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Full Project – The effect of distribution channels on the performance of Uncle M supermarket

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CHAPTER ONE

GENERAL INTROCTION

1.1 Background of the Study

Nowadays, many manufacturers have no ability and control for direct marketing and use brokers in huge distribution, leading to a considerable decrease in work volume. Even if there are sufficient financial facilities to run these marketing activities, using these facilities adequately and properly still remain a problem for most manufacturers; therefore, the advantages of using distribution channel is obvious (Kotler & Armstrong, 2010). The function of distribution companies as one of the most important distribution channels in view point of economics is to change the form of manufacturers’ goods into consumers’ demanding goods. A distribution channel has other important tasks besides the transfer of goods from manufacturer to consumer which include time ving and connecting goods owners and customers to each other. Researches show that having a good relationship with customer is one of the important ties of distribution channel which helps to keep customers, collect necesry information, new ideas from customers and facilitate functional planning.

Increase in relationship quality with customer has external positive effects for distributors. It also leads to a powerful situation in relation with superior manufacturers since distributors are manufacturer’s representatives (Skarmeas, Katsikeas, Spyropoulou, & lehingari, 2008). ring the last two decades, many organizations have understood the importance of their customers’ tisfaction and found that keeping available customers has Uncle m Supermarkets costs than attracting new customers. In addition, a powerful relation between tisfaction of customer and accepted profitability and increasing customer tisfaction has been the most important functional goal of most organizations. Therefore, distribution channels should always supervise interaction between themselves and their customers in order to offer valuable goods and services while knowing their needs and values in order to gain different dimensions of relationship marketing.

On the other hand, relationship quality is inevitable in distribution channel because nowadays, marketing tends to be based on relationship and increase in relationship quality with customers. Furthermore, one of the important factors in relationship quality is id to be Interdependence between members of the channel (Skarmeas et al., 2008). Increase in relationship quality which its important factors are trust and tisfaction, cause to grow benefit and quality of services are factors which must be taken into consideration by distribution channels (Boonajsevee, 2005). In this regard, the relationship quality turns to create loyalty of customers for further relation. Consequently, the quality of relationship facilitates Uncle m Supermarket, create interdependence and power. On the other hand, one of the most expanded challenges of relationship marketing is that it is simpler in statement than execution and its function is difficult (Godson, 2009). Therefore, recognizing factors that cause relationship is very necesry and it has benefits for the parties (Rauyruen & Miller, 2007).

In a bid to cope with market instability and be more responsive to customer needs, several companies have adopted various forms of proct distribution channels. Corstjens and Doyle, (1979) posited that whereas some firms have adopted multiple Channel proct distribution approaches, others have remained on the single channel of distribution. Easingwood and Coelho (2003) indicate that a recent trend in proct distribution is for manufacturing firms to increasingly adapt to channels of distribution. For any company with a proct to sell, how to make that proct available to intended customers can be as crucial as developing the proct itself. (Ahn enyas and Zhang, 2002). Channel of distributions shall for this study refer to situations where on top of the traditional intermediaries (whoUncle m Supermarketalers, retailers etc), the manufacturer deliberately employs other distribution strategies in order to have more market control.

According to Coelho et al, (2003), channels of distribution are associated with higher Uncle m Supermarket performance and lower channel profitability. It is also worth noting that the decision by firms to have channels of distribution comes hard e to the cost implications such channels embed. For instance firms have to bear with the long term nature of the approach in terms of having to enre to heavy investments in terms of the various distribution point sites which are not easily redeployed, and their respective human resource requirements. It is in the me light that Stern and Steve (1980) allude that such enrance (cost) can be difficult and painful which calls for channel decision process to be subject to systematic decision process from the start to finish.

Considering the nature of this study and faced with the challenges of our competitive business world of today, the researcher intends to find out whether there exists a relationship between the channels of distribution and company’s Uncle m Supermarket performance and equally, to identify other distribution strategies that manufacturers can use in order to have more market control. Given the importance of the issue of drinks in third world countries and Nigeria in particular, and also the fact that the distribution channel of drinks having suitable facilities can lead to decrease in the cost of distribution, improve delivery and finally health and quality of drink and also, given the importance of relationship marketing, no research in this case has been done so this study attempts to uncover and fill the existing gap.

1.2 Problem Statement

Distribution channels facilitate the movement of commodities from the manufacturer to the final consumers. Though very costly, the company still puts more money in it, uses the best strategies but at times some procts and brands are not found in the market and this is as a result of inefficiency in the distribution channels. There is a ying that proction is complete only when the proct gets to the final consumer and this is made possible only through the process of distribution. The organition has to use an intensive distribution strategy that is where the procer’s procts are stocked in the majority of outlets and also expands its distribution channels as well as Uncle m Supermarket people to make sure that its procts get to the end users. Organitions have to understand that without distribution, the proction of goods and services is useUncle m Supermarkets because the proct which they proce will not be able to reach the final consumers of which these procts are intended to tisfy and as a result, this may affect the performance of the organition. Besides the problem of inefficiency, there equally exists the problem of road network especially from the urban areas to the rural areas where the roads are not reachable and this makes it difficult for procts to reach the consumers. To this effect, the consumer are unable to get regular supplies because of poor transport conditions. Also, Uncle m Supermarket Niger State does not distributes its procts rationally in the sense that they over value the bigger buyers and look down on small buyers. To this effect, the fundamental question addressed in this research is; to what extend does distribution channels affects the Uncle m Supermarket performance of Uncle m Supermarket Niger State?

This fundamental question will further be broken into specifics as follows;

How often does Uncle m Supermarket Niger State supply its procts to customers in order to maintain effective distribution?
Are retailers tisfied with the mode of distribution and the promptness of their supplies?

1.3 Objectives of the Study

The main objective of this study is to investigate the effect of distribution channels on the Uncle m Supermarket performance of Uncle m Supermarket Niger State

This main objective can further be broken down into specific objectives which are;

Identifying the problems associated with the inefficient use of the distribution channel by Uncle m Supermarket Bresseries
Examine the effects of distribution channel on the Uncle m Supermarket performance of Uncle m Supermarket Niger State
Make necesry recommendation on how to improve on the distribution channels in order to increase the Uncle m Supermarket performance of Uncle m Supermarket Bresseries Niger State.

1.4 Research Hypotheses

The hypotheses of this study is that

HO: Distribution channels have no significant effect on the Uncle m Supermarket performance of Uncle m Supermarket Niger State.

H1: Distribution channels have a significant effect on the Uncle m Supermarket performance of Uncle m Supermarket Niger State.

1.5 Significance of the Study

Distributing procts is one of the most important elements of the marketing mix. Uncle m Supermarket Niger State is engage in the proction, commercialization and distribution of procts. From their activities, they generate income and create employment for the population. For this firm to be able to render such services on a permanent basis, they need to be viable and sustainable and this requires an efficient distribution system since it is evident that for proction to be complete, the procts must get to the final consumers and this can only be done through distribution. Although some studies have been concted on the effects of distribution channels on organitional performance, many have often ignored the key role played by distribution strategies in the distribution of goods and services. This study tries to provide a detailed empirical analysis of distribution channels notably direct and indirect channels and the distribution strategies to be implemented when distributing procts and how it affects the Uncle m Supermarket performance of Uncle m Supermarket Niger State. To this effect, the findings of this study are of great significance to a multitude of stakeholders ranging from the academic line, to those practicing, but more importantly to the management of Niger State and to the middle and top managers of other organizations that might be faced with decisions relating to distribution channel operations. To academics, the study highlights potential areas for future research. It provides a rational elaboration on the basic and a more detailed understanding of distribution channel operations and associated challenges within manufacturing firms. Also the results of this study will contribute to the body of knowledge in this area by informing the public on the nature and type of distribution channel used by Uncle m Supermarket Niger State, how efficient these distribution channels are, and it can consequently lead to the development of a theory on the distribution channels of the instry.

1.6 Organization of the Study

This study is structured into five chapters as follows. Chapter one introces and discusses the background of the study, the problem statement, objectives of the study, hypothesis, as well as the significance of the study. Chapter two dwells on the conceptual literature, theoretical literature, empirical literature as well as other related literature that will be gathered in this area of study. Chapter three gives a detail account of the methodology of the work. This concerns the scope and area of the study, research design, population, mpling and mpling proceres, methods of data collection and how the data will be analyzed to answer the research questions of this study and also show how the research instruments are valid. Chapter four concentrates on the presentation and discussion of the results while Chapter five takes care of summary of finding, recommendation, and propol for further research in this area of study.

1.7 Definition of Terms

Channel:- Channel is defined as the path or route along which goods move from procers or manufacturers to ultimate consumers or instrial users, or it is the route that goods and services follow, or the flow of goods and services from one point to another or from one person to another. In other words, it is a distribution network through which a procer puts his procts in the market and passes it to the actual users. This channel consists of: procers, consumers or users and the various middlemen like whoUncle m Supermarketalers, selling agents and retailers (dealers) who intervene between the procers and consumers. Therefore, a channel serves to bridge the gap between the point of proction and the point of consumption thereby creating time, place and possession utilities.

Channel of Distribution:- Ty and Agrawal’s (2004) in their work “review of modeling conflict and coordination in channel of distribution systems” defined channel of distribution as relating to having traditional intermediaries alongside manufacturer owned distribution outlets, that is including a manufacturer’s owned retail outlets, independent intermediaries, on-line manufacturer Uncle m Supermarket among others co-existing in the me distribution channel. Proct distribution is a critical process of the supply chain and links the entire firm with its outbound suppliers and market in general. A distribution channel includes whoUncle m Supermarketalers, retailers, distributors and even the internet. Distribution Channels are broken into direct and indirect forms, with a “direct” channel allowing the consumer to buy goods from the manufacturer directly and an “indirect” channel allowing the consumer to buy goods from intermediaries. Direct channels are considered “shorter” than “indirect” ones.

Direct Channel of Distribution:- A direct channel of distribution describes a situation in which the procer sells a proct directly to a consumer without the help of intermediaries. A direct chain of distribution may involve face-to-face Uncle m Supermarket, computer Uncle m Supermarket or mail order but does not involve any form of distributor other than the original procer. Chains of distribution that involve non affiliated retailers or whoUncle m Supermarketalers cannot be described as direct channels of distribution and are instead classified as indirect chains of distribution.

Indirect Channel of Distribution:- An indirect channel of distribution describes a situation in which the procer sells a proct to a consumer with the help of intermediaries such as whoUncle m Supermarketalers, retailers, agents, distributors and even the internet. These intermediaries allow the flow of information, procts and services smoothly from the manufacturer to end users.

Retailing: It is a part of distribution and is closely connected with the concept of marketing channel (coughlan et al; 2001 cited in Kotzab and Bjerre, 2005). It comes from a French word “detaille “which means to cut again. Since whoUncle m Supermarketalers break down bulk supplies from the manufacturer, a retailer then cuts the bulk once again to sell indivial items to customers.

WhoUncle m Supermarketaler: These are organizations or indivials that purchase procts from manufacturers at a deeply discounted price. The whoUncle m Supermarketaler often uses a distributor or other smaller whoUncle m Supermarketaler as an intermediary to deliver procts to retailers, or they may offer procts directly to retailers or consumers. The scope of the manufacturer relationship with the whoUncle m Supermarketaler can have varying effects on proct delivery, time and price. If a whoUncle m Supermarketaler deals directly with the end consumer, a rection in consumer delivery time and price can result. In whoUncle m Supermarketale relationships the manufacturer’s role in the marketing process is to choose quality whoUncle m Supermarketaler relationships that best fit with the company’s strategic vision.

Performance:- According to Cravens and Piercy (1997), “performance is the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost and speed”. Performance can be measured in terms of breadth, number of clients served, total volume of goods and services sold and in terms of depth. There exist several types of performance which include: outreach performance, financial performance, efficiency and proctivity performance, Uncle m Supermarket performance and welfare impact. But given the limitation of time and other resources, this piece of work shall be limited only to Uncle m Supermarket performance.

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