The Role Of Middlemen In Channels Of Distribution
This project work is titled “THE ROLE OF MIDDLEMEN IN CHANNELS OF DISTRIBUTION” A case study of Nigerian Brewery, Enugu.
An important element in the marketing made of any firm is the system of marketing channels through which products and services are distributed to their ultimate consumers and services or final user. A marketing channel is a loosely connected system comprising of manufacturer, middlemen and the ultimate consumers. Wholesalers and retailers are the functional middlemen for manufacturers.
The researcher described the problem under study and the relative importance of the study. There are also the definitions of channel of distribution and that of middlemen who are involved in the distribution of goods and services to their place of use. It is seen here that taking channel decision is very vital to a firm and to some extent determines the success of a product in its lifetime. Types of middlemen were also discussed in the distribution system.
The research work also listed the functions of middlemen their importance in Nigeria and the problems of middlemen in the Nigeria economy.
The methodology for this research work is the use of secondary data such as textbooks, journals, and informal discussion with informed people.
Important findings were singled out to enable conclusions to be drawn, that since the middlemen operate in the channels distribution, the public has always view them with some suspicion e.g. that most of the goods they pray for carry marketing cost instead of production cost which is being caused by the middlemen.
In the light of the recommendations were made, that is, instead of the middlemen to be eliminated from the channels of distribution their functions should be improved. However, it is the researchers hope that of the recommendation made are properly implemented the consumer will have a smile on their faces.
1.1 Background of the Study
A product may be the best in the world, but it will be of little use to the consumer of it is not where they wants it. This is concerned with the place where the consumer can acquire it and time utility function when the need arises.
Distribution is the flow of goods from producer to the ultimate user through channels that are made up of middlemen.
Distribution of goods and services has been an important aspect of marketing in our lives. Though, in the past, the usefulness was not immediately recognized.
Distribution is more than a series of channels between production and consumption. It provides a force, a pump in addition to the part along which goods flow.
Distribution in the 90’s is the most important link for getting goods and services from the producer to the ultimate consumer. Even with a soaring inflationary period, which may break all records in the short history of Nigeria, distribution still is vital to the continued existence of business.
In the olden days when barter was prominent, producers conducted the locater transaction (exchanging goods for goods) and other thing rather than for currently themselves, not utilizing middlemen.
When demand increase, producers found out that they did not have enough time, energy and the expertise needed for effective selling. Furthermore, producers increased levels of output enquired that they direct more attention to the production process. At this point, retailers (a type of middlemen) came into existence.
Producers and middlemen found barter of goods most accept other goods as payment and the “other” goods may not fit the seller needs.
As the economy continued to advance, retailers began to specialize, some for instance offer goods and other, clothing, in addition, wholesaler (another type of middlemen) emerge to meet the retailers need to draw from a large number of producer. This was how middlemen came into the scene as links between producers and consumers. As time went on, there was the need to have agents, distributors, brokers etc., springing from the march roof of wholesalers to be recognized as independent, entering the channel of distribution.
The Nigeria Brewery Limited mentions glory as one of the oldest breweries in the country. It was formed in 1946 with the commissioning of its Lagos branch. Nigerian and some foreigners own it. Before the indigenisation policy precisely, there are 40% Nigeria equity participation. After the indigenization policy precisely in 1978 it raise to 60% equity participation. This represents about 35,143,843 shares out of the total issued and fully paid shares of 58,560,000 at 50k each.
Nigerian Breweries Limited has a total labour force of about 9,700 but that of 9th Mile Corner, Udi branch, has about 500 labour forces. One of the major features of Nigeria Breweries Limited, 9th Mile Corner, Udi Branch is that it is the smallest of all the plants NBL while it is the biggest in comparison with the competitors in the State.
1.2 Statement of the Problem
The first step in channel selection is market definition that might by what and where are they? The answer can be elusome. It is undeniable that middlemen play important roles in the distribution channel by acting as a link between producers and consumers. However, many are of the opinion that middlemen cause more harm than good in the distribution channel by hiking the prices of products and services in a bid to maximize profit (Vaishnavi, 2018). Moreover, middlemen have been accused of causing artificial scarcity and the resulting artificial inflation and hence propose the elimination of middlemen from the supply chain (Vaishnavi, 2018). Nevertheless, these allegations have not been verified and hence cannot be generalized. Also, these allegations could be dependent on other factors. More so, these allegations are not enough to propose the elimination of middlemen from the channels of distribution considering that their role is inevitable in the process of distributing goods and services to the ultimate consumers. Against this backdrop, this study seeks to investigate the actual impact of middlemen in the channel of distribution in Enugu metropolis.
1.3 Objective of the Study
The broad objective of this study is to evaluate the impact of middlemen in the channels of distribution in Enugu metropolis.
The specific objectives of the study are as follows:
- To examine the impact of middlemen in the channels of distribution in an Organization.
- To identify the problems associated with the role of middlemen in the channels of distribution in Organization.
- To proffer a lasting solution to the problems associated with the role of middlemen in the channels of distribution in Organization
1.4 Research Questions
The researcher has formulated the following research questions to guide the study:
- What is the impact of middlemen in the channels of distribution in Enugu metropolis?
- What are the problems associated with the role of middlemen in the channels of distribution in Enugu metropolis?
- How can the problems associated with the role of middlemen in the channels of distribution in Enugu metropolis be solved?
1.5 Significance of Study
It is the researcher that the findings and recommendations of this project will be useful to many interested persons. The significance of the study will include the following:
- This study will further enlighten the company on the role of physical distribution in the organization.
- Purchasing students will no doubt find this study a vital academic materials, they will have a wider knowledge of the role of physical distribution in a company or firm.
- This study will also enlighten the government the basis of infrastructural amenities such as good road for the distribution system in the state.
- This will also make the manager of the company to have more knowledge of the distributive system.
1.6 Scope of Study
The research will focus on the study on the activities the physical distribution in the marketing performance beer in Enugu state. In trying to identify the roles of middlemen in distribution in depth of study will be taken on the present distribution. Arrangement of the company loading and off loading system, stock holding and inventory control, order, processing and administration, the documents used in delivery and dispatch and including the appointment of the distributor.
1.7 Limitation of the Study
The source of the income researcher is very low as a result, she cannot afford the money for all the expense, she is going to incur.
- In actual sense, this study should have involve the study of some of the manufacturing companies, but because of the geographical distribution of these firms. In view of these the researcher has decided after careful study of al the various types of firms to concentrate on the Nigeria beer company Enugu metropolis, Enugu state.
- Another is lack of relevant data in some area that could have helped the researcher in the study.
- There is also the problem caused by the attitude of the Nigerian to project and also PHCN intermident power failure.
- Also the problem of some uncompromising staff of ht company cannot be left out.
1.8 Definition of Terms
The physical flows of materials and final goods from point of origin to point of user or consumption to meet the needs of customers at a point.
This is the science based art of controlling the amount of stock held in various forms within a business to meet economically the demand placed upon it.
Re – Order Level:
This is a stock level when it is desirable to place a new order.
It is a place where storage is made for product and where supplies re made to customers.
This is an abbreviation of limited liability company, this is usually placed after the business name.
This is an acronym of the power holding company of Nigeria.
To fix the order of procedure of operation in the case of vehicles.
These are tools or machinery, fixtures, building grounds etc of a factory or business.
This is a branch of science having to do with moving and supplying of goods.
This exist in marketing and man of them come in the form of nature of product exposure desired by companies as to who and how many distributors should be given opportunity to sell their products.
5.0 Summary Conclusion and Recommendations
This chapter contains the conclusion and recommendations and summary given by the researcher in respect of the research work. The conclusion and recommendations were based on the objectives of the research as well as the findings of the study.
5.2 Summary of Findings
From the research carried out, the following findings were made:
- The findings of the study revealed that a significant percentage of the respondents (79.3% and 75% respectively) supported the assertions that middlemen play inevitable roles in the distribution of goods and services in an Organization and that middlemen facilitate speedy delivery of goods and services to consumers in an Organization. Also, many of the respondents supported the statement that the role of middlemen contributes to the economic development of an Organization. However, a significant percentage of the respondents (48.3%) opposed the statement.
- The findings showed that a significant percentage of the respondents (79.3% and 75% respectively) supported the assertions that middlemen hike the prices of goods and services in an Organization and that middlemen create artificial scarcity of goods and services in an Organization..
- The findings of the study revealed that most of the respondents (79.3%) supported the assertion that government regulation can be used to check the activities of middlemen in an Organization.
Based on the literatures reviewed and the findings made via questionnaire, the researcher has concluded as follows:
First, the researcher concluded that middlemen play inevitable roles in the distribution of goods and services and facilitate speedy delivery of goods and services to consumers in an Organization. Also, the role of middlemen contributes to the economic development of an Organization.
Moreover, the researcher concluded that middlemen hike the prices of goods and services and create artificial scarcity of goods and services in an Organization.
In addition, the researcher concluded that government regulation can be used to check the activities of middlemen in an Organization.
Based on the findings made in this study, the researcher has made the following recommendations:
- Middlemen should be supported in their role of distributing goods and services to consumers in Enugu metropolis through provision of good road networks, reliable telecommunication networks and so on. Based on the findings of the study, middlemen play inevitable roles in product distribution. Besides this, their activities contribute to economic development. Hence, cutting them off is not an option. Rather, they should be encouraged and given the enabling environment to thrive.
- The activities of middlemen should be checked because some of them contribute to price hiking and artificial scarcity of goods and services in an Organization. Hence, there is need to check and balance the activities of middlemen in an Organization.
- Besides government regulation, the activities of middlemen in an Organization should be monitored through trade unions which have strong influence on the prices of goods and services in the market. In addition, automation and the use of information and communication technology (ICT) in doing businesses can go a long way in checkmating the fraudulent activities of some middlemen in an Organization. For instance, buying and selling online does not eliminate but reduces the involvement of middlemen in business transactions and thereby saving the final consumer a lot of cost.
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