A STUDY OF IMPACT OF DISTRIBUTION STRATEGIES ON CONSUMER 

A STUDY OF IMPACT OF DISTRIBUTION STRATEGIES ON CONSUMER

A case study of Dangote Flour Mill Company Abuja

ABSTRACT

Every marketing firm that exist sustains its existence through production of goods or rendering of services to its target audience, marketing firms most choose distribution channels that is most effective for the distribution of goods and services giving that sometimes, some of those product hardly reach the consumers through the right distribution channel hence delay in the market of the products. Also sometimes customers are sometimes looked- winked into buying products they don’t intend to because of unavailability of their desired products. To this end, impact of distribution strategy in an organization, the questionnaire administrations combined with personal observations were employed as research instruments to gather data on the subject matter. The data collected were analyzed using descriptive and chi-square statistical techniques, the analysis revealed that Dangote Flour Mill Company Limited was equally found among that every distributor exist and this makes it not possible for local customers to have access to the product. Given these findings, appropriate recommendations were made.  

CHAPTER ONE: INTRODUCTION

1.         BACKGROUND OF THE STUDY

In its broadest sense, when it refers to the whole economic system, distribution is the allocation of income and assets within one society. In business economics, distribution relates to the allocation of goods to the recipients. In general, distribution includes all activities that enable the transfer of material and/or economic power over tangible or intangible goods from one economic subject to another. (Wirtscha, 2011).

This is concerned with the distribution in business economics as well as its implications on the whole economic system, i.e. on the whole national economy, since distribution is one of the main functions of retail trade (Wirscha, 2011).

Domschke and Schield thus emphasizes: “Distribution encompasses a system of all activities are related to the transfer of economic goods between manufacturers and consumers. It includes such a coordinated preparation of manufactured goods according to their type and volume, space and time, so that the supply deadline can be met (order fulfillment) or estimated demand can be efficiently satisfied (when producing for an anonymous market)” (Domschke & Schield, 1994).

Specht (2004) has pointed out that division is not completely accurate, since both of these subsystems exhibit certain common starting points. According to this author, acquisition distribution system management includes the management of distribution routes, i.e. distribution channels. Logistic distribution channels is focused on the bridging the space and time by transportation and storage, as well as order processing and shipment, supply logistics, i.e. the movement of material.

Therefore, it is assumed that there are three types of marketing channels (Kotler & Keller, 2008 p. 26): communication channels, distribution channels and service channels. Distribution or marketing channels are systems of mutually dependent organizations included in the process of making goods or services available for use or consumption. Moreover, a marketing channel is the external contractual organization that management operates to achieve its distribution objectives (Rosenbloom, 2004).

Channels of distribution provide downstream value by bringing finished products to end users. This flow may involve the physical movement of the product or simply the transfer of title to it. Also known as distribution channel, a distribution chain, a distribution pipeline, a supply chain, a marketing channel and a trade channel (Ostrow, 2009).

Similarly, distribution is defined by Hill: “Distribution channel- one or more companies or individuals who participate in the flow of goods and services from the manufacturer to the final user or consumer” (Hill 2010).

Nevertheless, other types of flows should not be neglected in distribution channel, so that the following distribution is also possible: “Channel of distribution consists of one or more companies or individuals who participate in the flow of goods, services, information and finances from the producer to the final user or consumer”. (Coyle, Bardi & Langley 2003).

These are various routes that products or services used after their production until they are purchased and used by end users. Therefore marketing channels, i.e. distribution channels are all organizations that a product has to go through between its production and consumption (Kotler, 2006).

HISTORICAL BACKGROUND OF DANGOTE FLOUR MILL COMPANY

Dangote Group of Company was found by Alhaji Aliko Dangote some two decades ago with a sum of N500,000 loans from his grandfather Alhaji Dangote.  The loan which was expected to be paid back in three years was liquidated within three months. Since then, there has been no stopping to become the biggest player in four productions in the industry. Yet flour production is a function of the investment of Dangote Group which has other subsidiary companies such as cement production factory etc.

What is known as Dangote Flour Mill Company is one of the key thrusts of economic reform policies of the present administration is background integration which could also be referred to as kick home philosophy.

In the area of production of flour, Dangote Group having proved to be one of the fastest companies Nigeria has carved a niche for itself for a vow to remain a prominent company in stimulating nation growth through the application of liaison of the present administrations economic reform policies. Propelled by its corporate vision of being a leading provider of food, Dangote Group are into flour productions, salt processing, sugar refinery, cement bagging among others. To ensure the effective sale of their product, the firm has sales staff that constitutes the sales division organizational structure as depicted. The company is made up of sales area encompassing the 37 sales depots spread all over the country.    

1.1     STATEMENT OF THE PROBLEM

In the ancient days, human activities were easy. The difficulties posed by nature then, were considerably simple and demanded a solution of relative simplicity. The compounded problem of how to serve and distribute goods and products in organizations.

Modern business organization today finds it difficult and cumbersome to take their products to those who need them. Today, companies face their toughest competitor ever moving from a product distribution philosophy to marketing; however, give a company a better chance of outperforming competition. And the corner stone of a well-conceived marketing orientation is a strong customer relationship through distribution efficiency. Marketers must connect with customers inspiring engaging and be ever energizing them in the process.

It is a fact that no firm can serve customers with all their needs and wants; it is therefore a difficult task. The firm is faced with the problem considering the difficulties facing the Dangote Four Mill Company in their distribution.

1.2OBJECTIVES OF THE STUDY (The Main And Specific Objectives)

The primary objective of this study is to investigate selling and distribution strategy of a product.

Other objectives include:

1. To investigate factors that influence product channel of distribution.

 2.  To identify the channel of distribution benefit the company most.

 3.  To assess how effective is adoption of distribution strategies to business firm.

1.3   RESEARCH QUESTIONS

1. Which channel does the company use in distributing their products?
2. Which factor mostly influence the channel of distribution of the company?
3. How effective is adoption of distribution strategies to the company?

1.4              STATEMENT OF HYPOTHESIS

The hypothesis below will be designed to serve as a guide for the study.

1. Hi: Marketing strategy has impact on the promotional activity of Dangote selling and distribution company.
2. Ho: Marketing strategy has on impact on the promotional activity of Dangote selling and Distribution Company.

1.5     SIGNIFICANCE OF THE STUDY

The significance of this study is aimed at achieving the goals of the organization through efficient distribution. At the end of this research work, Dangote Flour Mill Abuja will benefit by going through the work and finding out areas where improvement is necessary and also to determine the impact of distribution strategy. Furthermore, the student will also fulfill one of the criteria required to obtain Higher National Diploma of Polytechnics.

For the purpose of future researcher to have more opportunity in develop data. The significance of the study can be useful for the institution as they kept it for future reference and help to improve the life of other student in the institution.

1.6     SCOPE OF THE STUDY

The scope of this study would have covered wider areas, but due to the fact that the respondent were uncompromising with the researcher because they believe that the study will not benefit them, they fail to give adequate information to make up the project work. This has led the researcher to make conclusion based on the respondent answer to question in conjunction with researcher’s personal observation.

1.7     LIMITATION OF THE STUDY

The major challenge encountered by the researcher was lack of adequate material availability in the nearest library. This has limited the quality of literature reviewed for the study.

1.8     OPERATIONAL DEFINITION OF TERMS

     The meaning of the following terms shall apply in this project.

1. Exclusive Distribution: This means surely limiting the number of   intermediaries. It is used where the service level and out puts offered by the resellers. Often it involves exclusive dealing arrangements. By granting exclusive distribution, the producer hopes to obtain more dedication and knowledgeable selling.
2. Selective Distribution: This involves the use of more than a few or less of all of the intermediaries who are willing to carry a particular product. It is used by established companies and by new companies seeking distributions. The company does not have to worry about too many outlets; it can gain adequate market coverage with more control and less cost in intensive distribution.
3. Intensive Distribution: This consists of the manufacturer placing the goods in as many outlets as possible. This strategy is generally used for items such as tobacco products, soap, snack foods, and gum products for which the consumer requires a great deal of location convenience. Manufacturers are constantly tempted to move from exclusive or selective distribution to increase coverage and sales. This strategy may help in the short term, but often hurts long term performance. Intensive distribution increases product and service availability but may also result in retailers competing aggressively.