role of distribution channel in marketing of consumable products

ABSTRACT

This report work is aim at examining the roleof distribution channel on marketing of consumable products. Only few peple in the society today know that there is need to introduce a distribution channel in marketing of consumable products.

The report is also amed at enlightening the public on the role of distribution channel to orient the society on best way to market or purchase their products and the problems involved in distribution.

In this report, the problems, strategies and prospects of Unilever Nigeria Kaduna are stated, which is my reference company.

The beginning of this study introduces the aim and objectives of the study, which is why the subject matter is selected.

Literature review of various books on the subject matter which professors and professional body has talk about.

Moreover, it includes the main body of the essay, which shows various sub-topics on the role of distribution channel on the marketing of consumable products. This shows how distribution channel is available to business organization.

INTRODUCTION

In today’s economy, most producers do not sell their goods directly to the final consumers. Between them and the final users, stand host of marketing intermediaries, performing variety of function, bearing a variety of names. Intermediaries like wholesalers and retailers, take title to resell the merchandise,they are called merchant middlemen. Others such as brokers, manufacturers representatives, sales agents, search for customers and may negotiate onbehalf of the producer, but do not take title to goods they ae called agent middlemen. Still, others such as transportation companies independent ware houses,bank and advertising agencies, assist in the performance of  distribution, but neither take title to good nor negotiate purchaseof sales, they are called facilitators.

In selecting channels of distribution, producers have to struggle with what is ideal and what is available. In the typical case, a new firm starts as a locsl regional operation, selling to a limited market. Since it has limited capital,it usually utilizes existing middlemen. The numer of middlemen in any local market is apt tobe limited, a few manufacturer sales agent, a few wholesalers, an established set of retailers, a few trucking companies, a few ware houses. Deciding on the best channels may not be a problem, the problem may be to convince one or few available middlemen to handle the line.

If the new firm is successful, it may branch out to new markets. Again the producers will tend to walk through the existing intermediaries, although this may mean using different areas. In smaller markets, it may work only through distributors,in rural areas, it may with general goods merchants, in the urban areas, with limited linemerchants.

GENERAL PERSPECTIVE

Distribution channel refers to the channels by which goods are taken from teir place of production to the final consumers who actually want to makuse of such goods. There are several channels of distribution, depending on such things as whether the goods are home produce, or imported, whether they are manufacture goods or farm produce. Whether there are large number of producers of the product or only few, whether the good are distinguished by trade marks or brand names. The most usual route by which goods pass from the producers to the consumers is still by way of wholesalers and retailers though in the case of many branded goods, the manufacturer may open theie own shops, in order to by-pass both the wholesalers and retailer. The more complicated the distribution channel as with imported goods, the greater the number of wholesaler or middlemen between producers and consumers, the greater too the amount of specialization introduced into distribution, the greater will be the number of middlemen employed. Similarly, the increased specialization of production with concentration of products in particular places, leads to an increasing proportion of the working population being engaged in commercial distribution.

Therefore, the public has viewed marketing middlemen with some suspicion. Survey have shown that more than half the costs of the things we buy are marketing costs that are largely due to middlemen. People reason that if we could only get rid of middlemen, we could greatly reduced costs of everything we buy. In other words, many argue that middlemen take too large a share of the selling price of the goods and that  if they were eliminated by the manufacturers, establishing direct contact with consumers, price would be reduced.

In recent years, there have been tendencies for the  wholesalers to be eliminated. This has been due to:

1. the growth of large shops such as cooperative society multiple stores and supermarkets, which can order goods in bulk from producers and sell directly to he consumers
2. 3the development of the road transport, which produces the necessity of holding large stocks.
3. The desire of the manufacturers to retain some control over retailing outlets in order to ensure that their products are pushed or that a high standard of service, freshness etc is maintain.
4. The practice of branding many products, which eliminates many specialized functions. in other cases however, the elimination of wholesalers have been confirmed to those goods that are of high value, such as in circumstances where the producers and retailers are close together, as in where the manufacturer does his own retailing.

HISTORICAL BACKGROUND OF UNILEVER NIGERIA

Unilever Nigeria Plc, was incorporated as Lever Brothers (West Africa) Ltd on 11^th April, 1923 by Lord Leverhulme, but the company’s antecedents have to be traced back to his existing trading interests in Nigeria and West Africa generally, and to the fact that he had since the 19^th century been greatly involved with the soap business in Britain. Unilever Nigeria Plc started as a soap manufacturing company, and is today one of the oldest surviving manufacturing organizations in Nigeria. 

After series of mergers/acquisitions, the company diversified into manufacturing and marketing of foods, non-soapy detergents and personal care products. These mergers/acquisitions brought in Lipton Nigeria Ltd in 1985, Cheesebrough Ponds Industries Ltd in 1988. The company changed its name to Unilever Nigeria Plc in 2001.

Unilever Nigeria Plc is a public liability company quoted on the Nigerian Stock Exchange since 1973 with Nigerians currently having 49% of equity holdings.

The long-term success of this business stems from the strong relationship with the consumers based on the deep roots in the local cultures and markets, creating products that help them to ‘feel good, look good and get more out of life’ and the total commitment to exceptional standards of performance and productivity. In order to sustain this success, they endeavor to maintain the highest standards of corporate behavior towards their employees, consumers, customers, communities and operating environment. 

Their brands are household favorites and this is because they are so deeply committed to meet the everyday needs of people everywhere in Nigeria. What is more, their deep roots here combined with international experience and support; enable them to consistently develop brands, which raise the quality of life. It is therefore no surprise that one would find that all over Nigeria, people are at home with their brands.

Unilever as a company has embarked on a programme of restructuring in a bid to re-energize itself. Code-named the Journey to Greatness, the vision is re-inventing their selves so that they can deliver fully on their promises to their consumers, customers and investors. In addition, the company has sharpened its focus by introducing the Vitality mission, which stands to ensure that in all they do, they are adding vitality to life for everyone. 

Over the years, Unilever Nigeria Plc has been a socially responsible and responsive organization that takes strategic actions for the improvement of the communities and environments in which it operates. The company has made provision for assistance in fields of health, education/children welfare and potable water/hygiene as part of its social responsibility programme in the Nigerian communities.

STATEMENT OF PROBLEMS

Among the most complex and challenging decisions facing unilever Nigeria is the marketing channel decisions.

Another problem face by Unilever is the misconception by people of he idea of distribution channel by the negligible attention given to it by some manufacturers.

One other problem face by Unilever is the unequal distribution of natural resources. Some places are more endowed than others.

The most important and crucial problem face by Unilever is the satisfaction of consumer wants and needs. It recognizes that the requirement ant wants of a customer is the only factor that determines the use of distribution channels.

OBJECTIVES OF THE STUDY

The main aim of the study is to provide in singlevolume an accessible introduction to the principal idea and develpmen, on the role of distribution channel in the marketing of consumables products.

The study intents to directly rveal the importance of channel of distribution in the marketing both industrial and consumable products.

The study intents to provide a means to how distribution channel can be managed properly to achieve some meaningful reduction in the high cost of distribution.

The study identifies how distribution channel is face difficulties, causes, effects and ways of overcoming them.

The sudy provides an effectiveand efficient distribution channel network of Unilever Nigeria Kaduna.

SCOPE AND LIMITATION OF THE STUDY

The research is confine to the activities of Unilever as regards distribution channel in marketing its products. It covers the activities of Unilever Kaduna state.

It also involes the area of improvements of distribution channels in Unilever Kaduna

The limitation of the study depend on the time available to carry out the research work.

Finance is an important part of the research work if the money needed is not readily available, the research work cannot be carried out effectively.

Availability of data required. The company was not willing to give, such detailed data tome as required and so this cause a big problem to the research work.

SIGNIFICANT OF THE STUDY

The activities involved in the distribution of goods to the final consumers, may in many cases be slowed down by some discrepancies. Effective use of strategic distribution channels makes it possible for these discrepanciesto be discarded.

The operartion of distribution channel is marketing of consumable products, lower cost incurred in moving products to consumers and can lead to lower prices in comparison with other channels. Manufacturers can exercise greater control over their sales efforts when not relying on middlemen.

Distribution is a valid function of marketing. This is because it provides the needed level of satisfaction in the market place by physically moving goods and services from producers to the consumers

The most innovative products at an attractive price is worth nothing if its not available to buyers when they want it. Based on the same point, therefore, distribution essential creates place utility by bridging the gap between producers and consumers within the appropriate time.

DEFINITION OF TERMS

Intermediaries: an independent or corporate business that helps moves products from the producers to the ultimate consumers

Merchant Middlemen: an intermediary that does not take title to the products it distributes.

Agent Middlemen: An intermediary that does not take title to the products it distributes

Wholesale: an intermediary that distributes products primarily to commercial or professional users.

Retailers: an intermediary that sells product primarly to the ultimate consumers

Channel of distribution: route taken by a product and its title as it moves from the resources producer through the producer to the ultimate consumer.

Channel management: the activities involved in anticipating and understanding the sources of channel conflict and trying to eliminate or mnimised them.

Place \utility: the satisfaction that buyers received from having a product available at the appropriete place.

Time Utility: the satisfaction that buyers receive from having a product available i.e at the appropriate time.

LITERATURE REVIEW

It was argue that if the volume of production is high there will be every tendency to involve middlemen and sometimes, it will be uneconomical to sell direct, most especially consumables product

Harvey (1969) “a manufacturer will have to decide whether to produce one good or many varation of the same good or number of different  goodds. But whatever his plans he will still have to decide on how to get his finished goods to the consumers”

Bell (1932) in the same regards, dispelled theissue of  products feature approach irrelevant since it cannot logically substantially cause an effect relationship between channel and the product.

In the same regard, stanton (1981) argue “that because a channel distribution should be determined by the customer’s buying patern, the nature of the market is the factor influencing management choice of channel”. Some other factors that stanton outline are:

i.         Unit volume

ii.       Perishability

iii.      Technical natue of the product

iv.     Service provide by the middlemen

v.       Financial resources etc

INTRODUCTION

Base on the view and the fact gathered from different scholars, this chapter intends to crititically look at what the distribution channel really meant. The intense of the distribution, cost, how its been manage and satisfy to carry out its duty as expected. Thereby, reaching the consumers as when needed

CONCEPTUAL DEFINATION OF DISTRIBUTION  IN MARKETING CONSUMABLE PRODUCT

Channel of distribution, which is sometimes referred to as middlemen, has been defined by many scholars. But no matter the nature of the distribution channel and the complexity of the definition, the mai focus is providing consumers with whatever they want and satisfying their needs.

According to Nickel W.G (1978:271) “A distribution channel is an organised network of people and organ, station that performs all the marketing function and activities required to provide consumers with whatever they want and to saify the needs of all participants as well.

Kotler (1986:389) it is a set of interpendent organisation involved in the process of making a product or services available for use or consumption by the consumer or bussiness user.

Hanson J.L (1977) defined the term as the movement of raw materials from the place of manufacture and of finished goods to consumers. This is referring to the channel by which goods are taken from there place of production to the people who actually to make use of them

Samuelson (1980) said distributions channel do not only refer to marketing of goods and the csrrying of goods to the final consumers. Instead distribution deals with the problem of for whom goods are produced.

DISTRIBUTION CHSNNEL INTENSITY

Having selected a channel, the question as to the nunber of intermediaries to use at level should attract the designers. Kotler (1980) distinguished the degree of intensity of the market exposure as follows:

1.      Intensive Distribution: this is the company’s policy in which they stock their productin as many outlet as possible. These goods must be available where and when consumers want them. This is particularly relevant to marketing of consumers convenient goods, which\are usually purchase frequently with minimum effort. Because of  this, the closer the goods are to them, the more they are purchase.

2.      Eclusive distibution: under this policy, the manufacturer agree to sell only to particular intermediary. Kotler describes this as “the policy to granting limited number of dealers the exclusive right to distribute the company’s products in their respetive territories. This policy is often used in the consumer specially goods where the middlemen need to carry large inventory and in the case where installation of product such as equipment are necessary and their repairs and services are needed. These policies are not allowed to carry competing product.

3.      Selective distribution: between the extreems (intensive and extensive) stand the selective distribution policy. In this case, the manufacturer selects few outlets a particular market or he could have a lare outlet but short of intensive distribution, wholesale, volume, rate of turnover, order size, etc. create profitable business for him. Having work with intensive policy, the company might adopt selective system.

4.      Use of multiple channel: