THE IMPACT OF EFFECTIVE DISTRIBUTION SYSTEM IN AN ORGANIZATION (A STUDY OF PZ CUSSONS NIGERIA PLC)

THE IMPACT OF EFFECTIVE DISTRIBUTION SYSTEM IN AN ORGANIZATION (A STUDY OF PZ CUSSONS NIGERIA PLC)

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                                     CHAPTER ONE

GENERAL INTRODUCTION

1.0 Background to the Study

One of the important aspects of the production of goods and services is the proper distribution of the same in such a manner that it will reach the target consumers in the most cost-effective and expeditious manner. Marketing is an organizational function and a set of processes for creating, delivering and communicating value to customers, and customer relationship management that also benefits the organization. Marketing is the science of choosing target markets through market analysis and market segmentation, as well as understanding consumer behavior and providing superior customer value. From a societal point of view, marketing is the link between a society's material requirements and its economic patterns of response. Marketing satisfies these needs and wants through exchange processes and building long term relationships.Marketing activities have contributed greatly to the creation of affluent society.

The exact distribution mix that a company will select depends the analysis of the environment in which it is operating, the analysis of the target consumers, and the type of resources at its disposal. Manufacturers and producers depend on the availability of products to those who wish to purchase them in order for the products to move off the shelves and for the company to make profits, which shows the importance of selecting the

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right distribution mix. For example, an orange juice producer must select the most effective distribution mix to ensure that its products get to the right places from where customers can purchase them, a factor that is made more urgent by the short shelf life of such products.

Kaci Lane Hindman (2013), one of the factors that will be considered when coming up with the right distribution mix is the nature of the product to be distributed. For instance, in the case of a product with a limited shelf life, such as the orange juice, the distribution mix must enable a swift transfer of the products from the production plants to the warehouse and to the eventual retailers for purchase by final consumers. In the same sense, a product with a longer shelf life might benefit from the application of a different distribution mix. When considering the effect of the environment on the selection of the proper distribution mix, a lot of factors come into play, such as the state of the transportation infrastructure in place in the environment, since this can lead to different outcomes for the same product in different environments.

For instance, a company that is located in an area with good infrastructural framework in terms of good roads and reliable transportation schedules will adopt a different distribution mix that it will use in another country with a poor infrastructural framework. As such, if the orange juice company is located in a country with good infrastructure, it might use a combination of trucks, inventory and differently packaged products to distribute the finished product. If the same company is located in a country with poor roads and unreliable electricity supply, it might slightly modify the product in

order to extend the shelf life, since the poor state of the roads means it cannot expect the same expeditious and reliable delivery routines that it enjoys in more developed regions.

Kotler (2000), says that Place as one of the marketing mix elements is simply getting goods to the right place at the right time in the right quality. Place is the fourth “P” which has its traditional marketing term as distribution.Product distribution (or place) is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.

The distribution mix is all those functions marketers perform to move goods from producers to consumers. These intermediate consumers are wholesalers and retailers. They are known as marketing middlemen because they are in the middle of a distribution network that connects producers with consumers (Nwokoye, 1980).

Clifford (1992) opines that management needs to search for distribution economics in inventory control, warehouse location and transportation modes. One problem is that distribution efficiently declines when the company did not meet with delivery date.This leads customers to “bad-mouth” the company eventually sales fall. Management responds by increasing sales force incentives to secure more orders. The sales force succeeds but once again the company slips in meeting delivery dates. Management needs to identify the real bottleneck and invest inmore production and distribution capacity.

Physical distribution is an integrated set of activities that deal with managing the movement of goods within firms and through marketing channels (Kotler, 1980). Planning an effective physical distribution system can be significant decision point in developing an

overall marketing strategy. A company who places the right goods in the right places at the right time, in the right quantity, and with the right support service, is able to sell more than competitors who fail to observe or accomplish some goals.

Physical distribution is of great importance to most firms because it accounts for about 19% - 22% of the retail price. Part of these cost go for movement of products and the remaining part is related to inventory holding. Although physical distribution cost vary from industry to industry.With the above importance and many others prompted the researcher to verify more on the effectiveness of distribution in an organization and suggest other possible ways of distribution in an organization.

1.1Statement of the Problems

As earlier mentioned in our introduction, it was said that a company places the right goods in the right places, at the right time, in the right quantity and with the right support services and is therefore able to sell more than competitors who fail to observe or accomplish some goals. But over the years, organizations have been trying in one way or the other to bring about an effective distribution but still most organizations lack these areas of marketing mix element.

The various questions one would ask here are:-

1.      What are the distribution channels and how effective are the physical distribution activities in areas such as transportation, warehousing, communication and inventory management?

2.      Does distribution creates any impact on sales of organization product? What product characteristics have the company and what are the characteristics of middlemen?

3.      Are there lack of incentives of any kind by the company to its distributing agents?

4.      Is the design of channels of distribution enough to reach the potential customers? And is there poor road-network?

The present research work is an attempt of finding answers to the above questions that will lead to an effective distribution in an organization especially in 4P.Z Cussons Nigeria Plc. Sokoto.

1.2Objectives of the Study

The magnitude of the problems associated with the importance of effective distribution in an organization has reached an unacceptable proportion as many sectors of the society begin to show negative attitude towards it and to make derogatory statements about it.

The principal objective of this research is to assess the importance of effective distribution with particular reference to P.Z. Cussons Nigeria Plc.

Other objectives of this study are as follows:

1.      To appraise the company's product and its various distribution.

2.      To be able to determine the effective and profitable form of sales in organizations.

3.      To identify the means and processes of transportation and selecting the caliber of distributing agents.

4.      To determine the effectiveness of distribution channel.

1.3   Statementof Hypothesis

A hypothesis is a tentative statement of plausible assumption, the validity of which is yet to be known. Here statements of reasonable assumption are made and later subjected to test.The study shall test the following hypothesis:

Ho: That the poor state of roads has no significant impact on effectivedistribution of

goods.

Hi:That the poor state of roads has significant impact on effective distribution of goods.


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