The Impact Of Transportation Cost On Consumers Retail Goods Prices (A Case Study Of Garriki Market, Enugu South Local Government Enugu State)

Project and Seminar Material for Marketing

The Impact Of Transportation Cost On Consumers Retail Goods Prices (A Case Study Of Garriki Market, Enugu South Local Government Enugu State)


Abstract


The impact of transportation cost on consumers retails goods prices (A case study of Gariki Market, Enugu South Local Government Area Enugu State). The study was carried out to the wholesales and retails.

Data was collected using questionnaire that was distributed to the wholesalers and retailers in the market.

The generated data was analyzed using descriptive statistic tool and the major findings made include the following:

  1. Cost of transportation affects agricultural goods retails than manufactured goods retailers.
  2. Profit maximization was not always their desire for most dealers goes into business in order to avoid being idle.

Chapter One


1.0 Introduction

1.1 Background of the Study

In ancient days as life started mankind began to nurse the need for basic necessities of life for physiological satisfaction as food, shelter, safety, among other things.

At first man tried to provide the necessary things to satisfy his needs to engaging in hunting, fishing, and some selected cultivation and planting of food crops and frund shelter among trees, shades as well as applying plants leaves to cover his nakedness.

In the process of advancement man learnt that he could not provide all his needs by himself.

Then the introduction of exchange process came into existence. It began as an exchange of goods for goods otherwise called trade by barter.

The person who has a particular product in excess of his need of that particular moment would look for somebody that has a need for his product, for an exchange to take place, so the earliest trading or buying and selling practices was done by retailers through the barter process. When a common medium of exchange was inverted, the practices of trade by barter became less relevant in the exchange process. When trade by barter was in existence buyers and sellers did not take into account, the cost and burden of carrying the goods around n search of a market.

As money is the standard of measurement, the seller when calculating the expenses of their business has to add the cost of transportation of goods from the point of production to the point of consumption.

In the ancient times, man used mostly the beast of burden to carry his product from the point it was produced to the point it will be consumed, transportation these days has become more sophisticated convenient and faster.

Some of the mode of transportation include transport on railway, motor vehicles on road ship, boats, aircraft and others.

The nature of the product as well as location of market and the type of market will determine the mode of transportation to be used or employed. Transportation is involved in every level of production and distribution unit for a product to reach the final consumers industrial revolution came into place and led to the increase in productive capacity producers. Most manufacturers and sellers want to enjoy the benefit of what the economy offered by large scale production and distribution. They also aspire to explore large markets and operate at competition levels.

They have to manage cost and process to be able to operate with efficiency and remain in business.
In the Nigerian case, distribution costs are sometimes viewed as some of the factors that give account for the increasing price of goods.

This study the impact of transportation cost on consumers retailer goods pricesΒ”, a case study of yam prices at the Garriki Market, Awkunanaw Enugu South LGA, Enugu State will discover whether cost of transportation constitute significance proportion of the price of foods, particularly yams in the Garriki market.


1.2 Statement of Problem

There has been a continuous increase in the price of goods and services in Nigeria for many years now. These price increases have been alleged to be as a result of increase in the cost of raw materials, transportation, rent, capital and labour.

Among these variable, this study will help to determine the degree to which cost of transportation affects the consumer goods, particularly. This study tries to find out the following:

The consumers allege that the increasing in prices is an indication of the profiting attitude of sellers. On the side of the sellers, they blame increases in prices on the increasing cost of input materials and facilitating agents. It becomes difficult to determine which of the claims, is the truth about increases.

It has been reported that the increasing price have continue to make many families unable to afford three square meals daily.

The government, labour and consumers have show concern and made some efforts to bring the price increase under control without making any tangible headway.


1.3 Objectives of the Study

The activities of retailers in the market affect everybody in the society and mostly consumers are dissatisfied with the yam market

  1. Determine the effects of transportation cost on the prices of consumer goods particularly yam.
  2. Ascertain, if it is the desire for excessive profit that influence retailers infixing high prices for goods.
  3. Find out what can be done to alleviate the problems of increasing prices of goods in the market.

1.4 Research Questions

The following research questions are considered:

  1. Does cost of transportation contribute substantially to the price of yams?
  2. Is it desire to make high profit that cause rapid price increase of yams in the market?
  3. Have government efforts at reduction of prices helped to solve the problems of continuous price increase?
  4. Does transportation cost lead to rise in the price of other category goods and service?

1.5 Significance of the Study

This study will be of benefit to economic analysis who would want to trace the causes of inflation to the economy.

  1. It will also be of immense use to marketing and management experts who could want some appropriate solutions to some of their marketing problems.
  2. It will be an interesting source of material for academicians who are doing research in retail pricing for yams or for other agricultural based products and for staff.
  3. It will also be a useful piece of information for government in their regulatory policies of price control and transport management.
  4. It will be a guiding tool for business people who are in the distribution sectors because this work will teach them how to control costs and develop a competitive pricing system.

1.6 Scope and Limitaiton of Study

For goods to reach the ultimate consumers or final users the seller be he the producer, wholesaler or retailer must pay for the transport to convey them from point of sale to the point of buyer. This study intends to limit itself to transportation of goods by retailers form their suppliers producer or wholesalers to the point of sales of the goods or to the final consumers. In doing this, it will try to ascertain the effect of transportation cost on the prices the retailer fixed. The commodity used in study is study is Yam


Chapter Five


5.0 Summary of Finidngs, Recommendations and Conclusions

This chapter summarizes the findings based on analyzed data.

Recommendations were made based on these findings and finally the researchers attempted to drew reasonable conclusions form their findings.


5.1 Summary of Findings

The findings of the study are summarized as follows:-

Transport who conveys the same passengers on the same route for the same purpose see these passengers as partners in progress and who have developed such relationship with business in mind often make some scarifies to keep the relationship with business in mind often make some scarifies to keep the relationship gong.

Transporters devise the most appropriate loading method so that more goods are to be transported at a time for reducing transportation cost.

Profit maximization was not always the desire for most dealers particularly those who have retired starting up a retail business in order to avoid being idle.

More literate people are setting up retail businesses because of the freedom it offer them.

This group of people also believed that retailing offers them income than what they could get from paid employment cost of transportation affects agricultural goods retailers than manufacturing goods retailers.

Manufacturers transport their goods as close as possible to retailers so that retailers will not have to travel far distance for their goods. Agricultural goods dealers travel up to maiduguri, Abakaliki and many other places to buy their goods.


5.3 Recommendations

The study has shown that cost of transportation is not a constraint to the prices dealers offer. The dealers should engage the service of transportations jointly to reduce charges.

Dealers should strive to procure goods from the one source in order for them to develop good relationship with producers and transporters.

Procurement of goods from one source will also afford the dealer specialization in handling techniques that could reduce costs.

Sole proprietorship is common among consumer goods dealers, they are advised to form co-operative groups to enhance their chance of obtaining loans from bank. Collateral demand from co-operative society would be large than what a single dealer can offer. Retailer would benefit immensely when they buy goods on co-operative basis and producers would be more willing to offer better trading terms to co-operative than in individuals.

Government particularly, local government should monitor the activities of retailers in the market item of measurement devices (Cups). The government should increase their efforts in educating retailers about the benefits in using the services of community and people banks. The benefits derivable should reveal to dealers. For consumers, joint purchases can always bring reduced prices. This has been proved right through joint purchase of cry fish and beans by some workers of Institute of Management and Technology and those of First Bank Nigeria Plc, Okpara Avenue Enugu.


5.4 Suggested Area for Further Study

More detailed researchers are still needed in some areas not covered in this study, such further studies could be focus on the following:

How other costs such as rent and market maintenance affect prices offered by dealers in the market
The activities of market unions need to be studies properly especially when workers salaries are increases.

This is necessary in view of what happened in 1993 which government approved 45 percent increase for workers salaries and prices of goods increased astronomically. Further research is also needed on why there always across the board price increase on different brands of a particular product category when one producer increased the price of it’s brand. Prices of competitors also increased. For instance, when the Lever Brothers, Nigeria Plc, increase the retail price of Lux toilet soap, one discover similar increase in the price of the Imperial Leather toilet soap made by Palerson Zochonise Nigeria Plc,. It is unlike the two competitors would review up wards the retail price of their brands the same day and amount. This trend is common among dealers in the market.


5.6 Conclusion

For consumers to benefit form the consumption of goods and producers to realize revenue from their sales the gap between consumers and produces must be closed through transportation to ensure that goods are made available to wholesalers, retailers and consumers. Production is not complete until goods reach to the final consumers. Retailing is important to the natural economy.

Retailers solve the problems of ownership separation and value separation. An exchange cannot occur unit the title exchanged is transferred from the seller to the buyer. What producers and consumers seek fro exchange and scarifies they make in entering the exchange differs. Consumers seek utility from products to satisfy needs and wants, product seek revenue from product to recover cost of production and make profit.

Finally efficient and effective transportation of goods would reduce the prices of goods. The retailers provides time possession and place utilities. These utilities are best served through appropriate transportation system.


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