THE EFFECT OF DISTRIBUTION CHANNEL ON THE SALES OF GUINNESS MILE 3 DEPOT BAMENDA

ABSTRACT

Globalisation of markets is a phenomenon that has received much attention and being extensively debated both at general societal/institutional/cultural levels and at market and business levels. In any globalization process, distribution of goods and services between and within local industrial and consumer markets is of great importance. Distribution is the process of getting products and services from producers to consumer/user, when and where they are needed. It creates time, place and possession utilities and the transfer of ownership utility for the consumer or users to enjoy the form utility.

“It is often said rightly that production remains incomplete until goods or services concerned reach the final consumer. The main objective of this study is to examine the effect of distribution channel on the sales of Guinness Mile 3 Depot Bamenda. In this study, the bargaining theory of marketing channel, coalition theory and contingency theory were applied across the whole of my research in this field.

The study adopted the descriptive research design. The target population for this study is 120 (one hundred and twenty) which includes 25workers and 95 customers of Guinness Mile 3 Depot Bamenda. The convenient sampling technique was used to select a total of70 workers and customers of Guinness in the study. Both primary and secondary data were used in making factual decisions. 

The questionnaire was used to collect the primary data. Data analysis was done using the Statistical Package for Social Sciences (SPSS) Version 20. Data was analyzed by using descriptive statistical methods like percentages, correlation and regression analysis. The results showed that there is a strong positive relationship between distribution channel and sales performance (R= .850^**p<0.01).

We will therefore accept H₁ which state that distribution channel has a significant effect on the sales of Guinness Mile 3 Depot Bamendaand reject H₀ which state that distribution channel has no significant effect on the sales of Guinness Mile 3 Depot Bamenda.

In view of the findings from data analysis, the study concludes that distribution channel is a determinant of sales performance. Distribution channel was measured by direct, indirect and distribution strategy.

Finally, in view of the findings, it is recommended that management of Guinness Mile 3 Depot Bamenda should pay adequate attention to channel strategies that showed significant positive relationship with and influenced marketing performance in order to improve on sales performance.

KEY WORD:  Distribution Channel, Distribution Strategies and Sales Performance

CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background to the Study

Globalisation of markets is a phenomenon that has received much attention and being extensively debated both at general societal/institutional/cultural levels and at market and business levels.

In any globalisation process, distribution of goods and services between and within local industrial and consumer markets is of great importance. Globalisation of markets and organisation of distribution channels is mutually dependent process that involves changes in market structures.

As national markets expand and new opportunities arise for satisfying consumer demand, greater specialisation in distribution channels is evident both in level of distribution and in goods and services handled.

The  distribution  function  is  one  of  the  marketing  variables  in  the marketing mix. It is therefore, a marketing function, which aims at getting goods and services from the  manufacturer to the ultimate consumer, transferring  titles  and  physically  moving  the  products  in  the  process (Adirika, 2001).

According to economic distribution channel theory, the “ideal” distribution system or the normative distribution channel can be determined by exploring what the consumers want in terms of service outputs from the distribution channel, how much they are willing to pay for a given service level, how the services can be provided to them, and what the costs of the alternative distribution channels are (Stern et al., 2006).

As a result they argue that it can be determined which distribution system most efficiently meets the customers‟ wants and it can be pointed out that the distribution channel strategy adopted by a firm should take a customer perspective and analyses the output from the commercial part of the different distribution channels and relates it to the customers‟ costs and benefits from the different levels of service output offered by the available distribution channels (Cohen et al., 2003).

 Distribution is the process of getting products and services from producers to consumer/user, when and where they are needed. It creates time, place and possession utilities and the transfer of ownership utility for the consumer or users to enjoy the form utility.

“It is often said rightly that production remains incomplete until goods or services concerned reach the final consumer. Againunless products are distributed and delivered in the right amount, at the right time, in proper conditions, buyers may be reluctant to buy (Achison, 2000).

The unprecedented growth witnessed in the effective distribution of consumers goods since the last two decades has led many Cameroonian distributors’ of consumer’s goods to show more concern for the market of their products.

Unless a product is properly channelled, it cannot reach its target market/customers, it cannot achieve the required sales volume, the planned market share and profit goals of the firm may not be realized too.

It is the facilitation of this sort of accessibility that is the major function of a firm’s channel of distribution. Distribution system is a set of facilitating agency including order processing,  material  handling,  warehousing,  inventory  management, clearing  and  forwarding  companies  and transportation used  in the movement  of  products  from  producers  to  consumers  and  end users.

Planning an efficient and effective distribution system can be a significant decision in developing an overall marketing strategy. A brewery industry that places the right products in the right place, at the right time, in the right quantity and price and with the right support services is able to sell more than competitors who fail to accomplish these goals or objectives. These apart, distribution is an important variable in marketing strategy because it can decrease costs and increase customer satisfaction.

In fact, speed of delivery along with services and dependability is often as important to buyers as price of products. In order to obtain better result, channel of distribution activities should be integrated with marketing channel decision. This research work which is on channel of distribution conducted in Guinnesswith the objective of evaluating the effect of channel of distribution on the sales of brewery product. A survey conducted  by  the  researcher  shows  that  the  distribution  of  this product  by  the company is mostly through marketing intermediaries and channel members who  constitute the distributors and retailers of the products. Such method of distribution makes the products to be available only at strategic locations inBamenda town. This promotes competition, making the company to be highly competitive. As a result, it becomes proper and necessary for every brewery industry involve in the sales in such type of consumers product to formulate and adopt a cost effective distribution system that will guarantee better customer patronage through improved customer services in order to secure competitive advantages over other competitors. In addition, the  introduction  of  Structural  Adjustment  Programme  (SAP)  and availability  of  the  basic  raw  material  gave  an  added impetus to the establishment of this company. Therefore, they engaged in competing for customers’ patronage and for any of them to achieve competitive advantage over the others, it has to improve its distribution system strategy.

Filipe, Chris and Arnaldo, (2003) have examined exploratory evidence of channel performance in single versus multiple channel strategies. Their study contributed to theory by clarifying the relationship between the number of channels and channel performance, along with the relationship between channel strategy and product type and company size. The study sought to answer the question: what is the impact of the number of channels on the performance of the entire channel system? The financial services industry was selected for the study, since multiple channels are common in the distribution of these products. Cross sectional research design was adopted and the study collected information on the channel strategies used by 62 organizations using questionnaires (Filipe et al., 2003).

According to Swanson (2000), organizational performance is the valued productive output of a system in the form of goods or services. Organizational performance can be subdivided into three categories: financial performance (profit), internal non-financial performance (productivity) and external non-financial performance (e.g., customer satisfaction). Private sector organizations strive for good financial results whereas public organizations are aimed at non-financial aims like delivering good public services to citizens (Van Loo and De Grip, 2002). To achieve performance through employees, the organization must consider them as asset and must be treated with attention so that the employees become productive. Gone are the days where an employee was given single task. Today’s business environment demands people having multi skills so that they can be placed as per the need of the hour. Hence individual motivation, job design, job structure, individual competence, and appropriateness of performance goals and standards of measurement are considered important and are more directly and easily controllable.

Organizational performance, although not a precisely defined concept, is assessed in terms of the results that an organization achieves in relation to its objectives. In principle, it can be measured at the output, outcome or impact level, and, less rigorously, as the organization’s compliance to rules. The process of determining the performance of an organization requires the selection and the measuring of a set of key variables that can allow the organization to detect as well as monitor its competitive position in the business in which it engages. In another words, measuring performance is also one of the important steps in the strategic control process (Wheelen and Hunger 1995).

Therefore, the marketers of consumer’s goods should gear efforts towards seeking information about the consumer’s needs, designing appropriate products of different sizes, properly packaged in the manner most acceptable to the consumer, promoted through appropriate media, get them to the points where the consumers will buy with ease using appropriate channels at a price affordable to the potential consumers.

The firm’s performance could be measured by various concepts, such as sales per employee, value of export, total assets and operation profit ratio. The ability of an organization to survive and succeed is influenced by various factors, some of which can and some of which can’t be controlled. Therefore the performance of an organization is a function of the controllable and uncontrollable variables (Kim and Lim, 1988).Highly competitive environments, globalization, ever growing amounts of performance data and increasing pressure to do more with less have made it imperative for firms to be demand driven. It is no wonder that measuring, reporting and overall business performances are hot topics. Companies in every industry are seeking ways to get a clear, accurate view of operational performance to financial results.

1.2   Statement of the Problem

Getting a firm’s product to reach the final consumer has always been a major problem for most organizations. Generalizing about distribution channel patterns of various countries is almost as difficult as generalizing about behaviour patterns of people. Organizations are created with the intentions to grow and make profits through sales. As one of the key elements of a company’s success, selecting the proper distribution channel strategy has been a focal point in both supply chain and marketing channel structure.

The distribution strategy decision is usually based on finding the most profitable way to reach a market (Ford and Mottner, 2003). Successful distribution channel strategy selection, implementation, and management cannot only help to meet the shopping needs and habits of the target customers efficiently under the cost constraints of the seller; they must also mitigate the disadvantages caused by distribution channel conflicts such as double marginalization.

There is a saying that production is complete only when the product gets to the final consumer and this is made possible only through the process of distribution. A lot of research work had been conducted in this area but there has been a great lapse in the aspect of the effect of distribution channel on the sales of Guinness products.

Besides the problem of inefficiency, there equally exists the problem of road network especially from the urban areas to the rural areas where the roads are not reachable and this makes it difficult for Guinness goods to reach the consumer.

To this effect, consumers are unable to get regular supplies because of poor transport conditions. Also, Guinness Cameroun does not distributes its products rationally in the sense that they over value the bigger buyers and look down on small buyers in carrying out this study, some problems were identified from the background which include: The problem of shortage of Guinness product in the market, poor road infrastructure, theft, loss destruction of product and irregular disposition of Guinness product.

This study therefore seeks to establish the effect of distribution channel on the sales of Guinness Mile 3 Depot Bamenda.

1.3 Objectives of the Study

1.3.1The Main Objective of the Study

The main objective of this study is to examined the effect of distribution channels on the sales of Guinness Mile 3 Depot Bamenda

1.3.2 Specific Objectives of the Study

This main objective can further be broken down into specific objectives which are;

• Examine the effect of direct distribution channel on the on the sales of a of Guinness Mile 3 Depot Bamenda
• To find out the effect of indirect distribution channel on the sales of Guinness Mile 3 Depot Bamenda
• To analyse the effect of distribution strategies on the sales of case of Guinness Mile 3 Depot Bamenda

1.4 Research Questions

1.4.1 General Research Question

The main research question of this study is “what are the effects of distribution channels on the sales of Guinness Mile 3 Depot Bamenda?”

1.4.2 Specific Research Question

Specifically, this research work will seek to answer the following questions:

• What is the effect of direct distribution channel on the on the sales of Guinness Mile 3 Depot Bamenda?
• What is the effect of indirect distribution channel on the sales of Guinness Mile 3 Depot Bamenda?
• What is the effect of distribution strategies on the sales of case of Guinness Mile 3 Depot Bamenda?