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ASSESSMENT OF THE EFFECTIVENESS OF THE DISTRIBUTION

STRATEGIES OF A-Z PETROLEUM PRODUCTS LTD.

BY

ILODIGWE SAMUEL CHUKWUDI

PG/MBA/08/47494

A PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF MASTERS OF BUSINESS

ADMINISTRATION (MBA) IN MARKETING.

DEPARTMENT OF MARKETING

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA ENUGU CAMPUS.

SUPERVISOR: PROFESSOR (MRS) G.E. UGWUONAH

MARCH 2011

CERTIFICATION

This is to certify that this research project was carried out by ILODIGWE

SAMUEL CHUKWUDI, a postgraduate student in the Department of Marketing,

University of Nigeria Enugu Campus with registration number PG/MBA/08/47494

under the supervision of Professor (Mrs) G.E. Ugwuonah and has satisfactorily

completed the requirements for the postgraduate programme for the award of

Masters of Business Administration (MBA) in Marketing. This research work titled

“Assessment of the effectiveness of the distribution strategies of A-Z Petroleum

Products Ltd” is an embodiment of original work and has not been submitted in

partial or full to any other University.

Ilodigwe Samuel Chukwudi Date

PG/MBA/08/47494

Student

APPROVAL PAGE

This research project written by ILODIGWE SAMUEL CHUKWUDI with

registration number PG/MBA/08/47494 has been supervised, approved and

submitted to the Department of Marketing, University of Nigeria, Enugu campus in

partial fulfillment of the requirements for the award of Masters of Business

Administration (MBA) in Marketing.

Professor (Mrs) G.E. Ugwuonah Date

Project Supervisor

Dr. (Mrs) J.O Nnabuko Date

Head of Department

DEDICATION

This research work is dedicated to God Almighty for His Infinite Mercies in my life

and to my beloved parents and siblings.

ACKNOWLEDGEMENT

First and foremost, I wish to use this medium to thank our father in heaven for His

divine mercy, favour and the opportunity given to me to see the light of the day

couple with the sparkling wisdom, knowledge and understanding that makes me

unique among my mates in the University, place of work and at home. Most

especially during the course of this research project.

Secondly, I wish to express my heartfelt appreciation to my indefatigable supervisor

Professor (Mrs.) G. E. Ugwuonah for her motherly advise, guidance, understanding,

patience, directives and corrections from professional point of view that resulted to

this positive marketing transforming research compendium for academic and non-

academic research institutions / individuals. In the same vein, I will equally like to

thank Dr. (Mrs.) Obiamaka Egbo, Department of Banking and finance, University of

Nigeria Enugu Campus for her contributions to the success of this work. My

appreciation equally goes to my Head of Department Dr.(Mrs) J.O Nnabuko and

other bunch of intellectuals in the department of Marketing including Prof.

J.O.Onah, Prof. Ike Nwosu, Dr. I.C. Nwaizugbo and others.

Thirdly, This research project would be incomplete without the acknowledgment of

my beloved dad despite his demise. On that note, I sincerely appreciate the relentless

efforts of my late dad. He is my father, an Icon and my hero on earth. He was a

disciplinary and a man full of courage. I sincerely salute his courage couple with the

moral values impacted on me including the spiritual and financial support that paves

way for my educational breakthrough. I pray that may his gentle soul rest in perfect

peace (Amen).

Sequel to the popular saying that a tree cannot make a forest and beside every

successful man their must be a woman. I wish to use this medium to thank my

darling mother for her love, caring, advise, encouragement and inspiration instilled

into me from birth till date. She is a wonderful woman, a woman of peace and

optimism. An exemplary woman that deprives herself of material things just for the

happiness and progress of her family. With the singular spirit of mine, I wish to

submit that ‘I am very happy to have you as my mum’. You are a great woman,

woman of principle and integrity. Mum I love you. I truly appreciate your efforts

with dad that makes me what I am today. I pray that may the Almighty God bless

you with long life and prosperity. In the same vein, I wish to thank my Siblings and

my Maternal home for their moral, financial and spiritual support. I love you all.

The last but not the least appreciation goes to the Chairman of Chicason Group of

Companies, A multinational company(s) owned by Chief (Dr.) Alex Chika Okafor.

The top management team of A-Z Petroleum Products Ltd: The Managing Director,

Engr. Sir L.O. Ilozue, Mr. K. C. Chigbo and Sir Ozoemene Enemuo for their moral

support and new vision for Chicason Group of companies including Mr. C.S

Anekwe and Mrs Chinwe Osum. I equally thank A-Z distributors in Aba that

contributed to the success of this research work including my friends: Kindness

Chikezie, Kene Nwachukwu, Chinedu Okafor, Felicia Nwachukwu, Bro. Basil

Mary, Chidinma Iloegbunam, Kelechi, Ify and Onyin Okeke, Victor Okolo and

Cyril Eze that processed my masters degree admission on my behalf including

others that cannot be accommodated due to space.

Thank you all and God bless.

TABLE OF CONTENT

Title Page i

Certification ii.

Approval Page iii

Dedication iv

Acknowledgment v

Table of Content viii

Abstract xi

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study 1

1. 2 Statement of the Problems 6

1.3 Objective of the Study 8

1.4 Research Hypothesis 8

1.5 Limitation of the Study 9

1.6 Significance of the Study 9

1.7 Definition of Terms 10

CHAPTER TWO: LITERATURE REVIEW

2.1 Components and Definitions of Distribution 12

2.2 Physical Distribution 14

2.3 Channel of Distribution 16

2.4 Strategy 34

2.5 Distribution Strategies 35

2.6 Vertical Marketing System 37

2.7 Sales Management Defined 40

2.8 Functions of Sales Management 41

2.9 Recruitment and Selection of Salesmen 43

2.10 Sales force Selection Procedure 44

2.11 Importance of Sales Management 47

2.12 Application of Sales Management Principles in the field 48

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research Design 64

3.2 Scope of Study 65

3.3 Sources of Data 65

3.3.1 Primary Source 65

3.3.2 Secondary Source 66

3.4 Method of Data Collection 67

3.5 Population 67

3.6 Pilot Survey 68

3.7 Sample Size 68

3.8 Sampling Technique 69

3.9 Research Instruments 69

3.10 Validity and Reliability of Measuring Instrument 69

3.11 Method of Data Presentation and Analysis 70

CHAPTER 4: PRESENTATION AND ANALYSIS OF DATA

4.1 Introduction 72

4.3 Test of Hypotheses 97

CHAPTER 5: SUMMARY OF FINDINDS, RECOMMENDATION AND

CONCLUSION

5.1 Introduction 101

5.2 Summary of Findings 101

5.3 Recommendations 103

5.4 Conclusion 106

5.5 Suggestion for Further Study

Bibliography 108

Appendixes 111

Questionnaire 133

ABSTRACT

The primary aim of this study is to investigate and carryout an “Assessment of the

distribution strategies of A-Z Petroleum products Ltd in distributing its products to

her numerous customers nationwide. This study will enable the researcher to

ascertain the degree of product availability, measure its significant effects on the

distribution strategies of the firm and make recommendations towards enhancing

better strategies for the company’s performance.

The population of this study were the management staff of A-Z petroleum products

Ltd and the company’s distributors in Aba metropolis. The researcher collected data

from both Primary and Secondary source. Meanwhile, Pilot survey was carried out

among nine distributors in Aba, eight of the distributors responded positively to the

concerned questionnaires given to them while only one of them responded

negatively.

Topman’s formular was used to determine the sample size of (150) questionnaires

used. Out of which 30 questionnaires were given to management staff of A-Z

Petroleum Products Ltd, 25 completed and 120 questionnaires were given to A-Z

distributors, 92 questionnaires completed. Stratified sampling technique was used

for larger sample of the study.

The research instrument was tested for validity and reliability using test retest

approach in order to ensuring that the research instrument is error free and capable of

measuring what it suppose to measure.

The statistical technique used to test the hypothesis was chi-square at 5% level of

significance. The hypotheses were tested to know whether they are researchable or

not. Table and percentages was equally used to summarize data collected and the

option with highest score was favoured.

At the end of the study, the researcher was able to make some findings and

recommended among others that the management of A-Z Petroleum Products Ltd

should intensify their production activities / capacity by ensuring availability of

products at every Depot. Most especially for A-Z crown super 1litre that normally

involve rationing, Strengthening of channel of distribution and motivation of

production and field sales personnel so that product can be made available to

customers as at when needed. Knowingfully well that decision on the choice of

distribution channel is one of the cogent and sensitive issues steering at

management in recent times.

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

Distribution is the process of planning, implementing and controlling the

physical flow of materials, final goods and related information from point of

origin to point of consumption to meet customer requirements at a profit

(Phillip Kotler and Amstrong 2001). It is the marketing function responsible

for movement of products to the final users. It could be said that production is

not complete until the goods reach the final users and for this to be

accomplished, manufactured goods have to pass through distribution channels.

The key point of this research work as concerns any business set up or

organization especially one in a stiff Competitive economy like the case under

consideration in this research work in respect of A-Z Petroleum Products Ltd

needs to examine how it can effectively develop its distribution strategies.

Distribution strategies on its own, is a broad conception of how resources are

to be deployed to build a channel (or channels) linking the producer to the

consumer to insuring that the product and associated services are made

available to the target segment of the market. It concerned with efficient

channel arrangements that may be used to make goods and services available

to customers/users by deciding on which intermediaries and marketing

channel structures to be selected to move products in the most competitive and

efficient manner to satisfy customer’s needs and wants. However, it is very

important to position the channel of distribution of lubricating products in

strategic places where users can get them and at the right time probably by

using more effective, efficient and strategic physical distribution pattern

including well positioning of field salesmen, institutional distribution system

of products etc.

The level of the economy has put distribution into a less important position

and scarcity or short supply of products. Most management today are

interested on profit maximization without due attention to the effect of

distribution on the company and economy as a whole. This calls for the need

for this research work to research intensively on the assessment of the

effectiveness of the distribution strategies of A-Z Petroleum Products Ltd.

A-Z Petroleum Products Ltd. has made considerable progress in the area of

products development to meet international standard and effective marketing

of lubricating oil to meet customers taste satisfactorily at reasonable profit.

The company is using the distribution channel below:

Factory→ Depot→ Mega Distributors → Sub Distributors → Final

Consumers

The distribution channel is a set of firms or individual that takes title in

transferring title to a particular goods as it moves from point of production to

the point of consumption. The distribution channel of the company need to

cover areas/markets not yet served and under served by current efforts (current

level of distribution) with the aim of improving market potentials and market

share. Infact, marketing channel decisions are among the most important

decisions that management faces. A company’s channels decisions are linked

with every other marketing decision. The company’s pricing depends on

whether it uses mass merchandisers or high quality specialty stores. The firm’s

sales force and advertising decisions depend on how much persuasion,

training, motivation and support the dealers need. Companies often pay too

little attention to their distribution channels, however, sometimes with

damaging results. In contrast, many companies have used imaginative

distribution systems to gain a competitive advantage. Therefore, management

must design its channels carefully with an eye on tomorrow’s likely selling

environment as well as today’s.

The importance of distribution cannot be over-emphasized no matter how the

economic position of the country looks like. One major raw material used in

the production of A-Z lubricant is base oil. This requires smooth

transportation facilities and arrangement from the point of origin to where they

will be used for production of A-Z lubricants. This calls for a lot of logistics

especially in the transportation of the necessary raw materials and distribution

of finished products to the company’s major distributors as at when needed.

Transportation is then the pivot of the successful operation of any physical

distribution system. Choice and type of transportation therefore becomes very

important since the objective is to make the products available to consumers as

at the right time.

The poor road network has hampered the effectiveness of distribution and rail-

way mode of transportation which would have provided an alternative

transportation, has not been functional for sometime now which contributes to

the high transportation cost.

Therefore, this research work is to “Assess the effectiveness of distribution

strategies of A-Z Petroleum Products Ltd.

BRIEF HISTORICAL BACKGROUND OF A-Z PETROLEUM PRODUCTS

LTD.

A-Z Petroleum Products Ltd is owned by Chief Dr. Chika Okafor. It is one of the

subsidiaries of Chicason group of companies. It is a full-service lubricating oil

Blending Plant Incorporated in 1995, engaged in the research and development,

production and marketing of petroleum and petrochemical products.

The company while procuring base stocks from the Nigerian National Petroleum

Corporation (NNPC) through the operating licence granted by the Ministry of

Petroleum Resources, employs the latest in additive and blending technology to

deliver to its customers the high quality products that best meet their specific needs

which led to the Company award of ISO 2000 & 2001.

A-Z Petroleum Products Ltd is founded on the tradition of total commitment to

Excellence. Managed by a team of industry-trained professionals, the company

combines informed industrial foresight and creative knowledge to deliver ‘State-of-

art’ premium lubricants that guarantee the efficient running of motor vehicles and

industrial machinery.

The Company’s products offer an exceptional combination of superior quality and

economy achieved through well-researched, innovative and efficient production

methods much to the benefits of the customers.

A wide range of lubricating oil products have been developed for consumers.

Besides the standard prime products listed below there are other several specialty

products produced for customers on order. The standard range includes:

1. MOTOR OIL

a. AZ- Crown Super Series

b. AZ- Plus Motor oil series

c. AZ- Extra GL series

d. AZ- Extra DL series

2. HYDRAULIC OIL

AZ- HL series

3. GEAR OIL

a. AZGO-EP series-Automotive Gear Oil

b. AZI-EP series- Industrial Gear oil

4. AZ-ATF - Automatic transmission fluid

LLE- fluid Dexron

5. AZTHERM 32 - Heat transfer oil

6. AZ-AC Series - Petroleum Based Air Compressor oil

7. ALEXIS CS Series - Industrial Circulation oil

8. ALEXIS PS - Process Oil

1.2 STATEMENT OF THE PROBLEM

This research work is interested in the assessment of the effectiveness of

distribution strategies of A-Z Petroleum Products Ltd. During the process of

manufacturing and cost consideration, management decides on how to make

the company’s product available to the final consumers as at the right time,

right quality and at an affordable price which is a challenge to the

management and the essence of this work.

Poor road network adversely affect the effectiveness and efficiency of

products distribution in the country. This results in high rate of vehicle

breakdown and causes the products to get to the final consumers at the wrong

time.

High cost of transportation/delivery equally affects the distribution strategy of

the firm. This factor increases both the production and market cost of goods

and services to the detriment of the final consumers.

Government policy goes a long way in affecting the distribution strategy of the

firm. It is obvious that government contract or appoint adhoc / standing

taskforce who mobilizes revenue for the government or its representatives in-

line with the established Law, bye law, edict or act as the case may be.

Thereby, causes impediments to smooth flow of business by demanding for

annual official registration, stickers, emblems, daily tickets, infrastructure levy

doing the course of business in an area.

Environmental factors like whether / seasons are uncontrollable variables that

affect the distribution strategy of a firm. During this period, distribution is

hampered resulting in low turnover and profit reduced astronomically.

Artificial Scarcity of Products arises when the raw materials used in the

production of lubricants (base oil) is unavailable or insufficient for production

purposes. This indirectly affects distribution processes because the products in

question cannot be assessable to consumers during the course of production.

Meanwhile, production is said to be incomplete until the products get to the

final consumers.

1.3 OBJECTIVES OF THE STUDY

• To determine the quality of A-Z lubricants from Management

perspective.

• To assess the effect of high cost of transportation on the company’s

distribution activities

• To determine the impact of poor road network on the company

distribution strategies.

• To determine the availability of A-Z products from customers

perspective.

• To assess the effect of government policy on the company distribution

strategies.

• To assess the effect of environmental factors (season) on the company’s

distribution strategies.

1.4 HYPOTHESIS FORMULATION

Ho: The quality of A-Z lubricants does not significantly affect its demand.

Hi: The quality of A-Z lubricants significantly affects its demand

Ho: Cost of transportation does not significantly affect the price of A-Z lubricants.

Hi: Cost of transportation significantly affect the price of A-Z lubricants.

1.5 LIMITATIONS OF THE STUDY

Time factor is the major constraint of this research work. This research work

was made in a comprehensive way in order to meet the aspirations of people

interested in the field for further studies though time could not permit me to go

further.

Inability to provide and unveil top management exclusive sales policy and

strategy in respect of the subject matter under consideration. Moreover, the

competition in the market makes the respondents to be skeptic to the

questions, its implications or the actual purpose of the study not cleared to

them because of their level of education and exposure.

Financial factor is another constraint to this intensive research work. The extra

cost of running around to different locations, academic and non-academic

institutions couple with my inability to assess some relevant but encrypted

sites online due to high cost of online registration.

1.6 SIGNIFICANCE OF THE STUDY

• This research work is very crucial for the management of A-Z Petroleum

products Ltd as it will make management to device means of cutting down

cost on distribution activities in order to make reasonable profits.

• It will serve as a knowledge base for management to employ.

• It will enable the management to provide consumers with the right products at

the right time, right place and at the right price which result to a substantial

percentage of sales for the company.

• Finally, it will serve as a blue print of action guide to infant companies and as

a compendium of knowledge for further research work in

logistics/distribution channel management of indigenous and multinational

companies in the oil and gas industry (FMCG).

1.7 DEFINITION OF TERMS

Distribution: This is the process of planning, implementing and controlling

the physical flow of materials, final goods and related information from point

of origin to points of consumption to meet customer requirements at a profit.

Distribution Strategy: This is the efficient channel arrangements that may be

used to make goods and services available to consumers by deciding on which

intermediaries and marketing channel structures to be selected to move

products in the most competitive and efficient manner to satisfy customer’s

needs and wants.

Distribution Channel: This is a set of firms and individuals that take titles in

transferring titles to a particular goods as it moves from the point of

production to the points of consumption

Transportation

Distribution Centre: This is a large, highly automated warehouse designed to

receive goods from various plants and suppliers take orders.

Product: This is anything of value offered to a market for attention,

acquisition and consumption that may satisfy needs.

Customer: This is the bonifide buyer of a product that makes repeat purchase

from time to time.

Consumer: Individuals who purchase for personal or domestic consumption.

CHAPTER TWO

2.1 COMPONENTS AND DEFINITIONS OF DISTRIBUTION

According to Philip kotler & Armstrong 2001, Distribution is the process of

planning, implementing and controlling the physical flow of materials, final

goods and related information from point of origin to points of consumption to

meet customer requirements at a profit.

Schewe and Smith (1980) defined distribution as the physical movement of

products to the ultimate consumers. Production is not complete until goods

reach the final consumers and products are worthless until they are made

available to those who need them. It is this process of making goods available

to those that need them that gives rise to distribution basis in a marketing

strategy.

Achison (2000) defined distribution as the process of getting products and

services from producer to consumer or users, when and where they are needed.

It provides time, place, possession utility and the transfer of ownership.

Revzan (1971) defined distribution as managerial battle field in which

marketing strategy and tactics either succeed or fail. It is imperative to make a

thorough study of available alternatives before choosing one. This is because

distribution system is a key external resources which normally takes years to

build and can not be easily changed.

According to him distribution involves two aspects: Physical distribution and

channels of distribution. Physical distribution involves the physical flow of

products from the producer to the consumer while channel of distribution

involves the flow of title of goods from the producer to the consumer.

Achison (2000) denoted that unless products are distributed and delivered in

the right quality, at the right time, in proper condition and at the right price;

buyers may be reluctant to buy. He stressed further that distribution is

regarded as a major consideration in strategic planning because it is an

important marketing function that is responsible for making goods and

services available to the consumers.

According to John O’ Shaughnessy (1992) in his book competitive marketing.

A Strategic Approach denoted that a distribution system is the network of

people, institutions or agencies involved in the flow of a product to the

consumers, together with the informational, financial, promotional and other

services associated with making the product convenient and attractive to buy

and re-buy.

2.2 PHYSICAL DISTRIBUTION

Physical distribution is often regarded as “logistics”, logistics refers to the

interrelation and management of all the key element or activities involved in

providing both raw materials and finished products to customers.

According to Kotler & Armstrong (2001) Physical distribution is the task

involved in planning, implementing and controlling the physical flow of

materials, final goods and related information from point of origin to points of

consumption to meet customer requirements at a profit.

Traditionally, Physical Distribution typically started with products at the plant

and then tried to find low-cost solutions to get them to customers. However,

today’s marketers prefer market logistics thinking, which starts with the

marketplace and works backward to the factory. Logistics addresses not only

the problem of outbound distribution (moving products from the factory to

customers) but also the problem of inbound distribution (moving products and

materials from suppliers to the factory). It involves the management of entire

supply chains, value-added flows from suppliers to final users. Thus, the task

of logistics manager’s is to coordinate activities of suppliers, purchasing

agents, marketers, channel members and customers. These activities include

forecasting, information systems, purchasing, production planning, order

processing, inventory, warehousing and transportation planning.

It has been discovered that customer service and satisfaction are the

cornerstones of marketing strategy and distribution is an important customer

service element. So many companies have discovered that they can attract and

keep customers by giving better service or selling at lower prices through

better physical distribution.

Secondly, logistics is a major cost element for most companies more

importantly A-Z Petroleum Products Limited. Poor Physical distribution

decisions result in high costs. Improvement in physical distribution efficiency

can yield tremendous cost savings for both the company and its customers.

Thirdly, the explosion in product variety has created a need for improved

logistics management.

Finally, improvements in information technology have created opportunities

for major gains in distribution efficiency. The increased use of computers,

point-of-sale scanners, uniform product codes, satellite tracking, electronic

data interchange (EDI) and electronic funds transfer (EFT) has allowed

companies to create advanced systems for order processing, inventory control

and handling, transportation routing and scheduling.

2.3 CHANNEL OF DISTRIBUTION

Every finished products can only get to the consumers through an effective

and efficient channel of distribution.

The term channel of distribution refers to the systems of marketing institution

through which goods and services are transferred from original producers to

the ultimate consumers.

According to Linus Osuagwu and Vivian Emola, (1998). Channel of

distribution refers to series of marketing institutions through which title to or

control of a product, service or idea is transferred from producer to customer,

clients or business users. The key element in this definition is the passage of

title or control over goods, services or idea and not necessarily their physical

movement.

Kotler & Armstrong (2001) view it as a set of interdependent organization

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

consumption by the consumer.

Osuagwu & Emola (1998) in their book denoted that Morden (1991) has

identified four main types of distribution channels. They are:

1. Direct supply

2. Merchant

3. Short channel

4. Long channel.

Direct supply: In this system, the supplier or manufacturer supplies the

customers directly. Some manufacturer sells directly to end users. This type of

operation is found, more frequently in the marketing of industrial goods and

services than in the marketing of consumer goods.

The Advantages of Direct Supply:-

i) It gives the manufacturer direct contact and communication with the

customer. This assists products sales promotion and leads to effective

customer feedback.

ii) There is absence of reseller or middlemen. Therefore, the avenue

received by the supplier will equal the purchase price paid by the

customer, less the costs incurred in direct supply or retailing.

Disadvantages of Direct Supply:

i) Difficulty of product display due to direct supply to consumer without

retail outlet or agencies. They usually rely on catalogues, pictures and

descriptions. Here customers cannot feel, touch or experience the

product as would have been done in a retail outlet. They may be

unwilling to buy without the re-assurance arising from physical

presence of the product.

ii) Direct supply is not possible with products produced in mass or fast

moving consumer goods markets. Such as household products. There

are too many customers and the low relative value of each transaction

makes direct supply uneconomical.

MERCHANT SUPPLY

In this form of distribution channel, the supplier or manufacturer supplies the

consumer through a merchant who acts as the reseller. It is widely used by

manufacturers because it is cost effective. The merchants buy in very large quantities

from the manufacturers and sometimes break them into smaller unit sizes for resale

to customers.

Advantages of Merchant Supply from the Distribution Channel are:

i) Supply to the merchant is usually in bulk and as a result the manufacturer

does not have to think about how to break into smaller units.

ii) Merchants would pay regularly and this would enable the manufacturer

have liquid flow of cash for other business activities.

iii) There would be little risk of payment default because the manufacturer has

a track record of the merchant which would have developed as a result of

long association with the company.

Disadvantages of Merchant Supply Distribution Channel are:

Manufacturer would depend on the sales and marketing effort of the merchant. If

sales drop at any point in time, it would affect the manufacturer drastically.

Moreover, the merchant needs motivation from the manufacturer from time to time

and if it is not forthcoming, then there would be problem in the efforts of the

manufacturer.

SHORT CHANNEL

In this form of distribution channel, the supplier or manufacturer supplies the

customer in a consumer goods market through a retailer who acts as the reseller or

intermediary. Here the supplier is not in direct contact with the customers.

Infact, the following should be noted about the short form of Distribution

Channel:

i) The supplier may be maximizing the number of separate accounts with which

she has to deal. This in turn maximizes the administrative cost of supplying

these accounts and controlling the flow of revenue from them.

ii) The supplier will be maximizing the risk of payments default and bad debts,

since it will be statistically inevitable that a significant proportion of retail

intermediaries will suffer from inefficient and ineffective financial

managements and control, or go out of business completely.

iv) It exposes the supplier to the bulk buying power of large scale retailers. Such

retailers would demand large trade discounts and can interrupt the smooth

flow of production by arbitrary changes in the rate at which they order the

supplier products.

LONG CHANNEL

In this form of distribution channel, the manufacturer supplies the customer through

a set of two intermediaries. firstly, the supplier or manufacturer sells his merchandise

on a bulk basis to the wholesaler who in turn breaks these bulk order down and

supplies smaller quantities to retail outlets. The wholesaler then supplies a range of

complimentary goods to the retailer who stocks his shop with a variety of goods

from other wholesalers; the retailer finally sells to the ultimate consumer.

The Following are the Advantages of Long Channel form of Distribution:

i) The long channel is a cost effective means whereby the manufacturer can

get his products to most of the retail outlets at minimum effort.

ii. The manufacturer would receive bulk order which would be paid for on a

regular basis.

iii. Bulk order would lead to smooth production planning, reduce operational

uncertainty and minimize the requirement for the manufacturer to hold on

to a larger stock.

iv. It will simplify the Physical Distribution problem, cutting down the need

for delivery fleets and warehouse facilities that may be eatures of the short

channel form of distribution.

v. It reduces the risk of payment default and bad debts.

The Following are the Disadvantages of Long Channel form of Distribution:

1. The final cost of the product goes up because of the long channel the goods

have to pass before getting to the customers.

2. It may be a relatively expensive channel to operate.

THE ROLE OF DISTRIBUTION CHANNEL IN MARKETING:

It is very obvious that distribution channel ensures that finished products gets into

the hands of the final consumers as at when needed through an effective means of

transportation as well as the middlemen who handle the goods. It helps to move

goods and services from one place to another (place utility), it bring goods or

services to the consumer when he wants them (time utility); they bring the goods or

services to the consumer in convenient shape unit and package (convenience value);

it makes it possible for the consumer to get the goods or services at a price he is

willing to pay by providing conditions which bring satisfaction couple with pride of

ownership (possession value) to consumers.

The desired objective is to perform these services or functions at the lowest possible

cost with the greatest possible efficiency in order to serve the consumer better. If one

manufacturer, supplier or seller does not seek to do this a competitor will outwit him.

As a matter of fact, the channel chosen, whether directly from the producer’s

factory or point of manufacturing to the consumer or through functional and

merchant middlemen, has a great deal to do with the destination reached by the

goods, the cost at which they reach this destination, the utility, value and satisfaction

derived by the consumer from the goods. The choice of channels will also determine

the type of coverage obtained by a seller and the kind of services provided to both

seller and consumer in the process of transferring both the physical goods and the

ownership of the goods from producer to consumer.

The choice of channels will influence not only the extents of the market attained by

the producer and the service rendered to the consumer but will equally affect

employment, total earnings, volume of goods manufactured, sold and volume

consumed including the standard of living and the well being of the nation as a

whole. Therefore, it is very important to take decision on marketing distribution

channels very seriously, choose proper and best channel.

The Marketing Manager’s Channel Objectives

The supplier of a products, service or idea will have clear Marketing objective that

he or she will want the chosen channel of distribution to achieve. Morden (1991) has

identified nine marketing channel objectives. These objectives, which must be

achieved on a continuous and consistent basis include:

a. Appropriate and adequate distribution channel will enable the firm to

achieve market penetration, market share aid competitive position.

b. Access to the markets and to target customer segments. It is very important

that the channel chose must be capable of giving access to the target market

segments. Do these channels serve the appropriate geographic and

demographic areas? Is the coverage of the market to be intensive with

product, service or idea being widely available? Or is it to be selective and

restricted to target locations constraining specific customer types?

c. Relative cost effectiveness in access and transaction value. It is important

that the marketing manager use a channel of distribution which yields some

net benefit or advantage relative to the costs or disadvantages incurred in

employing it.

d. Competitive representation and reseller effort. The choice or availability of

channel type will be a key determinant of how the marketer can actually

implement his competitive distribution strategies. Can he or she gain a level

of representation in the market such that product or service can compete on

equal terms with similar goods or services? Does channel of distribution

used usually give competitive advantage and what is the cost of that

advantage?

e. Motivation of middlemen / Sales Personnel. The marketing manager is

expected to develop effective motivational strategies for the middlemen and

company Sales Personnel. Generally, middlemen stock a wide range of

merchandise some of which will be directly competing. He can achieve this

by-motivating the middlemen into achieving consistent and effective sales

of the company’s products or services.

Motivating the middlemen to put more effort into selling the company’s

products when he stocks a variety of competing merchandise. This can be

achieved by using sales promotional tools to sensitize the middle and sales

men to work harder.

f. Revenue returns from resellers. The Marketing Manager will like to

optimize his revenue returns from the middlemen or intermediaries used. He

would be very effective in this regard when some of the objectives outlined

above are achieved.

g. Cost effectiveness in physical distribution. Physical distribution is

concerned with the actual movement of goods to their point of sale and to

locations of storage before sale. The choice of any particular pattern of

distribution will entail the use of an appropriate transportation and storage

system. The company should try to use the most cost effective physical

distribution strategy.

h. Customer access to repairs and servicing facilities. It is pertinent to note that

buyers in consumer goods markets usually rely on retailers, dealers etc for

repairs and servicing activities and other forms of after-sales-services. This

will enable a firm to have edge over its competitors.

i. Cost-effectiveness of customer service. The marketing manager has to

balance the cost of providing the necessary level of service to the customer

within its channels of distribution against the marketing and competitive

benefits to be gained by offering an accessible and efficient standard of

customer service.

FUNCTIONS OF DISTRIBUTION CHANNEL

The major function of a marketing channel is the movement of goods and services

from producers to consumers. It accommodates the issue of time, place and

possession gaps that separate goods and services from those who would use them.

According to Kotler (1991) these are some of the functions performed by marketing

channel:

1. Information: This is the collection and dissemination of marketing research

data and information about current and potential customers, competitors

actions and forces in the marketing environment.

2. Promotion: This is the development and dissemination of persuasive

communications about the product or service designed to attract customer.

3. Negotiation: This is an attempt to reach final agreement on price and other

terms so that transfer of ownership or possession can be effected.

4. Ordering: The backward communications to the producers of intentions to

buy by the marketing channel member.

5. Financing: The acquisition and allocation of funds required to finance

inventories at different levels of the channel of distribution.

6. Risk taking: This is the assumption of risks connected with carrying out the

channel of distribution tasks.

7. Physical possession: The successive storage and movement of principal

products from raw materials to the final consumers.

8. Payment: This is making of payment by buyers. Buyers paying their bills

through banks and other financial institutions to the sellers, wholesalers,

agents etc.

9. Title: This is the actual transfer of ownership from one organization or person

to another.

DISTRIBUTION CHANNEL DECISION

The ultimate goal of distribution channel is to reach the customer in a way

appropriate to his or her requirements and to the firms capabilities. The distribution

channel is said to be good if and only if it is one that does the work efficiently and

effectively at the least possible cost. It is notable that some producers sell direct to

end users. This is frequently used in the marketing of industrial products and it is

called direct distribution channel. On the other hand, dual distribution can be

defined as situations in which the manufacturer of a branded product sells the

brand through two or more competing distribution channels eg sale of petroleum and

petroleum related products through franchised independent outlets and through

company owner retail outlets.

FACTORS AFFECTING CHANNEL DECISION

1. The Nature of the Product

2. The Nature of the Market / Customer

3. The Manufacturer / Company

4. The Middlemen

5. The Competition among Channel Members

6. The Nature of the Environments.

THE NATURE OF THE PRODUCT: This is the basic attributes of the product

that makes it competitive among others.

- Price: The money value of a typical product or service sets the limit as to

how short the channel should be. The higher the unit price of a product, the

shorter the channel of distribution.

- Physical perishability: Perishable products such as fresh fish or vegetable

are usually distributed through relatively short channels to ensure swift

handling because of the obvious dangers associated with delays and

repeated handling.

- Product complexity: Highly technical product require specialized selling

abilities such as demonstrations and should normally be sold through short

channels.

- Degree of standardization: Unstandardized goods usually pass through

short channels because of the need for direct contact between sellers or

producers and users.

THE NATURE OF THE MARKET: Market consideration exert powerful

influences on distribution channel decisions with the following attributes:-

- Consumer buying habits: This arises when consumers get accustomed to

buying a particular product from a particular source, they develop brand

loyalty which makes them difficult to switch to alternative sources. If

buying is highly seasonal distribution channel intermediaries may usefully

be employ to perform storage functions so that production can go on

steadily instead of being affected by variations.

- Size and location of market: When there are very large numbers of a

customer, a long channel of distribution will be needed when customers are

widely dispersed geographically. It may be easier and more convenient to

reach them through one or more layers of middlemen.

- Order size: If the size of the order is large the manufacturer will sell

directly to a large chain of stores while using wholesalers to reach retailers

and some consumers.

THE MANUFACTURER / COMPANY

It is pertinent to note that the financial strength of a company will affect its choice of

distribution channel. Its financial resources determine which marketing functions. It

can handle and which to delegate to intermediaries. The shorter the channel of

distribution the cheaper the distribution cost. The size of the firm will determine the

size of its markets and its ability to secure desired dealers. The wider the product mix

the greater the company’s ability to deal with customers directly and the greater the

depth of the company’s product mix. Lastly, company’s marketing strategy will also

influence its channel decisions for example a company with a strategy of speedy

delivery will have longer channel than others.

THE MIDDLEMEN: Marketing channels are sometimes determined by the type of

middlemen involved. Middlemen vary according to their cost and the extent of the

services they provide. Factors to be considered include:

- Experience and knowledge of the middlemen to be able to move the

product (merchandising ability)

- Ability to carry different product lines and volumes

- The availability and non-availability of certain types of middlemen eg

specialized middlemen.

The factors above implies that a manufacturer may be restricted in his choice of

distribution channels by the availability of certain middlemen. Some may be willing

to take on a company’s product line, they may be on the other hand, unwilling to

take a company’s distribution policy. Distribution channel policy shows the strengths

and weaknesses of different types of intermediaries in handling various distribution

tasks. In general, marketing intermediaries differ in their attitude for handling

promotion, negotiation, storage, contact and credit among others.

THE COMPETITION: The nature and extent of competition in any industry may

have important bearing on marketing channels. The distribution channel policy is

influenced by competitors’ channels. If the nature of competition is such as to call

for a particular combination of promotional activities, channels must be selected

partly on the basis of their ability and willingness to carryout this promotional

program eg displaying A-Z product next to Mobil product, a competitive brand.

THE NATURE OF THE ENVIRONMENT: In a depressed economy like Nigeria,

producers try to reduce their costs as much as possible. They want to move their

goods in the most economical way. This means they will use shorter distribution

channels. The legal environment also has an impact on channel choice, among other

environmental factors.

Marketing channel decisions are among the most complex and challenging decisions

facing any Nigerian firm. Each channel system creates a different level of sales and

costs, and once a particular marketing channel is chosen, the firm must usually

adhere to it for a substantial period. The chosen channel will significantly affect and

be affected by the other element in the marketing mix. It is pertinent to note that the

ability of the Nigerian manufacturer to compete successfully will be based on his

ability to gain the most economical form of distribution and to develop continued

profit.

Source: Adapted from Kotler, P.& Armstrong, G. ‘principles of marketing” New

Jersey Prentice Hall, Inc., Upper Saddle River, 9th Ed. 2001. p. 434.

Fig. 2.1. Consumer and Business Distribution channel.

MANUFACTURER

Retailer Wholesaler Wholesaler

Retailer Jobber

Retailer

CONSUMER

MANUFACTUER

Manufacture’s representatives or sales branch

Manufacture’s representatives or sales branch

Industrial distributor

Industrial distributor

INDUSTRIAL CUSTOMER

CHANNEL OF DISTRIBUTION FOR CONSUMER PRODUCT:

1. Manufacturer → Consumer

This shortest simple channel of distribution has no intermediary levels. It

consists of a company selling directly to consumers.

2. Manufacturer → Retailer → Consumer

It is indirect marketing channel that contains one intermediary level.

3. Manufacturer → Wholesaler → Retailer → Consumer

This contains two intermediary levels, a wholesaler and a retailer which

normally used by small manufacturers.

4. Manufacturer → Wholesaler →Jobber → Retailer → Consumer.

Contains three intermediary level wholesaler, jobber and retailer.

CHANNEL OF DISTRIBUTION FOR BUSINESS MARKETING:-

This shows some common business description channel. The business marketer can

use its own sales force to sell directly to business customers. It can also sell to

industrial distributors, manufacturer’s representatives/sales branches who in turn sell

to business customers. It can as well use these representatives and branches to sell

through industrial distributors.

Thus business markets commonly include multilevel distribution channels. All of the

institutions in the channel are connected by several types of flows and it can make

distribution channel with only one or few level very complex, the flow includes-

i. Physical flow of products

ii. Flow of ownership

iii. Payment flow

iv. Information flow and

v. Promotion flow.

2.4 STRATEGY

The Term “strategy” has been used in different ways by different authors with

many meaning, its origin was derived from the Greek word strategos’ and it

means different things to different people.

- The military used the word “Strategies” to mean grand plans or design to

win the war. Competition strategy, which may be defined as an art of

guiding, forming or carving out a plan to achieve certain goals.

- While managers see it as broad areas of an organization operation.

Simply defined as the basic long term objectives of resources necessary

to achieve these goals.

- Strategy in Marketing deals with guideline plans developed by an

organization to ensure survival in a competitive environment.

- Andrews (1971:28) observes that strategy is a pattern of essential

business policy/decision and plan for achieving company’s goal and

objectives.

- Strand Taylor and Bowersox (1976:41) stated that marketing strategy

consists of a pre-determined plan to guide the development of resources

in an effort to generate growth. Kotler & Armstrong (2001) viewing

marketing strategy in holistic way as “a set of objectives, policies and

rules that guide over- time, the firms marketing effort- its level, mix and

allocation partly independently and partly in response to changing

environment and competitive conditions.

The formation of strategy consists of environmental monitoring, identification of

objectives, selection of target market, formulation of market mix and resource

allocation. Thus, distribution strategy can be summarized as a set of objective

services available to the point where such goods and services are needed within a

competitive environment.

2.5 DISTRIBUTION STARTEGIES

Achison (2002:348) stated that before a decision about the distribution to be

adopted for efficient channels network, company should identify the target

consumer it intends to reach with it’s products.

This is because distribution network can vary among companies, however for

more narratives the following scope of the strategic alternatives companies

could pursue include:

i. Exclusive distribution

ii. Intensive distribution and

iii. Selective distribution

I. EXCLUSIVE DISTRIBUTION

Suggest that one particular dealer serving a given area is granted sole right to

sell a product and it is usually associated with products that the targeted

customer would not mind to seek out for.

Again by contrast, some producers purposely limit the number of

intermediaries handling their products, availability and accessibility are

deliberately restricted. Exclusive distribution often is found in the distribution

of new automobile and prestige products which need to protect their image up-

market exclusivity and allows for higher- mark up.

II. INTENSIVE DISTRIBUTION

The aim of intensive distribution strategy is to secure as many outlets as

possible in order to maximize availability and accessibility to potential buyers.

This type of distribution is most suited to products where convenience of

purchase and impulse buying are important factors influencing sales.

Examples of product requiring intensive distribution are: cigarette, candies,

cookies, soft drink, ice cream, tooth paste, petrol and other similar items are

sold in many of outlets to provide maximum brand exposure and consumer

convenience.

III. SELECTIVE DISTRIBUTION

This involves were a few selected distribution outlets are given the

opportunity/right to distribute the company’s goods. The manufacturer may

want the distribution of the product to be as intensive as possible but may also

want to protect the mage of the company and its brands by exercising some

control over the type of retailers selling it.

Most televisions, furniture and small appliance brands are distributed in this

manner. By using selective distribution they do not have to spread their efforts

over many outlets, including many marginal ones.

They can develop good working relationships with selected channel members

and expect a better- than average with more control and less cost than does

intensive distribution.

2.6 VERTICAL MARKETING SYSTEMS:

This is a distribution channel structure in which producers; wholesalers and

retailers act as a unified system.

This describes a coordinated channel of distribution where all the members

work together for a common good with the aim of achieving greater efficiency

and thereby a competitive advantage.

Source: Adapted from Kotler, P. & Armstrong, G. “Principles of marketing” New

Jersey Prentice Hall, Inc. Upper Saddle River, 9th

Ed. 2001. P. 436.

Fig. 2.3 Vertical marketing System.

Vertically integrated channel may be:

a. Corporate VMS

b. Contractual VMS

c. Administrative VMS

a. CORPORATE VMS: This is a vertical marketing system that combines

successive stages of production and distribution under single ownership channel

- leadership is established through common ownership.

Manufacturer

Wh

ole

sale

r

Retailer

Consumer

b. CONTRACTUAL VMS: This is a vertical marketing system in which

independent firm at different level of production and distribution join together

through contracts to obtain more economics or sales impact than they could

achieve alone.

c. ADMINISTERED VMS: This is a vertical marketing system that coordinates

successive stages of production and distribution, not though common ownership

or contractual ties but through the size and power of one of the parties.

INTEGRATIVE GROWTH STRATEGIES

This is growth strategy aimed at maximizing the use of unexploited avenue in the

organization’s wider environment. It also has three approaches viz:

i. Backward integration:

This happens when a company takes up the activities originally carried out by

its suppliers, that is getting the raw materials by oneself.

ii. Forward integration:

This occurs when organization expands by taking up activities of its market

intermediaries.

iii. Horizontal integration:

This happens when a firm grows by buying over its competitors or merging

with them to accomplish that more than one company could work alone.

Example, coca-cola and Nestle formed a joint venture to market ready-to-

drink coffee and tea worldwide. Cocke provided experience in marketing and

distributing beverages and Nestle contributed two established brand names

Nescafe and Nestea.

2.7 SALES MANAGEMENT DEFINED

Originally, sales management was exclusively used to refer to the

management of sales force personnel. Later the term was used to refer to the

management of all marketing activities such as marketing research, product

merchandising, physical distribution, pricing, advertising and sales promotion.

As time went on, business like the academics, started to use the term

marketing management rather than sales management to describe all

marketing activities. Thus sales management was then exclusively for

management of the sales force. But modern sales manager’s responsibilities

encompass the management of the sales force.

Today, sales managers are in charge of personal selling activity in addition to

their primary assignment of management of sales force personnel.

Kotler (1986:546) sees sales management as “the analysis, planning,

implementation and control of sales activities. It includes setting sales force

objectives, designing sales force strategy; and recruiting, selecting, training,

supervising evaluation of firm’s sales representatives”.

The above definition emphasized the setting up of a sales force, selecting,

evaluation and training of sales representatives. In sales management, sales

force is made to undergo training from time to time.

Source: Adapted from Kotler, P. & Armstrong, G. “Principles of Marketing”

New Jersy Prentice Hall, Inc. Upper Saddle River, 9th Ed. 2001. p. 583.

Fig. 2.4 Major steps in sales force management

In the performance of their routine function for the overall benefit of sales

management, the sales representatives carry out a lot of functions which will

be discussed briefly.

2.8 FUNCTIONS OF SALES MANAGEMENT

Companies set different objectives for their sale force. They perform the

following function for the accomplishment of the company’s objectives.

i. Selling

Sales representative know that art of “salesmanship”, approaching,

presenting, answering objections and closing sales. Managers organize

sales efforts, both within and outside their companies.

ii. Prospecting

Sales representatives and customers. The sales representative or the

manager is a key contact with customer and other bodies. He is also

Designing sales force

strategy and structure

Recruiting

and selecting sales force

Training sales

force

Compensating sales force

Supervising sales force

Supervising sales force

responsible for the building and maintaining of an effective distribution

network for the company’s product(s).

iii. Servicing

Sales managers provide service to customer, consulting on their

problems, rendering technical assistance, arranging financing and

expediting delivery.

iv. Information gathering

Sales managers / representatives carry out market research and

intelligence work and also fill in call reports from time to time.

v. Allocating

Sales representatives evaluate customer quality and allocate scare

products during shortages. He also makes critical marketing decisions

such as budgeting, quotas and territories. A sales manager also

participates in decision making on products, distribution policies,

channel selections and pricing. It is important to note that the selling

function varies greatly from one company to another depending on their

sales objective, character of the company’s target market and the types

of sales position. Since no two selling jobs are alike, the above five

functions explicitly tell the role sales management play in marketing

environment.

Components of sales force management.

The management of sales force in Nigerian an worldwide variable tool for enhancing

the marketing potential of any product. It is therefore imperative that the sales

manager make a special point of duty to effectively manage their sales force.

Hence, the management of sales force has three main components, they are:

a. Recruitment and selection of salesmen

b. Training of salesmen

c. Remunerating salesmen

2.9 RECRUITMENT AND SELECTION OF SALESMEN

One of the tasks of the sales manager is the responsibility of recruitment and

selecting right men and woman to fit into the various sales positions of the

organization.

Managing the personal selling effort essentially has to do with recruiting,

selecting, training, compensating, supervising and evaluating sales

representatives and co-ordinating their efforts with the overall marketing

programme of the firm.

Staffing the sales force is one of the most important of all managerial

activities. The importance of careful selection is seen in several ways, it is

difficult most times to find good sales people. Again, the performance levels

or sales productivity of inferior sales people are low, poor selection provides

competitors with an unnecessary selling advantage. It should also be noted that

there are great wastes having the wrong person. Survey has shown that high

turnover of sales representatives is related to poor selection. The cost of

recruiting, training and supervising sales people is wasted in poor selection.

A sales force that is well selected is an asset to the organization. Selection is

done to replace the vacant position of promoted, transferred, fired,

incapacitated or resigned sales person. It is important to note that poor

selection means poor performance, lower sales volume and high selling cost.

2.10 SALES FORCE SELECTION PROCEDURE

The following eight procedure of sales force selection will be briefly

discussed. They are:

i. Sales force inventory

ii. Job description and man profile

iii. Recruitment source

iv. Conducting advertisement

v. Assessing application

vi. Testing application

vii. Interviewing

viii. Evaluation and placement.

i. SALES FORCE INVENTORY

Sales force inventory/forecast is a comparison of the current stock of sales

force with the future sales force requirement of the organization in order to

reveal any surplus or shortage in sales force requirement. The essence of this

is to determine the number and type of people wanted.

ii. JOB DESCRIPTION AND MAN PROFILE

The job description is a written explanation of the task of the sales person.

This is not only essential for selection but is also of great value for staff

appraisal and checking that all duties in the organization are covered. The job

description guides the salesman in his every day duties. They act as

motivational factor for the sales representatives who tend to feel more secure

when they know more precisely the limits and opportunity of their jobs.

iii. RECRUITMENT

When vacancies have been determined in the organization’s sales force, and a

criteria has been set for filling the existing vacancy, the recruitment is turned

over to the personnel department, which completes the remaining steps of the

selection procedure.

iv. CONDUCTING THE ADVERTISEMENT

The vacancy that exists in a company should be made known to a large

number of job seekers through advertisement. The purpose of advertisement is

to attract qualified candidates from within and outside the company to apply

for the opportunities that exist in the sponsoring company. Like for other sales

presentation, a job advertisement must attract attention, create interest, arouse

desire and result in action by the right caliber of job seekers it is aimed at.

v. ASSESSING APPLICATIONS

An initial information about each candidate should be collected as applicants

come in, the stage of assessing job applications in the selection process

provides management with the means of reviewing the applicant background

without being influenced by his appearance or personality. This aids personal

interviewing.

vi. TESTING OF APPLICANTS

Relevant test for screening and selecting salesmen depend on individual

intelligence quotient (IQ) of the applicant, sales aptitudes personality test try

to find out the applicants temperament, competitiveness, sociability, drive and

independence. Interest tests reveal whether the applicant is interesting in

selling or not.

vii. INTERVIEW

The most important stage of any selection procedure is the personal interview,

through the interview, additional information about the candidate is made

known and their already made claims verified. Screening interview sometimes

used to first eliminate applicants who are not interested in the job or whose

basic qualifications are not up to the jobs basic requirement.

viii. EVALUATION AND PLACEMENT

Collected information must be evaluated against the requirement of the job

description and men- profile. The candidate can be assessed and scored to

arrive at final recommendation. The score should be weighted and not average

or totaled in making the final selection. Finally, successful candidates are

communicated in writing with an appointment paper.

2.11 IMPORTANCE OF SALES MANAGEMENT

The need for sale management in today’s marketing and salesmanship

environment cannot be over emphasized because a company’s success and

progress depends upon the performance of its sales force within the market

place.

The need for sales training and management arises because of the following

reasons:

a. It enable sales organization to cope with the ever increasing demands of

complex business environment.

b. Sales management helps to provide expert knowledge for salesmen. This

involves training salesmen to gain essential knowledge, products, people

and himself.

c. It helps in achieving the sales objectives in a systematic and planned way

by responding to opportunities promptly.

d. It helps in increasing sales and consequently profit.

e. It educates the salesmen on how to deal with customers

f. Sales management helps to cultivate good working relationship between

the sales organization and their salesmen.

g. It helps to reduce wastage. Time will be effectively managed as well as the

sales territories.

2.12 APPLICATION OF SALES MANAGEMENT PRINCIPLES IN THE

FIELD

Selling a product requires some ingenuity on the part of the seller as his

personality and level of confidence counts when he approaches prospective

buyer. Most buyers prefer doing business with honest salesmen since it helps

to build trust.

In the field, salesmen always try their best in explaining situations whenever

they meet objections from prospects. Field salesmen are under pressure to

deliver maximum services and make returns to their parent company.

Since sales are geared toward profit making, it is important to look at various

types of sales transactions used both in the field and outside the field. These

transactions and channels for reaching customers carried out by the company

through its accredited distributors or sales representatives form standard sales

practices which will be studied briefly.

TRANSPORTATION

Transportation in physical distribution serves to functionally link the fixed

facilities including the markets and thus serves to neutralize the spatial

separation of the facilities. The choice of transportation carriers will affect the

pricing of the products, on-time delivery performance and the condition of the

goods when arrive all of which will affect customer satisfaction. As a

marketing function, it increases the economic value of products by creating

time and place utility and promotes possession utility. For the producer, the

transportation activities are involved in moving raw materials, parts and

components from suppliers to the plants and warehouses and the movement of

finished goods from plants to warehouses or distribution centre to customers.

The wholesaler and retailer perform various distribution functions from the

manufacturer to the final consumers. There are five modes of transportation,

they include transportation by road, rail, water and pipeline and by air.

i. Road Transportation

The motor vehicles used in goods transportation include trucks, lorries and

vans. Heavy-duty trucks are growing in importance as a means of moving

goods in the country. They account for the largest portion of intra-city as

opposed to intercity transportation. This has been as a result of the

improvement of existing roads, construction of more modern highways and an

increase in roads rehabilitation covering the whole country. Motor vehicles

are used to transport about everything and this is due to its availability,

convenience and speed of this facility.

Generally, transportation by truck brings about some savings in packing costs

and because of limited handling and vibration; the incidence of merchandise

damage in transit is low.

ii. Rail Transportation

Transportation by rail in Nigeria was developed long before the development

of road transportation. The network of rail lines built with forced labour at the

turn of the last century was designed primarily for the evacuation of desire raw

materials in form of some agricultural and mineral products from the hinter

lands to major ports of Lagos and Port-Harcourt for exportation. Rail roads are

one of the most effective modes for shipping car, load quantities of bulk

products such as coal, sand, minerals, farm and forest products over long

distance. While rail transport rates are about the same as road transport rates

the latter is preferred because rail transport is slow, inconvenient, unavailable

nation wide and the prospects for damage goods in transit are higher, although

rail transport could also mean extra handling cost.

iii. Rail road and cost saving devices

Railroad transport service can be improved and costs saved through.

i. Piggyback services

ii. Utilized trains

iii. Fast freight lines

iv. Refrigerator and other special cars

i. PIGGYBACKS SERVICES

This involves the use of flatcars for transport loaded trucks, this reduces

handling lost and damage goods in transit. Often during the rainy season some

important roads are not motorable, piggyback type arrangement can be used to

avoid bad patch. The combination of fast train service with the piggyback

arrangement will reduce delivery time.

ii. UTILIZED TRAINS

This is the use of trains with several cars for special shuttle services full time

often from mines to factory. The savings come from full time operations and

specialized nature of the operation and route.

iii. FAST FREIGHT TRAINS

The introduction of fast freight aims at minimizing one major short coming or

rail transport which is delayed delivery times which limits the suitability of

railroad transport to only non- perishable items.

iv. REFRIGERATOR AND OTHER SPECIAL CARS

The special cars include refrigerator car and specially designed cars for

moving new motorcars, fuel tanks, and livestock. The NNPC and PAN limited

use the specialized cars often and this kind of movement reduces dangers of

damage to the good being transported.

iv. WATER TRANSPORTATION

Transportation through inland waterways is important in the riverine areas for

conveying the products of peasant farmers and fishermen to the markets on

the mainland.

It is suited to moving non-perishable bulk items of low unit value. It should

be noted however that climatic conditions could limit the use of waterways

since they become less navigable especially in the dry season.

v. PIPELINE TRANSPORTATION

Pipelines are a specialized means of shipping petroleum, coal and chemicals

from sources to markets or where they could be stored. Although pipeline

transportation is cheaper than alternative modes, its use is limited by its lack of

flexibility, they are not numerous and are not conveniently located.

vi. AIR TRANSPORTATION

Air transport has the highest rate structure and is therefore ideals for the

movement of high-value lightweight or perishable products. Costs savings in

transportation by air arise from lower packaging and handling cost and low

investment in inventory because of the fast delivery services. Air

transportation in Nigeria is very unreliable and limited to airport facilities

within the country.

INVENTORY

Inventory levels represent another physical distribution decision affecting customer

satisfaction. It is the stock of raw materials, component parts, fabricating parts or

finished goods, which are held for several reasons. The maintenance of inventories

allows the production and marketing function to operate in an autonomous and

economic manner.

Inventory for production or marketing purposes is held for the following four

reasons:

1. To maintain lot-size quantity

2. To avoid possible loss sales through variation in demand

3. To avoid disruption in production or marketing as a result of disruption

in supply

4. Lot-size inventory

i. LOT-SIZE INVENTORY

This is inventory arising from buying more stock than is immediately needed for

production or marketing purposes as a result of selling condition of the supplier

or economic purchase quantity of the buyer.

ii. SAFETY STOCK

This is inventory maintained to avoid losses as a result of variation in either

demand over-lead-time or supply time give rise to what is usually called safety or

buffer stock. Hence safety stock is maintained to take care of extra demand arising

from variation normal demand over lead time and variation in lead-time.

iii. FORWARD BUYING

Forward buying results when a quantity inventory is greater than the

immediate need of production or marketing function and over and above the

lot-size inventory needs, it is usually done in anticipation of disruptions in

supply such as labour strikes, war, climatic condition, production patterns and

arising prices.

ORDER PROCESSING

Physical distribution begins with a customer order. The order department prepares

multi-copy invoices and dispatches them to various departments. Items out of stock

are back-ordered. Shipped items are accompanied by shipping and billing documents

with copies going to various departments. Ideally, the sales representatives send in

their orders every evening, in some cases phoning them the order department

processes these quickly. The warehouse sends the goods out as soon as possible.

Bills go out as soon as possible. Usually the computer is used to expedite the order-

shipping billing cycle.

DETERMINATION OF CONTROL POINTS

Control points in order process in are indicated bearing the following in mind:

a. Economic order quantity (EOQ)

b. Re order point

c. Maximum quantity of inventory

d. Safety stock level

a. ECONOMIC ORDER QUANTITY (EOQ)

The economic order quantity is the amount or quantity of inventory to be purchase

with each ordering, which will minimize the total cost of ordering inventory and

holding or carrying the inventory. Inventory acquiring or ordering costs increase

with quantity purchased. Carrying cost are made up of opportunity cost, taxes and

insurance on inventory.

To computer the total cost of carrying inventory it is assumed that inventory is

depleted or used up at a constant rate and that in the year only half or the total

operating inventory is held in stock.

It is notable that opportunity costs, taxes and insurance are determined only as a

percentage of the monetary value of inventory. Ordering cost is made up of all

possible costs involving in placing an order. There are fixed elements of the cost

such as salaries, which remain fixed over a reasonable number of orders.

There are also variable aspects of the ordering costs such as stationary cost, postage,

transportation costs and others.

MATHEMATICALLY

Total carrying cost = Q/2XCI = QC1/2

Total ordering cost = D+QXS = DS/Q

Then Total cost (TC) = QC1/2 + DS/Q

TC = Total carrying cost + Total ordering cost. Where C is value or inventory

carried, D is the period demand S is ordering cost in naira and 1 is percentage of

annual inventory.

The value of Q, the order quantity, which has the lowest cost, TC has been

determined to be equal to the square root of (2xDxS+C.1) ie EQQ = 2DS/C1

Therefore, this becomes the quantity to be ordered each time an order must be placed

under normal circumstances. This approach is known as the Q- system of inventory

management. In the P-system the emphasis is not on economic order quality, rather

the quantity of order placed at fixed order periods is the difference between planned

purchased for the period and the inventory on hand and one order. Thus for the P-

system order periods are fixed while quantity of order varies. In the Q-system, order

periods may vary but the quantity ordered each order period is fixed.

b. RE ORDER POINT

Re-order point is simply the level of inventory at which order must be place for the

already determined quantity above. It can be expressed in absolute quantity such as

30 units or in period supply such as so many days, weeks or months supply. For

example if the reorder point is 50 units then an order for more inventories must be

placed when only 50 units of stock are left. Re-order points are determined by the

order lead-time or supply time, the desired service level and the service or sales

rates. The higher the lead time and desired service level and the service or sales

rates, the higher the lead time desired service level and the usage rate, the higher the

reorder point.

c. MAXIMUM OPERATION STOCK

The maximum operating stock or inventory Normal for the Q-system of inventory

management is the economic order quantity (EQQ) plus the safety stock ie. Q-

system = EQQ + Safety stock.

For the P-system of inventory management which is ideal for the retailer situation,

the maximum operation stock (MOS) is made up of minimum stock required for

order period variation in demand or usage plus stock required for delivery period

variation in demand, both period assume fixed minimum stock, therefore covers for

variation in demand in the buying period which is order period delivery period. The

buying period stock is stock needed to cover sales or usage for the reorder interval

and the delivery interval.

Lets take a hypothetical example if minimum stock is set by management at 40 units

and usage rate is 90 units per week while buying period is 5 weeks, then

Minimum = 40 units buying period

Stock = 90x5 250

Minimum operation stock

(MOS) = 490

d. SAFETY STOCK LEVEL

This is the level of inventory maintained by the company to avoid losses in sale as a

result of variation in either demand over lead-time. It has been earlier discussed in

this chapter.

LOGISTICS SUPPORT

Logistics consists of all activities which facilitate the efficient operation of the

distribution system. The activities include unitization repairs and communication.

Unitization concerns the packaging and prefiguring of products in such a way as to

achieve economics of movement and storage. A good support system works to

reduce the cost of physical distribution through a reduction in handling cost, in the

incidence of product damage especially through physical spoilage and deterioration.

The communication network is important to support the products and information

flow through the distribution network. A good communication network saves cost by

reducing to a minimum the lead-time between the receipt of an order and the

execution of the order. Communication flow is in both directions; from the plant to

the warehouse and vice versa. Dele and Levis identified criteria for the evaluation of

distribution information system as:

i. Maximum usable information and flexibility

ii. Minimum cost bias and error

iii. Provision of flow data in space and time

iv. Geographical homogeneity of data

v. Compatibility of data with other information

Quantity of information as regards the accuracy with which events are reported and

speed with which the information is transmitted are important considerations in

setting up the communication network. The overall effect of a good communication

network is an increase in customer service level and satisfaction with positive effect

on profit.

REFERENCES

Achison, C.B. (2000), Industrial Marketing, Enugu: Precision Publishers and Printer.

Schewe, D.C and Smith, R.M. (1980), Marketing Concepts and Application, New

York: Mc Graw-Hill, Bk Company.

Stanton, W.J. (1981), Fundamentals of marketing. 6th

ed, Tokyo: Mc Graw-Hill,

Kogakrisha Ltd.

Kootntz, H. and Welhrich H. (1994), Management: A Global Perspective, 10th ed,

Mc Graw – Hills Series in Management.

Bowersox, D.J et al (1978), logistics management, New York: Macmillan

Publishers.

Kotler, P. (1986), Marketing management analysis, planning and control, New

Jersey: Prentice – Hall-Inc.

Kotler, P and Armstrong, G. (1996), Principle of marketing 9th

ed, New Jersey:

Prentice Hall Inc.

Ezeh, J.A. and Onodugo, V.A. (2002), Business policy and strategic management, 1st

ed, Enugu: Kinsmann Publishers Limited.

Churchhill, Jr et al (1997), Sales force management, Reb Zwettler A times Mirro

Author Education Group Inc. Company.

Callaghan, P. (1994), Business advanced level GNVQ3, Business Education

Publishers and Great Britain.

Revzan, D.A. (19710, The Evaluation of channel effectiveness Wiliam G.M. Jurs &

David L.W. ed: Marketing Channels; a system of view point Home wood III

Akpala, A. (1989), Management an interdiction and the Nigerian Perspective UNEC.

Shaughnessy, J.O. (1992), Competitive marketing A strategic approach 2nd

ed.

Routledge: Chapman and Hall, Inc.

Kotler, P. and Armstrong (2001) Principle of Marketing 9th

ed, New Jersey: prentice

Hall Inc.

Linus, O. and Emola, V. (1998) Marketing management: Principles, strategies and

cases, 2nd

ed. Malthouse press ltd.

Achison, C.B (2002), Strategic Marketing Management: Analytical and systematic

approach, Enugu: Precision Publisher Ltd.

Baker, M.J., Marketing strategy and management, London: Macmillan, 1992.

Christopher, M.G, et al., Customer service and distribution strategy, London:

Associated business press, 1979.

Odugbesan, A.O. and Osuagwu, L.C; Distribution channel management.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

In order to achieve meaningful result in this research work, the methodology

will be purely on survey research work and will be given a particular attention

- using mental scheme of solving the research problems in a systematic

manner within the circumstances of the researcher.

However, this chapter will further explains the scope and area of study, source

of data and method to be used in analysis of data collected etc. As the research

objective is to carry out “An Assessment of the Effectiveness of the

distribution strategies of A-Z Petroleum Products Ltd.

Robbert Kreithner (1980:134) sees research design as the plan, structure and

strategy of investigation concerned so as to obtain answers to research

questions and control variance. It is therefore a blue print for all data and

information collected, also specified the method and procedure for acquiring

the information needed.

3.2 SCOPE OF STUDY

In this study, the researcher examine clearly on how A-Z Petroleum product

Ltd; A lubricant manufacturing company distribute its products to her

numerous customers, so as to assess the effectiveness of the distribution

strategies used by the firm in distributing its manufactured lubricating oil in

Aba.

However, the management staff of the company and their distributors in Aba

is mainly used in this research work.

3.3 SOURCES OF DATA

Primary and secondary sources of data collection will be extensively used in

conducting this research work.

3.3.1 PRIMARY SOURCE

The researcher will adopt a survey technique through the use of personal

interview with some management Staff of A-Z Petroleum Product Ltd in the

marketing department and extensive use of questionnaires to both staff and

distributors of A-Z Petroleum products Ltd in Aba.

3.3.2 SECONDARY SOURCE

The researcher will extensively use the following:

1. Text books, magazines, newspapers, journals, calendars and hand bills

2. Research Project related to the study

3. Federal Ministry of Industry Enugu

4. National Library Enugu

5. Materials from UNEC Enugu

6. Journal of American Marketing Association

7. Internet source.

3.4 METHOD OF DATA COLLECTION

This research work was carried out through the combination of structured

questionnaires and personal interviews. However, the interview guide and

questionnaires constituted the chosen data collection instrument. In the course

of this research work, the researcher administered two questionnaires for

management staff and customers respectively.

INTERVIEW

Some of the management staff of A-Z Petroleum Products Ltd including

distributors were interviewed with the aim of getting more useful information

for the research work.

QUESTIONNAIRES

This will be designed under ten point questions for Customers and sixteen

questions for Management staff with maximum of five points options. This will

help in getting tentative assessment of the distribution strategies of A-Z

Petroleum Products Ltd.

3.5 POPULATION

The population of this study includes:

1. The management staff of A-Z Petroleum Products Ltd

2. The company’s distributors in Aba.

3.6 PILOT SURVEY

Questionnaire will be distributed to nine distributors in Aba with the following

points; where they buy lubricating oil, period of delivery, disappointment

posed during distribution, the effect of transportation on cost, customers

satisfaction, assessment of distribution strategies, ways of improving and what

should be done to the distribution strategies of A-Z Petroleum products Ltd.

3.7 SAMPLE SIZE

This size of the sample will be determined using the Top man’s formular

stated below:

n = Z2 PQ

e2

Where

Z = no of standard deviation from the exact level of confidence

(1.96).

P. = The percentage of the positive response 0.89 (8/9)

Q = The percentage of the negative response 0.11(1/9)

e = 5% limit of tolerable error

n = 1.962x0.89x0.11 = 0.37609264

(0.052) 0.0025

n = 150.437056

n = 150 approximated

Thus a total of 150 questionnaires will be distributed to the management staff

and the distributors of A-Z Petroleum Product Ltd.

3.8 SAMPLING TECHNIQUE

To achieve efficient result, stratified sampling will be used to ensure larger

sample in the study (management staff and distributors).

3.9 METHOD OF QUESTIONNAIRE DISTRIBUTION

30 questionnaires were distributed to the Management Staff of A-Z Petroleum

Products Limited in Aba Metropolis. Out of 30 questionnaires distributed 25

were filled accurately and returned. 120 questionnaire were distributed to the

Customers and 92 filled and returned. After editing, it was discovered that the

questionnaire returned are virile for the purpose of this study.

3.10 RESEARCH INSTRUMENTS

The researcher will use extensive approach in the distribution of

questionnaires and oral interview.

3.11 VALIDITY AND RELIABILITY OF MEASURING INSTRUMENT

The instrument used two experts from Nnamdi Azikiwe University Awka and

University of Nigeria Enugu Campus in measuring and testing. They look at

the phases and content utility and offered some suggestion which the

researcher accepted and effected.

They are:

1. Uniform search for instrument was used.

2. Questions that have no options were suggested to be removed.

3. Adoption of three to five point options in order to make the measurement

more reliable and tentative.

The instrument was tested for reliability using test re-test approach. The

reliability index and calculated at 0.82 which is said to be high enough for

some internal consistency.

3.12 METHOD OF DATA PRESENTATION AND ANALYSIS

The data gathered from the survey questionnaires will be analyzed using SPSS

for the determination of frequency tables and test of significance.

In enhancing clarity and easy comprehension of the data generated,

Descriptive Statistics will be used to summarize the data generated. The option

which has the highest in the presentation will be favored.

The chi-square statistical model will be applied to test the designed hypotheses

accepting or rejecting possible result based on the stated decision rules and the

tests will be carried out at 0.05 level of significance.

REFERENCES

Ikeagwu, E.K (1998), Research Methods, Enugu: Institute of Development Studies

(IDS) UNEC.

Chisnail, P. (1981), Marketing Research Analysis Management, 2nd

Edition,

England: Mc Graw Hill Book Company Ltd.

Kreithner, R. (1980), Management A problem solving process, Boston: Houghton

Miffin Co.

Ferber, R. Marketing Research, New York: McGraw Hill Book Company:

Akuezuilo E.O. (1993), Research Methodology and Statistics, 2nd

Ed, Awka:

Christon Printing and Publishing Company.

Onwural E. A. (1998) Academic Research Methods, Enugu: Gostak Printing &

Publishing Co. Ltd.

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.1 INTRODUCTION

The purpose of this chapter is to present and interpret the primary data collected for

this study. In the analysis of this research work, descriptive statistics was used to

arrange, summarize, present and interpret the data collected in a meaningful manner

at glance. In the testing of the hypotheses, NPar and Chi-square test was used.

RETURN OF QUESTIONNAIRE

TABLE 4.2.1: RETURN OF QUESTIONNAIRE

Sex Number Distributed Number Returned Percentage

Male 20 17 68

Female 10 8 32

Total 30 25 100

The table above shows that 30(100%) questionnaire were distributed to the

management staff and 25 returned. 17(68%) questionnaire were received from male

respondents while 8(32%) questionnaires were received from the female

respondents.

TABLE 4.2.2: AGE OF RESPONDENTS

Age Frequency Percentage

‘Under 30’ 8 32

’30 – 40' 11 44

‘41 and above’ 6 24

Total 25 100

From the table above, 8(32%) respondents were under the age of 30 years, 11(44%)

respondents were within the range of 30-40 years and 6(24%) respondents were

41years and above.

TABLE 4.2.3: MARITAL STATUS

Marital Frequency Percentage

Single 8 32

Married 17 68

Total 25 100

The table above revealed that 8(32%) respondents were single during the course of

this research work while the remaining 17(68%) respondents are married.

SECTION B: MANAGEMENT QUESTIONNAIRE

TABLE 4.2.4: WHO IS YOUR TARGET MARKET.

Target Market Frequency Percentage

Distributors 15 60

Retailers 10 40

Total 25 100

The table above revealed that 15(60%) management staff of A-Z petroleum chose

distributors as there target market while 10 chose retailers as there target market in

the channel of distribution. From the table, we can accept the fact that distributors

are the target market of the firm based on the obvious figures of the table.

TABLE 4.2.5: HOW LONG DOES IT TAKE TO DELIVER A-Z OIL

TO YOUR CUSTOMER.

Delivery Time Frequency Percentage

One day 15 60

One week 9 36

One month 1 4

Total 25 100

From the table above, 15(60%) respondents denoted that it took them one day to

deliver A - Z oil to there customers, 9(36%) respondents chose one week while

1(4%) of the respondents chose one month.

TABLE 4.2.6: EXTENT TO WHICH TRANSPORTATION AFFECT COST

Frequency Percentage

High 5 20

Moderate 17 68

Low 3 12

Total 25 100

From the table above, 5(20%) respondents indicated that transportation hike the price

of A - Z oil, 17(68%) respondents chose moderately while the remaining 3(12%)

respondents affirmed that transportation only affect cost to a low degree.

TABLE 4.2.7: HOW WOULD YOU RATE YOUR COMPANY

TRANSPORTATION SYSTEM.

Frequency Percentage

Very effective 10 40

Effective 13 52

Ineffective 2 8

Total 25 100

The table above shows that 10(40%) respondents rated A-Z transportation system

very effective, 13(52%) chose effective and remaining 2(8%) respondents chose

ineffective. With the table above the transportation system of A - Z is effective.

TABLE 4.2.8: HOW WOULD YOU ASSESS THE QUALITY OF A-Z OIL IN

RELATION TO OTHERS

Quality

Assessment

Frequency Percentage

Excellent 5 20

Very good 12 48

Good 8 32

Total 25 100

The table above revealed that 5(20%) respondents indicated that the quality of A-Z

oil is excellent in relation to other products, 12(48%) respondents chose very good

while the remaining 8(32%) respondents chose good.

TABLE 4.2.9: EXTENT TO WHICH BAD ROAD AFFECT DISTRIBUTION

STRATEGIES

Bad Road

Effect

Frequency Percentage

High 2 8

Moderate 19 76

Low 4 16

Total 25 100

From the table above, 2(8%) respondents indicated that bad road network has high

effect on the company distribution strategies, 19(76%) respondents chose moderately

and 4(16%) respondents chose low effect.

TABLE 4.2.10: DOES GOVERNMENT POLICY AFFECT THE COMPANY

DISTRIBUTION STRATEGY

Govt. Policy Effect Frequency Percentage

Yes 16 64

No 1 4

Undecided 8 32

Total 25 100

From the table above, 16(64%) respondents indicated that government policy affect

the company distribution strategy, 1(4%) of the respondents indicated that it does not

affect the company distribution strategy while the remaining 8(32%) respondents

chose undecided.

TABLE 4.2.11: EXTENT TO WHICH ENVIRONMENTAL FACTORS

AFFECT DISTRIBUTION

Environmental effect Frequency Percentage

High 4 16

Moderate 18 72

Low 3 12

Total 25 100

From the table above, 4(16%) respondents chose high, 18(72%) respondents chose

moderate while the remaining 3(12%) respondents affirmed that environmental

factors affect distribution to a low degree.

TABLE 4.2.12: EXTENT TO WHICH PROBLEM OF CAPITAL AFFECT

DISTRIBUTION STRATEGIES

Environmental effect Frequency Percentage

High 2 8

Moderate 18 72

Low 5 20

Total 25 100

From the table above, 2(8%) respondents chose high, 18(72%) respondents chose

moderate while the remaining 5(20%) respondents chose low.

TABLE 4.2.13: HOW WOULD YOU ASSESS THE PERFORMANCE OF

THE COMPANY DISTRIBUTION STRATEGY FOR THE

PAST DECADE

Performance

Assessment

Frequency Percentage

Excellent 1 4

Very good 14 56

Good 10 40

Total 25 100

The table above revealed that 1(4%) of the respondents denoted that the company

distribution strategy was excellent, 14(56%) respondents indicated that it was very

good while the remaining 10(40%) respondents indicated that the company

distribution strategy was good.

TABLE 4.2.14: BASED ON QUESTION 10 ARE YOU SATISFIED WITH

THE DISTRIBUTION STRATEGIES

Performance

Assessment

Frequency

Percentage

Yes 24 96

No 1 4

Total 25 100

From the above table, 24(96%) of the respondents indicated that they are satisfied

with the distribution strategies of A–Z while 1(4%) respondents disclosed not

satisfied.

TABLE 4.2.15: POLICY ON PRICING

Frequency Percentage

Yes 24 96

System 1 4

Total 25 100

The above table shows that 24(96%) respondents want the company to improve its

policy on pricing and the remaining 1(4%) respondent not indicated.

TABLE 4.2.16: POLICY ON PRODUCT AVAILABILITY

Frequency Percentage

Yes 4 16

System 21 84

Total 25 100

From the table above, 4(16%) respondents want the company to improve on its

policy on product availability while the remaining 21(84%) respondents not

indicated

TABLE 4.2.17: POLICY ON CHOICE OF CHANNEL

Frequency Percentage

Yes 2 8

System 23 92

Total 25 100

The above table shows that 2(8%) respondents want A–Z to improve on its policy on

choice of channel while the remaining 23(92%) respondents not indicated.

TABLE 4.2.18: POLICY ON PROMOTION

Frequency Percentage

Yes 2 8

System 23 92

Total 25 100

The table above shows that 2(8%) respondents want the company to improve its

policy on promotion as a way of boosting its distribution strategies while the

remaining 23(92%) respondents never indicated.

TABLE 4.2.19: EXTENT TO WHICH ACTIVITIES OF SUB-

DISTRIBUTORS AFFECT COST

Frequency Percentage

To a very large extent 1 4

To a large extent 11 44

To a fair extent 11 44

To a low extent 2 8

Total 25 100

The table above revealed that 1(4%) respondent indicated that the activities of sub-

distributors affect cost to a very large extent, 11(44%) respondents indicated that it

affect it to a large extent, another 11(44%) respondents indicated that it affect it to a

fair extent while the remaining 2(8%) respondents chose to a low extent.

TABLE 4.2.20: EXTENT TO WHICH CUSTOMERS ARE SATISFIED

WITH THE COMPANY’S CHANNEL OF DISTRIBUTION

Frequency Percentage

To a very large extent 2 8

To a large extent 16 64

To a fair extent 7 28

Total 25 100

From the table above, 2(8%) respondents indicated that the customers were satisfied

with the company’s channel of distribution to a very large extent, 16(64%)

respondents indicated that customers were satisfied to a large extent while the

remaining 7(28%) respondents chose to a fair extent.

TABLE 4.2.21: GOVERNMENT POLICY

Frequency Percentage

Yes 3 12

System 22 88

Total 25 100

The table above revealed that 3(12%) respondents were of the opinion that

government policy frequently prevent A–Z Oil from reaching the consumers while

the remaining 22(88%) respondents not supportive.

TABLE 4.2.22: CHANNEL OF DISTRIBUTION

Frequency Percentage

Yes 9 36

System 16 64

Total 25 100

From the table above, 9(36%) respondents denoted that channel of distribution

frequently prevent A – Z Oil from reaching the consumers while the remaining

16(64%) respondents were not supportive

TABLE 4.2.23: POOR ROAD NETWORK

Frequency Percentage

Yes 14 56

System 11 44

Total 25 100

The table above revealed that 14(56%) respondents were of the opinion that poor

road network frequently prevent A – Z Oil from reaching the consumers while the

remaining 11(44%) respondents were not supportive.

TABLE 4.2.24: HIGH COST OF TRANSPORTATION

Frequency Percentage

Yes 3 12

System 22 88

Total 25 100

The table above revealed that 3(12%) respondents indicated that high cost of

transportation frequently prevent A – Z Oil from reaching the consumers while the

remaining 22(88%) respondents seen it from different perspective.

TABLE 4.2.25: CAPITAL AND LOSS

System 25 100

The table above revealed that none of the respondents was supportive that capital

and loss prevent A – Z Oil from reaching the consumers representing 100%.

SECTION A: CUSTOMERS QUESTIONNAIRE

TABLE 4.2.26: RETURN OF QUESTIONNAIRE

Sex Number

Distributed

Number

Returned

Percentage

Returned

Male 70 52 56.5

Female 50 40 43.5

Total 120 92 100

The table above indicated that 120(100%) questionnaire were distributed to

customers and 92 returned. 52(56.5%) of the respondents were male while the

remaining 40(43.5%) respondents were female.

TABLE 4.2.27: AGE

Frequency Percent

‘Under 30’ 23 25.0

’30 – 40' 49 53.3

’41 and above 20 21.7

Total 92 100

Table above revealed that 23(25%) respondents were under 30years, 49(53.3%)

respondents were within the age bracket of 30-40years while the remaining

20(21.7%) respondents were 41 years and above.

TABLE 4.2.28: MARITAL STATUS

Frequency Percentage

Single 22 23.9

Married 64 69.6

Engaged 6 6.5

Total 92 100

Table table above revealed that 22(23.9%) respondents are single, 64(69.6%)

respondents are married while 6(6.5%) respondents are engaged.

SECTION B: CUSTOMERS QUESTIONNAIRE

TABLE 4.2.29: WHERE DO YOU SOURCE YOUR PRODUCTS

Frequency Percentage

Factory 26 28.3

Depot 60 65.2

Distributor 1 1.1

Sub-distributor 3 3.3

Total 90 97.8

System 2 2.2

Total 92 100

The table above revealed that 26(28.3%) of the respondents source their products

from the factory, 60(65.2%) respondents source from depot, 1(1.1%) source from

distributor, 3(3.3%) respondents source from sub-distributors while the remaining

2(2.2%) respondents not indicated.

TABLE 4.2.30: ANY LAPSE IN TRANSPORTATION FROM SOURCE TO

WAREHOUSE

Frequency Percentage

No 49 53.3

Yes 41 44.6

Total 90 97.8

System 2 2.2

Total 92 100

The table above revealed that 49(53.3%) respondents denoted that no lapse in

transportation from source to warehouse, 41(44.6%) indicated Yes while 2(2.2%)

respondents not indicated.

TABLE 4.2.31: POOR ROAD NETWORK

Frequency Percentage

Yes 28 30.4

System 64 69.6

Total 92 100

The table above revealed that 28(30.4%) respondents were of the opinion that poor

road network was the lapse in transportation of A-Z Oil from the source to customer

warehouse while the remaining 64(69.6%) respondents not indicated.

TABLE 4.2.32: POOR CHANNEL OF DISTRIBUTION

Frequency Percentage

Yes 26 28.3

System 66 71.7

Total 92 100

The table above revealed that 26(28.3%) respondents were of the opinion that poor

channel of distribution was the lapse in transportation of A-Z Oil from the source to

customer warehouse while the remaining 66(71.7%) respondents not indicated.

TABLE 4.2.33: HIGH COST OF TRANSPORTATION

Frequency Percentage

Yes 11 12

System 81 88

Total 92 100

The table above revealed that 11(12%) respondents indicated yes meaning that high

cost of transportation cause lapse in the transportation of A-Z Oil from the source to

customer warehouse while the remaining 81(88%) respondents not indicated.

TABLE 4.2.34: GOVERNMENT POLICY

Frequency Percentage

Yes 18 19.6

System 74 80.4

Total 92 100

The table above revealed that 18(19.6%) respondents indicated that government

policy cause lapse in the transportation of A-Z Oil from the source to customer

warehouse while the remaining 74(80.4%) respondents not indicated.

TABLE 4.2.35: HOW OFTEN DO YOU WITNESS LAPSE?

Frequency Percentage

Twice a week 6 6.5

Once a week 17 18.5

Once a month 17 18.5

Not sure 14 15.5

System 38 41.3

Total 92 100

From the table above, 6(6.5%) respondents indicated that they witness lapse from

the source to warehouse twice a week, 17(18.5%) of them witness lapse once a

week, another 17(18.5%) respondents witness it once in a mouth, 14(15.5%)

respondents are not sure while the remaining 38(41.3%) respondents not indicated.

TABLE 4.2.36: TO WHAT EXTENT DOES TRANSPORTATION AFFECT

COST?

Frequency Percentage

Very High 9 9.8

High 35 38.0

Moderate 36 39.1

Low 12 13.0

Total 92 100

The table above revealed that 9(9.8%) respondents chose very high as the extent

transportation affect cost, 35(38%) respondents chose high, 36(39.1%) chose

moderate while the remaining 12(13%) respondents chose low.

TABLE 4.2.37: HOW WOULD YOU RATE EFFECTIVENESS OF A-Z OIL

Frequency Percentage

Very effective 33 35.9

Effective 46 50

Ineffective 13 14.1

Total 92 100

The table above revealed that 33(35.9%) of the respondents indicated that A-Z Oil is

very effective, 46(50%) respondents indicated that the oil is effective while the

remaining 13(14.1%) respondents indicated ineffective.

TABLE 4.2.38: TO WHAT EXTENT DO YOU ENJOY AVAILABILITY OF

A-Z OIL

Frequency Percentage

Very High 17 18.5

High 52 56.5

Low 20 21.7

Very low 3 3.3

Total 92 100

The table above shows that 17(18.5%) respondents chose very high as the extent

they enjoy availability of A-Z Oil, 52(56.5%) respondents chose high, 20(21.7%)

chose low while 3(3.3%) respondents chose very low.

TABLE 4.2.39: RATE THE EFFECT OF ROAD NETWORK ON

PRODUCT DELIVERY

Frequency Percentage

Excellent 2 2.2

Very good 21 22.8

Good 58 63

Poor 11 12

Total 92 100

The table above revealed that 2(2.2%) respondents were of the opinion that road

network as excellent effect on product delivery, 21(22.8%) respondents denoted very

good, 58(63%) respondents denoted good while the remaining 11(12%) respondents

were of the opinion that it has poor effect on product delivery.

TABLE 4.2.40: EXTENT TO WHICH BAD ROAD AFFECT DELIVERY

Frequency Percentage

Very high 4 4.3

High 55 59.8

Very low 7 7.6

Low 26 28.3

Total 92 100

The table above revealed that 4(4.3%) respondents chose very high, 55(59.8%)

respondents chose high, 7(7.6%) respondents chose very low and the remaining

26(28.3%) respondents chose low.

TABLE 4.2.41: POLICY ON MODE OF TRANSPORTATION

Frequency Percentage

Yes 43 46.7

System 49 53.3

Total 92 100

The table above revealed that 43(46.7%) respondents want the firm to improve its

policy on mode of transportation while the remaining 49(53.3%) respondents not

indicated.

TABLE 4.2.42: POLICY ON PRODUCT QUALITY

Frequency Percentage

Yes 21 22.8

System 71 77.2

Total 92 100

The table above revealed that 21(22.8%) respondents want the company to enhance

its product quality while the remaining 71(77.2%) not indicated.

TABLE 4.2.43: POLICY ON PRICING

Frequency Percentage

Yes 56 60.9

System 36 39.1

Total 92 100

The table above indicated that 56(60.9%) respondents want the firm to improve its

policy on pricing while the remaining 36(39.1) not indicated.

4.3 TEST OF HYPOTHESES

The hypotheses drawn from the objective of this research work would be tested

using chi-square test in order to test the validity of already stated hypotheses based

on the nature of questionnaire designed. The chi-square test is basically a measure of

the discrepancy existing between the observed and expected frequency. Meanwhile,

the decision rule is that anything less the .005 is significant. In that case we reject the

null hypothesis (HO) and Accept the Alternative Hypothesis (HI) and vice versa.

4.3.1 HYPOTHESIS

HO: The quality of A-Z lubricants does not significantly affect its demand.

HI: The quality of A-Z lubricants significantly affect its demand.

To test this hypothesis, response to question 6 of the questionnaire was analyzed:

NPar Tests

FREQUENCIES: HOW WOULD YOU ASSESS THE QUALITY OF A-Z OIL

IN RELATION TO OTHERS

Observed N Expected N Residual

Excellent 5 8.3 - 3.3

Very good 12 8.3 3.7

Good 8 8.3 - 3

Total 25 100

Chi-Square Test

Test Statistics

How would you assess the quality of A-Z Oil in relation to others

Chi-Square 2.960

Df 2

Asymp. Sig. – 228

DECISION RULE:

Since O cells (.0%) have expected frequencies less than 5. The minimum expected

cell frequency is 8.3. Therefore, we reject the null hypothesis (HO) and accept the

alternative hypothesis (HI) that the quality of A-Z lubricant significantly affect its

demand.

4.3.2 HYPOTHESIS 2

HO: Cost of transportation does not significantly affect the price of A-Z lubricants.

HI: Cost of transportation significantly affect the price of A-Z lubricants.

To test this hypothesis response to question 3 of the questionnaire was analyzed.

NPar Tests

FREQUENCIES “TO WHAT EXTENT DOES TRANSPORTATION AFFECT

COST”

Observed N Percent Residual

High 5 8.3 - 3.3

Moderate 17 8.3 8.7

Low 3 8.3 -5.3

Total 25 100

Chi-Square Test

Test Statistics

“TO WHAT EXTENT DOES TRANSPORTATION AFFECT COST”

How would you assess the quality of A-Z Oil in relation to others?

Chi-Square 13.760

Df 2

Asymp. Sig. .001

DECISION RULE:

Since O cells (.0%) have expected frequencies less than 5. The minimum expected

cell frequency is 8.3. Therefore, we reject the null hypothesis (HO) and accept the

alternative hypothesis (HI) that the cost of transportation significantly affect the

price of A-Z lubricants.

CHAPTER FIVE

SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION

5.1 INTRODUCTION

This chapter is based on the analysis and interpretation given in chapter four.

Sequel to presentation of data, a lot of observations and findings emerged

from the study but will be summarized for easy assessment at a glance for the

purpose of recommendation and conclusion thereafter.

5.2 SUMMARY OF FINDINGS

Based on the analysis and interpretation of data in chapter 4 of this research

work, the following findings were made:

1. It was ascertained that A-Z petroleum products Limited was a licensed

manufacturing outfit meant for the production and marketing of A-Z

lubricants to its numerous customers in the country for the servicing of

motor engine, motorcycle engine, heavy duty engine, generators etc. Its

channel of distribution starts from the Factory -> Depot -> Distributors -

> Sub-Distributors -> Final Consumers.

2. It was discovered that the quality of A-Z oil was very good when

compared to the competing products of Tonimas oil, Ammasco oil, Dossy

flow oil and Lubcon oil. Moreover, it was certified by the American

Petroleum Institute (API), Standard Organization of Nigeria(SON) and

Society of Automotive Engineers(SAE) and other regulating bodies.

3. The researcher discovered that the cost of transportation significantly

affect the price of A-Z lubricant because the firm bears the cost of

transportation right from the source of raw materials (additives) to the

point of delivery to distributor warehouse.

4. It was discovered that most of the customers enjoy the availability of A-Z

lubricants. This easy accessibility to A-Z products was a good strategy of

increasing the company’s market share and its presence in the market

place.

5. The researcher discovered that bad road network significantly affect the

demand of A-Z lubricants in Aba metropolis because some of the

customers cum potential customers that suppose to buy from Aba moved

to other neighboring towns like Port Harcourt, Uyo, Owerri to buy due to

the bad road network currently experiencing in Aba.

6. From the management perspective, it was discovered that government

policies adversely affect the company distribution activities. In most cases,

government requires firms to pay certain levies, obtain emblems, daily

ticket, yearly certificate (National/State) before such company can

experience effective Marketing in an area / locality without molestation.

This is a big hurdle to business growth and development of Nigerian

economy.

7. Finally, it was discovered of recent that environmental factors like high

level of social menace and upheaval in Aba metropolis significantly affect

the demand of A-Z lubricants in the area because some of the distributors

are relocating to a more secured and conducive neighboring towns.

Another determinant is the climatic factors like the raining season; during

this period there is decline in sales of lubricants.

5.3 RECOMMENDATIONS

1. Since A-Z petroleum products Limited was licensed manufacturing outfit

fpr the production and marketing of lubricants in the Nigeria market there

is need for its expansion internationally. The chairman and the

management should start thinking of converting the firm from what I

regarded as indigenous national company (entrepreneur) to a multinational

public limited liability company. Its intense outlook should go beyond the

nation most especially as it has been certified by various regulating bodies

both locally and internationally like the Standard Organization of Nigeria

and American Petroleum Institute respectively. Moreover, as a player in

the oil and gas industry, the firm should fully diversify into the

establishment of filling stations in major cities and acquiring oil well in

Nigeria and beyond.

2. It is true that the quality of A-Z oil was certified as very good when

compared to the competing Products of Tonimas oil, Ammasco oil, Dossy

Flow oil and Lubcon oil during the course of this research work but what

happens when compared to the BIG 8 (Mobil, Total, Texaco, Oando, AP,

Conoil etc). Therefore, management should not relax in there quest for top

brands and higher quality products that are capable of competing

internationally. These products in question should be outstanding and

unique in its features and marketing mix arrangement. This will enable the

management of the firm to curtail the pressure and problem of brand

switching in the market among the consumers couple with the rapid

proliferation of technologies nowadays.

3. In order to cut-down cost on transportation, the management should at

times supply directly to distributors warehouse with the consent of the

depot manager after due confirmation of its payment instrument / balance

as the case may be. This will help to minimize cost.

4. Since it has been discovered that most of the customers enjoy the

availability of A - Z

lubricants, effort should be made to ensuring continuity of supply and that

the distribution channels have easy access to the company’s products as at

when needed. This will help to reduce the tendency for product switching

among the consumers or diversification of money by the distributors to

other firms. In the same vein, improvement of policy on Product

availability is very crucial as this will help to enhance the market share of

A-Z, promote product intensity and acceptability in the market.

5. Since bad road network adversely affect the demand Of A-Z oil, the

management of the company through its numerous direct and indirect

agencies, Business Associates, Clubs, Associations, government

representatives should join the masses in their quest for good road network

in Nigeria for social and economic development of Nigerian business. This

will help to boost demand in Aba metropolis.

6. Since government policy affect demand of A-Z Lubricants, management

should device means of negotiating properly with government or its agents

for smooth and efficient marketing. Moreover, this will help the company

sales force to avoid molestation by the government task force which may

dent the corporate image of the firm and generate de-marketing if care is

not taken. Meanwhile, government policy should be drawn in such a way

that will suit the economy at hand and favor existing or potential firms.

7. Since the environmental factors are becoming higher each day in Aba and

some other places, the firm business is affected evident in its low turnover,

the firm should stand out among others/public to say NO to the social and

economic menace. This will help to define the stand point of the firm and

goodwill restored for increase turnover.

8. Finally, the management of the firm should strive to stabilize prices of

various products at least to a reasonable time with the aid of effective

management of pricing functions and general improvement on pricing

policy of A-Z petroleum products limited. Moreover, there is need for line

managers in the company especially in marketing related areas to re-

appraise the company, adopt more strategies through periodic research and

adequate human resources development of field sales men.

CONCLUSION:

This study has generated an exciting package on the assessment of the distribution

strategy of A-Z petroleum products Ltd. The researcher collected relevant data,

analyze, and interpret the data, summarize its finding and recommend to the

management how to sustain, maintain and improve the market share of the company

and better ways of strengthening its distribution strategy.

It is pertinent to appraise and reappraise corporate distribution strategy/objectives

and ensuring that organizational activities are not deviated from the attainment of

goals. The researcher hope that the firm will continue to sustain its prevent levels of

operations in distributing its products and even surpass it in the interest of the future.

Finally, the researcher is of the view that if the recommendations are judiciously

looked into and implemented by the management of the firm it will go a long way

towards improving company’s physical distribution activities, performance of field

sales managers and other researchers that will like to study more on this work.

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APPENDIX B

RESULT OF MANAGEMENT QUESTIONNAIRE ANALYSIS AS GIVEN BY SPSS

NPar Tests

From Management Perspective

Frequencies

Statistics

‘to what extent does

environmental factors affect

distribution’

N Valid 25

Missing 0

‘to what extent does environmental factors affect distribution’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘high’ 4 16.0 16.0 16.0

‘moderate’ 18 72.0 72.0 88.0

‘low’ 3 12.0 12.0 100.0

Total 25 100.0 100.0

Frequencies

Statistics

‘does government policy affect

the company distribution

strategy’

N Valid 25

Missing 0

‘does government policy affect the company distribution strategy’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 16 64.0 64.0 64.0

‘no’ 1 4.0 4.0 68.0

‘undecided’ 8 32.0 32.0 100.0

‘does government policy affect the company distribution strategy’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 16 64.0 64.0 64.0

‘no’ 1 4.0 4.0 68.0

‘undecided’ 8 32.0 32.0 100.0

Total 25 100.0 100.0

Frequencies

Statistics

‘to what extent does bad road

affect distribution strategies’

N Valid 25

Missing 0

‘to what extent does bad road affect distribution strategies’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘high’ 2 8.0 8.0 8.0

‘moderate’ 19 76.0 76.0 84.0

‘low’ 4 16.0 16.0 100.0

Total 25 100.0 100.0

NPar Tests

Chi-Square Test

Test Statistics

‘to what extent

does

transportation

affect cost’

Chi-Square 13.760a

Df 2

Asymp. Sig. .001

Test Statistics

‘to what extent

does

transportation

affect cost’

Chi-Square 13.760a

Df 2

Asymp. Sig. .001

a. 0 cells (.0%) have

expected frequencies

less than 5. The

minimum expected cell

frequency is 8.3.

Frequencies

‘to what extent does transportation affect cost’

Observed N Expected N Residual

‘high’ 5 8.3 -3.3

‘moderate’ 17 8.3 8.7

‘low’ 3 8.3 -5.3

Total 25

Chi-Square Test

Test Statistics

‘how would you

assess the

quality of A-Z

oil in relation to

others’

Chi-Square 2.960a

Df 2

Asymp. Sig. .228

a. 0 cells (.0%) have expected

frequencies less than 5. The

minimum expected cell

frequency is 8.3.

Frequencies

‘how would you assess the quality of A-Z oil in

relation to others’

Observed N Expected N Residual

‘excellent’ 5 8.3 -3.3

‘very good’ 12 8.3 3.7

‘good’ 8 8.3 -.3

Total 25

DESCRIPTIVE

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

‘sex’ 25 1 2 1.32 .476

‘age’ 25 1 3 1.92 .759

‘marital status’ 25 1 2 1.68 .476

‘who is your target market’ 25 1 2 1.40 .500

‘how long does it take to

deliver A-Z oil to your

customer’

25 1 3 1.44 .583

‘to what extent does

transportation affect cost’ 25 2 4 2.92 .572

‘how would you rate your

company transportation

system’

25 1 3 1.68 .627

‘how would you assess the

quality of A-Z oil in relation

to others’

25 1 3 2.12 .726

‘to what extent does bad

road affect distribution

strategies’

25 2 4 3.08 .493

‘does government policy

affect the company

distribution strategy’

25 1 3 1.68 .945

‘to what extent does

environmental factors affect

distribution’

25 2 4 2.96 .539

‘to what extent does problem

of capital affect distribution

strategies’

25 2 4 3.12 .526

‘how would you assess

performance of company

dist strategy for the past

decade’

25 1 3 2.36 .569

‘based on question 10 are

you satisfied with the

distribution strategies’

25 1 2 1.04 .200

‘policy on pricing’ 24 1 1 1.00 .000

‘policy on product

availability’ 4 1 1 1.00 .000

‘policy on choice of

channel’ 2 1 1 1.00 .000

‘policy on promotion’ 2 1 1 1.00 .000

‘to what extent do activities

of sub-distributors affect

cost’

25 1 4 2.56 .712

‘to what extent are

customers satisfied with the

company’s channel of

distribution’

25 1 3 2.20 .577

‘government policy’ 3 1 1 1.00 .000

‘channel of distribution’ 9 1 1 1.00 .000

‘poor road network’ 14 1 1 1.00 .000

‘high cost of transportation’ 3 1 1 1.00 .000

‘capital and loss’ 0

Valid N (listwise) 0

Frequencies

Frequency Table

‘sex’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘male’ 17 68.0 68.0 68.0

‘female’ 8 32.0 32.0 100.0

Total 25 100.0 100.0

‘age’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘under 30’ 8 32.0 32.0 32.0

’30-40’ 11 44.0 44.0 76.0

’41 and above’ 6 24.0 24.0 100.0

Total 25 100.0 100.0

‘marital status’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very high’ 8 32.0 32.0 32.0

‘high’ 17 68.0 68.0 100.0

Total 25 100.0 100.0

‘who is your target market’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘distributors’ 15 60.0 60.0 60.0

‘retailers’ 10 40.0 40.0 100.0

Total 25 100.0 100.0

‘how long does it take to deliver A-Z oil to your customer’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘one day’ 15 60.0 60.0 60.0

‘one week’ 9 36.0 36.0 96.0

‘one week’ 1 4.0 4.0 100.0

Total 25 100.0 100.0

‘to what extent does transportation affect cost’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘high’ 5 20.0 20.0 20.0

‘moderate’ 17 68.0 68.0 88.0

‘low’ 3 12.0 12.0 100.0

Total 25 100.0 100.0

‘how would you rate your company transportation system’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very effective’ 10 40.0 40.0 40.0

‘effective’ 13 52.0 52.0 92.0

‘ineffective’ 2 8.0 8.0 100.0

Total 25 100.0 100.0

‘how would you assess the quality of A-Z oil in relation to others’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘excellent’ 5 20.0 20.0 20.0

‘very good’ 12 48.0 48.0 68.0

‘good’ 8 32.0 32.0 100.0

Total 25 100.0 100.0

‘to what extent does bad road affect distribution strategies’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘high’ 2 8.0 8.0 8.0

‘moderate’ 19 76.0 76.0 84.0

‘low’ 4 16.0 16.0 100.0

Total 25 100.0 100.0

‘does government policy affect the company distribution strategy’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 16 64.0 64.0 64.0

‘no’ 1 4.0 4.0 68.0

‘undecided’ 8 32.0 32.0 100.0

‘does government policy affect the company distribution strategy’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 16 64.0 64.0 64.0

‘no’ 1 4.0 4.0 68.0

‘undecided’ 8 32.0 32.0 100.0

Total 25 100.0 100.0

‘to what extent does environmental factors affect distribution’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘high’ 4 16.0 16.0 16.0

‘moderate’ 18 72.0 72.0 88.0

‘low’ 3 12.0 12.0 100.0

Total 25 100.0 100.0

‘to what extent does problem of capital affect distribution strategies’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘high’ 2 8.0 8.0 8.0

‘moderate’ 18 72.0 72.0 80.0

‘low’ 5 20.0 20.0 100.0

Total 25 100.0 100.0

‘how would you assess performance of company dist strategy for the past

decade’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘excellent’ 1 4.0 4.0 4.0

‘very good’ 14 56.0 56.0 60.0

‘good’ 10 40.0 40.0 100.0

Total 25 100.0 100.0

‘based on question 10 are you satisfied with the distribution strategies’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 24 96.0 96.0 96.0

‘no’ 1 4.0 4.0 100.0

Total 25 100.0 100.0

‘policy on pricing’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 24 96.0 100.0 100.0

Missing System 1 4.0

Total 25 100.0

‘policy on product availability’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 4 16.0 100.0 100.0

Missing System 21 84.0

Total 25 100.0

‘policy on choice of channel’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 2 8.0 100.0 100.0

Missing System 23 92.0

Total 25 100.0

‘policy on promotion’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 2 8.0 100.0 100.0

Missing System 23 92.0

Total 25 100.0

‘to what extent do activities of sub-distributors affect cost’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘to a very large extent’ 1 4.0 4.0 4.0

‘to a large extent’ 11 44.0 44.0 48.0

‘to a fair extent’ 11 44.0 44.0 92.0

‘to a low extent’ 2 8.0 8.0 100.0

Total 25 100.0 100.0

‘to what extent are customers satisfied with the company’s channel of distribution’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘to a very large extent’ 2 8.0 8.0 8.0

‘to a large extent’ 16 64.0 64.0 72.0

‘to a fair extent’ 7 28.0 28.0 100.0

Total 25 100.0 100.0

‘government policy’

Frequency Percent Valid Percent

Cumulative

Percent

Valid 1 3 12.0 100.0 100.0

Missing System 22 88.0

Total 25 100.0

‘channel of distribution’

Frequency Percent Valid Percent

Cumulative

Percent

Valid 1 9 36.0 100.0 100.0

Missing System 16 64.0

‘channel of distribution’

Frequency Percent Valid Percent

Cumulative

Percent

Valid 1 9 36.0 100.0 100.0

Missing System 16 64.0

Total 25 100.0

‘poor road network’

Frequency Percent Valid Percent

Cumulative

Percent

Valid 1 14 56.0 100.0 100.0

Missing System 11 44.0

Total 25 100.0

‘high cost of transportation’

Frequency Percent Valid Percent

Cumulative

Percent

Valid 1 3 12.0 100.0 100.0

Missing System 22 88.0

Total 25 100.0

‘capital and loss’

Frequency Percent

Missing System 25 100.0

APPENDIX C

RESULT OF CUSTOMERS QUESTIONNAIRE ANALYSIS AS GIVEN BY SPSS

From Customers perspective

Frequencies

Statistics

‘to what extent does

transportation affect cost’

N Valid 92

Missing 0

‘to what extent does transportation affect cost’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very high’ 9 9.8 9.8 9.8

‘high’ 35 38.0 38.0 47.8

‘moderate’ 36 39.1 39.1 87.0

‘low’ 12 13.0 13.0 100.0

Total 92 100.0 100.0

Frequencies

Statistics

‘to what extent does bad road

affect delivery’

N Valid 92

Missing 0

‘to what extent does bad road affect delivery’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very high’ 4 4.3 4.3 4.3

‘high’ 55 59.8 59.8 64.1

‘very low’ 7 7.6 7.6 71.7

‘low’ 26 28.3 28.3 100.0

Total 92 100.0 100.0

Frequencies

Statistics

‘to what extent do you enjoy

availability of A-Z oil’

N Valid 92

Missing 0

‘to what extent do you enjoy availability of A-Z oil’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very high’ 17 18.5 18.5 18.5

‘high’ 52 56.5 56.5 75.0

‘low’ 20 21.7 21.7 96.7

‘very low’ 3 3.3 3.3 100.0

Total 92 100.0 100.0

Descriptives

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

‘sex’ 92 1 2 1.43 .498

‘age’ 92 1 3 1.97 .687

‘marital status’ 92 1 3 1.83 .526

‘where do you source’ 90 1 4 1.79 .627

‘any lapse in transportation

from source to warehouse’ 90 1 2 1.46 .501

‘poor road network’ 28 1 1 1.00 .000

‘poor channel of

distribution’ 26 1 1 1.00 .000

‘high cost of transportation’ 11 1 1 1.00 .000

‘government policy’ 18 1 1 1.00 .000

‘how often do you witness

lapse’ 54 1 4 2.72 .979

‘to what extent does

transportation affect cost’ 92 1 4 2.55 .843

‘how would you rate

effectiveness of A-Z oil’ 92 1 3 1.78 .677

‘to what extent do you

enjoy availability of A-Z

oil’

92 1 4 2.10 .727

‘rate the effect of road

network on product delivery 92 1 4 2.85 .645

‘to what extent does bad

road affect delivery’ 92 1 4 2.60 .950

‘policy on mode of

transportation’ 43 1 1 1.00 .000

‘policy on product quality’ 21 1 1 1.00 .000

‘policy on pricing’ 56 1 1 1.00 .000

Valid N (listwise) 0

Frequencies

Frequency Table

‘sex’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘male’ 52 56.5 56.5 56.5

‘female’ 40 43.5 43.5 100.0

Total 92 100.0 100.0

‘age’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘under 30’ 23 25.0 25.0 25.0

’30-40’ 49 53.3 53.3 78.3

’41 and above’ 20 21.7 21.7 100.0

Total 92 100.0 100.0

‘marital status’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘singe’ 22 23.9 23.9 23.9

‘married’ 64 69.6 69.6 93.5

‘engaged’ 6 6.5 6.5 100.0

Total 92 100.0 100.0

‘where do you source’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘factory’ 26 28.3 28.9 28.9

‘depot’ 60 65.2 66.7 95.6

‘distributor’ 1 1.1 1.1 96.7

‘’sub distributor’ 3 3.3 3.3 100.0

Total 90 97.8 100.0

Missing System 2 2.2

Total 92 100.0

‘any lapse in transportation from source to warehouse’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘no’ 49 53.3 54.4 54.4

‘yes’ 41 44.6 45.6 100.0

Total 90 97.8 100.0

Missing System 2 2.2

Total 92 100.0

‘poor road network’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 28 30.4 100.0 100.0

Missing System 64 69.6

Total 92 100.0

‘poor channel of distribution’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 26 28.3 100.0 100.0

Missing System 66 71.7

Total 92 100.0

‘high cost of transportation’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 11 12.0 100.0 100.0

Missing System 81 88.0

Total 92 100.0

‘government policy’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 18 19.6 100.0 100.0

Missing System 74 80.4

Total 92 100.0

‘how often do you witness lapse’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘twice a week’ 6 6.5 11.1 11.1

‘once a week’ 17 18.5 31.5 42.6

‘once a month’ 17 18.5 31.5 74.1

‘not sure’ 14 15.2 25.9 100.0

Total 54 58.7 100.0

Missing System 38 41.3

Total 92 100.0

‘to what extent does transportation affect cost’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very high’ 9 9.8 9.8 9.8

‘high’ 35 38.0 38.0 47.8

‘moderate’ 36 39.1 39.1 87.0

‘low’ 12 13.0 13.0 100.0

Total 92 100.0 100.0

‘how would you rate effectiveness of A-Z oil’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very effective’ 33 35.9 35.9 35.9

‘effective’ 46 50.0 50.0 85.9

‘ineffective’ 13 14.1 14.1 100.0

Total 92 100.0 100.0

‘to what extent do you enjoy availability of A-Z oil’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very high’ 17 18.5 18.5 18.5

‘high’ 52 56.5 56.5 75.0

‘low’ 20 21.7 21.7 96.7

‘very low’ 3 3.3 3.3 100.0

Total 92 100.0 100.0

‘rate the effect of road network on product delivery

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘excellent’ 2 2.2 2.2 2.2

‘very good’ 21 22.8 22.8 25.0

‘good’ 58 63.0 63.0 88.0

‘poor’ 11 12.0 12.0 100.0

Total 92 100.0 100.0

‘to what extent does bad road affect delivery’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘very high’ 4 4.3 4.3 4.3

‘high’ 55 59.8 59.8 64.1

‘very low’ 7 7.6 7.6 71.7

‘low’ 26 28.3 28.3 100.0

Total 92 100.0 100.0

‘policy on mode of transportation’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 43 46.7 100.0 100.0

Missing System 49 53.3

Total 92 100.0

‘policy on product quality’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 21 22.8 100.0 100.0

Missing System 71 77.2

Total 92 100.0

‘policy on pricing’

Frequency Percent Valid Percent

Cumulative

Percent

Valid ‘yes’ 56 60.9 100.0 100.0

Missing System 36 39.1

Total 92 100.0

APPENDIX D

QUESTIONNAIRE TO A-Z DISTRIBUTORS

Department of Marketing

University of Nigeria

Enugu Campus

5th

March, 2010.

Dear Sir/Madam,

I am a postgraduate student of University of Nigeria Enugu Campus conducting an MBA research

work on the Assessment of the Distribution Strategies of A-Z Petroleum Products Ltd.

The objective of this study is to improve the body of knowledge in the field of Marketing with

emphasis on distribution strategies. It is purely an academic exercise to enable me fulfill the

necessary requirement for the award of Master of Business Administration (MBA) in Marketing.

Please feel free to complete it and chose from the available options. You are required to tick the

box of your choice among the options provided. Please return accordingly as all information

provided will be treated with utmost confidentiality.

Thanks.

Yours faithfully,

Ilodigwe Samuel Chukwudi

PG/MBA/08/47494

CUSTOMERS QUESTIONAIRE (DISTRIBUTORS)

SECTION A: PERSONAL DATA

Please tick the one that is most appropriate to you.

1. Sex: (a) Male □ Female □

2. Age: (a) under 30 years □ (b) 30 – 40 years □ (c) 41 above □

3. Marital Status: (a) Single (b) Married (c) Engaged (d) Otherwise

SECTION B:

1. As a distributor of A-Z Oil, where did you source your Products?

(a) Factory □ (b) Depot [ ] (c) Distributor □ (d) Sub Distributor □

2. Is there any lapses in the transportation of A-Z Oil from your source to your warehouse?

(a) Yes (b) No

3. What kind of lapses do you observe? (Multiple response possible)

(a) Poor road network

(b) Poor Channel of distribution

(c) High cost of transportation

(d) Government policy

4. How often do you witness lapses?

(a) Twice a week [ ](b) Once a week [ ] (c) Once a month [ ] (d) Not sure [ ]

5. To what extent does transportation affect the cost of A-Z Oil?

(a) Very high [ ] (b) High [ ] (c) Moderate [ ] (d) Low[ ]

6. How would you rate the effectiveness of A-Z Oil?

(a) Very effective (b) Effective (c) Ineffective (d) Very ineffective

7. To what extent do you enjoy availability of A-Z Oil?

(a) Very high (b) High (c) low (d) very low

8. How would you rate the effect of road network on the delivery of your products as at when

needed?

(a) Excellent (b) Very good (c) Good (d) Poor

9. To what extent does bad road network affect delivery?

(a) Very high (b) high (c) Very low (d) low

10. What aspect of the distribution strategies do you think should be improved upon (multiple

response)?

(a) Policy on mode of transportation

(b) Policy on product quality

(c) Policy on pricing

APPENDIX E

QUESTIONNAIRE TO A-Z MANAGEMENT STAFF

Department of Marketing

University of Nigeria

Enugu Campus

5th

March, 2010.

Dear Sir/Madam,

I am a postgraduate student of University of Nigeria Enugu Campus conducting an MBA research

work on the Assessment of the Distribution Strategies of A-Z Petroleum Products Ltd.

The objective of this study is to improve the body of knowledge in the field of Marketing with

emphasis on distribution strategies. It is purely an academic exercise to enable me fulfill the

necessary requirement for the award of Master of Business Administration (MBA) in Marketing.

Please feel free to complete it and chose from the available options. You are required to tick the

box of your choice among the options provided. Please return accordingly as all information

provided will be treated with utmost confidentiality.

Thanks.

Yours faithfully,

Ilodigwe Samuel Chukwudi

PG/MBA/08/47494

A-Z MANAGEMENT STAFF QUESTIONNAIRE

Section A: Personal Data

Please tick the one most appropriate

1. Sex (a) Male (b) Female

2. Age (a) Under 30 yrs (b) 30-40yrs (c) 41 above

3. Marital status (a) Single (b) Married

Section B

1. Who is your target market in the channel of distribution?

(a) Distributors (b) Retailers (c) End users

2. How long does it take you to deliver A-Z oil to your

customers warehouse.

(a) One day (b) One week (c) One month

(d) Above one month

3. To what extent does transportation affect the cost of A – Z products?

(a) Very high (b) High (c) Moderate (d) Low

4. How would you rate your company transportation system?

(a) Very effective (b) Effective (c) Ineffective

(d) Very ineffective

6. How would you assess the quality of A-Z oil in relation to competing products of Ammasco

oil, Tonimas oil, Dozzy flow oil and Lubcon oil?

(a) Excellent (b) Very good (c) Good (d) Poor

7. To what extent does road network affect the distribution strategies of A-Z oil?

(a) Very high (b) High (c) Moderate (d) Low

8. Does government policy affect the company distribution strategies?

(a) Yes (b) No (c) Not sure (d) Undecided

9. To what extent does environmental factors affect the company distribution strategies?

(a) Very high (b) High (c) Moderate (d) Low

10. To what extents does the problems encountered in getting capital affect distribution

strategies of the company?

(a) Very high (b) High (c) Moderate (e) Low

11. How would you assess the performance of the company distribution strategies for the past

decade?

(a) Excellent (b) Very good (c) Good (d) Poor

12. Based on your rating above, would you say that you are satisfied with the present

distribution strategies of the company?

(a) Yes (b) No (c) Undecided

13. What aspect of the distribution strategies do you think should be improved upon? (multiple

response possible)

(a) Policy on pricing

(b) Policy an product availability

(c) Policy on choice of channel

(d) Policy on promotion

14. To what extent do you think that activities of sub-distributors in the distribution channel are

responsible for high cost of A-Z oil?

(a) To a very large extent (b) Large extent

(c) Fair extent (d) To a low extent

(e) To a very low extent

15. To what extent do you think customers are satisfied with the channel of distribution used by

the company?

(a) To a very large extent (b) Large extent

(c) Fair extent (d) To a low extent

(e) To a very low extent

16. Indicate the factors which you think frequently prevent A-Z oil from reaching the

consumers?

(a) Government policy

(b) Channel of distribution

(c) Poor road network

(d) High court of transport

(e) Capital and loss