Problem Of Distribution Channel In Marketing Consumer Good In Food Specialties (Nigeria) Limited

Project and Seminar Material for Business Administration and Management BAM

Abstract

The issue of distribution channels in marketing consumer goods has become a problem in Nigeria. The aim and objective of this project therefore, is to find out the loopholes that is associated with distribution of consumers good so that an amicable solution can be proffer to it. In the course of carrying out this study, I intend to use both primary and secondary data as well as the distribution of questionnaires in order to make my finding a successful one.

Chapter One

Introduction

1.1 Background of the Study

Food Specialties (Nigeria) limited is one of the nation’s leading food processing marketing and distribution companies. It’s head office is situated at 10/21 industrial avenue, Ilupeju, Lagos. While her modern factory is at Agbara Industrial estate in Ogun state. The company’s modern distribution center is at Otta, also in Ogun State.
The company has branch office is following town in Nigeria etc. the Area Sale Manager who head these branches help to ensure that food specialties goods are distributed into every corner of the country.

The company state operation in Nigeria over 50 years ago with importation of Nestle product into the country the product gained rapid popularity and acceptance by consumer in Nigeria because of their, high quality. Among these high quality products are Maggi cubes, Nescafe, milo, Gactogen, Nan, Nido and Cerelac.

The company was by them known as Nestle Products Limited which was a subsidiary of Nestle South Africa, Switzerland. The company Food Specialties(Nigeria) Limited was formally incorporated in Nigeria in 1969 as a private company. It was about this time that Food Specialties (Nigeria) Limited started to give serious consideration to setting up a manufacturing unit in Nigeria in order to develop the volume of trade it’s products were enjoying as well as to exploit new business pastures.

In 1971 the company established a factory at Illupeju industrial Estate in Lagos which started in the same year to press and wrap it’s popular Maggi cube locally. Facilities for the production of packaging materials were added to the plant at the same time.

In 1975 Food specialties (Nigeria) Limited started to broaden it’s equity base by offering for sales to Nigerian citizen and organization 40% of it’s share capital in compliance with the Enterprise Promotion Decree of 1972.

The company formally became a public company in 1978 when it’s authorized share capital was increased from N5m to N7.5m.

At the same time in compliance with the Enterprise promotion Decress of 1977. The company sold further 20% of it’s share to increase the proportion of share of Nigerian holding to 60% with the continuing growth in demand for food specialties products the company took the far-sighed decision in 1979 to expand it’s industrial base by acquiring 16 hectare of land for the construction of a food processing plant at Agbara Industrial Estate on the Badagary Express way.

The factory which was build at a cost of N30m was commissioned in February 1952. Food specialties (Nigeria) Limited also decided to build a modern distribution center at the cost of N5m at Otta. As a result of backward integration, Food Specialties (Nigeria) Limited established in 1954 a subsidiary company, Agro Development (Nigeria) Limited in Benin, Kaduna. For the production of local raw material like maize, soya bean and sorghum. Food Specialties (Nigeria) Limited produce the following range of products at Agbara: Milo, Nescao, Maggi cube, Maggi Super, Golden Morn, Cerelac maize, Nutrient and Choco milo. She also import Nido, Nescafe, Nan and Hactogen into the country for distribution.

According to the Managing Director Mr. Rolf Frei, the company made N23.42 million profit before tax in 1986 which represented 7.23% increase over the previous years record of N21.83m.

1.2 Purpose of the Study

To examine the company policy and objective of physical distribution with the view of finding the extent to which the objective have been achieved.
To examine the adequate of the company physical distributions strategies or method for the realization of the objective.
To make recommendation based on the finding to the company for a competitive advantages.
To find out if there are other better methods the company could use other than the present method of distribution.
To see the opportunities of otherwise that face the company in her present centralized method of storage of processed good etc.

1.3 Relevant of the Study

Distribution channel are very important organs of product circulation. A company like food specialties (Nigeria) Limited cannot distribute her products nationwide without using distribution channels.

This study will be of great help not only to food specialties (Nigeria) Limited but also other organization that are involved in distributive business in Nigeria as it will make recommendation on how cost of the products could be lowered by using better channel of distribution.

1.4 Hypotheses

Ho: To test if the service rendered by the company to the customers are adequate.
Hi: To test if the service rendered by the company to the customer are not adequate.
Ho: To test if the company has no transportation problem.
Hi: To test if the company ahs transportation problem etc.

1.5 Problems Analysis and Hypotheses

It is the wish of this study to analyses such problem that face food specialties in the process of satisfying consumer needs at a profit in Nigeria.

Does the company have problem in the distribution of her good in Nigeria?
What method of transportation does the company use?
Does the company use several warehouse in the country or does it’s have any problem with centrally managed distribution channel?
What service does the warehouse provide? Are they adequate? Etc.

1.6 Methodology

This study will use both primary and secondary data in the analysis. It is the wish to the study to make use of questionnaire through self-administered techniques.

1.7 Scope of the Study

This study is aimed at the study of the problem of distribution Channel in Marketing Consumer Good in Food Specialties (Nigeria) Limited.

The study is a marketing audit type of study which aim at evaluating the company’s operation with regard to its product distribution, customer services, selling etc.

1.8 Research Limitation

This study is aimed at analyzing the problem that face food specialties in the distribution of her products.
Attempt will be made to limit ourselves to the use of food specialties staff in some state and the company’s distributor’s, sub-distributor’s and direct customer and its environment in the study.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to reiterate that the objective of this study was to examine the problem of distribution channel in marketing of consumer good in food specialties.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given.

In this chapter, certain recommendations are made which in the opinion of the researcher are drawn from the findings of the study.

5.2 Summary

This study was undertaken to examine the problem of distribution channel in marketing of consumer good in food specialties. The study opened with chapter one where the statement of the problem was clearly defined. The study objectives and research hypotheses were defined and formulated respectively. The study reviewed related and relevant literatures. The chapter two gave the conceptual framework, empirical and theoretical studies. The third chapter described the methodology employed by the researcher in collecting both the primary and the secondary data. The research method employed here is the descriptive survey method. The study analyzed and presented the data collected in tables and tested the hypotheses using the chi-square statistical tool. While the fifth chapter gives the study summary and conclusion.

5.3 Conclusion

Distribution channels, i.e. marketing channels are being developed in contemporary conditions of concentration, internationalization and globalization processes. New structures of vertical marketing systems are thus created. The expansion of large retail chains from developed countries into economically underdeveloped countries is very dynamic at the moment. The process is supported by the explosive development of IT, as well as by certain trends on the international geopolitical scene. As large international retail chains penetrate certain markets not only in the functional but also in the spatial sense, the development of domestic retail is being limited, which puts the domestic production under threat as well. Of course, the development of distribution channels is conductive to production development; however, management is being transferred to large international business systems. Future research might cover the following topics: (a) until when will it be possible to maintain the current tempo of the exploitation of energy and space resources; (b) what possible rationalisations are offered by savings in value chains based on the decrease of transport costs (bringing production sites closer to consumption sites) and faster development of communication and service channels.

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