CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The Internet has glocalized almost the entire human activities, creating new and innovative ways for people to shape and share their identity, and express themselves (Neogy, 2008:70). The impact of glocalization has been felt much in marketing in such areas as E-advertising, E-payment, E- etc. But the Internet is yet to introduce E-distribution of tangible products such as the palm produce! The philosophy that marketing operates on the “space” such as E-marketing, in this new era is limited because the actual physical distribution requires a place for effective implementation. Marketing is therefore lamed without distribution even in the developed countries where hybrid

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systems are upheld. Palm Produce especially palm oil can be used for domestic and export or industrial processing. Palm oil has three grades, which include;

i.                    Special Grade Palm Oil (SPO) which has less than or equal to 3.5% free fatty

acid,

ii.                   Technical palm oil 1 which has less than or equal to 9% free fatty acid; and

iii.                  Technical palm oil 11 which has greater than 9% free fatty acid but less than or equal to 18% free fatty acid (Okwelogu, 2001:20). Currently, 80% of palm oil goes into food (special grade palm oil) and 20% is used in the non-food sector (Technical Palm Oil 1 & 11). The proportion going into the non-food sector for making soaps and detergents, toiletries and cosmetics and other industrial uses is expected to grow further in the near future (Khoo, 2001).

In Nigeria, the high dependency ratio of the economy on petroleum led to the neglect of the palm produce which had sustained the nation when there was economic diversification in the country (Okwelogu, 2001:36). The first set of the whitemen were attracted by the palm produce which they were taking to their own land and then, they returned things like soap, cream and textiles to our ancient kings, who got pleased and would give out human beings as slaves in exchange for the said good smelling creams and textiles (Oni, 2000:36-37). What some of our King did, when replayed now, appear funny, but our continual neglect of palm produce in the present era makes us more slaves than those who formed Freetown.

Meanwhile, if the whitemen could not use the power of the web to relegate distribution, and we have not been able to succeed well without palm produce, we need a step further; effective and efficient distribution of palm produce. But how can this be done? Chukwu (2004:391) opined that the task of achieving efficiency in the distribution system should be seen as an integrated one which all the player/stakeholders should be part of. This then calls for the need for the distribution manager to be not only proactive, but environmentally friendly in order to survive in the emerging world-wide market. Ehikwe (2002:188-189) stated that the maxim that all customers are important holds true, but not all customers are equal in their performance ratings with manufacturers. Therefore, it is very important for manufacturers to maintain open communication with the customers,

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receive and listen to complaints, provide solutions to problems and offer prompt services to certainly improve customers’ service levels and encourage their patronage. Ikezue (2006:367) contended that a basic output of a physical distribution system is the level of customer service, which represents one of the key competitive benefits that can be offered to potential customers in order to attract and retain them to the business. Customer service takes several forms which include:

i.                     Maintaining the target time period between order placement and order reception

by the customer at an optimal level of costs.

ii.                        The suppliers willingness to meet emergency Merchandise needs of the customer

iii.                   The care with which Merchandise is delivered in good condition, etc. Onah and Thomas (2004:404) citing (Guirdham, 1972:122) stated that distribution strategy should be ‘bottom-up rather than top-down’. This means that the customer demands should determine the kind of channel to be used to meet consumer needs at a profit and to generate maximum impact at the point of contact.

The rapid spread of production systems and facilities has compelled new tastes and choice options at unprecedented rate on consumers, such that, only the manufacturers with the distribution advantages can meet the customer satisfaction and remain in business. Distribution management in marketing is considered paramount as it epitomizes the marketing responsibility of satisfying customers in the consumption of goods and services through place, time and possession utilities (Ehikwe, 2002: Viii & 288).

Distribution, apart from being an important marketing variable, provides time, place and possession utilities (production creates form utility). The time, place and possession utilities constitute the value added in marketing. The provision of time utility has been a traditional marketing technique of businessmen and women as they store products during the harvesting season to be sold during the dry season. The place utility is created by the distributive system having goods for sale at places where they are in demand. The importance of place utility cannot be overestimated considering the fact that many locally manufactured goods have their factories located far away from their market. The possession utility is created by providing the means whereby a consumer can take possession and title (ownership) to goods including the provision of credit facilities by

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wholesalers, and/or retailers and other financial institutions (Onah and Thomas, 2004:401).

1.2       Statement of the Problem

The actions of one channel member may enhance or inhibit the performance of another channel member. As the producer, wholesaler, and retailer of palm produce relate with one another in the distribution system, there are serious disagreement, argument, differences of opinions and values exhibited by each member in the form of conflict.

The transportation of palm produce by roads and railways are poorly developed, as some areas (especially rural areas) are inaccessible. Many producers therefore find it difficult to reach a wider market, and the extent to which they can distribute palm produce effectively is severely limited.

Many businessmen lack adequate capital to carry on large-scale wholesaling and retailing of palm produce as many of them find it difficult to raise capital from commercial banks and other financial institutions without the necessary collateral or security.

Adequate storage or warehousing facilities which are suitable for palm produce are not easily available because of lack of capital. These produce therefore got contaminated with impurities and spoilt, and this leads to a waste of resources and scarcity of these produce at all seasons.

The tendency or inclination to palm produce to create artificial scarcity when there is demand for these produce at the peak of production season prevents the free flow of these produce to consumers who demand for them. This situation becomes aggravated at the peak of demand season and the bane of the manufactures is how to improve the distribution facilities for effective services to customers with produce availability all the seasons.

1.3         Objectives of the Study

In view of the above research problem statement, the major objective of the study is:

1)                  To examine the relationship between producers’s incentives and channel conflict experienced among marketing intermediaries of palm produce.

Other specific objectives of the study are;

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2)                To evaluate the effect of transportation of palm produce to consumers in rural and urban areas.

3)                To ascertain the effect of inadequate capital on large-scale wholesaling and retailing of palm produce.

4)                To determine the relationship between poor storage of these produce and its marketing and consumption.

5)                To evaluate the effect of hoarding of palm produce on consumers who demand for the produce.

1.4         Research Questions

Based on the above research objectives, the research questions for the study include;

1)                What are the incentives of producers that cause channel conflict experienced among the marketing intermediaries in distributing palm produce?

2)                Is there any significant difference in the effect of transportation of palm produce to consumers in the rural and urban area?

3)                Is there any significant difference in the effect of inadequate capital on large scale wholesaling and retailing of palm produce?

4)                How does poor storage of palm produce affect negatively their marketing and consumption?

5)                What adverse effect has artificial scarcity of palm produce on consumers?

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