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EFFECTS OF DISTRIBUTION ON CONSUMER DEMAND OF PALM PRODUCE

Project Topic: Effects of Distribution on Consumer Demand of Palm Produce in Nsukka Area of Enugu State


CHAPTER ONE

INTRODUCTION

 Background of the Study

The Internet has globalized almost the entire human activities, creating new and innovative ways for people to shape and share their identity, and express themselves (Neogy, 2008:70). The impact of globalization has been felt much in marketing in such areas as E-advertising, E-payment, E- etc. But the Internet is yet to introduce E-distribution of tangible products such as the palm produce! The philosophy that marketing operates on the “space” such as E-marketing, in this new era is limited because the actual physical distribution requires a place for effective implementation. Marketing is therefore lamed without distribution even in the developed countries where hybrid systems are upheld. Palm Produce especially palm oil can be used for domestic and export or industrial processing. Palm oil has three grades, which include;

  1. Special Grade Palm Oil (SPO) which has less than or equal to 3.5% free fatty acid,
  2. Technical palm oil 1 which has less than or equal to 9% free fatty acid; and
  3. Technical palm oil 11 which has greater than 9% free fatty acid but less than or equal to 18% free fatty acid (Okwelogu, 2001:20). Currently, 80% of palm oil goes into food (special grade palm oil) and 20% is used in the non-food sector (Technical Palm Oil 1 & 11). The proportion going into the non-food sector for making soaps and detergents, toiletries and cosmetics and other industrial uses is expected to grow further in the near future (Khoo, 2001).

In Nigeria, the high dependency ratio of the economy on petroleum led to the neglect of the palm produce which had sustained the nation when there was economic diversification in the country (Okwelogu, 2001:36). The first set of the whitemen were attracted by the palm produce which they were taking to their own land and then, they returned things like soap, cream and textiles to our ancient kings, who got pleased and would give out human beings as slaves in exchange for the said good smelling creams and textiles (Oni, 2000:36-37). What some of our King did, when replayed now, appear funny, but our continual neglect of palm produce in the present era makes us more slaves than those who formed Freetown.

Meanwhile, if the whitemen could not use the power of the web to relegate distribution, and we have not been able to succeed well without palm produce, we need a step further; effective and efficient distribution of palm produce. But how can this be done? Chukwu (2004:391) opined that the task of achieving efficiency in the distribution system should be seen as an integrated one which all the player/stakeholders should be part of. This then calls for the need for the distribution manager to be not only proactive, but environmentally friendly in order to survive in the emerging world-wide market. Ehikwe (2002:188-189) stated that the maxim that all customers are important holds true, but not all customers are equal in their performance ratings with manufacturers. Therefore, it is very important for manufacturers to maintain open communication with the customers, receive and listen to complaints, provide solutions to problems and offer prompt services to certainly improve customers’ service levels and encourage their patronage. Ikezue (2006:367) contended that a basic output of a physical distribution system is the level of customer service, which represents one of the key competitive benefits that can be offered to potential customers in order to attract and retain them to the business. Customer service takes several forms which include:

  1. Maintaining the target time period between order placement and order reception by the customer at an optimal level of costs.
  2.  The suppliers willingness to meet emergency Merchandise needs of the customer
  3. The care with which Merchandise is delivered in good condition, etc. Onah and Thomas (2004:404) citing (Guirdham, 1972:122) stated that distribution strategy should be ‘bottom-up rather than top-down’. This means that the customer demands should determine the kind of channel to be used to meet consumer needs at a profit and to generate maximum impact at the point of contact.

The rapid spread of production systems and facilities has compelled new tastes and choice options at unprecedented rate on consumers, such that, only the manufacturers with the distribution advantages can meet the customer satisfaction and remain in business. Distribution management in marketing is considered paramount as it epitomizes the marketing responsibility of satisfying customers in the consumption of goods and services through place, time and possession utilities (Ehikwe, 2002: Viii & 288).

Distribution, apart from being an important marketing variable, provides time, place and possession utilities (production creates form utility). The time, place and possession utilities constitute the value added in marketing. The provision of time utility has been a traditional marketing technique of businessmen and women as they store products during the harvesting season to be sold during the dry season. The place utility is created by the distributive system having goods for sale at places where they are in demand. The importance of place utility cannot be overestimated considering the act that many locally manufactured goods have their factories located far away from their market. The possession utility is created by providing the means whereby a consumer can take possession and title (ownership) to goods including the provision of credit facilities by wholesalers, and/or retailers and other financial institutions (Onah and Thomas, 2004:401).

Statement of the Problem

The actions of one channel member may enhance or inhibit the performance of another channel member. As the producer, wholesaler, and retailer of palm produce relate with one another in the distribution system, there are serious disagreement, argument, differences of opinions and values exhibited by each member in the form of conflict. The transportation of palm produce by roads and railways are poorly developed, as some areas (especially rural areas) are inaccessible. Many producers therefore find it difficult to reach a wider market, and the extent to which they can distribute palm produce effectively is severely limited. Many businessmen lack adequate capital to carry on large-scale wholesaling and retailing of palm produce as many of them find it difficult to raise capital from commercial banks and other financial institutions without the necessary collateral or security. Adequate storage or warehousing facilities which are suitable for palm produce are not easily available because of lack of capital. These produce therefore got contaminated with impurities and spoilt, and this leads to a waste of resources and scarcity of these produce at all seasons. The tendency or inclination to palm produce to create artificial scarcity when there is demand for these produce at the peak of production season prevents the free flow of these produce to consumers who demand for them. This situation becomes aggravated at the peak of demand season and the bane of the manufactures is how to improve the distribution facilities for effective services to customers with produce availability all the seasons.

Objectives of the Study

 

In view of the above research problem statement, the major objective of the study is to examine the relationship between producers’s incentives and channel conflict experienced among marketing intermediaries of palm produce.

Other specific objectives of the study are;

  1. To evaluate the effect of transportation of palm produce to consumers in rural and urban areas.
  2. To ascertain the effect of inadequate capital on large-scale wholesaling and retailing of palm produce.
  3. To determine the relationship between poor storage of these produce and its marketing and consumption.
  4. To evaluate the effect of hoarding of palm produce on consumers who demand for the produce.

Research Questions

Based on the above research objectives, the research questions for the study include;

  1. What are the incentives of producers that cause channel conflict experienced among the marketing intermediaries in distributing palm produce?
  2. Is there any significant difference in the effect of transportation of palm produce to consumers in the rural and urban area?
  3. Is there any significant difference in the effect of inadequate capital on large scale wholesaling and retailing of palm produce?
  4. How does poor storage of palm produce affect negatively their marketing and consumption?
  5. What adverse effect has artificial scarcity of palm produce on consumers?

Research Hypotheses

Based on the above research questions, the hypotheses for the study will include;

  1. There is no significant relationship between the producer’s incentives and the channel conflict experienced among middlemen in distributing palm produce.
  2. There is no significant difference in the effect of transportation of palm produce to consumers in rural and urban areas.
  3. There is no significant difference in the effect of inadequate capital on large-scale wholesaling and retailing of palm produce.
  4. There is no significant relationship between poor storage of palm produce and their marketing and consumption
  5. There is no adverse effect of artificial scarcity of palm produce on consumers

Significance of the Study    

Furthermore, research students will expand their academic horizon by acquiring more knowledge about the distribution process of palm products. The study will also help them in enriching their secondary data in related studies in future.

The impact of distribution on the society can be considered in two ways; first, distribution as part of marketing takes on a societal dimension when marketing is defined as everything that happens after production. Secondly, distribution can be seen as the performance service in the distribution channel especially the involvement of the intermediaries with the public viewed in a social context, which is discernible (Chukwu, 2004:10-11).

The study would ensure the following benefits for the consumers. Goods are easily available to the consumers when needed (Availability), consumers are made to purchase goods without much difficulty (convenience), they have the opportunity of being exposed to different levels of service (service), consumers through the distribution process are encouraged to save (savings) and studies have shown that many of them derive a variety of sensory, interpersonal and recreational pleasures through shopping (enjoyment) (Chukwu, 2004:9).

Moreover, this study would help to ensure that the middlemen realize the importance of co-operation in trade and that for them to achieve efficiency in the distribution system, they should be integrated. In addition, the study would address such issues relating to traders and shopkeepers which include adequate space for stores and parking facilities, easy flow of produce into and out of market, clean and dry trading environment, garbage disposal facilities, clean toilet, adequate water points, easy access to banks for deposits, well managed markets, appropriate market regulations, services in exchange for market fees, fences and security for persons and property.

This highlights the major benefits sought and which should be derived from the study. Who benefits from the study? Manufacturers or producers, middlemen, consumers, the society, and research students. From the manufacturer’s standpoint, the study would help educate them to understand that the consumers are the controlling function in any business activity, who require to be given qualitative services in order to achieve the firm’s objectives through their patronage. They would equally understand that channel management is generally their job although in some cases wholesalers and retailers may exert middle level channel leadership.

Scope of the Study

The study will be discussing the distribution management of palm oil and palm kernel products in Nsukka Area of Enugu State

Limitations of the Study

The major limitations of the study are as follows;

Financial Problem

Research requires adequate financial backing to achieve qualitative result. Gathering data (Primary and Secondary) are indeed very expensive.

Time Constraint

Time is an important factor which waits for nobody. Every research requires adequate time to achieve good result. When time is utilized in this regard, it becomes difficult engaging in other sundry activities such as religious, recreational and even entrepreneurial activities.

Attitude of Respondents

Obtaining information from the respondents is a very difficult task. They are afraid that the information they may provide might affect them negatively. This negative attitude is attributed to their ignorance and illiteracy.

Power Problem

Incessant power failure is endemic in Nigeria, studying, browsing; typing and printing are ugly experiences because of epileptic power supply.

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Project Topic: Effects of Distribution on Consumer Demand of Palm Produce in Nsukka Area of Enugu State

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