DISTRIBUTION NETWORK IN MANUFACTURING INDUSTRY

          Since the introduction of democracy in Nigeria in 1999, the consumer goods industry has shown considerable growth as government policies (allied with increasing oil prices) channel more cash to the consumers. The advent of a democratic government has led to a more business friendly environment and privatization policies have led to an increase in the size of the private sector in the country. However, the sector faces many challenges caused by the environment in Nigeria such as poor infrastructure, poor standards of education and high levels of corruption and a general low level of disposable income of the population. There is little manufacturing for export, but a significant activity exists in the manufacture of fast moving consumer goods aimed at the domestic market. In recent years, multinational corporations have increased their investment in physical plants, information technology and staff training with a view to improving their operational performance. The consumer goods sector is a major part of the manufacturing sector in Nigeria. And like all other manufacturers, the consumer goods industry is characterized by low valued added production. What we see are processors who process imported raw materials into finished products, with very little value added. Multinational companies operating in this industry hardly add value because they import concentrates from their parent companies, which they convert into finished products with minimal value added. The industry is dominated by wholesalers and distributors. In fact distributors and wholesalers account for over 50% of total sales within the industry (Lead Capital, July 2009). Their dominance is as a result of fragmentation nature at the retail end of the market. The retail end lacked adequate supermarket and glossary stores. They mainly compose of roadside kiosks, stores and small sized restaurants, whose sales volumes are generally low. Distribution to the retail market is hampered by huge investments required for delivery trucks coupled with the general bad road network. Consumer goods industry in Nigeria is highly fragmented with the presence of multinationals, domestic and foreign companies. Except in categories where domestic players are protected by legislation, multinationals usually dominate. Notable players include UNILEVER Nig. PLC, Cadbury Nig. PLC, PZ Cussons Nig. PLC, Nestle Nig. PLC, UAC foods, WAMCO Nig. PLC, Guiness Nig. PLC, and Nigeria Breweries PLC. It is common for large international companies to form alliances with Nigeria companies to repackage and/or market their products in Nigeria. This lowers the risk of market entry as well as enables the international company to benefit from the existing marketing and distribution capabilities of the Nigerian company. The prime place of distribution program in planning the project objectives of consumer goods manufacturing firms in Nigeria cannot be overemphasized. The economy of any nation depends to a great extent on the production and distribution of finished goods and services with distribution as the pivot of the operations. Products must therefore be delivered to buyers when and where they need them and at a reasonable cost. In performing the delivery function, goods and their titles are known to pass through certain paths or routes from the producer to the consumer. These routes are variously called distribution channels or trade channels. Over the years, distribution channels have been widely discussed in the marketing literature by academics, professionals and other agents of marketing including manufacturing firms and products distribution agencies especially on factors relating to costs of distribution of products. Distribution costs could have significant financial burden that may impact on the profits of manufacturing firms and by implications on the economy of a nation such as Nigeria. Many business concerns fail to achieve set objectives despite producing very high quality goods because they do not accord distribution, the importance it deserves. Thus, one may be tempted to ask: what is the economic worth of an effective productive actively that fails to give the physical flow of the entire inventory the attention it deserves? Kotler (1986:431) states that physical distribution activities when uncoordinated could tend to high cost that consequently affect the level of service rendered by firm and the profit accruable to it. In the circumstances, the benefits of business efforts are swallowed up resulting to loss or mere break-even instead of the expected profit objective. Therefore, for a total realization of a company’s profit objectives and customer satisfaction, its distribution channel strategy must be carefully diagnosed, planned and implemented since production is not complete until goods are in the hands or within the reach of the final consumer. Furthermore, it should be noted that the design and management of effective and efficient distribution channels offer significant, frequently untapped opportunities for firms to create unique long term strategic advantages. Superior performance of channel activities has become a major route to providing extraordinary value to end users. All around the world, firms are increasingly recognizing these opportunities in channel management and are rapidly adapting to the dramatic changes that have occurred in the organization of channel activities. According to Uduji and Nnabuko (2011: 99), Global marketing channels are becoming more important to companies seeking growth abroad. Manufacturers introducing products in foreign countries must decide what type of channel structure to use – in particular, whether the product should be marketed through direct channels or through foreign intermediaries. They advised that Marketers should be aware that channel structures in foreign markets may be very different from those they are accustomed to in the home country. Regrettably, even though issues associated with distribution have become central to the growth and well-being of firms, industries and society in general, the education and research activities devoted to this “place element” of the marketing mix are sparse. It is against this background that this study aims at evaluating the distribution channels of consumer goods manufacturing firms in Nigeria with a view to developing more profitable ways to companies to reach the market and end users.

2.       Where production is usually most economical as a continuing process, but purchasing by customers may occur at intervals, be seasonable biased or subject to peaks or other reasons.

3.       Economies in large scale production, but customers often choose to buy in small quantities at a time.

4.       Lack of awareness of consumer to the sources of the goods they need and certainly would be unable to acquire them from their source. Therefore, it is the function of distribution to fill these gaps in order to create place, title and time utility.

          The greatest advertisement cannot sell a product which is not in the store because distribution system has broken down nor will advertising convince people to buy, product which the consumers feels cost too much, poorly packed or in some other ways do not live up to expectations. It is therefore paramount that the understanding and practice of distribution is the satisfaction of consumer.

          Moreover, production is not complete until the goods are in hands of the final consumer, hence, distribution begins with the producer and ends with ultimate consumers. Between these two personalities, various institutions that are responsible for this channel. The distribution institution is subdivided into merchant, middlemen and the agent, which the former take title of goods and act independently while the other act dependently on its principal.

          This method is to achieve an efficient system that provides an acceptable level of customer services that do not involve the firm in eradicative distribution cost, that the role of distribution is to optimize the value of a product by making it available at the various retail outlets, where the customers normally expect to be able to avail themselves to it.

          There are numerous objectives of carrying out this research work, essentially the principal objective is to evaluate the effective distribution and its impact on sale in manufacturing company.

          Furthermore, the study is aimed at:

·        Knowing various tentacles of distribution that is available for the transfer of both consumer and industrial goods and services.

·        Finding out most relevant channel of distributing goods for an organization manufacturing companies.

·        Finding out various means of distributing goods of an organization.

·        Recommending a more systematic, purposeful and consumer oriented method of distribution that will increase the sales volume of an organization.

·        Finding out what the organization will benefit from applying effective distribution network.