THE IMPACT OF DISTRIBUTION STRATEGY ON ORGANISATIONAL PROFITABILITY

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CHAPTER ONE

1.0 INTRODUCTION

The type distribution policy exercised differs from one organisation to another, depending on the type of goods and services produced in such business organisation. In considering the importance of distribution policy on organizational profitability, volume of business organisation either positively or negatively.

Before an organisation settles for the type of distribution policy to be used, two things has to be considered, knowledge of various marketing channels available is one thing, developing a sound system is another thing. The effectiveness of an excellent marketing executive however in his ability to select and obtain channels, which will minimize sales and costs.

In selecting marketing channels, one must understand that, they are not rigid, rather they are dynamic. In essence the impact of distribution policy on the organizational profitability of coca-cola is that it helps to strengthen and make the organisations marketing conception in terms of place and ability possible. However, when a wrong system of distribution is being used by an organisation, such organisation is bound to fail but if the right peg is being put into the right hole success is bound to be attained.

1.1 AIMS AND OBJECTIVES OF THE STUDY

The motive behind the study is to seek out and explain what will be the impact of distribution policy on organizational profitability of coca-cola.

The essence of choosing coca-cola is because of the fact that most Nigerian manufacturers are producers of such consumer gods. The study intends to seek the distribution policy that, they make use of in getting the goods to the ultimate consumers or user and impact of such policy on the profitability of the organisation and overall of achieving the target of any marketing form, which is consumer satisfaction, whether the impact of these stated focus are favourable, otherwise or has no impact at all.

The study would also look at various distribution policies that are open to manufacturers, from which they can make their choice depending on the market coverage, product characteristic of each and how each of the earlier mentioned policies (intensive, selective and exclusive) can be adopted for coca-cola. In order to be able to cover all aims and objective of the study it would require an extensive research involving some of the department or units in the Nigerian Bottling Company Plc, Agidingbi, Lagos, but due to some constraints, just two departments would be made use of in this research i.e. Sales/marketing and distribution department.

The organization was chosen due to the position it occupies as one of the leading organisations, more so as market leader in its sector (soft drink sector) hence much reference would be made to the company.

1.2 STATEMENT OF THE PROBLEM

The problem that this study meant to examine is that of the distribution policy adopted by Nigerian Bottling Company. This effect, affects the producer that they are not to exploit their potential customers not reached while even the present consumers are not given the utmost satisfaction they are supposed to enjoy from the product.

Meanwhile, distribution problem can also have chain effect of leading the organisation to operate below full capacity interms of manufacturing. This study wants to find out the actual problems and how well they can be solved, and the advantages hope to gain soon when applying the various distribution policies in distributing coca-cola and its impact on organisational profitability of the product (coca-cola).

1.3 RATIONAL OF THE STUDY

A study of this nature, though for academics purpose, it can also help to the producer in bringing out problems encountered in distribution and how to overcome such problems. Also, it will analyse the best way or method to maximize sales.

The study will also examine how a good distribution policy can be of good and positive influence to the producers and how it will help him (producer) in achieving his organisational goods and objectives, more so, making the marketing concept realistic. This is because production is not complete until products get to the ultimate consumer. The fact that adoption of a distribution policy will help to produce (NBC) in improving its production capacity, as we know that distribution problem with other problem is the cause of under utilization of most product.

Moreover, the study will also examine briefly, the role of public authorities (government) un alleviating and improving the distribution of coca-cola, because of the fact that some of these problems (external factors) are not what the producer can solve hence they requires the help of the government to overcome them. For instance, the issue of good infrastructural facilities like roads which will link up the producer to the customer are much left to the public authority than for the private sector to embark upon.

1.4 SCOPE AND LIMITATION OF RESEARCH

These are problems encountered during the research of this particular topic.

· Financial problem – There is no enough money for example transport fare, going from one place to another like NBC office i.e. the Nigerian Bottling Company.

· Book constraint – There are not enough books to consult in the library, even books conducted contained not enough information needed.

· The Nigerian Bottling Company – The NBC staff does not disclose fully their activities like their financial statement for the year ended for security purposes.

The criteria for choosing the best channel is very important and it will be analysed because of the relationship that distribution has on each of the distribution policies and the roles that channels in making the product get to it’s final consumer.

The research will make report on the activities of distribution in Nigeria Bottling Company Plc. And how this policy is affecting eh sales of coca-cola whether it is effective or not.

1.5 THE HISTORICAL BACKGROUND OF THE SUBJECT MATTER

The history of Nigerian Bottling Company is almost as old as Nigeria itself. It is one of the largest companies established in the country.

There is a young man called A. G. Leventis that arrived at Abeokuta in the year 1922 as the sales agent of A. J. Tanagalakis and company. With this development the group was laid for the establishment of the company, but it was to be for a short period of time when the company choose to start its own operation at Ghana in 1937.

The development led to such establishment in Nigeria following leventis company’s operation in Nigeria, he received a boast and more focus, due to the fact that its business interest in Ghana never sold to the government in 1956.

This focus led to greater improvement in the companies operation with the country that is Nigeria and it’s name was changed from leventis to Nigerian Bottling Company (NBC).

In 1952, NBC was incorporated and this could be said to be the beginning of the company’s life circle. The first NBC plant was commissioned in 1953. This was situated at the basement of the company. The Ooze size of coca-cola bottle was introduced into market in 1955.

The major landmark history of the company includes: after initiating the bottling operation at Oyingbo, the first plant to be opened was that of Apapa. This was followed by another landmark in the company’s history in which change volumes cases surpassed one million naira (1,000,000.00). In 1961 with this increase in sales they had money to diversify from one brand to the other. Such flavours like sprite, grape, fanta curgerale and fanta tonic were introduced in 1961. This diversification led to further increase in sales volume and also made the company a major competition in the market.

An expansion was realized in the company’s operation due to this success. For example, with the increase in sales experience in 1961. The Ibadan plant was opened in the same year. This also led to further expansion with the advert of other plants in the 1970’s in different parts of the country. The list of other plants established during this period are:

· The plant at Benin in 1970

· The plant at Jos in 1972

· The plant at Enugu in 1975

· The plant at Ikeja in 1978

· The plant at Ilorin in 1979

1.7 LIMITATION OF THE STUDY

It is generally accepted that there is nothing in this world without it’s limitation, it also applied to this project.

Financial Problem:

The cost of conducting and carrying out the research is much at times so these discourage and give many student problems in writing their project especially when not financially buoyant.

Book Constraint

There are not enough textbooks that could be consulted. Those available for consultation does not contain enough required information.

1.8 DEFINITION OF THE KEY TERMS

· DISTRIBUTION: This task is ensuring that goods and services produced by the organization are taken from place of purchase to the point of distribution or consumption as efficient and economical possible.

· CHANNEL: A channel includes the producer and final consumer of the product and all agents or the appointed distributor.

· DISTRIBUTION POLICY: This is the policy that determine the number of middlemen handling the product and services and it is adopted by the manufacturer to serve as guide for their choice of distribution channel.

· SALES VOLUME: This is the total sales figure of goods and services over a period of time.

· SALES REPRESENTATIVE: They are the link between the organization and the company.

· DIRECT CHANNEL: This is the situation whereby manufacturers on producers were directly to consumer.

· INDIRECT CHANNEL: This involve the participation of two or more intermediaries between the producer and consumer.

· PRODUCT: Product is anything that can be offered for the attention, acquisition or use or consumption etc.

· DATA DISTRIBUTION SYSTEM: This is the combination of both direct and indirect channels of distribution. It involves the use of more than one channel to cover the desired market for a product.

· CONSUMER BEHAVIOUR: These are the actions, activities displayed by consumer in searching for purchasing using evaluating and disposing of goods and services that are expected to satisfy their needs.

· WHOLESALER: This is the person that buy direct from the manufacturers, store the goods and later resell to the public at a profit.

· BUSINESS: This is a social activity that involves creation and distribution of goods and services for private profit.

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