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THE EFFECTIVENESS OF DISTRIBUTION STRATEGY ON ORGANISATIONAL PROFITABILITY

CHAPTER ONE

INTRODUCTION

1.0   BACKGROUND OF THE STUDY

The type of distribution policy/strategy exercised differs from one organisation to the other, depending on the type of goods and services provided or produced in such business organisation. In considering the importance of distribution strategy on organisational profitability or before an organisation settles for the type of distribution policy to be used, two things has to be considered;

i.             Knowledge of various marketing channels available is one thing

ii.           Developing a sound system is another thing

The effectiveness of an excellent marketing executive however is in his ability to select and obtain channels which will maximize sales and minimize cost.

In selecting marketing channels, one must understand that, they are not rigid, rather they are dynamic. In essence the impact of distribution strategy on the organisational profitability of Coca-cola is that it helps to strengthen and make organisation’s marketing conception in terms of place and ability possible.

However, when a wrong system of distribution is being used by an organisation, such organisation is bound to fail but it the right peg is being put into the right hole success is bound to be attained.

1.1   AIMS AND OBJECTIVES OF THE STUDY

The motive behind the study is to seek and explain what will be the impact of distribution strategy on organisational profitability of coca-cola. The essence of choosing coca cola is because of the fact that must Nigerian manufacturers are producers of such consumer goods. This study intends to seek the distribution strategy that they make use in getting the goods to the ultimate consumer or user and the impact of such strategy on the profitability of the organisation, and overall of achieving the target of any marketing form, which is consumer satisfaction, whether the impact of these stated focus are favourable, otherwise has no impact at all.

The study would also look at various distributor strategies that are open to manufacturers, from which they can make their choice depending on the market coverage, product characteristics of each and how each of the earlier mentioned strategies can be adopted for coca cola. In order to be able to cover all the aims and objectives of the study, it would require an extensive research involving some of the department or units in the Nigeria Bottling Company Plc, Agidingbi Ikeja Lagos, but due to some constraints just two departments would be able to make use of this research i.e. sales/marketing and distribution department.

The organisation was chosen due to the position it occupies as one of the leading organisations, more so a market leader in its sector (soft drink sector). Hence much reference would be made to the company.

1.2   STATEMENT OF THE PROBLEM

The problem this study is meant to examine is that of distribution strategy adopted by Nigerian Bottling Company. This in effect, affects the producer, is that they are not to exploit the market of their potential customers not reached, while even the present consumers are not given the utmost satisfaction they are supposed to enjoy from the product.

Morever, distribution problem full capacity in terms of manufacturing. This study wants to find out the exact problems and how best they can be solved, and what advantage hope to gain soon when applying the various distribution strategies in distributing coca-cola and its impact on organisational profitability of the product (coca cola).

1.3   RATIONALE OF THE STUDY

A study of this nature, though for academic purpose can also be of help to the producer in bringing out problems encountered in distribution and how they can overcome such problem. Also, it will analyse the best way or method to maximize sales.

The study will also examine how a good distribution strategy can be good positive influence to the producers and how it will help him (producer) in achieving his organisational goals and objectives, more so, making the marketing concept realistic. This is because production is not complete until the products get to the ultimate consumer. The fact that adoption of a distribution strategy will help (NBC) in improving its production capacity, as we know that distribution problem together with other problem is the cause of under utilization of most product.

Moreover, the study will also examine bristly, the role of public authority (governors) in alleviating and improving the distribution of coca cola, because of the fact that some of these problems (external factors) are not what producer can solve, hence, the producers requires the help of the government to overcome them. For instance i.e. the issue of good infrastructure like roads which link up the producer to the consumer are much left to the public authority than for the private sector to embark upon.

1.4   SCOPE OF THE STUDY

This study intends to examine the impact of distribution strategy on the organisational profitability of coca cola and as a result would carry out only the necessary areas which includes distribution channels, types of channels and this is important because the first step in designing a distribution strategy is to decide on the kind of distribution channel to be adopted.

Also, the study tends to examine the various distribution strategies that a firm would be interested in using to distribute its products; most especially the type being used by the Nigeria Bottling Company (NBC) in distributing coca-cola.

Moreover, the study will bring out what impact these strategies will have on organisational profitability of coca-cola and the problem encountered making use of such a policy, what can be done to improve the systems, the effect it has on sales of coca cola.

Criteria for choosing the best channel is also important and it will be analysed because of the relationship that distribution channel has on each of the distribution strategies and the roles that channels play in making the product gets to it’s final consumer.

The study will make reports on the distribution activities in Nigeria Bottling Company Plc and how their distribution policy is affecting the sales of coca cola whether positively or reverse.

1.5   HISTORICAL BACKGROUND OF THE SUBJECT MATTER

The history of Nigeria Bottling Company is almost as old as Nigeria itself. It is one of the largest companies established in the country.

A young man named A. G. Leventis arrived at Abeokuta in (1922) as the sales agent of A. J. Tanagalakis and Company, with this development the group was laid for the establishment of the company, but it was to be for a short period of time when the company choose to start it’s operation at Ghana in (1937). This market strigger the beginning of A. G. Leventis business in West Africa. The development led to such establishment in Nigeria following leventis company’s operation in Nigeria received a boast and more focus, due to the fact that IE’s business interest in Ghana never sold to this government in (1962).

This focus led to greater development or improvement in the companies operation within the country that is Nigeria and it’s name was changed from leventis to Nigerian Bottling Company (NBC).

In (1952), NBC was incorporated and this could be said to be the beginning of the company life cycle. The first NBC plant was commission in (1953). This was situated as the basement of the company’s began and in (1955) the Ooze size of coca cola bottle was introduced into the market.

The major landmark history of the company includes: after initiating bottling operation at Oyingbo, the first plant to be opened was at Apapa. This followed by another landmark in the company’s history in which volume sales surpassed a million naira (N1,000,000) in 1961.

With this increase in sales the company had money to diversify from one brand to another. Such flavours like: sprite, fanta grape, club soda, fanta tonic and others were introduced in (1961). This diversification led to further increase in the sales volume and also made the company a major competitor in the market.

An expansion was realized in the company’s operation due to this success. For example, with the increase in sales experience in 1961. The Ibadan plant was opened in the same year. This also led to further expansion with the advert of other plants in the 1970’s in different parts of the country. The list of other plants established during this period are:

i.        The plant at Benin in 1970

ii.        The plant at Jos in 1972

iii.        The plant at Enugu in 1975

iv.        The plant at Ikeja in 1978

v.        The plant at Ilorin in 1979

1.7   LIMITATION OF THE STUDY

It is generally accepted that there is nothing in this world without it’s limitation, this also applied to this term paper. Some of the limitation in writing and confirming the topic on which this term paper is based are discussed below.

FINANCIAL PROBLEM:

The cost of conducting the research with the cost of carrying out the research in some part of the company was relatively expensive. This has discourage and given many student problems in writing their term paper especially who are not financially buoyant.

BOOK CONSTRAINT

There were no enough textbook which could be consulted in the library, the books available for consultation does not contain enough and the required information. Besides, the student were not allowed to take any material out of the premises or even to make photocopy of any of it.

UNWILLINGNESS OF THE RESPONDENT

There was no adequate statistics or essential issues, getting reliable information concerning the topic, even the company was reluctant to give their articles in distribution strategy. They feel insecure and therefore not giving any information minded thinking it will be used against than.

1.8   DEFINITION OF THE KEY TERMS

·                    DISTRIBUTION: This task is ensuring that goods and services produced by the organization are transported from place of production to the point of consumption as efficient and economical as possible.

·                    CHANNEL OF DISTRIBUTION: This is the combination of institutions or bodies through which the product passes to reach the market. It usually starts from a producer and ends with the buyer.

·                    DISTRIBUTION POLICY: This is the policy which determine the number of middlemen handling the products and services and it is adapted by the manufacturer to serve as guide for their choice of distribution channel.

·                    SALES VOLUME: This is the sales figure for a particular goods and services over a period of time. It’s earning of manufacturer from his sales of his product expressed in monetary value.

·                    SALES REPRESENTATIVE: They are the link between the organization and the consumer’s.

·                    DIRECT CHANNEL: This is the situation where the product are been distributed directly from the producers to the consumers through the help of the supervisor of the company.

·                    INDIRECT CHANNEL: This is the use of middlemen as intermediaries that distribute the product between the producers and the consumers.

·                    PRODUCT: A product is anything that can be offered to the market for attention, acquisition, use or consumption.

·                    MANAGER: This is the person at the helm of affairs charge with the responsibility of controlling other staffs in an organisation to attain set goals of such establishment.

REFERENCES

CHARLES D. SHEWE (1980) Marketing Concept and Applicant, McGraw Hill.

COLE A. A.  (1997): Basic Principle of Marketing Beyus Consult.

SANYAOLU T. O. (2002) Marketing Principle and Practice Fast Ventures Limited.

STANTON W. J. (1981) Fundamental of Marketing McGraw Hill.

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