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EFFECTS OF MARKETING SEGMENTATION ON SALES PERFORMANCE IN BEVERAGES INDUSTRY

ABSTRACT

The research study evaluated the effect of marketing segmentation on sales performance in beverages industry. The study investigated how these companies utilized marketing orientation and practices, organizational structure and strategy, marketing strategies on acquisition of market shares, usage of marketing mix elements on returns on capital employed, and how the competitive use of these variables influence the perception of consumers. The research study was developed around the theories of connectionist, personality, innovation diffusion, and cost structure and business performance. These variables were used to evolve a detailed analysis of issues relating to product quality, organizational structures and management theories. Theoretical models were reflected and used in developing five different hypotheses that were investigated through the survey of forty multinational and one-hundred and twenty indigenous foods and beverage manufacturing companies which were respectively randomly selected. Copies of well-structured questionnaire were administered to companies sampled. The validity and reliability of the instrument were measured at Cronbach’s alpha of 0.69 and alternative form validity of 0.62. Five hypotheses were raised and tested at 0.05 significant levels. The findings revealed that  marketing orientation adopted by multi-national companies (MNCs) yielded better performance than those of indigenous companies (INCs),  the structure/strategy adopted by MNCs yielded better performance than those of INCs, marketing strategies adopted by MNCs yielded more market shares than those of INCs, MNCs use of elements of marketing mix yielded higher rates of returns on capital employed than that of INCs, and competitive use of these 4Ps for consumers’ perception by MNCs yielded better performance compared to that of indigenous counterparts. The conclusion from the research findings showed that indigenous companies were unable to compete favourably because of their limited financial resources. It was recommended that indigenous companies should adopt competitive marketing, functional structure and strategy, with five marketing divisions, competitive use of elements of marketing mix, and embark on the production of food and beverages for export.

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

The concept of marketing competitiveness is highly synonymous with the theory of marketing evolution (Kotler, 2006). Robinson (1827) presented an elaborate disposition on the nature and structure of marketing system. Before then, there were only two market conditions explicitly recognized in literature. These market conditions divided market structure between perfect and monopoly markets; and succeeded in impressing that it is the market forms (intermediate) between pure competition and monopoly that are most commonly found in actual business world. Other factions of these divisions are well documented and include workable, effective and potential competitions. (Otokiti, 2000, and Varian, 1999)

With reports of the various successes and failures recorded by multinational companies in different continents of the world and in Nigeria particularly, it is necessary to attempt an extensive and intensive study of the strategies adopted in managing these multinationals companies that have resulted in their various successes and failures. Of great significance is the emergence of indigenous companies that are equally attempting either to expand or become multinational companies or grow to compete with the multinationals in food and beverage industry in Nigeria. This comparative study is thus essential, as it is capable of identifying the reasons for successes or failures of multinational and indigenous companies operating in Nigeria. Perhaps lessons could be learnt about the marketing orientation and practices, organizational structure and strategies (mother-daughter matrix), competitive marketing strategies and competitive use of the four elements of marketing mix of both the multinational and indigenous companies. A review of the various multinational companies in Nigeria, for instance, reveals their widespread branches covering major cities in the six geo-political zones with numerous widespread distributors, merchant-houses, and retailers. On the other hand, indigenous companies have very limited spread of operational bases and distributorship channels. This therefore informs the comparative nature of the research conducted and the analysis of these food and beverage companies.

According to Awodun (2007) in managing any organization, there are three conventional levels of management that constitute most hierarchical structure. These are the corporate level, the business level, and the functional level. These three levels are equally regarded as the strategic, operational and tactical levels respectively. At each of these levels, different types and sophistication of decisions are made but with diverse scope and intense. Decisions considered as strategic in nature usually required top-level management, large amounts of resource allocation, long-term prosperity, futuristic, multinational or multi-business consequences, and consideration of the external environment usually occupy important positions. For these reasons, Jones, et al., 1998; Harrison & Pelletier, 1998, 2000 asserted that top-level management or corporate managers are said to determine the right things to do, the middle-level management or functional managers do the right things while the low-level managers or functional managers do things right.

In a much recent neo-classical discuss, other variables in competitive system and pre-requisites listed against them are effective, potential, and workable competitions. All these are essential for optimal product mix, and provide general availability of necessary information about alternatives, presence of moderately large number of sellers, with each possessing capacity to survive and grow. Again, the preservative conditions to keep alive basis of these competition modes from others, include substantial independence of action whereby each seller is free to adopt own policy concerning production, pricing, and policy to modify changing conditions of demand and supply (Otokiti, 2004). The extent of competitiveness between these monopolistic firms necessitates attention to evaluate longitudinal operations of these enterprises via a comparative inter-firm analysis. This analysis is designed along the long operating years of operations of the foreign companies as against the indigenous counterparts with shorter history, despite owning greater proportion of productive resources like land, labour and unprocessed raw materials are either not fitting into the business realm or are just struggling to exist. It must be mentioned that only Cocoa Industry Limited, amongst other local food and beverage companies has records of substantial longitudinal documentation.

Studies (Bennett, 2000, and Dollinger, 2003) have also shown that multi-national companies are indicative of superior performance when compared with their indigenous counterparts, even when the dates of establishment are not too different from the objectives of indigenous enterprises. The need therefore to appraise the modality of achieving corporate objectives between multi-national and indigenous food and beverage manufacturing companies becomes inevitable. With these performance indicators, the focus on these companies’ ‘game plan’ called strategies regarded as the framework for managerial decisions (Goold and Campbell, 1987, Hax, 1990, Boarch and Arthur, 1995, and Manning, 2001), with the four elements of marketing mix viz: product, pricing, positioning, and promotion to highlight how the multinational and indigenous companies in the food and beverage manufacturing industry meet up their performance expectations, is the problem of this study.

1.2 Statement of Research Problem

Nigeria is a country endowed with abundant human and natural resources (Emmanuel, 2003) which include expanse of fertile land, moderate plantation cum irrigation farming, extensive sea-coast, long irrigative water and mineral deposits, etc. This is in addition to geographically located oil-rich belt, gulf of Guinea that is typical of equatorial type of regions. All these notwithstanding, her performance or dismay performance and uncoordinated results in Agricultural production, with partial success in foods and industrial crops such as rubber, cocoa, dye; oil-seeds etc call for actionable research. It is against this background that industrial enterprises are required to convert these resources for industrial usage; particularly as existing studies revealed that the global Agro-industrial linkage has been extensively documented in the literature of developed countries (Otokiti, 2004). Whereas their counterparts from developing countries are reluctant in making use of these abundant resources in enhancing food and beverage industry (Emmanuel, 2003). Consequently,

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