AN EVALUATION OF DISTRIBUTION STRATEGIES IN MARKETING OF PETROLEUM PRODUCTS
(A CASE STUDY OF NNPC ABA DEPOT)
ABSTRACT
The research topic “AN EVALUATION OF DISTRIBUTION STRATEGIES IN THE MARKETING OF PETROLEUM PRODUCTS” (A CASE STUDY OF NNPC, ABA DEPOT) was chosen because of the constant scarcity of petroleum products that the Nigerian public has been witnessing for some years.
The research looked at the relationship between the distribution and the relationship between the distribution strategies and the availability of petroleum products for public use and to find out if there were other factors other than poor distribution strategies responsible for these scare products.
In sampling of the opinion of the NNPC staff and customers (marketers), the questionnaire and interview methods were used, while their responses were analyzed and used to test the hypothesis using the chi-square method. The result revealed that there were other factors such as overhead costs of distributing the petroleum products, vandalization, and corrupt practices by some members of the distribution chain etc. responsible for the ineffectiveness of the distribution strategies.
At the conclusion of the research, it was suggested that these factors mentioned above be either eliminated or reduced and stringent measures be adopted to act as deterrents to other corrupt practices in the distribution chain.
TABLE OF CONTENTS
Title Page
Table of Contents
List of Tables
Abstract
Chapter One
Introduction
1.1 Background Of The Study
1.1.1 Profile Of The Company
1.2 Statement Of The Problem
1.3 Objective Of The Study
1.4 Research Question
1.5 Research Hypothesis
1.6 Significance Of The Study
1.7 Scope And Limitation Of Study
1.8 Operational Definition Of Terms
Chapter Two
Review Of Literature
2.1 Introduction
2.2 Current Literature Review Of The Study
2.3 Physical Distribution
2.4 Consultation And Public Enlightenment
Chapter Three
3.1 The Design Of The Study
3.2 The Area Of The Study
3.3 Population Of The Study
3.4 Sample And Sampling Techniques
3.5 Method Of Data Collection
3.6 Method Of Data Analysis
3.7 Limitation Of Study
Chapter Four
Data Presentation And Analysis
4.0 Introduction
4.1 Analysis Of The Questionnaire
4.2 Testing Of Hypothesis And Interpretation
4.3 Discussion Of Findings
Chapter Five
Summary, Conclusions And Recommendation
5.1 Restatement Of The Problem
5.2 Summary Of The Findings
5.3 Conclusions
5.4 Recommendations
5.5 Suggestions For Further Study
References
Bibliography
Appendix 1
Questionnaire
LIST OF TABLES
1 Does NNPC have any distribution strategy by which its products are marketed?
2 If all the above questions are yes how will you describe its operation and implementation?
3 Which distribution strategy is being used in NNPC Aba depot?
4 Since the implementation of the strategies by NNPC has there been any change in consumer’s behavior?
5 If the above question is yes what type of change was it?
6 What do you think is responsible for the negative altitude of consumer towards the distribution strategies used in marketing petroleum product?
7 What do you think is the main objectives for introducing such strategies?
8 Are the distribution strategies used in the marketing of petroleum production by NNPC Aba depot acceptable to consumer?
9 What other factors affect the efficient distribution of petroleum products in Aba and its zones?
10 Will reduction in these factors help improve the effectiveness of the distribution of petroleum products Aba and its zones?
11 Has management made any provision for the improvement of the distribution strategies?
12 How would you assess the role of petroleum product marketers in the distribution chain?
13 Do you think some of the distribution personnel contribute in any way to the malfunctioning of the distribution strategies?
14 Should NNPC carry out consumer orientation (awareness) programmes and will it improve consumer’s attitude toward the scarcity of petroleum product should it arise?
CHAPTER ONE
INTRODUCTION
Over the years, Nigeria has experienced a boom in her economy especially in the oil industry. Her citizens depended much on imported goods, especially household products. Nigeria is a country is a country that is richly endowed mineral resources as a gift of nature. The inception of the petroleum industry in Nigeria can be traced back to the first decade of this country when a German company started prospecting for oil in the Ararow area of Ondo state, the first concrete indication that Nigeria is endowed with enormous resources of petroleum came in 1956 with the discovery of the Oloibir field, Nigeria’s first commercial oil find. At that time, there were no Nigerian involvement at all the oil will drilling sites, at government level, the only vehicle that could have been employed in the management of the nation’s oil resources was promulgated to regulate the right to search for, win and work mineral oils. It is interesting to note that the mineral oils act of 1914 was meant to regulate the right to search” for oil and not much else, because the 1948 edition of that law, effectively restricted the right to search for and win oil to British subjects as well as to companies which had their principal places of business in British or in its dominions and whose chairmen or majority shareholders and directors were British subject. This portion of the law (which was not repeated till 1958) was partly responsible for keeping out, American and other nationalities from our petroleum industry until after our independence. Thus, this piece of legislation contributed significantly to giving shell Bp a head start and a dominant role in Nigeria’s petroleum industry.
1.1 BACKGROUND OF THE STUDY
Historically, having established that the Oloibiri field was commercially viable and that oil could be produced and exported from that field within two years, government responded with the enactment of the oil pipelines act of 1956, thus establishing a legal framework within, which shell. Bp could install and operate the pipeline network for evaluating crude oil from the Oloibiri field. Two years later, Nigeria’s first shipment of crude oil for export was made. Other crude oil exports followed steadily, as Nigeria’s petroleum industry develop rapidly with time. Meanwhile, with the growing warnings from petroleum that shell Bp was realizing from Nigeria’s crude oil exports, it was necessary to impose a special tax on petroleum that was different from the tax imposed on companies engaged in other activities in Nigeria. As a result of this, on 1st January 1958, the petroleum profit tax act was promulgated.
In addition, government established a petroleum unit within the ministry of Lagos affairs in reaction to the growing importance of the petroleum industry, which is improving rapidly. This unit had primary responsibility of all time it grew to become a full department in that ministry. Later it was transferred to the ministry of mines and power and by 1975; petroleum activities in the country as well as revenues had become so significant the department of petroleum was upgraded to a full-fledged federal ministry of petroleum. In the early sixties, for example, a large number of companies including calf (now chevron) Tenneco, Texaco overseas petroleum company Philips oil company, esso exploration, union oil and Nigeria petroleum scene.
In the year 1960, the year Nigeria gets its independence from British colony; the government negotiated an agreement with shell Bp to establish a refinery in Port Harcourt to carter for Nigeria’s petroleum needs. The Nigeria petroleum refinery company was established with 50% of its share owned by government, which shell Bp owned it balance shell p was appointed the operator and the refinery was commissioned in 1965. In response to the development, a laws known as the hydrocarbon oil refineries act of 1965 was enacted to take care of refining operations in the Nigeria oil industry. As petroleum continued to grow in its importance to the economy, it was to be expected that in the absence of a virile articulate and enterprising private sector, government with all its might would continue to work towards enacting laws and installing structures that would enable the nation benefit more and more form her growing petroleum resources, which is equally improving greatly.
A good example of the result of such efforts was the petroleum act of 1969 more popularly known in the industry as the petroleum decree 51 of 1969, which attempted to encompass a lot of necessary legislation for regulating a much wider span of petroleum operations them has been leveled by any previews legislation. For example the petroleum degree 51 of 1969 touched on issues like the ownership of petroleum licenses and leases, refining and distribution of petroleum product, power and duties of certain officers in government, payments of fees, rent royalty, as well as wide ranging aspects of petroleum exploration, development drilling and production etc.
OPEC INFLUENCE
Nigeria joined OPEC in the year 1971 at a period when the aspiration of most developing nations that had the clout was to take over commanding height of their economics. OPEC was then involved in deep negotiations to wrest a higher share of the rewards of their petroleum resources from the multinational oil companies who were operating in member countries. By a unanimous resolution OPEC members decided that each member state should take a minimum ownership stake in the oil operations in their countries, and even set out plans for gradually increasing the stake until a majority ownership was altered within a time frame of five years. OPEC member states adopted different strategies in implementing that resolution.
The government of Nigeria after considering all the available options ventures for a form of joint venture participation in which:
1. Total ownership and full control of all the petroleum resources in the ground is retained by the state.
2 Government and oil companies would jointly own (in undivided interest) all the assets created for conducting petroleum operations
3 The oil companies were appointed the operations on the behalf of both parties in oil prospecting and mining leases.
4 All funds required for petroleum operations would be contributed in the same ratio of ownership of the ventures.
5 The rewards would be taken in kind (i.e. in crude oil) and shared in the proportion of ownership of the ventures.
To manage the assets created through government’s joint ownership of all existing exploration and production companies the Nigeria national oil corporation degree no 18 of 1971. The degree empowered the corporation to acquire assets and liabilities in existing oil producing companies on behalf of the Nigerian government and authorized it (NNPC) participate likewise other major multinational oil companies in all phases of the petroleum industry.
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