an assesment of the effects of distribution strategies on - Kisii ...

AN ASSESMENT OF THE EFFECTS OF DISTRIBUTION STRATEGIES ON

ORGANIZATIONAL PERFORMANCE; A CASE OF NYANKOBA TEA FACTORY,

NYAMIRA COUNTY

MESHACK OTIENO OLIECH

A Research Project Submitted to the Board of Undergraduate Studies in Partial

Fulfillment for the Award of the Diploma in Business Administration of School of Business

and Economics, Kisii University.

DECEMBER, 2017

DECLARATION AND RECOMMENDATION

DECLARATION

This Research Project is my original work and has not been submitted to this university or any

other university for the award of a degree or diploma.

....................................... ………………………Signature Date

Meshack Otieno OliechCB01/10587/15

RECOMMENDATION

This Research Project is submitted for examination with my approval as University Supervisor.

……………………. ………………………….

Signature Date

Justine Onyoni

Assistant Lecturer

School of Business and Economics

Kisii University.

ii

DEDICATION

This Research Project is dedicated to my lovely wife Winne Addah and my children Beryl, Jesca,

Iddah and Jack for their financial support and encouragement throughout my study.

.

iii

AKNOWLEDGEMENT

My sincere acknowledgement goes to all that have made it possible for this Research Project to

be a success. Special thanks to my Almighty God for the gift of life and good health, to my

supervisors Mr. Justine Onyoni for his valuable guidance throughout the Project development.

Equally I also acknowledge the efforts of all lecturers who taught me more so to my Research

Methods lecturer.

iv

ABSTRACT

The purpose of this study was to assess the effect of the distribution strategies on organizational

performance of firms a case of Nyankoba Tea Factory. The research was guided by the following

objectives that were focused: to determine the type of distribution channel used by organizations

to influence performance, to determine the policies of the organization regarding to the

distribution strategies and to determine some factors considered when choosing the channel of

distribution. The study was based at Nyankoba Tea Factory. The target population was 250

employees. Descriptive research design was used because it was to enable the researcher to get

the data on the effect of distribution strategies on organizational performance. A sample of 75

employees representing 20% of all staff working in Nyankoba Tea Factory was picked for the

study. The sample size was selected from 250 employees of Nyankoba Tea Factory using

purposeful sampling technique. Structured and closed ended questionnaires were used to solicit

information from the respondents. The collected data was analyzed using descriptive statistics

such as percentages, mean and weighted averages which were later presented in form of tables

and graphs. Secondary Data was processed and analyzed using Descriptive and Inferential

statistics. The summary and conclusions were drawn from the results which give a proper

illustration on the various strategies adopted in the selection of proper channel of distribution.

v

TABLE OF CONTENTS

DECLARATION AND RECCOMMENDATION………………………………… ii

DEDICATION………………………………………………………………………… iii

ACKNOWLEDGEMENT…………………………………………………………… iv

ABSTRACT…………………………………………………………………………… v

TABLE OF CONTENTS……………………………………………………………… vi

LIST OF FIGURES…………………………………………………………………… ix

LIST OF TABLES……………………………………………………………………… x

CHAPTER ONE………………………………………………………………………… 1

INTRODUCTION……………………………………………………………………… 1

1.1 Background of the Study……………………………………………………………… 11.2 Statement of the Problem……………………………………………………………… 21.3 Objectives of the Study…………………………………………………………………21.4 Research Questions…………………………………………………………………… 21.5 Significance of the Study ………………………………………………………………31.6 Scope and Justification of the Study……………………………………………………31.7 Limitations of the Study……………………………………………………………… 31.8 Assumptions of the Study……………………………………………………………… 3

1.9 Operational Definition of Terms……………………………………………………… 4

CHAPTER TWO……………………………………………………………………… 5

LITERATURE REVIEW……………………………………………………………… 5

2.1 Distribution Strategies………………………………………………………………… 5

2.2 Roles of the Intermediaries…………………………………………………………… 5

2.3 Types of Distribution Strategy………………………………………………………… 6

2.3.1 Factors that affect the distribution strategy performance………………….…… 6

vi

2.4 Channel Management Decision………………………………………………………. 8

2.4.1 Objectives of distribution strategy……………………………………………… 9

2.4.2 Relationship marketing in channels……………………………………………… 10

2.5 Conceptual Framework……………………………………………………………… 11

CHAPTER THREE…………………………………………………………………….. 12

RESEARCH METHODOLOGY……………………………………………………… 12

3.1 Research Design……………………………………………………………………….. 12

3.2 Study Area…………………………………………………………………………… 12

3.3 Target Population…………………………………………………………………… 12

3.4 Sample Size and Sampling Procedure……………………………………………… 12

3.5 Data Collection and Procedure……………………………………………………… 12

3.6 Instrumentation……………………………………………………………………… 13

3.6.1 Validity of Research Instrument……………………………………………………13

3.6.2 Reliability of Research Instrument…………………………………………………13

3.7 Data Analysis and Presentation……………………………………………………… 13

CHAPTER FOUR……………………………………………………………………… 14

DATA ANALYSIS, RESULTS AND DISCUSSION………………………………… 14

4.1 Response Rate……………………………………………………………………… 14

4.2 Analysis of distribution channels……………………………………………………… 15

4.3 Factors influencing the choice of distribution channels……………………………….. 16

4.3.1 Effectiveness of the channel……………………………………………………… 17

4.3.2 Market coverage region on beverages………………………………………...…… 18

4.4 General Factors Influencing the Choice of Distribution Channels………………… 19

vii

CHAPTER FIVE……………………………………………………………………… 20

SUMMARY, CONCLUSION AND RECOMMENDATION……………………… 20

5.1 Summary of the findings……………………………………………………………… 20

5.2 Conclusion…………………………………………………………………………… 20

5.3 Recommendation……………………………………………………………………… 21

5.4 Suggestion for further Research……………………………………………………… 22

References………………………………………………………………………………… 23

APPENDICES

Appendix I: Questionnaire

viii

LIST OF FIGURES

Figure 2.1 Conceptual Framework…………………………………………………..……11

ix

LIST OF TABLES

Table 4.1 Response Rate……………………………………………………………….14

Table 4.2 Analysis of Distribution Channels………………………………..………....15

Table 4.3 Factors Influencing Choice of distribution Channels………………………..16

Table 4.4 Response on Effectiveness of the Channel………………………………….17

Table 4.5 Analysis of the Market Coverage Region…………………………...……….18

Table 4.6 Rating of the factors affecting the Channel Selected………………………..19

x

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Research has proved that each organization depends on distribution to ensure that its products

and services reach the final consumer. Different methods have to be employed to ensure these

goods move from point of manufacturing to the point of consumption. Distribution strategies are

techniques that are used by producers and other business people to ensure that their products

move from the area of production to the final users profitably.

Saleemi,(2009) states that a channel of distribution or trade channel consists of producer

consumer and middlemen who intervene between the two. The channel serves as connecting link

between producer and consumer. The physical distribution is an important area in marketing

management.

Cole, (2001) states that the characteristics of consumers, product, intermediaries, competitors,

marketing environment and companies strengths and weakness determine the various possible

alternatives for the choice of distribution channels in line of products. An organization should

consider the terms demanded by different channel constituents and evaluate them in comparison

with services and benefits provided. Depending on factors such as consumer and product

characteristics, the organization will opt to choose those channels that make the maximum

impact in the market at a minimum cost.

Show, (2010) states that the channel of distribution is a vehicle for viewing and marketing

organization in its external aspect and for bridging physical and non-physical gaps which exist in

moving goods from producer to consumer through the exchange process including the

determination of price.

Companies must build the distribution strategies which are product, price, place and promotion

that an organization adopts in order for them to achieve their objectives. The four marketing

strategies involves groups of vertically aligned organization that add value to a product in

moving

1

from basic suppliers to finished products, to consumers and organizational end users.

The distribution strategy is concerned with the firm’s product and services to reach the target

market. The distribution strategy ensures that consumers get the product at the right time and

place. The Coca-Cola Company is the leading beverage and soft drink producer in the country

and also in Nyanza province must consider the factors in place when selecting an effective

distribution channel in order to satisfy its consumers efficiently.

1.2 Statement of the Problem

Different firms use different channels of distribution in respect of their products. Poor selection

of these channels leads to low yields of overall profits in the firm and high rate of losing

customers, hence there is need for an organization to give attention to the factors affecting in the

selection of the channel, and therefore, this study aimed to assess the factors that affect the

choice of distribution channels in an organization.

1.3 Objectives of the Study

The main objective of the study was to assess the effect of distribution strategies on

organizational performance and the study was guided by the following specific objectives;

i. Determine the type of distribution channels used by the organization.

ii. Determine the policies of the organization regarding to the distribution strategies.

iii. Determine factors considered when choosing the channel of distribution.

1.4 Research Questions

The following were the research questions that were used in the study.

i. What are the types of distribution channels used by organizations?

ii. What are the policies of the organizations regarding to the distribution strategies?

2

iii. What are the factors considered when choosing the channel of distribution?

1.5 Significance of the Study

The study is important to the management in analyzing the economic needs of the organizational

distribution strategies in distributing goods and services. The money required facilitating the

distribution activities; therefore the study will help to come up with a good budget for

distribution. Also the research will help intermediaries by ensuring they get training about

distribution channels and also be able to solve problems that might occur in the distribution

channel. Proper strategies will ensure that there is development in community since different

materials will be out in place. And finally the study reports will help the government to know the

needs of different markets this will guide the government in taxing the firm or to support where

necessary.

1.6 Scope and Justification of the Study

The study was carried out at Nyankoba Tea Factory which is located 387km from Nairobi CBD,

Nyamira County and approximately 20km from Kisii town. It will be basically on the assessment

of the effects of distribution strategies on organizational performance.

1.7 Limitations of the Study

The study was descriptive research where responses from a sampled population were obtained

and therefore the views of the entire target population were not captured. The Study limited itself

only to distribution strategies on organizational performance.

1.8 Assumptions of the Study

It is assumed that the employees were on duty during the research period, the respondents

selected were willing to fill the questionnaires. It was also the assumption of the researcher that

all respondents who were interviewed responded positively and lastly the sample size selected

was representative enough to make general conclusions from the entire population.

3

1.9 Operational Definition of Terms

Distribution Structures : Refers to channel designs and structures and

Management of channel.

Product : Anything that is offered to the market for

Acquisition or purchase including physical objects,

services, places and ideas.

Culture : Is a learned way of life including values ideal and

Attitude shared and transmitted by members of a

Particular society.

Channel Of Distribution : System of market intermediaries’ use by producers

/marketers in making its products available to the

ultimate user.

4

CHAPTER TWO

LITERATURE REVIEW

2.1 Distribution strategies

Kyritsis & Leader, (1995) postulated that channel of distribution is a chain of marketing

intermediaries used by a producer to make products and services available when and where

customers want them. A marketing channel is a set of interdependent organizations that is

involved in the process of making a product or a service available for use or consumption.

Kotler, (2001) examined that channels of distribution includes the network of distributive

organization through which goods are transferred from the supplier to a place where they may be

readily purchased. A company may have developed a good project, priced it correctly, presented

it efficiently through appropriate distribution strategy and generate interest but fail to get the

actual product to the interested parties because the distribution network was not properly set up

or because the company itself could not affect the physical distribution of the product on time.

2.2 Roles of the intermediaries

Kibera and Waruingi, (1998) contended that intermediaries perform the following functions:

contracting function, physical distribution and function of demand stimulation. They reduce the

number of sales contractors or sales calls needed to reach all customers. They act as a bridge

between the producers and the users and the end users. They serve the customers with the

products of the right quality and to their respective destinations at the right time. The function of

sorting has two dimensions: bulk breaking and bulk building which involves buying in large

units and breaking the units down into smaller units suitable for sale. Physical distribution

function involves transportation and storage of products as they move from the producer to the

final consumer. It includes storage in the warehouse and distributers’ stations middle-men like

producers are in the business to make profits, they therefore stimulate demand in the same way

as producers do. Thus,

5

they engage in personal selling, advertising, sales promotion, production and formulating pricing

policies. Middle-men are important sources of information about the market place because they

are closer to the consumers more than the manufacturers.

2.3 Types of distribution strategy

Keller &Kotler, (2009) postulated that producers do gain several advantages by using

intermediaries. Many producers lack the financial resources to carry out their direct marketing;

producers who do establish their own distribution strategies can often earn a greater return by

increasing investment in the main business, in some cases direct marketing is not feasible. There

are different types of distribution channel levels.

A zero level channel also called direct marketing channel is the shortest channel which entails

selling product and services direct to the final consumer. In this case, the producers open up their

own retail outlet hence customers buy the merchandise. This channel is practiced by the firm

through opening up factory door sales. In a one level channel the products move from the

producer through the retailer before it reaching the final consumer. This channel is common in

the marketing of agricultural commodities such as vegetables and fruits.

In a two level channel the product moves from the producer to the wholesaler who in turn sells

the products to the retailer who finally transfers to the final consumer. This channel may also be

in different form that the product moves from the producer to the agent instead of the wholesaler

then through the retailer before reaching the final consumer.

A three level channel comprises of three middlemen and although it is occasionally used in

distributing locally produced and consumed products; these middlemen comprises of the agent,

wholesaler and end users.

2.3.1 Factors that affect the distribution strategy performance

Kotler, (2009) stated that a strategy should be chosen according to their efficiency, controlling

and adaptability. There are several factors which influence distribution strategies or have to be

considered when selecting channels. Product characteristics such as size, price, perishability,

status attached to the product, nature of benefits offered by a producer, must all be taken into

account, and perishable goods will need to be kept in low quantities considering the trends to

which the

6

consumers buy them. Customer characteristics is another factor which affect the selection of the

strategy, these includes the size of the target market, profile of potential buyers, geographically

dispersion of market and customer expectation. For example high social economical groups

purchasing items will probably buy from departmental shops or specialty shops.

Kyritsis & Leader, (1995) examined that a large widely dispersed market often requires the use

of wholesalers and retailers for distribution or probably direct marketing, because they will

indeed perform the task of bulk breaking and bulk building making it possible for consumers to

get the product in any quantity of their choice at the right time and place.

Competitor trends and achievements is another factor which also determines the correct channel

to be used in the distribution of the product by the firm. The type of distribution strategy used by

the competitors and the geographical spread of their operations should be considered closely

although on shared not completely led by what competitors are doing.

Environmental characteristics such as economic, political, social and cultural factors also affect

the distribution strategy. It is often argued that where economic conditions are depressed

marketers distribute their products via the route that is least expensive, political factors also

affect largely in the selection of the channel. The government may interfere with a certain

channel as a way of reducing the consumption of a certain product. Legal factors affect in the

sense that if the channel does not have any legal document to transacting the business, then it

will be considered illegal. Middlemen characteristics should also be considered in deciding the

contribution of market intermediaries to be used in distributing the producer’s product.

The major factors are the market, middlemen, their financial requirements, the services that they

provide and their availability in that manner. The middlemen members should undergo training

and coaching in order to make the channel to be more effective and increase the sales volume

Marketing objectives being pursued should be closely considered also in the selection of the

channel. If early market saturation is needed to be obtained a firm foothold in the market, then

the company may need to use many outlets as possible. The main distribution strategy or policies

a company can use to distribute its product.

7

Armstrong, (2001) examined the use of intensive distribution strategy where a company sells its

products through many outlets as possible within a given area to ensure that the market place is

fully covered and obtain every sale opportunity. This even involves the use of street standards

and vending machines depending on the producer. Also there are exclusive rights to every few

carefully selected intermediaries without causing conflict of interest between them. Alternatively,

the company may encourage certain well-chosen distributive outlets to stock anew product on

the promise that they will be the one selling in this area. Also there is the selective distribution

strategy which is half-way house between intensive and exclusive distribution and may be used

for a wide variety of product. The manufacturer will attempt to gain adequate market coverage

by selecting appropriate outlets through which the product may be sold.

2.4 Channel management decisions.

Keller, (2009) postulated that, after a company has chosen a system; it must select, train,

motivate and evaluate individual intermediaries for a channel. It must also modify channel

design and arrangement over time; companies need to select their channel members carefully. To

facilitate channel member selection, producers should determine what characteristics distinguish

the best intermediaries. They should evaluate the number of years in the business, other lines

carried, growth and profit record, financial strength, cooperatives and service reputation.

If the intermediaries are sales agents, producers should evaluate the number and character of

other lines carried and the size and quality of the sale force. If intermediaries and department

stores that want exclusive distribution, the producer should evaluate locations, future growth

potential as type of clientele.

Kotler, (2009) stated that companies need to plan and implement careful training programs for

their intermediaries. This will make the channel members to be more accurate when distributing

the product. Training and coaching of channel members will in return increase the sale volume of

the product and also add value to their skills. Motivation of channel members is other way of

8

channel management decision used by the firm to increase the morale of channel members this

will in turn keep the members in the channel to enjoy as they perform the process of distribution.

A company needs to view its intermediaries the same way it views its end users.

It needs to determine intermediaries’ needs and construct a channel positioning such that the

channel offering is tailored to provide superior value to those intermediaries being able to

channel to top performance, starts with understanding their needs and wants.

2.4.1 Objectives of distribution strategy.

Rosenbloom, (2009) examined the various objectives to be served by a distribution strategy will

typically cover how, when and where he enterprises market offering should be made available to

the target markets. The strategy provides means of this ends. Perhaps the most crucial aspect was

the choice of a level of service by which an enterprise might seek to secure competitive

advantage. Considering the characteristics of order: large orders will require different

distribution strategies from those which are appropriate for small orders. In general it costs just

as much to process a small order as it does to process a larger order, with the result that small

orders give rise to disproportionally high distribution cost since many of the latter are a function

of the number of orders processed and a number of customers served.

Rosenbloom pointed out the importance of channel strategy is likely to depend upon the

existence of one or more of target markets demands a strong emphasis on distribution,

competitive party exist in other marketing mix variables with the need for channel strategy to

provide some differential advantage.

McDonald, (2011) examined the distinction between sellers distribution objectives, sellers

requirements of middlemen and distributers requirement of sellers. Manufactures and middlemen

need to cooperate fully in their common objective satisfying consumer needs profitably

therefore; conflict can occur when manufacturers or middleman seeks domination and/or

becomes dissatisfied with the relationship.

9

2.4.2 Relationship marketing in channels

J. Paul Peter, (2011) examined the relationship that exist where marketing has taken competitive

view of channel of distribution. In other words members had different goals and strategies it was

believed that the major focus should be on concepts such as power and conflict. More recently

however anew view of channels has developed, perhaps because of the success of Japanese

companies in the 1980s, it was recognized that much could be gained by developing long term

commitments and harmony among channel members. This view is called relationship marketing

which can be defined as “marketing with the conscious aim to develop and manage business

term or trusting relationship with customers, distributers, suppliers, or other parties in the

marketing environment”

10

2.5 Figure 2.1 Conceptual Framework

Independent Variables Dependent Variables

Distribution Strategies Organizational Performance

Channel of distribution profits

Policies Number of customers

Relationship marketing in channels Efficiency

Productivity

Infrastructure

Political interference

Economy

Inflation

Intervening Variables

Source: Researcher, (2017)

Explanation of Variables

The conceptual framework shows the independent variables that influence the dependent

variable. The figure suggests that the independent variable is conceptualized as method of

channel of distribution intermediaries involved in distribution and channel relationship

marketing. Dependent variable is conceptualized as increased number of customers and profit.

Intervening variables like infrastructure, political interference economy and inflation.

11

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design

The study employed descriptive research design. Descriptive research design was preferred for it

facilitates the collection for a considerable amount of data quickly, efficiently and accurately

(Oso&Onen, 2005). Descriptive research design was preferred because it permits the collection

of data through questionnaire admitted to a sample of respondents and that the data collected by

the design would be used to suggest reasons for a particular relationship between variables and

produce models for those relationships. Sanders &Thornhill, (2007)

3.2 Study Area

The study was carried out at Nyankoba Tea Factory which is located 387km from Nairobi CBD,

Nyamira County and approximately 20km from Kisii town. It was basically on the assessment of

the effects of distribution strategies on organizational performance.

3.3 Target Population

Ngechu, (2004) a population is a set of people, elements and events, group of items that are

investigated. In this study, the target population comprised of 250 employees of Nyankoba Tea

Factory.

3.4Sample Size and Sampling Procedure

Mugenda &Mugenda, (1999) recommended a sample of at least 20 % of social studies. The

sample size will be 75 respondents using 30% rule. The studyemployed simple random sampling

technique whichensured that each number of the population is included.

3.5 Data Collection and Procedure

The sources of data were both primary and secondary. The researcher utilized structured and

closed ended questionnaire to gather data from the targeted population. The secondary data on

the other hand was obtained from journals and text books in the university library.

Questionnaires were used to obtain information from employees.

12

3.6 Instrumentation

3.6.1 Validity of Research Instrument

Kerlinger, (1973) states that validity refers to the extent to which an instrument is good in what is

designed to measure. This was through crosschecking of the questionnaire by the supervisor so

as to ensure that they achieve the research objectives.

3.6.2 Reliability of Research Instrument

Mugenda, (2002) Reliability is the measure of the degree to which Research Instruments yield

consistent results after repeated trials. The test-Retest method was used to confirm the degree of

reliability. Before the researcher distributes questionnaires, there will be need to check its

reliability. This will be done through test-retest run so as to bring out weakness if any. This will

allow for modification of various questions in order to rephrase, clarify, clear or modify any

ambiguities in the questionnaire.

3.7 Data Analysis and Presentation

The study used descriptive statistical techniques such as mean, percentage and weighted

averages to analyze the data, and then the data was presented by the use of frequency tables and

charts.

13

CHAPTER FOUR

DATA ANALYSIS, RESULTS AND DISCUSSION

4.1 Response Rate

The researcher distributed 75 copies of the questionnaires to the entire employees of the firm.

The response rate of the respondents is as shown in the table below.

Table 4.1 Response Rate Analysis

Population category Frequency percentageResponse 65 83.3

Did not respond 10 16.7

TOTAL 75 100

Source：Field Data, (2017)

The study above shows the response rate of the respondents who filled questionnaires given to

them by the researcher within Nyankoba Tea Factory. The total respondents who were distributed

with the questionnaires were 75 but those who managed to fill the questionnaire were 65.this

represents 83.3% responded while 16.7% did not respond. From the study, respondents were able

to give a representation of the sample.

Table 4.2: Analysis of Distribution Channels.

14

Channels frequency percentageProducer to consumer 2032

Producer, retailer to consumer 20 40

Producer, wholesaler to consumer 15 28

Through manufacturing agent 0 0

TOTAL 65 100Source: Field Data(2017)

From the study above, all the distribution channels are applied by the firm except the channel

which involves the manufacturing agent.32% of the respondent agreed that the product whose

direct consumers.40% agree that the product passes through the retailer before the end

consumers. 28% of respondents agree that the product first goes through the wholesaler before

the final consumer. This shows that, though the product goes through all the combination of the

channels except through a manufacturing agent, most of the product undergoes through the

retailer before the final consumer.

4.3 Factors Influencing the Choice of Distribution Channels

Table 4.3: Ratings of the Factors that Influence the Choice of Channels

15

Weights Strongly Agree Disagree Strongly N/A ∑fi ∑fiwi ∑fiwi/∑fi

Agree Disagree

Factors 5 4 3 2 1

Government

Policy 12 10 14 14 3 65 161 3.22

Political and

Economic factors 10 17 11 12 - 65 175 3.50

Peak and off peak

Periods 23 19 7 5 - 65 222 4.44

Competency of

Channel members 21 19 6 4 - 65 207 4.14

Complaints from

Consumers 21 14 9 6 2 65 202 4.04

The cost involved 20 19 7 4 - 65 205 4.10

Future outcomes 14 13 8 15 2 65 204 4.08

Suggestions from

The consumers 18 19 4 9 - 65 196 3.92

Source: Field Data (2017)

In the study above, all the factors were responded to with different weights. The respondents

assigned more weights on the factors of consideration of the peak and off-peak seasons and also

the factor of competency and skills of the channel members. This has a weight of 4.44 and 4.08

respectively

The other factors considered by the respondents were political and economic factors which took

the mean weight of 3.5, total cost involved which was assigned the mean of 4.1 and complaints

by the consumers on delivery had a mean weight of 4.04. the analysis shows that the factors with

highest mean weight give the high chances of proper selection of the channel.

Complaints from the consumers on product delivery in time and place enhance the firm to

choose the effective channel which will minimize these complaints.

16

4.3.1 Effectiveness of the Channel

Table 4.4 Response on Effectiveness of the Channel

Response Yes NoIs the channel in place adequate? 38 12

Percentage 78 24Source: Field Data (2017)

The findings above revealed that a small percentage of 24% disagree with the chosen channel in

that it is not fully adequate for the distribution of beverages. 78% of the respondents support the

channel in place in the comment that it is adequate to the distribution of beverages. This means

that the factors considered by the firm and the cooperating channel members made the channel

adequate.

For the channel to be more adequate and efficient, 48% of the respondents agree in the channel

which in turn brings about high productivity to the firm.20% of respondents agree that when

there is lack of complaints from the consumers being supplied with the product, then the channel

is adequate.24% of respondents suggested that when the channel members cooperate then the

channel will be more efficient while a small percentage of 8% agree that when there are no other

distributing channels then the only available channel will be adequate.

4.3.2 Market Coverage Region on Beverages

Table 4.5: Analysis of Market Coverage Region

Market regionFrequencyPercentageUrban 0 0

Suburbs 0 0

Rural 0 0

Institutions 0 0

Combination 50 100

Total 50 100

17

Source: Field Data (2017)

From the analysis, all respondents agree that the product penetrates through the entire market

coverage region (100%). this means that the product penetrates through all the regions available

as it has no specific market region. The product goes through urban, suburbs, rural areas and the

institutions.

4.4 General Factors Influencing the Choice of Distribution Channels

Table 4.6: Rating of the Factors Affecting the Channel Selected

Ratings Large small not at ∑fi ∑fiwi ∑fiwi/∑fi

Extent extent all

Factors 3 2 1Consumer related factors 30 12 8 50 122 2.44

Product durability26 19 5 50 121 2.42

Company policies 37 10 3 50 134 2.68

Competitor strategies 31 12 7 50 124 2.48

18

Environmental characteristics 34 14 2 50 132 2.64

Government policy 20 20 10 50 110 2.2

Political factors 19 30 1 50 118 2.36

Economic factors 43 6 1 50 142 2.84

Source: Field Data (2017)

From the study above, economic factors has been assigned more weight of 2.84. This is the

leading factor which is being considered in the selection of the channel. Environmental factors

and customer related factors are also considered closely in the selection of the appropriate

channel having the mean weight of 2.68 and 2.64 respectively. Competitor strategies, product

durability, political factors and government policies are also ranked in that order respectively.

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of the Findings

The findings of the study revealed that the major factors that influence the choice of the channel

used in the distribution was the factors such as political and economic factors, future outcomes of

the concern channel, technological advances, competency of the middlemen and conditions of

the infrastructure and network. Environmental factors and product durability also influence the

choice of distribution channel in large extent and it is taken in close consideration by the

management of the firm.

Despite the stated factors which influence the choice of the channel, there were other factors that

made the selected channel to be more effective and adequate. The findings revealed that when

19

the channel members are socializing and cooperating with proper communication between

themselves and management. The findings also provided that the motivation given to the channel

members for effectiveness of the channel was by increasing their salaries, providing the means of

transport and offering free training and coaching to channel members. This was aimed by the

management in order to gain competitive advantage and to increase sales volume of the product.

The results of this study indicated that the factors considered in the selection of the appropriate

channel of distribution have impacted positively in the company’s outcomes and service delivery.

5.2 Conclusion

The factors influencing the choice of the distribution channel considered by the firm was

extremely many, and in that relation, there was need to undertake the research to find out the

extent to which these factors affect in the selection of the channel. From the findings of the study,

it was concluded that the company considers the trend of the current economy when fixing the

channel.

Though the management considers many factors that, there are factors that were mostly

considered in order to capture the position of the competitive advantage and increase the overall

sales volume of the firm.

Provision of motivation to the channel members by the firm also makes the distribution channel

selected to be more adequate and effective. The motivation methods like salary increment and

providing free training to the members also tend to increase the morale of the channel members

and by doing so will in turn make the channel to be more effective. Improvement of

infrastructure and advancement of technology also leads to proper selection of effective

distribution channel. This makes it possible for the company to easily select the members with

more skills, experience and competency.

5.3 Recommendations

Thecompany should always consider the factors available so as to establish and assess the proper

channel of distribution and be able to formulate strategies of curbing and tackling this scenario.

20

This is because proper selection of the distribution channels possesses important hidden

implications to the company. The company should introduce counseling and support programs to

the channel members so as to maintain channel effectiveness. The firm also should increase

motivational activities to the concerned members and improve the terms and conditions of

services of its workforce so as to enhance the morale of the concern parties

The company should also improve the overall infrastructure and network systems. Improvement

of infrastructure like construction of roads leading from the firm to the product distribution

centers. There should be improvement of communication systems between the channel members

and the management

The management should define the criteria for approval of training and development to ensure

consistency and fairness between the channel members. The channel arrangement should be

evaluated after every six months rather than yearly in order to make the channel to be more

effective

5.4 Suggestion for further Research

Resources and time to exhaustively cover the whole issue of distribution channels limited to the

project paper. Therefore, the researchers proposed that; a study should be carried out on the types

of distribution strategies used by other organizations. The researchers also recommend the same

study to be carried out on the strategic policies used by the organization regarding to distribution

strategies. The researchers also recommend a study to be done on factors considered when

choosing the channel of distribution.

21

REFERENCES

Show, (2010) The Anatomy Of Marketing Positioning Strategy. Marketing intelligence and

planning.

Cole AG (1996) Management Theory and Practice, 5th edition, Ashford colour press,

London.

Koonz JW (2000) Global Marketing Management, 5th edition, prentice New Delphi, India.

Kotler Philip (1999) Marketing Management, 10th edition prentice hall publishers, united

states of America.

Mugenda O.M. Mugenda (2002) Success in Commerce, 4th edition, John Murray publishers,

London.

Kyritsis & Leader (1995), International Marketing Management, 3rd edition, Boston:

pwskentpublishing

22

United States of America Saleemi, A (1998) Commerce Simplified, N.ASaleemi publishers

company, Cincinnati Ohio.

Kibera&Waruingi, (2002), Global Marketing Management, upper saddle river, NJ prentice

hall

Keller, (2009) Marketing News, Guerilla marketing research outsmarts competition.

Armstrong, (2001) Management Practices, Holistic Approach

Rosenbloom, (2009) Management and Organization Behavior

Mc Donald, (2011) Management Practices

J.Paul Peter, (2011) Organizational Theory and Design.

APPENDIX I: QUESTIONNAIRE

Dear respondent,

I am a student at Kisii University carrying out our research on the effect of distribution strategies

on organizational performance a case of Nyankoba Tea Factory. Please fill in your responses in

the space provided or tick against the answer which closely represents your opinion.

Your honest response to all questions will be highly appreciated.

PART 1: PERSONAL DETAILS

1. Gender Male [ ] female [ ]

2. Age

14-25 years [ ] 26-35 years [ ] 36-45 years [ ] 46-55 years [ ]

3. Marital status single [ ] married [ ]

4. Please indicate your Educational level

23

Certificate [ ] diploma [ ] degree [ ] masters [ ]

5. For how long have you worked in the organization?

0-5 years [ ] 6-10 years [ ] 11-15 years [ ] 16-20 years [ ]

Above 20 years [ ]

6. Please indicate your grading?

Manager [ ] junior employee [ ]

PART II: SPECIFIC INFORMATION

7. a) Name of department……………………………………………………..

b) Work /field………………………………………………………………..

8. Which products do you produce?

a) ……………………………………….

b) ……………………………………….

c) ……………………………………….

d) ………………………………………..

Tick where applicable in the following.

9. What is your market coverage?

24

UrbanSuburbsRuralInstitutionUrban and ruralCombination

10. What type of distribution channel do Coca cola Company you use?

Producer consumer [ ]Producer retailer consumer [ ]Producer wholesaler retailer consumer [ ]Producer manufacturing agent retailer consumer [ ]Combination [ ]

11.a) Is the channel that the coca cola company put in place adequate?

Yes [ ] No [ ]

b) If yes, which of these factors makes it adequate?

Cooperating channel membersLack of other distributing channelsDelivery on timeLack of complaints from the consumerIncrease in productivity

12. To minimize the problems arising from the channels of distribution selected, what has

Coca-Cola Company put in place?

Improve infrastructure

25

Advancement of technologySelection of skilled middlemenMotivation of the channel membersResponse to complaints of the consumers

13. a) Can you say your company has been successful in handling its channels of

distribution?

Yes [ ] no [ ]

b) If yes, what are the outcomes?

Increase in sales volumeHigh demand of the productLess competitionIncrease in profitsMinimal complaints by the channel

membersAchievements of the targets

PART III (Junior Employee Section)

Please indicate the extent to which the following factors influence the choice of distribution

channel.

SA: Strongly agree

A: Agree

D: Disagree

SD: Strongly disagree

N/A: Not applicable

SA A D SD N/

26

5 4 3 2 A

11. The cost involved2. Technological advances3. Future outcomes4. Government policy5. Period taken by the product to reach the final consumer6. Competency and skills of the middlemen7. Training and coaching of the middlemen8. Political and economic factors9. Conditions of network and infrastructure10. Consideration of peak and off peak periods11. Suggestions and complaints from the middlemen,

distributors and consumers12. Marketing objectives being pursued13. Complaints from customers on delivery14. Organizational complexity

14.a) Do the Channel Members need Motivation?

Yes No

b) If yes, which of the following motivation method do you give to your channel members?

Increasing their salariesAssisting in the transport meansOffering free training

15. In general, to what extent do the following factors influence the choice of distributionchannel in your firm?

Large extent Small extent Not at all

27

3 2 1Customer related factors

Company policies

Environmental factors

Political factors

Thank you for your cooperation.

28