THE EFFECTIVENESS OF PHYSICAL DISTRIBUTION IN NIGERIAN BOTTLING COMPANY
(A CASE STUDY OF COCA-COLA, ENUGU)
This research work is mainly on the effectiveness of physical distribution in Nigeria Bottling Company (NBC) (A case study of Coca-cola). The essential objectives of this study is to determine the physical distribution activities of Nigeria Bottling Company products in Enugu metropolis and try to find out if these activities are well performed as expected. To analyze the present level of physical distribution system with the sole aim of assessing its level of efficiency, and to determine the nature of market coverage that physical distribution of Nigeria Bottling Company product is concentrated on. Also, to know if their products reaches the consumers at the right time and in the right quantity. Primary and secondary data were collected in the course of this study. The primary data needed for this study were collected from employee’s, dealers and consumers of coca-cola products, while secondary data used came from authoritative local and foreign textbook’s, newspapers and journals and relevant past related projects. The research methodologies employed for data collection were questionnaire and observation to provide rudiments on how physical distribution activities are implemented. The data collected were treated and analyzed using tables, frequencies and percentages as well as top-man formula and Z-test statistical technique were used in calculating the sample size and testing of the hypothesis respectively of this study. From the analysis of the data obtained through the questionnaire’s distributed and collected revealed a lot of findings among which are:
· That coca-cola product has a very wide demand within Enugu metropolis.
· That customers are not satisfied with the present level of physical distribution service they receive.
· That coca-cola products are not distributed to every point where they are needed at the right time and in the right quantity, and
· That the employees of Nigeria Bottling Company receive complaints from customers
Finally, the researcher made some recommendations based on the findings and the various facts highlighted. The following were recommended among which are
· That Nigeria Bottling Company should maintain high quality products for continual greater market share.
· That Nigeria Bottling Company in view of the fact that the initial problem of the company is finding capable distribution outlets, the company should engage more on intensive and efficient physical distribution system so that the numerous customers are adequately reached.
· That Nigerian Bottling Company should provide more storage facilities to customers in order to increase sales.
· The sales truck of Nigeria Bottling Company should be serviced more often to avoid unnecessary breakdown in order to enable it render uninterrupted delivery services. This will help minimize the rate of complaints from customers.
To conclude based on the findings and recommendations highlighted; Nigerian Bottling Company and other companies should have good potential for growth and increased profitability, if only they can endeavor to improve more on their physical distribution system in order to further satisfy the actual and potential customers of their products. They should also make sure that the salesmen are being effective and efficient in their respective physical distribution activities.
TABLE OF CONTENTS
Title page - - - - - - - - - i
Approval page - - - - - - - - ii
Dedication - - - - - - - - iii
Acknowledgement - - - - - - - iv
Abstract - - - - - - - - - v
Table of contents - - - - - - - vi
List of tables - - - - - - - - x
Introduction - - - - - - - - 1
1.1 Background of the study - - - - - 1
1.2 Statement of the problem(s) - - - - 3
1.3 Objectives of the study - - - - - 6
1.4 Research Questions/Hypothesis - - - 7
1.5 Significance of the study - - - - - 9
1.6 Scope/ Delimitation of the study - - - 10
1.7 Definition of Terms - - - - - - 11
1.8 Limitations of the study -- - - - - 13
Review of Related Literature - - - - - 16
2.1 Meaning of Physical Distribution - - - 16
2.2 Nature of Physical Distribution - - - 19
2.3 Overview of Physical Distribution - - - 20
2.4 Activities Involved in Physical Distribution - 21
2.5 Physical Distribution in Enugu metropolis - 26
2.6 Importance of Physical Distribution - - - 28
2.7 Concept of Physical Distribution - - - 30
Research Methodology - - - - - - 33
3.1 Sources of Data - - - - - - 33
3.2 Population of Study - - - - - - 36
3.3 Sample Size Determination and Technique - 36
3.4 Research Instruments Used - - - - 41
3.5 Reliability or validity of Research Instruments- 43
3.6 Questionnaire Administration and Response Rate 47
3.7 Method of Data Treatment and Analysis - - 51
Presentation, Analysis and Interpretation of Data - 53
4.1 Presentation and Analysis of Data - - - 53
4.2 Test of Hypothesis - - - - - - 87
Discussion of Findings, Recommendations and Conclusion
5.1 Summary of Findings - - - - - 96
5.2 Recommendations - - - - - - 98
5.3 Conclusion - - - - - - - 100
Bibliography - - - - - - - 103
Appendices - - - - - - - 105
LIST OF TABLES
Table 4.1.1: Response of employee’s on whether company have a physical distribution department 55
Table 4.1.2: Response of employee’s on whether company embark on physical distribution activities 55
Table 4.1.3: Response of employee’s on company’s effectiveness of physical distribution
activities - - - - - - 56
Table 4.1.4: Response of employee’s on initial problem encountered by the company which restricted physical distribution. - - - 57
Table 4.1.5: Response of Employee’s on company’s capability to overcome these problems encountered. - - - - - 58
Table 4.1.6: Response of Employee’s on whether company’s warehousing facilities meet the needs of customers. - - - - - 60
Table 4.1.7: Response of Employee’s on enough distribution outlets - - - - 61
Table 4.1.8: Response of Employee’s on whether company provides storage facilities - - - 62
Table 4.1.9: Response of Employee’s on whether company have enough sales truck for delivery of its products to their customers - - 63
Table 4.1.10: Response of Employee’s on categories of customers - - - - - - 64
Table 4.1.11: Response of Employee’s on whether they receive complaint from their customers 65
Table 4.1.13: Summary of the Sex of Respondents - 66
Table 4.1.15: Summary of the marital status of
Respondents - - - - - 68
Table 4.1.16: Summary of the Educational attainment of respondents - - - - - 69
Table 4.1.17 Summary of the Position of Respondents 70
Table 4.1.18: Response of Dealers types - - - 71
Table 4.1.19: Response of Dealers on the supply of products at the right time and in the right quantity 71
Table 4.1.20: Response of Dealers on frequency of supply of products at the right time and in the right quantity- - - - - - 72
Table 4.1.21: Response of Dealers on satisfactory supply 73
Table4.1.22: Response of Dealers on how many crates of soft drink supplied to them - - 74
Table 4.1.23: Response of Dealers on whether they are satisfied with the present level of physical distribution service they receive - 75
Table 4.1.24: Response of Dealers on the efficiency of company driver- salesmen- - 76
Table 4.1.25: Response of Dealers on the attitude of driver-salesmen - - - - - - 77
Table4.1.26: Summary of the sex distribution of Respondents - - - - - 78
Table 4.1.27: Summary of the Age distribution of Respondents - - - - - 79
Table 4.1.28: Summary of the marital status of
Respondents - - - - - 80
Table 4.1.29: Summary of the Educational Qualification of Respondents - - - - - 81
Table 4.1.30: Summary of the Occupation of respondents 82
Table 4.1.31: Response of consumers on whether they know about physical distribution - - 83
Table 4.1.32: Response of consumers on justification of the company physical distribution activities 84
Table 4.1.33: Response of Consumers on Effectiveness of the Company Physical Distribution Activities 85
Table 4.1.34: Response of consumers on whether its motivate them to buy the company’s
Products - - - - - - 86
Table 4.1.35: Response of consumers on whether they are satisfied with the company’s product price 87
1.1 BACKGROUND OF THE STUDY
Production is incomplete until the goods get to the final consumers whom they are meant for. A typical firm will deliver as soon as the products are ready for consumption by the target consumers. The decision for firms to distribute its products directly through its own sales outlets and/or indirectly through marketing intermediaries such as wholesalers and retailers alone are not enough to get the goods to the final consumers. The firm has to ensure that the products are actually available to the distribution outlets.
Adequate care has to be taken if the products will minimize losses or damages and commensurate customer’s service have to be given in order to achieve customer satisfaction and increase patronage. In other words, the physical distribution management in charge of the flow of products from the manufacturer to the target customer with the sole aim to satisfy customers as well as to attain organization goals. Physical distribution must be properly channeled to this respect. Physical distribution is just how companies store, distribute and handle more goods so that they will be available to consumers at the appropriate time and place.
Consumer’s attraction and satisfaction are highly influenced by seller physical distribution capabilities. As such, the issue of physical distribution is paramount in business activities. An effective physical distribution will result to a reduction in cost of transportation, production cost and even will invariably lead to the attraction of many price conscious consumers.
In Nigeria context as well as most other developing countries, Industries are concentrated in few industrial cities, while the consumers are scattered both in home base and abroad. Efficient transportation and location of sales outlet will enable industries to make their products available to consumers at far distance. And so effective transportation and physical distribution can give a company an advantage to be close to these consumers. Pun-dits in distribution system believe that enormous savings can be gained in effective physical distribution section which has been described as “the last frontier for cost economics” from journal of marketing, April 15th, 1962.
Physical distribution should be intensive because consumers are not sufficiently satisfied with the way companies distribute their products within restricted area in the market environment. Therefore, an effective distribution of their products is very paramount as to attain marketing goals as well as to compete efficiently and effectively as possible within a given competitive marketing territory.
1.2 STATEMENT OF THE PROBLEMS
Physical distribution is a very important aspect in marketing activity as it creates place, convenient, form and time utilities and also set the possession phase for consumer acquisition of the most satisfying products. All gained toward customer satisfaction.
Based on this respect, there is need for careful handling of the physical distribution functions for the successful operation of industries.
However, physical distribution in Enugu industries tries to beat near perfection. It must be rated high in it careful activities such as transportation, warehousing, inventory management, order processing, production schedule and other components of physical distribution. Processing also has the ability to organize these lists of activities properly and implement them efficiently and effectively. sometimes the salesmen are not efficient in carrying out their physical distribution activities.
More so, the salesmen arbitrarily raise the cost of product sold to intermediaries in the target market. Thus reducing their profit margins sometimes. The degree of wholesalers and retailers profit margin impinges the final consumers. In some cases, the customers do not get enough of the required products at the right time, place and quantity. In particular reference to Nigeria Bottling Company, Enugu. They do not have enough outlets for their products.
Never-the –less, for them to compete efficiently and effectively with other companies in the soft drink industry, they need to have enough distribution outlets for their product mix. In most cases, the salesmen direct some products to place already allocated by the company customers. In this way, the physical distribution of products has a direct relationship with sales turnover.
Negative response to any of these points indicated above suggest that there is a deviation from what should normally be done. The desire to find out if any of such problems prevail, their cause- effect and what may be done to resolve such prevailing problems are the reasons for undertaking this study.
1.3 OBJECTIVES OF THE STUDY
In consonance with the macro objectives so as to determine the effectiveness of physical distribution in Nigeria Bottling Company, Enugu metropolis. This research study has some objectives to achieve which include:
To study the physical distribution activities of Nigerian Bottling Company products in Enugu metropolis and try to find out if these activities are well performed as expected.
To analyze the present level of physical distribution system with the aim to assess its level of efficiency.
To determine the nature of the market coverage that Nigerian Bottling Company physical distribution system is concentrated on.
To also determine the extent to which the physical distribution of products date along with the sales being made.
1.4 RESEARCH QUESTIONS
The question for this research work will be based on the following below. These are:
i. What is the size of demand for Nigerian Bottling Company products?
ii. Are customers satisfied with the present level of physical distribution service they receive from Nigerian Bottling Company?
iii. Does Nigerian Bottling Company have enough distribution outlets to satisfy their customer’s needs?
iv. What is the distribution objective of Nigerian Bottling Company?
v. What presentation of market coverage is Nigerian Bottling Company servicing?
vi. What is the type of distribution channel used by Nigerian Bottling Company?
vii. Do Nigerian Bottling Company products have a very wide demand in Enugu metropolis?
viii. Are Nigerian Bottling Company products distributed to every point where they are needed at the right time and in the right quantity?
This research work is based on the following hypotheses:
Ho1: Nigerian Bottling Company products have a very wide demand in Enugu metropolis.
Hi: Nigerian Bottling Company products do not have a very wide demand in Enugu metropolis.
Ho2: Nigerian Bottling Company products are distributed to every point where they are needed at the right time and in the right quantity.
Hi: Nigeria Bottling Company products are not distributed to every point where they are needed at the right time and quantity.
Ho3: Customers are satisfied with the present level of physical distribution service they receive.
Hi: Customers are not satisfied with the present level of physical distribution service they receive.
1.5 SIGNIFICANCE OF THE STUDY
An effective physical distribution of Nigerian Bottling Company products to the marketing intermediaries leads to efficient customer’s service. And so, it is important to study physical distribution because without distribution, companies cannot make sales. The old system of buying in marketing was traced back that when you produce a product the whole world will bit a part at your door. In modern time, it does not apply because the place utility must be incorporated. This means that in producing the best product, the customers must be communicated and they may want it delivered at a given time, place, form and as such, it is the function of physical distribution.
Non durable products such as soft drinks have to be supplied as at when needed. Any short fall in the performance will reduce the level of consumer service. Therefore, it is important to study physical distribution and the benefits derivable from this effective physical distribution study of products which will be made more readily available to them at all times.
1.6 SCOPE /DELIMITATION OF THE STUDY
This research work is conducted in Enugu metropolis which was divided into four (4) groups:” A, B, C and D” to find out the present physical distribution system of Nigerian Bottling Company. Also, to find out how effective such system is to enhance the marketing of Nigerian Bottling Company products. For further classification, the groups are made up of the following:
Group A: Ogui New Layout, Obiagwu and Asata.
Group B: Mary-land, Trans –Ekulu, Independence Layout and GRA
Group C: Emene, Abakpa-Nike and New Haven.
Group D: Uwani, Awkunanaw/ Gariki, Achara Layout/Agbani road and Coal camp.
1.7 DEFINITION OF TERMS
This is the movement of goods from the point of production to the point of consumption to satisfy consumers as efficiently and effectively as possible. (Stantons and Futrece, 1976:56)
This is the process of holding raw materials in the warehouse for the purpose of making available supply of raw materials to the production section if called for. Thus, it is a marketing function of holding goods and /or raw materials. And so, it is said to provide time utility. (Udeagha and Okeke , 1993).
This is the total amount of goods and/or raw materials contained in a store or factory at any given time. Store owners need to know the precise number of items on their shelves and storage areas in order to place order or control losses. (Kotler, 1988, p.34)
This is the physical distribution management activities that involve planning, implementing and control of the physical flows of finished goods from the point of production to the point of consumption to satisfy customer’s needs at the most appropriate time and place for the sole aim of profit motive. (Kotler, 1994, p.585)
A warehouse is a location with adequate facilities where volume shipment of goods i.e. capital goods are received such as “containers, tractors, truck, trailers and so on” from a production centre, broken down, reassembled into combination representing a particular order or orders and shipped to customer’s location or locations. In the same vein, it is a place for loading and off loading of products both in the central stores and the depot of Nigerian Bottling Company products. (Kotler, 1967, p. 46)
This is the process by which information is passed out to the target audience from the sales representative or distributor’s either by written, oral or non verbal expression or beckons. (Anibueze and Basil, 1996, p. 104).
1.8 LIMITATIONS OF THE STUDY
There are some factors that hindered the researcher from attaining the peak of this research work. Among these factors are:
i. ATTITUDE OF THE RESPONDENTS: The respondent attitudes were not in any way encouraging. Many of them including the management and its staff, dealers and consumers showed great indifferent in giving information about questions probed through the distributed questionnaire.
ii. TIME CONSTRAINT: The researcher complained seriously about the issue of time. As the time space at the researcher’s disposal to carryout adequate and exhaustive research is seriously impinged by other academic activities in collaboration with school programs.
iii. FINANCE CONSTRAINT: Due to the nature of the study that demands such finances than what the researcher could afford. Therefore, the scope/delimitation of the study was almost narrowed to enable the researcher have a representative sample from each of the geographical area’s classified that could effectively be studied bearing in mind the financial resources available to the researcher.
iv. LITERACY LEVEL:
The literacy levels of some of the respondents, most especially the studied company customers as well as their dealers are very discouraging one in carryout marketing research of this sort. As a result of that, problems were encountered in the completion of distribution strategy questionnaire as some were properly completed but wrongly filled with irrelevant information.