising attitude of respondents in view of the work.

1.8 Definition Of Terms:

These are some terms that need to be explained their meanings in this work. This position or page of the paper explains in brief the meaning of these terms and they include:


This is an importation element of the marketing mix it is one of the 4ps of marketing it involves all the activities that aid the movement of goods from where they are produced to where they are needed whether in finished or semi-finished state.

Distribution Strategy:

This is a particular system used by a firm to move its product to their customers.

Channel Of Distribution:

This can be said to be a trade followed by products from their producers to the consumers. It is a body of independent agencies and institutions.

Target Market:

This is a term used when a producer sales directly to his customers.


This is a business arrangement that enables a firm to operate in more than one country.

Independent Marketers:

These are private business units that engage in petroleum marketing.

Chapter Five

5.0 Summary, Conclusion And Reccomendations

5.1 Summary

Production creates goods and services that will satisfy consumers, be the intermediate or final, making these goals available to where they are needed, are the function of distribution, which is the cause of this study.

The distribution function is seen in diffder3ent firms due to availability of resources and other external factors as it affects individual firms.

Generally, it is believed that manufacturers of consumer product used indirect channels of distribution to distribute petroleum products because of their unique nature can fall into both categories depending on the need they are put.

This decision to use a particular channel is influenced by such factors as market average desired by firm, the cost of distributing the product, the control needed over the product and in particular the product characteristics.

In choosing among the various channel option decision to use a particular outlet always follows such criteria as the location of the firm, the facilities available and the location of the target market. It was also discovered that firms adopt varying forms of transportation as a means of moving their products. The firm use transportation from such as public carriers and specialized carriers private carriers are frequently used in transport of goods to their required distribution, it is obvious that specialized public carriers constitute 87.5%, which shows that specialized public carriers provide private vehicles, and trucks perform the distribution function effectively conventional public carriers constitute about 12.5% of the total transportation function.

The most challenging task facing petroleum marketers is the ability to make their product available at the target market as at when required. This is because the distribution function is not complete until the product has been made available to the general consumers.

This all-important function is always neglected and many a times causes conflict in the channel. This situation is evident when there is scarcity. It is necessary to focus on the mode of transportation adopted by firms. They have the option of using road, railway, air and water. The most patronized mode of transportation is by road. From the data it was discovered that all the firms employ road transportation, water and railway are supplementary modes.
Air transportation is relatively non-existing as a means of transportation. Firms often have criteria for selection of reliable middlemen to save in the channel system having satisfied such conditions. In evaluating the criteria it was considered the most important factor. This is followed by reputation of dealer and provision of facilities. Selling capabilities come next. The findings that there is significant relationship between distribution strategy adopted by firm and the location of the target market is in agreement with the findings of the literature review of this study. Distant location from the market, all other location of the market is a major factor that accounts on which form of distribution to be adopted in a bid to save the market effectively.

5.2 Conclusions

Based on the background findings obtained from the project works, the following conclusion have been drawn on the distribution strategies adopted by petroleum marketers:

  1. Petroleum marketers employ both direct and indirect channels of distribution. This strategy enables to market their products effectively.
  2. Under this strategy, it was discovered that intensive distribution is highly practical by these firms.
  3. It is important to note that petroleum marketers take into consideration, the product characteristics in formulating their distribution strategies.
  4. Either causes the carriers the frequent scarcity of petroleum product or there is an outright hoarding.
  5. Finally, conflict of interest is often experienced in the channel of distribution leading to scarcity of petroleum products.

5.3 Recommendations

There are some policy implication arising from the findings and conclusions of this research study for policy makers in petroleum products to ensure a continues flow of product to their consumers. The following implications have been identified.

  1. Distribution as an important component of the marketing move should be competitive in the market.
  2. It is also recommended that firms adopt both direct and indirect channels of distribution. This system will facilitate wider market coverage thereby resulting in increased sales volume and of course profits
  3. Most of the firms here profit-maximization as an important objective, therefore it is recommended that firms should adopt the most economic means of distributing their products.
  4. Firms should also monitor their environment continuously to discover new and under developed market. This will improve their profit potential.
  5. Finally, for firms to be able to adopt to the ever-changing environment it is recommended that they diversity their product range. This will not only serve different market segments but also make the firm remain completive.

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