Post on 13-Mar-2020
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KARAMI LAWALI
PG/M.Ed/08/48865
ANALYSIS OF MARKETING CHANNELS FOR EFFECTIVE DISTRIBUTION OF CONSUMER
PRODUCTS BY SMALL SCALE MANUFACTURING ENTERPRISES IN ZAMFARA STATE
FACULTY OF EDUCATION
DEPARTMENT OF VOCATIONAL TEACHERS EDUCATION
BUSINESS EDUCATION
Chukwuma Ugwuoke
Digitally Signed by: Content manager’s Name
DN : CN = Webmaster’s name
O= University of Nigeria, Nsukka
OU = Innovation Centre
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ANALYSIS OF MARKETING CHANNELS FOR EFFECTIVE
DISTRIBUTION OF CONSUMER PRODUCTS BY SMALL
SCALE MANUFACTURING ENTERPRISES IN
ZAMFARA STATE
by
KARAMI LAWALI
PG/M.ED/08/48865
A THESIS PRESENTED TO THE DEPARTMENT OF
VOCATIONAL TEACHER EDUCATION (BUSINESS EDUCATION)
FACULTY OF EDUCATION, UNIVERSITY OF NIGERIA NSUKKA
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE DEGREE OF MASTER OF EDUCATION (M. Ed)
IN BUSINESS EDUCATION
MAY, 2013
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CHAPTER I
INTRODUCTION
Background of the Study
The state of any nation‘s economy depends largely on its achievements in
the sector of small scale manufacturing enterprises. Nyong and David (2004)
defined Small scale manufacturing enterprises as those with investments not
exceeding N500,000:00 (excluding cost of land), with not more than 50 paid
employees. Small scale manufacturing enterprises have been the backbone of
economic growth of an economy in driving industrial development (Normah,
2006).
The Central Bank of Nigeria (in its Monetary Policy Circular No. 22 of
1988) defined small-scale enterprises which of course include manufacturing
enterprises as having an annual turnover not exceeding N500,000:00. In the 1990
budget the federal government of Nigeria defined small-scale enterprises for
purposes of commercial bank loans as those with an annual turnover not exceeding
N500,000:00, and for Merchant Bank Loans, those enterprises with capital
investments not exceeding 2 million naira (excluding cost of land) or a maximum
of 5 million naira.
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The National Economic Reconstruction Fund (NERFUND) (2001) put the
ceiling for small-scale manufacturing enterprises at 10 million naira. Section 37b
(2) of the Companies and Allied Matters Decree of 1990 defined a small company
as one with:
(a) an annual turnover of not more than 2 million naira;
(b) net asset value of not more than 1 million naira.
Therefore, small scale manufacturing enterprises are defined for the purpose
of this study as those with investments in machinery and equipment not exceeding
a capital base between one million Naira (N1,000,000:00) to four million Naira (N
4,000,000:00) and a labor size of between 50 to 100 paid employees. Small scale
manufacturing enterprises play a big role in national economies by providing job
opportunities and supporting the big industries (Fabayo,2009).
In industrialized countries according to Osuala (2004) Small scale
manufacturing enterprises are acknowledged as generator of significant economic
growth, employment and business development. Small scale manufacturing
enterprises are widely recognized in terms of production and income generation in
both industrialized and developing economies. Small scale enterprises encourage
entrepreneurship development (Onyenekenwa, 2005).
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In Nigeria, small scale manufacturing enterprises account for 50 per cent of
the employed and about 45 per cent of all goods sold (Osuala, 2004). Accordingly,
Federal Republic of Nigeria (FRN, 1999) posit that 97 per cent of all businesses in
Nigeria employ less than 100 per cent employees, meaning that 97 per cent of all
the businesses in Nigeria are under the umbrella term ― small businesses‖. This
sector provides an average of 50 per cent of the country‘s industrial output.
In the uncertain fluctuating market of today, it is essential for small scale
manufacturing enterprises to have an experienced Marketing manager to hold on
and face those uncertainties to survive. Marketing manager according to David and
Wendy (2008) is a skilled person, whose role is to instill a marketing led ethos
throughout the business, researching and reporting on external opportunities and
understanding current and potential customers‘ needs among others. In the same
vein, consumers also play a vital role for any manufacturing industry survival.
Hence, in this case, it is essential for consumers to get the goods of enterprises
whenever, however and wherever they need them through effective marketing
channel adopted by the industry.
Marketing channel which is also called distribution channels are the
different paths that goods passed through in moving from the producer to the
consumer (Levine, 2006). Frances and Stephen (2006) asserted that, part of a
marketing-oriented organization is to get the product to the customers in the right
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place at the right time. This will lead to the development of extremely efficient and
effective distribution system.
Marketing channels describes all the logistics involved in delivering a
company's products or services to the right place, at the right time, for the lowest
cost. In the unending efforts to realize these goals, the channels of distribution
selected by a business play a vital role in this process. Well-chosen channels
constitute a significant competitive advantage, while poorly conceived or chosen
channels can doom even a superior product or service to failure in the market.
Levine (2006) outlined the type of distribution channels as direct and
indirect channels of distribution. Levine further emphasized that direct marketing
channel has no intermediary levels; the company sells directly to consumers.
Direct channel may be by internet, mail, telemarketing, face-to-face selling,
catalogs, direct- response advertising and e-mail among others. On the other hand,
indirect marketing channel according to Kotler (2010) is the channel containing
one or more intermediaries in selling products to the consumer.
Intermediaries according to Bernard (2000) are the set of interdependent
organizations involved in making a product or service available for use or
consumption. The author further maintained that these sets of interdependent
organizations include wholesalers, retailers, brokers, distributors and sales agents
among others. Wholesalers generally buy goods in large quantities, warehouse
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them, then break them down into smaller shipments for their customers—usually
retailers. Sales Agent is the one who act as intermediary between producers and
wholesalers or retailers. Retailers buy goods from wholesaler and sell them
directly to consumers. Thus he acts as a direct link between the wholesaler and
consumers. Distributors/Dealers sell goods direct to the end user but in this case
the customer is often a business or an organization (David and Wendy, 2008).
Given the type of distribution channels and interdependent organizations that
help products move from the producer to customer, along with the limited
resources generally available to small scale manufacturing enterprises, it is
particularly important for manufacturing enterprises to make a careful assessment
of their channel alternatives. It is imperative to note that, Schmitz (1982) asserts
that manufacturer‘s level of awareness of different types of channels, selected
channel extent of utilization, channels effectiveness and benefits derivable from the
selected channel are the key determinants to efficient running of a business
enterprise.
Olofin (1990) described level of awareness of different types of marketing
channel by the enterprises‘ operators as an important factor need to be considered
in running any business. This means that any enterprise whose operators are not
aware of different types of channels, those enterprises would not prosper.
However, for effective utilization of the selected channels of distribution, Musa
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(2010) posited that there should be what is called channels motivation and
channels monitoring and management among others. More so, proper use of
different types of distribution channel helps a lot in getting the products to the
consumer when, how and where he wants it.
In explaining channel of distribution, Alexander (1995) opined that channel
of distribution provides a benefit by bridging the gap between the assortment of
goods and services generated by producers and those in demand from consumers.
Manufacturers typically produce large quantities of a few similar products, while
consumers want small quantities of many different products. Ideally, the
distribution channels selected by a small business owner should be close to the
desired market, able to provide necessary services to buyers, able to handle local
advertising and promotion, experienced in selling compatible product lines, solid
financially, cooperative, and reputable.
Since many small scale manufacturing enterprises in Nigeria lack the
resources to hire, train, and supervise their own sales forces, wholesaler, sales
agents, retailers and distributors are common channel members adopted by small
businesses in the states of the country which of course include Zamfara state
(Muhammad, 2011). Muhammad further maintained that, many small businesses
consign their output to an agent, who might sell to various wholesalers, large
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distributor, or a number of retail outlets. In this way, an agent might provide the
small scale business with access to channels it would not otherwise have had.
According to Adesugba (2005) harnessing the international market requires
that product meet with international markets and specifications, for this to be
realized, there will be need for a purposeful pursuit of an industrialization agenda.
With the winds of globalization now prevalent, it is envisaged that there will be
influx of competition in the Nigeria market thereby raising the standard of quality
and competitiveness in our small scale manufacturing enterprises.
Nigeria‘s experience, with competitiveness as Agboli (2007) observed, is
colored with poor performance of its small businesses sector on the international
scene. It will be important therefore for small scale manufacturing businesses
operators to identify their strengths and weaknesses in the channels of distribution
thereby determining the attractiveness of the market to the customers, now and in
the future. Unfortunately, this identification has not been achieved in Zamfara
state. Hence, there is a need to analyze the marketing channels adopted by small
scale manufacturing enterprises in Zamfara State to enhance distribution of
consumer products by small scale manufacturing enterprises.
Statement of the Problem
Part of the responsibility of marketing oriented organization is to get the
product to the customer in the right place at the right time. Getting the right
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product or service to the right customer at the right time is facilitated by correct
and effective channel of distribution. Creative and well executed marketing
channels provide some of the more potent means by which companies can enhance
their ability to compete domestically and internationally. In the last couple of
years, Nigeria has been facing heavy profitability problems, especially in the
customer product segment of small scale manufacturing enterprises due to poor
utilization of marketing channels (Aftab and Rahim, 1989; Ekpenyong, 1982;
Akamiokhor, 2006).
In Nigeria, the small business enterprises are under increasing pressure to
improve their performance level (Normah, 2006). Previously, the enterprises used
to compete based on the price and quality, but now they have to compete across all
competitive aspect including marketing channels in the current economic
environment (Gunasekaran, 2003).
It has been observed by the researcher that in Zamfara state small scale
manufacturing enterprises have not performed creditably well and hence have not
played the expected vital and vibrant role in the economic growth and development
of the state. This is due to inability of the small scale manufacturing enterprises to
identify their strengths and weaknesses in their marketing channel in distributing
their products to the end user. This situation has been of great concern to the
government, citizenry, operators, practitioners and the organized private sector
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groups. Thus, it is necessary to analyze the current marketing channels adopted by
Small scale manufacturing enterprises in Zamfara state so that this will enable
them to identify their strength and weaknesses in the utilization of marketing
channels and direct their focus on the areas that require improvement.
Purpose of the Study
The purpose of the study is to analyze the marketing channels adopted by
small scale manufacturing enterprises in Zamfara State.
Specifically, the study is aimed at determining the:
1. level of awareness of direct and indirect marketing channels by Small scale
manufacturing enterprises operators in Zamfara State.
2. extent of utilization of direct and indirect marketing channels by Small scale
manufacturing enterprises operators in Zamfara State.
3. effectiveness of the direct and indirect marketing channels adopted by Small
scale manufacturing enterprises operators in Zamfara State.
4. benefits derived from the direct and indirect marketing channels adopted by
Small scale manufacturing enterprises in Zamfara State.
Significance of the Study
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The findings of this study will be of benefit to different individuals and
groups in many ways. It is hoped that, the findings of this study will be of immense
benefit to small scale manufacturing enterprises, customers, students and potential
researchers.
The outcome of the study will assist small scale manufacturing enterprises in
selecting appropriate marketing channels for their product, for maximum
satisfaction of customer wants and needs for better returns. The findings of this
study will be of great importance to customers of companies using appropriate
marketing channels. Knowledge gained from this study will enable customers
navigate to the exact product, information or services they want as quickly and
with a little confusion and place order for the products of their choices at any time.
The findings of this study would create awareness to marketers not only on
the concept of marketing channels but also understand the benefits of utilizing
marketing channels. The outcome of the study will serve as a source of information
to those who formulate policies on business enterprises.
Due to the importance of marketing channels in the marketing practices, the
outcome of this study will flourish studies in this area within the Nigerian small
business enterprises. The findings of this research would act as a benchmark to
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further researches in marketing channels and enrich the pool of reference materials
and findings relating to the marketing channels in the small businesses.
Research Questions
The following research questions are formulated to guide the study:
1. What are the levels of awareness of direct and indirect marketing channels
adopted by small scale manufacturing enterprises operators?
2. What is the extent of utilization of direct and indirect marketing channels
adopted by small scale manufacturing enterprises operators?
3. How effective are the direct and indirect distribution channels adopted by
small scale manufacturing enterprises operators?
4. What are the benefits derived from the direct and indirect channels adopted
by small scale manufacturing enterprises operators?
Hypotheses
The following null hypotheses were formulated to guide the study and was
tested at 0.05 level of significance:
H01 There is no significant difference in the mean responses of the Marketing
Managers and Wholesalers on the level of awareness of the different
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marketing channels by small scale manufacturing enterprises operators in
Zamfara State.
H02 There is no significant difference in the mean responses of the Sales Agents
and Retailers on the extent of utilization of the direct and indirect marketing
channels by small scale manufacturing enterprises operators in Zamfara
State.
H03 There is no significant difference in the mean responses of the wholesalers
and distributors on effectiveness of the channels adopted by small scale
manufacturing enterprises operators in Zamfara State.
Delimitations of the Study
The study is delimited to small scale manufacturing enterprises in Zamfara
State with a capital base between one million Naira (N1,000,000:00) to four
million Naira (N4,000,000:00) and a labour size of between 50 to 100 paid
workers. The study is also delimited to identification of items in consumer product
on marketing channels for effective distribution of products by manufacturing
enterprises with the view to ascertain the effectiveness for improvement.
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CHAPTER II
REVIEW OF RELATED LITERATURE
The literature related to this study is reviewed under the following sub-headings:
1. Conceptual Framework
Distribution channels
Small Scale manufacturing Enterprises in Nigeria
The level of awareness of direct and indirect marketing channels by
small scale manufacturing enterprises operators.
The level of utilization of direct and indirect marketing channels by
small scale manufacturing enterprises operators.
The effectiveness of the direct and indirect marketing channels
adopted by small scale manufacturing enterprises operators.
The benefits derivable from both direct and indirect adopted by small
scale manufacturing enterprises operators.
2. Theoretical Framework
3. Review of Related Empirical Studies
4. Summary of Review of Related Literature
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DISTRIBUTION CHANNELS OF COSUMER PRODUCTS
Schematic Diagram by researcher ( 2012)
MANUFACTURER
D I RECT
RETALER RETAILER
RETAILER
CONSUMER
WHOLE SALER
AGENT WHOLE
SALER
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Marketing Channels
The purpose of any business is to satisfy the needs of its customers. A
business that fails to do this in a competitive economy will not survive, because
customers will go elsewhere. Businesses that are good at satisfying customer needs
have the best opportunities to grow and prosper (Doyle, 1998). Satisfying customer
is the most important and difficult task for business and depends largely on the
type of marketing channel the company adopts.
Drucker (2002) predicted that in the twenty-first century business, the
biggest change would not be in new methods of production or consumption, but in
distribution channels. Drucker further emphasized that the concept of marketing
channel can be confusing. Sometimes it is thought of as the route taken by a
product as it moves from the producer to the consumer or other ultimate user.
Thus, the marketing channel may be defined as: "The external contractual
organization that management operates to achieve its distribution objectives".
(Rosenbloom, 2004)
Distribution channels according to Gaski (2004) refers to the system of
marketing institutions through which goods, products or services are transferred
from the original producers to the ultimate users or consumers. Most frequently a
physical product transfer is involved, but sometimes an intermediate marketing
institution may take title to goods without actually handling them. To this effect,
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Frances and Stephen (2006), viewed marketing channels as the structure linking a
group of individuals or organizations through which a product or service is made
available to the consumer or industrial user.
David and Wendy (2008) opined that manufacturer usually faced with the
choice of selling products through a number of channel levels or distributing direct
to the customer. In describing channel of distribution or trade channel, David and
Wendy (2008) further maintained that distribution channel is the path or route
along which goods move from producers to ultimate consumers or industrial users.
In other words, it is the distribution network through which a producer puts
his product in the hands of actual users. Giles (1990) opined that there is a very
wide range of marketing institutions which carry out a variety of functions along
the channels of distribution. Ade (2009) posited that distribution channel is a
network of interdependent and interrelated institutions that perform all the
activities necessary to move product from manufacturers to ultimate consumers.
He further emphasized that channels of distribution are made up the
manufacturers/producers, intermediaries and customers.
Manufacturer/Producer- This is the word used for companies who process things
in large quantities in the factories or the like (Hanson and Kalyanam, 2007).
Intermediateries/Middlemen- The term middlemen/intermediaries according to
Ade (2009) refers to any institution or individual in the channel which either
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acquires title to the goods or negotiates or sells in the capacity of an agent or
broker. In essence, facilitating agencies that perform or assist in marketing function
are not included as middlemen in the channel of distribution (Ekpenyong, 1982).
This is because they neither acquire title to the goods nor negotiate purchase or
sale. Such facilitating agencies include banks, railways, roadways, warehouses,
insurance companies, advertising agencies, etc.
According to Giles (1990) a firm should identify the types of channel
members available to carry out its channel work. For example, suppose a
manufacturer of test equipment has developed an audio device that detects poor
mechanical connections in machines with moving parts. More so, Daniel, Green
and Lipton (2005) suggest that company executives should think if this product
would have a market in all industries in which electric, combustion, or steam
engines are made or used. The company's current sales force is small, and the
problem is how best to reach these different industries.
Number of Marketing Intermediaries in small scale manufacturing
Enterprises
Companies should determine the number of channel members to use at each
level. Three strategies according to Campbell (2003) are available: intensive
distribution, exclusive distribution, and selective distribution. Campbell further
maintained that, producers of convenience products and common raw materials
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typically seek intensive distribution—a strategy in which they stock their products in
as many outlets as possible. These goods must be available where and when
consumers want them. For example, toothpaste, candy, and other similar items are
sold in millions of outlets to provide maximum brand exposure and consumer
convenience. Coca-Cola and other consumer goods companies distribute their
products in this way.
By contrast, some producers purposely limit the number of intermediaries
handling their products. Coelho and Easingwood (2003) opined that the extreme
form of this practice is exclusive distribution, in which the producer gives only a
limited number of dealers the exclusive right to distribute its products in their
territories. Exclusive distribution is often found in the distribution of new
automobiles and prestige women's clothing.
In the same vein, selective distribution according to Christopher (2005) lies
between intensive and exclusive distribution—the use of more than one, but fewer
than all, of the intermediaries who are willing to carry a company's products. Most
television, furniture, and small-appliance brands are distributed in this manner. For
example, general Electric sell their major appliances through dealer networks and
selected large retailers.
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Howe (1992) viewed that, by using selective distribution, small scale
manufacturing enterprises do not have to spread their efforts over many outlets,
including many marginal ones. They can develop good working relationships with
selected channel members and expect a better-than-average selling effort. Selective
distribution gives producers good market coverage with more control and less cost
than does intensive distribution. The middlemen perform the following marketing
functions which are listed in sequence as identified by Kotler (2010) to include:
searching out buyers and sellers (contacting & Mechandising), matching goods to
the requirements of market, offering goods in the form of assortments or packages,
Persuading and influencing the prospective buyers to favour a certain product and
its maker (personal selling/sales promotion) and implementing pricing policies in
such a manner that would be acceptable to buyers and ensure effective distribution
among others.
An agent- Agent according to Giles (1990) refers to an organization which buys or
sells on behalf of a firm in a manner defined by agreement. Agent normally earns
their profit from commission payments made in turn for their part in negotiating
business operations. Agents negotiate purchases or sales but do not take title to the
merchandise. They include brokers and sales representatives. In addition to
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negotiating purchases, Agents according to David and Wendy (2008) also
represent producers and suppliers .
Wholesaler- Wholesaler is an independent trader who sells at ‗wholesale‘ to other
business organizations either for the purpose of resale or for business uses.
According to David and Wendy (2008) wholesaler is an organization that buys a
range of stock from producer or their agents, which they then resell to the retail
traders.
Kotler (2010) posit that Wholesaler acts as a middleman in the channel of
distribution as he buys goods in large quantity from the manufacturer and sells
these to retailers in small quantities. His role in distribution of goods is discussed
below as identified by Kotler (2010):
I. Buying and assembling: A wholesaler forecasts the demand for goods and
assembles different varieties of goods from several manufacturers. Some
wholesalers also import goods from foreign countries.
II. Selling and dispersing: A wholesaler breaks the bulk so that retailers and users
can buy them in small lots. His representatives‘ regularly call on retailers and
industrial users/buyers to distribute the goods among widely scattered people.
III. Transportation and storage: A wholesaler arranges transportation of goods from
producers to his god owns and from there to retailers. Sometimes he has his own
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transport arrangement for this purpose. In storage, a wholesaler holds large stocks
and serves as a reservoir and supplies to retailers. He helps in stabilizing prices by
adjusting supply of goods to their demand.
IV. Packing and grading: A wholesaler packs and repacks goods in convenient lots.
He sorts out goods in different grades. He also gives brand names to the products
packed and graded by him.
V. Advertising and sales promotion: A wholesaler performs advertising and sales
promotion activities to increase the sale of products. He also takes the services of
experts for this purpose.
Retailers – According to David and Wendy (2008) retailers are those who sell
goods or services direct to the final consumer. Frances and Stephen (2006) viewed
retailers as those intermediaries that sell direct to the consumer and may either
purchase direct from the manufacturers or deal with a wholesaler, depending on
purchasing power or volume.
Roles of retailer in distribution of goods as enumerated by Ade (2009) are
given below:
I. Wide choice to consumers: The retailer anticipates needs of consumers. He
assembles goods from different sources and stocks different varieties of products.
Thus, he offers a wide choice to consumers. They can buy according to their
purchasing power and requirements.
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II. Availability of goods in small quantities and at convenient locations: A retailer
provides ready supply of goods so that consumers can buy conveniently and
quickly in small lots without any inconvenience of placing advance orders and
waiting for supplies. By ensuring uninterrupted and fresh supply of goods, he saves
consumers from the botheration of buying goods in bulk and storing them.
III. Home delivery and Assurance of regular supply: A retailer transports goods
from wholesalers to ultimate consumers. Some retailers provide free home delivery
service to their consumers. Thus they create place utility. In Assurance of regular
supply, retailer maintains adequate supply of goods so that consumers are sure of
getting regular supply at the time of their need.
V. Credit facility and Close interaction with customers: Although retailers mostly
sell goods for cash, they also supply goods on credit to their regular customers.
Concerning Close interaction with customers, retailer brings new products to the
notice of customers and educates them in their uses. A retailer thus, acts as a friend
and guide to his customers.
Indeed retailer‘s interaction with customers is of intimate personal nature
and thus he is able to provide feedback to wholesalers and manufacturers about
consumers' preferences. Generally, retailers contribution towards fulfillment of
enterprises objectives cannot be over emphasized. (Levitt, 1996)
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Distributors and Dealers- Distributors and Dealers sell goods direct to the end
user but in this case the customer is often organization or a business owner. Giles
(1990) sees Distributors as organizations which contract to buy an enterprise‘s
goods and services, and sell it to third parties.
The following diagram (chart) is illustrative of the channel of distribution which
may exist in a market as identified by Adeleye (1998).
a) PRODUCER DIRECT SALE CONSUMER
b) PRODUCER RETAILER CONSUMER
c) PRODUCER WHOLESALER RETAILER CONSUMER
d) PRODUCER AGENT RETAILER CONSUMER
e) PRODUCER AGENT WHOLESALER RETAILER CONSUMER
f) PRODUCER AGENT/DEALER RETAILER CONSUMER
g) PRODUCER AGENT/DEALER WHOLESALER RETAILER CONSUMER
The above charts indicate that the number of middlemen may vary. Chart ‗a‘
shows that if there is direct sale by the producer to the consumers then there is no
middleman. But that is very rare. As the chart ‗b‘ shows the producer may sell
goods to retailer who may then sell the same to consumers. Chart ‗c‘ indicated that
the producer sells goods to wholesaler who in turn sells to retailer who then sells to
the final consumer.
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The fourth alternative (chart‗d‘) channel of distribution is when any
agent/dealer intervenes between the producer and retailer and acts as a middlemen.
The agent is appointed by the producer for the sale of goods to the retailer. Chart
‗e‘ show that producer‘s agent sells goods to wholesalers who sell to retailers who
then sells to consumer. (Chart ‗f‘) indicated that Agent/dealer may sell to retailers
and goods are thus made available to consumers. (Chart ‗g‘) indicated that
Agent/dealer may sells to wholesalers who may then sell to retailers and goods are
thus made available to consumers. In the channel of distribution there may be more
than one agent/dealer and wholesaler.
Small Scale Manufacturing Enterprises in Nigeria
There is no single criterion for classifying business enterprises globally. In a
study carried out by International Labour Organization (2005), over 50 definitions
were identified in 75 different countries. However, in defining small- scale
business, reference is usually made to some quantifiable measures such as: number
of people employed by the enterprises, investment outlay, the annual turnover
(sales) and the asset value of the enterprise or a combination of these measures. At
the moment in Nigeria, following the National Council for Industry (NCI, 2002)
classification, Small --scale business, if the enterprise has a capital outlay of
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between N1.5million and N50million including working capital but excluding cost
of land and or workforce of between 11-100 employees.
Generally, enterprises that engage in the production of light consumer goods
that are primarily related to food and beverages, clothing, electrical parts,
automotive parts, leather products, soap and detergents, woodworks are called
small scale business enterprises. Fabayo, (2009) mentioned small scale
manufacturing enterprises as one of the type of Small scale business enterprises in
Nigeria.
Small scale manufacturing Enterprises do play a major and important role in
today‘s world economy, and they are recognized as one of the main contributors to
economic, development and employment growth (Kilby, 2010). Regardless of the
high importance of small scale manufacturing enterprises for any economy, it is
noticed that defining it had always been a difficult thing to do. Watson and Everrett
(1996) posit that there is a little agreement between researchers, practitioners,
financial institutions and governmental agencies on what defines a small scale
manufacturing enterprises. Based on that, small scale manufacturing enterprises
had been defined in different ways from different parts of the world according to
national and local needs.
Small scale Manufacturing enterprises have been the backbone of economic
growth of an economy in driving industrial development (Normah, 2006). Small
28
scale manufacturing enterprises play a big role in national economies by providing
job opportunities and supporting the big industries. Facing increased competitive
pressure due to globalization and increased quality requirements from their
customers (St-Pierre and Raymond, 2004). Small scale manufacturing enterprises
in particular are central in achieving sustainable growth. They constitute about
90% of the business population in North America and they accounted for the most
new jobs in the country (Karatko & Hodgetts, 1998).
The Nigerian concepts of the small scale manufacturing enterprises are also
somewhat divergent but generally there is agreement on the definition provided by
the National Council on Industry (NCI) in 2001, which defines Small scale
manufacturing enterprises as any manufacturing enterprise with a maximum asset
base of not more than N50 million, excluding land and working capital and with
employees of not less than 11 and not more than 100 (Sanusi, 2003; Udechukwu
2003). By this definition it means that any manufacturing enterprise that has less
than 11 to 100 employees can be considered as small scale manufacturing
enterprises.
However, the small scale manufacturing enterprises in focus as predicted by
Box (2003) are those manufacturing firms/businesses within the real sectors of the
economy. Small scale manufacturing enterprises constitute a very heterogeneous
group, comprising of a variety of firms that possess a wide range of sophistication
29
and skills and operate in different markets and social environments. Some are
dynamic, innovative, and growth oriented; others are traditional enterprises that are
satisfied to remain small (Mathewson and Winter, 2004).
Despite differences in definitions of small scale manufacturing industries
McGolrick (2002) maintained that, both within and outside national boundaries of
countries, one of the distinctive features of Small scale manufacturing enterprises
is that they are sole proprietorships, partnerships or limited liability companies. But
in most cases even where they are registered as limited liability companies, their
true ownership is either one man or partnership (Udechukwu,2003).
Most small scale manufacturing enterprises are labour intensive businesses
having centralized and or personalized management and have limited access to
long term capital. And even where they have access to short term financing it is
usually at a penal rate of interest and other conditionalities (Ayeety, 1994).
Because of its nature of ownership and management there is flexibility in decision
making and often informal employer-employee relationship. Usually partners in
most Small scale manufacturing industries pursue personal goals at the expense of
the overall interest of the business.
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The Level of Awareness of Direct and Indirect Marketing Channels by Small
Scale Manufacturing Enterprises Operators
In the recent years, it has been acknowledged that small scale manufacturing
enterprises can positively influence the economic growth of developing countries.
The entrepreneurs of these enterprises do not only create income and employment,
but they generate wealth and contribute to welfare in the long run. The choice of
the most effective channel of distribution is an important aspect of marketing. To
find and select the right channel intermediaries is crucial to the success of the
marketing. (Hayes, Jernster and Aaby, 1996).
The selection and resultant performance of a specific partner or partners are,
of course, the ultimate determinants of the success or failure of a marketing
channel (Stern & El-Ansary, 1992). Clearly, Companies need to select their
channels members carefully. To customers, the channel members are the company.
Marketing channel is a process that involves very high cost since all over the world
big companies are spending millions and billions on their marketing.
In essence, marketing channel is a process that involves very high cost
depending on the type of marketing channel the manufacturing entrepreneurs
adopts. Giles (1990) assert that the lowest cost of marketing is on the internet.
There are two main types of marketing strategies that manufacturing entrepreneur
cater while adopting marketing channel. The strategies are: Push or pull strategies.
31
Push Strategy: involves when the producer advertise, market its products to
create awareness among the people about the product. Push strategy works on the
places where there is low brand loyalty and mostly they are impulse items or
everyday product. While Pull Strategy according to Boehm and Gensler (2005)
involve where customers are highly brand loyal and ask for the product. In this
scenario the producer advertises his product in such a manner that intermediaries
crave to buy it from the producer. When the manufacturing entrepreneur jumps
into the market as a new firm, it uses the direct selling strategy to market its
product. Michael and Moore (1995) opined that, due to the fact that, the market is
limited and the people are not aware of the manufacturing entrepreneur. Hence,
choosing best channel is not a problem for the firm but to offer the middlemen to
be a part of an organization and handle the firm‘s line is a great problem for the
manufacturing entrepreneur (Kotler and Armstrong, 2006).
Gradually if the manufacturing entrepreneur started moving better in the
market it will exaggerate its marketing channel and will use retailers for small
markets and use distributors for large markets. Different manufacturing
entrepreneur are using multiple ways to market the product. Now a day‘s
manufacturing entrepreneurs are also using hybrid channels or channels
integration. Hybrid channel is a new way of doing business. Kotler and Armstrong,
(2006) posited that if manufacturing entrepreneurs are going towards hybrid
32
channel it should keep a track to watch that channels are working properly together
and match each target customer preferred ways of doing business or may adopts.
Channel integration according to Kotler (2010) is one of the other ways
which the customer wants from the manufacturing entrepreneur to offer e.g. the
customer can use the internet to buy the product and can easily hold the product
from the manufacturing entrepreneur‘s nearest retail outlet. If the customer
wouldn‘t like the product or want to exchange the product, he can conveniently do
that through nearest retail store. Customers want to get discounts on whatever
product they buy (Miller, 2007).
It is imperative to note that, an entrepreneur has to know and choose a
suitable channel of distribution for his product such that the channel chosen is
flexible, effective and consistent with the declared marketing policies and
programmes of the firm. While selecting a distribution channel, the entrepreneur
should compare the costs, sales volume and profits expected from alternative
channels of distribution and take into account the following factors as enumerated
by David and Wendy (2008):- Product Consideration, in this type and the nature of
products manufactured is one of the important elements in choosing the
distribution channel. Second consideration is Market Consideration which is
another important factor influencing the choice of distribution channel and the
nature of the target market.
33
All these factors or considerations affecting the choice of a distribution
channel are inter-related and interdependent (Blattberg, Getz and Thomas, 2001).
Hence, an entrepreneur must choose the most efficient and cost effective channel
of distribution by taking into account all these factors as a whole in the light of the
prevailing economic conditions. Such a decision is very important for a business to
sustain long term profitability.
Since small scale manufacturing enterprises get their products to final
consumers by using different distribution channels, using a proven distribution
channel allows a small business to minimize its marketing efforts and focus
properly on making a quality product. Established distributors have the marketing
muscle that small businesses typically lack.
Faboan (2004) opined that finding appropriate distribution channels is a key
task in marketing. Distribution channel strategy involves selecting the right
channels of distribution, and forms a major component of your suite of marketing
strategies. A clear idea of available distribution channels can help small business
persons go about this task more effectively. He further maintained that there are a
number of ways that manufacturing enterprises can sell and distribute what it
manufactures.
34
Observing the distribution practices of competitors gives ideas for distribution
channel strategy and know how to manage the selected channel of distribution.
Akpambo (2003) posit that distribution channels, whether direct or indirect, need
to be managed effectively to achieve desired sales volumes and cash flows.
Management typically involves developing a complete marketing plan that spells
out the marketing strategy, and setting quantitative targets for each channel and
distributor. In essence small scale manufacturing enterprises cannot just select a
few distributors and hope they will do a good job. In particular, distributors will
typically buy from you on credit and you will have to ensure that they pay you in a
timely manner. Developing an effective distribution channel strategy and
managing the channels you select are thus key marketing task (Verhoef and
Donkers, 2005).
According to Giles (1990) the first step in selecting a marketing channel is
determining which type of channel will best meet both the seller‘s objectives and
the distribution needs of customers. Giles further emphasized that, distribution
channels can be described as being either short or long. According to him short
channel involves few intermediaries. A long channel, on the other hand, involves
many intermediaries working in succession to move goods from producers to
consumers. In addition, business products tend to move through shorter channels
35
than consumer products due to geographical concentrations and comparatively few
business purchases.
The Level of Utilization of Different Marketing Channels By Small Scale
Manufacturing Enterprises Operators for Effective Distribution of Products
In marketing, a distribution channel is a vehicle used by the company to sell
its products and services to its customer. In general, distribution channels are either
direct, meaning the company interacts with customers directly, or indirect,
meaning intermediaries perform activities on behalf of the company to reach
customers. When a company develops its marketing strategy, it determines which
channels it wants to use. Companies can choose to use a single channel or multiple
channel strategy.
According to Giles (1990) a distribution channel is an inter-organizational
system that makes products and services available for purchase. Focus in the
course is on how companies (institutions) can efficiently transfer products and
services from production to use and consumption. Distribution channels can be
analyzed from both economic and behavioral perspective. This analysis draw
attention to how companies can cooperate and coordinate activities throughout the
channel, so that the benefits that can be realized by cooperation can be analyzed
36
and how long-term cooperative relationships can be developed. and issues related
to power and conflict between channel actors will also be discussed.
To maintained proper utilization of enterprises‘ selected channel of
distribution. Abdullahi (2009) opined that some consideration need to be made,
such consideration include, product, market, company and middlemen
considerations. He further explains the considerations as:
Product considerations: The nature and type of product have an important
bearing on the choice of distribution channels. For examples, perishable
goods need speedy movements and hence shorter channel or route of
distribution; For durable goods, longer and diversified channels may be
used; Similarly, for technical products requiring specialized selling and
serving talents, the shortest channel should be used.
Market considerations: The nature and type of customers and size of market
are important considerations in the choice of a channel of distribution. For
example, if the market size is large, there may be long channels, whereas in
a small market direct selling may be profitable. The nature and type of
consumers include factors such as desire for credit, preference for the stop
shopping, demand for personal services, amount of time and effort the
37
customer is willing to spend. It also includes factors like age, income group,
sex, and religion of customers.
Company considerations: The nature, size and objectives of the business
firm also play an important role in the selection of distribution channel. It
includes financial resources, market standing, volume of production, desire
for control of channel, services provided by manufacturers', etc. For example
a company with substantial financial resources need not rely too much on
the middlemen and can afford to reduce the levels of distribution. Similarly a
company desiring to exercise greater control over channel will prefer a
shorter channel.
Middlemen considerations: The cost and efficiency of distribution depend
largely on the nature and type of middlemen. It includes characteristics of
middlemen such as availability, attitudes, services, sales potential, costs etc.
For example, if the terms and conditions of engaging wholesalers are
unfavorable, a manufacturer may like to channelize his products through
semi wholesalers or retailers, thereby, bypassing wholesalers. However, the
determining factor would be the differential advantage involved in the
choice.
To conclude, the channel generating the largest sales volume at lower unit cost
will be given top priority. This will minimize distribution cost. In short,
38
distribution describes all the logistics involved in delivering a company's products
or services to the right place, at the right time, for the lowest cost. In the unending
efforts to realize these goals, the channels of distribution selected by a business
play a vital role in this process. Well-chosen channels constitute a significant
competitive advantage, while poorly conceived or chosen channels can doom even
a superior product or service to failure in the market.
Given the importance of distribution channels along with the limited
resources generally available to small businesses is particularly important for
entrepreneurs to make a careful assessment of their channel alternatives. In
evaluating possible channels, it may be helpful first to analyze the distribution
channels used by competitors. This analysis may reveal that using the same
channels would provide the best option, or it may show that choosing an
alternative channel structure would give the small business a competitive
advantage.
Other factors to consider include the company's pricing strategy and internal
resources. As a general rule, as the number of intermediaries included in a channel
increase, producers lose a greater percentage of their control over the product and
pay more to compensate each participating channel level. At the same time,
however, more intermediaries can also provide greater market coverage.
39
Among the many channels a small business owner can choose from are:
direct sales (which provides the advantage of direct contact with the consumer);
original equipment manufacturer (OEM) sales (in which a small business's product
is sold to another company that incorporates it into a finished product);
manufacturer's representatives (salespeople operating out of agencies that handle
an assortment of complimentary products); wholesalers (which generally buy
goods in large quantities, warehouse them, then break them down into smaller
shipments for their customers usually retailers); brokers (who act as intermediaries
between producers and wholesalers or retailers); retailers (which include
independent stores as well as regional and national chains); and direct mail.
Ideally, the distribution channels selected by a small business owner should be
close to the desired market, able to provide necessary services to buyers, able to
handle local advertising and promotion, experienced in selling compatible product
lines, solid financially, cooperative, and reputable.
Since many small businesses lack the resources to hire, train, and supervise
their own sales forces, sales agents and brokers are a common distribution channel.
Many small businesses consign their output to an agent, who might sell it to
various wholesalers, one large distributor, or a number of retail outlets. In this way,
an agent might provide the small business with access to channels it would not
40
otherwise have had. Moreover, since most agents work on a commission basis, the
cost of sales drops when the level of sales drops, this provides small businesses
with some measure of protection against economic downturns. When selecting an
agent, an entrepreneur should look for one who has experience with desired
channels as well as with closely related not competitive products.
Other channel alternatives can also offer benefits to small businesses. For
example, by warehousing goods, wholesalers can reduce the amount of storage
space needed by small manufacturers. They can also provide national distribution
that might otherwise be out of reach for an entrepreneur. Selling directly to
retailers can be a challenge for small business owners. Independent retailers tend to
be the easiest market for entrepreneurs to penetrate. The merchandise buyers for
independent retailers are most likely to get their supplies from local distributors,
can order new items on the spot, and can make adjustments to inventory
themselves. Likewise, buyers for small groups of retail stores also tend to hold
decision-making power, and they are able to try out new items by writing small
orders. However, these buyers are more likely to seek discounts, advertising
allowances, and return guarantees.
Medium-sized retail chains often do their buying through a central office. In
order to convince the chain to carry a new product, an entrepreneur must usually
41
make a formal sales presentation with brochures and samples. Once an item makes
it onto the shelf, it is required to produce a certain amount of revenue to justify the
space it occupies, or else it will be dropped in favor of a more profitable item.
National retail chains, too, handle their merchandise buying out of centralized
offices and are unlikely to see entrepreneurs making cold sales calls. Instead, they
usually request a complete marketing program, with anticipated returns, before
they will consider carrying a new product. Once an item becomes successful,
however, these larger chains often establish direct computer links with producers
for replenishment.
Since any business use one or more marketing channels to distribute
products to the customer. Some organization resources will be used in the
marketing channels through which the company product passes on to the hands of
the customer. Marketing channels perform the function of transferring title of the
product to the customers.
Many companies nowadays use multiple marketing channels through which
to reach their customers, often involving one or several intermediaries. The role of
an intermediary is to provide the means of achieving the widest possible market
coverage at a lower unit cost. Many intermediaries hold stock and therefore carry
some of the financial risk with the supplier. Use of intermediaries carries benefits
42
to the supplier but it also carries one important disadvantage and that is the loss of
control. Also there are situations where the suppliers objectives differ from those
of the distributor leading to conflict.
The effectiveness of the Direct and Indirect marketing channels adopted by
Small scale manufacturing enterprises operators for effective distribution of
products
A channel of distribution involves an arrangement of exchange relationships
that create value for buyers and sellers through the acquisition (procurement),
consumption (usage), or elimination (disposal) of goods and services.
For effective utilization of the selected channels of distribution Musa (2010)
posited that there should be what is called channels motivation and channels
monitoring and management. Musa further emphasized that, it is difficult enough
to motivate direct employees to provide the necessary sales and service support.
Motivating the owners and employees of the independent organizations in a
distribution chain requires even greater effort. There are many devices for
achieving such motivation. Perhaps the most usual is `incentive': the supplier offers
a better margin, to tempt the owners in the channel to push the product rather than
its competitors; or compensation which is offered to the distributors' sales
personnel, so that they are tempted to push the product.
43
Julian and Dent (2008) defined this incentive as a Channel Value
Proposition or business case, with which the supplier sells the channel member on
the commercial merits of doing business together. He describes this as selling
business models not products. Julian and Dent further described that channel
monitoring and management in much the same way that the organization's own
sales and distribution activities need to be monitored and managed, so will those of
the distribution chain.
In practice, many organizations use a mix of different channels; in particular,
they may complement a direct sales-force, calling on the larger accounts, with
agents, covering the smaller customers and prospects. These channels show
marketing strategies of an organization. Effective management of distribution
channel requires making and implementing decision in these areas Daniel (2011)
observed that for effective utilization of different distribution channels,
manufacturers should inculcate the habit of Evaluating Channel Members. In
evaluating channels members the producer must regularly check the channel
member's performance against standards such as sales quotas, average inventory
levels, customer delivery time, treatment of damaged and lost goods, cooperation
in company promotion and training programs, and services to the customer. In
addition, the company should recognize and reward intermediaries who are
44
performing well. Those who are performing poorly should be assisted or, as a last
resort, replaced. A company may periodically "requalify" its intermediaries and
prune the weaker ones. Finally, manufacturers need to be sensitive to their dealers.
Those who treat their dealers lightly risk not only losing their support but also
causing some legal problems.
Joseph and Daniel (2009) posited that effective distribution provides
customers with convenience in the form of availability (what, where, when - the
right product, at the right place, at the right time), access (customers' awareness of
the availability and authorization to purchase), and support (e.g. pre-sales advice,
sales promotion and merchandising, post-service repairs).
For effective Members of channels of distribution typically buy, sell, and
transfer title to goods. There are, however, many other flows between channel
members in addition to physical possession and ownership of goods. These include
promotion flows, negotiation flows, financing, assuming risk, ordering, and
payment. In some cases the flow is in one direction, from the manufacturer to the
consumer. Physical possession, ownership, and promotion flow in one direction
through the channels of distribution from the manufacturer to the consumer.
In other cases there is a two-way flow. Negotiation, financing, and the
assumption of risk flow in both directions between the manufacturer and the
45
consumer. Ordering and payment are channel flows that go in one direction from
the consumer to the manufacturer. There are also a number of support functions
that help channel members perform their distribution tasks. Transportation,
storage, insurance, financing, and advertising is tasks that can be performed by
facilitating agencies that may or may not be considered part of the marketing
channel. From a channel management point of view, it may be more effective to
consider only those institutions and agencies that are involved in the transfer of
title as channel members.
The other agencies involved in supporting tasks can then be described as an
ancillary or support structure. The rationale for separating these two types of
organizations is that they each require different types of management decisions and
have different levels of involvement in channel membership.
In essence, Musa (2010) maintained that effective management of the
channels of distribution involves forging better relationships among channel
members. With respect to the task of distribution, all of the channel members are
interdependent. Relationships between channel members can be influenced by how
the channels are structured. Improved performance of the overall distribution
system is achieved through managing such variables as channel structure and
channel flows.
46
The Benefits Derivable from the Direct and Indirect Marketing Channels
Adopted by Small Scale Manufacturing Enterprises for Effective Distribution
of Products
The Greek philosopher Heraclitus wrote, "Nothing endures but change."
Marketing channels are enduring but flexible systems. They have been compared
to ecological systems. Thinking about distribution channels in this manner, points
out the unique, ecological-like connections that exist among the participants within
any marketing channel. All marketing channels are connected systems of
individuals and organizations that are sufficiently agile to adapt to changing
marketplaces.
Chukwudi (2004) posit that most producers use intermediaries to bring their
products to market. They try to develop a distribution channel (marketing channel)
to do this. Since distribution channel is a set of interdependent organizations that
help make a product available for use or consumption by the consumer or business
user. Channel intermediaries are firms or individuals such as wholesalers, agents,
brokers, or retailers who help move a product from the producer to the consumer or
business user.
A company‘s channel decisions directly affect every other marketing
decision. Place decisions, for example, affect pricing. In essence, marketers that
distribute products through mass merchandisers will have different pricing
47
objectives and strategies than will those that sell to specialty stores. Distribution
decisions can sometimes give a product a distinct position in the market.
The choice of retailers and other intermediaries according to David (2005) is
strongly tied to the product itself. Manufacturers select mass merchandisers to sell
mid-price-range products while they distribute top-of-the-line products through
high-end department and specialty stores. To this end, the firm‘s sales force and
communications decisions depend on how much persuasion, training, motivation,
and support its channel partners need. Whether a company develops or acquires
certain new products may depend on how well those products fit the capabilities of
its channel members. Some companies pay too little attention to their distribution
channels. Others, have used imaginative distribution systems to gain a competitive
advantage which in turn benefits the firm.
Kotler (2010) identified some benefits derivable from distribution channels
depending on the type of organization that performs the different functions can
vary from channel to channel, the functions themselves cannot be eliminated.
Channels according to Kotler provide time, place, and ownership utility. They
make products available when, where, and in the sizes and quantities that
customers want. Distribution channels provide a number of logistics or physical
48
distribution functions that increase the efficiency of the flow of goods from
producer to customer.
In addition to increasing the efficiency of the flow of goods from producer
to customer distribution channels create efficiencies by reducing the number of
transactions necessary for goods to flow from many different manufacturers to
large numbers of customers. This occurs in two ways. The first is called breaking
bulk. Wholesalers and retailers purchase large quantities of goods from
manufacturers but sell only one or a few at a time to many different customers.
Second, channel intermediaries reduce the number of transactions by creating
assortments—providing a variety of products in one location—so that customers
can conveniently buy many different items from one seller at one time. The
transportation and storage of goods is another type of physical distribution
function.
Retailers and other channel members according to Joseph and Daniel (2009)
move the goods from the production site to other locations where they are held
until they are wanted by customers. Channel intermediaries also perform a number
of facilitating functions, functions that make the purchase process easier for
customers and manufacturers. Intermediaries often provide customer services such
as offering credit to buyers and accepting customer returns. Some wholesalers and
49
retailers assist the manufacturer by providing repair and maintenance service for
products they handle. Channel members also perform a risk-taking function. If a
retailer buys a product from a manufacturer and it doesn‘t sell, it is ―stuck‖ with
the item and will lose money. Last, channel members perform a variety of
communication and transaction functions.
Wholesalers buy products to make them available for retailers and sell
products to other channel members. Retailers handle transactions with final
consumers. Channel members can provide two-way communication for
manufacturers. They may supply the sales force, advertising, and other marketing
communications necessary to inform consumers and persuade them to buy. And
the channel members can be invaluable sources of information on consumer
complaints, changing tastes, and new competitors in the market (Kotler &
Armstrong, 2006).
Since distribution channel moves goods and services from producers to
consumers. It overcomes the major time, place, and possession gaps that separate
goods and services from those who would use them. Members of the marketing
channel perform many key functions. Some help to complete transactions:
50
Information: gathering and distributing marketing research and intelligence
information about actors and forces in the marketing environment needed for
planning and aiding exchange.
Promotion: developing and spreading persuasive communications about an
offer.
Contact: finding and communicating with prospective buyers.
Matching: shaping and fitting the offer to the buyer's needs, including
activities such as manufacturing, grading, assembling, and packaging.
Negotiation: reaching an agreement on price and other terms of the offer so
that ownership or possession can be transferred.
The question is not whether these functions need to be performed—they
must be—but rather who will perform them. To the extent that the manufacturer
performs these functions, its costs go up and its prices have to be higher. At the
same time, when some of these functions are shifted to intermediaries, the
producer's costs and prices may be lower, but the intermediaries must charge more
to cover the costs of their work. In dividing the work of the channel, the various
functions should be assigned to the channel members who can perform them most
51
efficiently and effectively to provide satisfactory assortments of goods to target
consumers.
David and Wendy (2008) outlined the benefits derivable from marketing
channels intermediaries to include reduced investment, local knowledge, and
economics of sales, transactional efficiency and breaking bulk. David and Wendy
explained the benefits as:
Reduced investment- intermediaries reduced investment cost by shifting
the responsibilities for stock holding further down the chain, a manufacturer
can reduced the amount of their own funds tied up in stocks. They can also
minimize their investments in premises, transport, systems and other aspects
of the distribution infrastructure.
Local knowledge- an intermediary such as an agent or a wholesaler usually
operates in a geographic area where they understand the business
environment and have good local contact. If an organization wishes to
expand in areas where they have little experience, they may need the
knowledge and networks of a local intermediary, at least for a while.
Economies of scale- a distributor or retailer selling more than one manufacturers‘
product sprayed the distribution cost, which should achieve some economies of
scales.
52
Transactional efficiency- by consolidating a number of producers‘ product
in one place, an intermediary cuts down the number of transactions required
to give customers what they need.
Breaking bulk- sometimes intermediaries take a large consignment of
goods and break it down in to more manageable unit for the next distributor
or customer in the chain. This process of ― breaking bulk‖ takes place, for
example, when an economic shipment quantity, such as a full container of
electronic goods, arrives at an important wholesaler and is divided of into
the smaller quantities required by retail outlet.
Carefully examining the above benefits of marketing channels, it is
sufficient to note that channel members provide value to companies in so many
ways. Vivian (2009) assert that Channels of marketing intermediaries exist because
they offer value in making goods and services more available and accessible to the
targeted markets. In addition to making goods and services available to customers,
Channel intermediaries also offer contacts, experience, specialization, and
economies of scale to organizations that cannot offer these attributes on their own.
Marketing channels allow producers to realize the benefits that only larger
organizations may be able to support.
53
Through the acquired expertise and economies of scale, channel members
offer these activities more efficiently than organizations, particularly smaller ones,
could provide on their own. The marketing channel allows the producer and the
channel members to do what they each do best in higher volumes. In essence
Distribution channels perform a number of functions that make possible the flow
of goods from the producer to the customer. These functions must be handled by
someone in the channel. Afuah and Tucci (2003) posit that, though the type of
organization that performs the different functions can vary from channel to
channel, the functions themselves cannot be eliminated. Channels provide time,
place, and ownership utility. They make products available when, where, and in
the sizes and quantities that customers want. Distribution channels provide a
number of logistics or physical distribution functions that increase the efficiency of
the flow of goods from producer to customer.
More so, distribution channels according to Berman and Evans (2004) create
efficiencies by reducing the number of transactions necessary for goods to flow
from many different manufacturers to large numbers of customers. This occurs in
two ways. The first is called breaking bulk. Wholesalers and retailers purchase
large quantities of goods from manufacturers but sell only one or a few at a time to
many different customers. Second, channel intermediaries reduce the number of
54
transactions by creating assortments—providing a variety of products in one
location—so that customers can conveniently buy many different items from one
seller at one time. Channels are efficient. The transportation and storage of goods
is another type of physical distribution function. Retailers and other channel
members move the goods from the production site to other locations where they
are held until they are wanted by customers.
In addition to moving goods from the production site to other location,
channel intermediaries also perform a number of facilitating functions, functions
that make the purchase process easier for customers and manufacturers.
Intermediaries often provide customer services such as offering credit to buyers
and accepting customer returns Giles (1990). David and Wendy (2008) opined that
some wholesalers and retailers assist the manufacturer by providing repair and
maintenance service for products they handle. Channel members also perform a
risk-taking function. If a retailer buys a product from a manufacturer and it doesn‘t
sell, it is ―stuck‖ with the item and will lose money. Last, channel members
perform a variety of communication and transaction functions. Wholesalers buy
products to make them available for retailers and sell products to other channel
members.
55
Retailers handle transactions with final consumers. Channel members can
provide two-way communication for manufacturers Kotler (2010). They may
supply the sales force, advertising, and other marketing communications necessary
to inform consumers and persuade them to buy. And the channel members can be
invaluable sources of information on consumer complaints, changing tastes, and
new competitors in the market. If selling directly from the manufacturer to the
consumer was always the most efficient methodology for doing business, the need
for channels of distribution would be obviated. Intermediaries, however, provide
several benefits to both manufacturers and consumers: improved efficiency, a
better assortment of products, routinization of transactions, and easier searching for
goods as well as customers.
Reducing the number of necessary contacts brings more efficiency into the
distribution system by eliminating duplicate efforts in ordering, processing,
shipping among others. Musa (2010) opined that in terms of efficiency there is an
effect of diminishing returns as more intermediaries are added to the channels of
distribution. If, in the example above, there were three wholesalers instead of only
one, the number of essential contacts increases to 75: 15 contacts between five
manufacturers and three wholesalers, plus 60 contacts between three wholesalers
and 20 retailers. Of course this example assumes that each retailer would order
56
from each wholesaler and that each manufacturer would supply each wholesaler. In
fact geographic and other constraints typically eliminate some lines of contact,
making the channels of distribution more efficient.
Intermediaries provide a second benefit by bridging the gap between the
assortment of goods and services generated by producers and those in demand
from consumers. Manufacturers typically produce large quantities of a few similar
products, while consumers want small quantities of many different products. In
order to smooth the flow of goods and services, intermediaries perform such
functions as sorting, accumulation, allocation, and creating assortments.
In sorting, intermediaries take a supply of different items and sort them into
similar groupings, as exemplified by graded agricultural products. Accumulation
means that intermediaries bring together items from a number of different sources
to create a larger supply for their customers. Intermediaries allocate products by
breaking down a homogeneous supply into smaller units for resale. Finally, they
build up an assortment of products to give their customers a wider selection.
A third benefit provided by intermediaries is that they help reduce the cost of
distribution by making transactions routine. Exchange relationships can be
standardized in terms of lot size, frequency of delivery and payment, and
communications. Seller and buyer no longer have to bargain over every
57
transaction. As transactions become more routine, the costs associated with those
transactions are reduced (Vivian, 2011).
The use of intermediaries also aids the search processes of both buyers and
sellers. Producers are searching to determine their customers' needs, while
customers are searching for certain products and services. A degree of uncertainty
in both search processes can be reduced by using channels of distribution. For
example, consumers are more likely to find what they are looking for when they
shop at wholesale or retail institutions organized by separate lines of trade, such as
grocery, hardware, and clothing stores. In addition, producers can make some of
their commonly used products more widely available by placing them in many
different retail outlets, so that consumers are more likely to find them at the right
time.
Theoretical Framework
This study examines two influential distribution channels theories, namely:
Bargaining theory of marketing channel
Bargaining Theory of Marketing Channel
Bargaining Theory of Distribution Channels propounded by Anderson and
Weitz (1989). The theory stated that power imbalance in channel relationships
58
leads to conflict and channel coordination is enhanced when the bargaining power
of a given member is matched by the countervailing power of the other channel
member or when there is no such countervailing power.
A critical factor in channel relationships between manufacturers and
intermediaries is the relative bargaining power of both parties. In this study, the
framework to examine bargaining between channel members and demonstrate that
the bargaining process actually affects the degree of coordination and that two-part
tariffs will not be part of the market contract even in a simple one manufacturer–
one retailer channel is developed
To establish the institutional and theoretical bases for these results, the
Researcher relax the conventional assumption that the product being exchanged is
completely specifiable in a contract. It is shown that the institution of bargaining
has force, and it affects channel coordination when the complexity of non
specifiability of the product exchange is present. It is founded that greater retailer
power promotes channel coordination. Thus, there are conditions in which the
presence of a power and Wholesaler retailer might actually be beneficial to all
channel members.
In addition, it is recovered that the standard double-marginalization take-it-
or-leave-it offer outcome as a particular case of the bargaining process. The study
also examine the implications of relative bargaining powers for whether the
59
product is delivered ―early‖ (i.e., before demand is realized) or ―late‖ (i.e.,
delivered to the retailer only if there is demand). The authors present the
implications for returns policies as well as of renegotiation costs and retail
competition.
Bargaining between manufacturers and intermediaries over the terms of
trade is an important characteristic of many distribution channels. Relationships
between manufacturers and their channel members often hinge on the importance
of negotiation and its effects on each party‘s share of the pie, as well as on channel
coordination. This role of bargaining and the exercise of bargaining power by
participants exist in distribution systems in a wide range of industries. The
following examples illustrate the common problems that are associated with
bargaining in channels that are examined in this study.
First, the channel relationship involves the manufacturer and the channel
members indulging in a bargaining process. It is not merely a relationship in which
the manufacturer makes take-it or leave-it offers to the channel members. Rather,
the relationship involves bargaining over the terms of trade. Furthermore, the
different bargaining powers of both parties might end up significantly affecting the
size of the total channel profits (i.e., the extent of channel coordination). As
evident from the previous examples, occurrences of product damages or delayed
payment can clearly affect the total profits in the channel.
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Secondly, a problem faced in channel relationships is that manufacturers
and/or retailers can renegotiate their earlier agreements. This renegotiation occurs
because of the non specifiability of the product exchange, which can encourage
opportunistic behavior. In nearly every channel relationship, there are aspects of
the product exchange that are intangible and difficult for the parties to agree on.
Consequently, the parties often find it difficult to completely specify the
product exchange in a contract. It would be hard to ascertain who should be held
responsible if the packaging of the product was found damaged (as defined by the
retailer) a month after the manufacturer shipped it. A powerful retailer or
wholesaler, in this case, may behave opportunistically and demand additional
compensation. Such behavior may be perceived as fraudulent, but opportunistic
behavior is not necessarily illegal. All that is needed for opportunism is for a party
to renege on an earlier unenforceable agreement.
However, the point highlighted through this example is that the parties can
be opportunistic when it is quite hard for a third party (e.g, a court of law) to
enforce a contractual agreement. Indeed, this idea of intangibility of the product
exchange is a basic marketing notion that is consistent with Levitt‘s (1998) idea of
the augmented product. At a general level, and as Coase (1999) and Williamson
(1997) point out, contracts on product characteristics can be incomplete because of
transaction costs.
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These costs might arise because of unforeseeable contingencies at the
contracting date, too many contingencies to write into the contract, the high cost of
monitoring, or considerable legal costs of enforcing the contract. Despite the
prevalence of product 3Market power should not be confused with bargaining
power in the channel. The retailer has market power in the end-consumer market if
it faces a downward sloping demand function (in the extreme, monopoly power).
Market power might be due to factors such as locational convenience, store
reputation, and so forth. In contrast, bargaining power represents the ability or skill
of a party to bargain for a greater share of the pie.
This study distinguishes between market and bargaining power.
nonspecifiability–related problems in distribution channels, the implicit
assumption in the previous research on channel coordination is that the product
being exchanged is completely specifiable in a contract. However, relaxing this
assumption has nontrivial implications for channel coordination. Product non
specifiability creates opportunism among the parties in a distribution system. This
opportunism affects the optimal transfer arrangement and the role of the relative
bargaining powers.
Considering product nonspecifiability and bargaining helps us address a
persistent inconsistency between the theoretical literature on distribution
contracting and observed managerial practice. The theoretical literature often
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prescribes two-part tariffs (a payment made by the retailer to the manufacturer that
involves a fixed fee plus a variable fee the quantity sold) as the optimal contract
design. Indeed, in markets where retailers have some market power, two-part
tariffs have been shown to be theoretically optimal under a remarkably broad range
of market situations.
These include situations with simple double marginalization when retailers
need only to set prices (Moorthy, 2007), when retailers or manufacturers need to
provide a noncontractible service when retailers buy other input to sell a composite
output (Vernon and Graham, 1971), when retailers carry a product line (Villas-
Boas, 1998), when there is demand uncertainty (Rey and Tirole 1986), or when
either retailers or manufacturers have private information (Desai and Srinivasan
1995; Tirole 1988).
However, in actual practice, both the magnitude and the incidence of two-
part tariffs may be quite insignificant. In mainstream retail sectors such as retailing
or departmental stores, retailers do not seem to pay lump-sum fees to
manufacturers. Even in business format franchising (in which the incidence of
franchise fees is the highest), the evidence indicates that franchisors often charge
negligible franchise fees compared with what they could otherwise have
commanded (Kanfana & Lafintaine, 1994). The bargaining framework of this
study addresses this inconsistency between theory and practice.
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The overall logic of this study is that the many distribution systems face
problems of product nonspecifiability. As a result of this nonspecifiability, channel
members can be opportunistic, which has an impact on the channel relationship.
Opportunism in a vertical relationship can be modeled through the possibility of
renegotiation of an initial ex-ante contract. This captures the idea that a powerful
party might renege on an initial agreement, even after the product is delivered, and
demand extra payment. It is the presence of such opportunism that enables the
bargaining process to have an impact on the market decisions (such as setting the
retail price).
This study explores this logic and thereby establishes the link from
nonspecifiability to opportunism to renegotiation and, therefore, to the role of
bargaining on the market outcome. Bargaining in a distribution channel is
consisting of a manufacturer that produces the product and an intermediary that
takes a market action (e.g., setting the retail price) and sells the product to the
consumer market. The intermediaries action (i.e., price) is unobservable, and the
manufacturer cannot fix it in a contract. Market where retail demand is uncertain is
considered, which makes it difficult for the parties to contract on a fixed quantity
of the product.
The contracting problems that investigation are predicated on three factors:
product nonspecifiability, demand uncertainty, and unobservability of retail or
64
wholesale behavior. The presence of these three factors results in the channel not
being fully coordinated. In the standard case, when the product is specifiable, it is
well known that a two-part tariff can coordinate the channel and maximize total
channel profits (Moorthy, 2007). This is the case even when demand uncertainty
and unobservability of retail behavior are present in the channel.
However, this study show that in the comparable case, (represented by
costless renegotiation), the nonspecifiability of the product can lead to the two-part
tariff not being an equilibrium contract, even in the simplest possible channel
structure involving one manufacturer and one retailer. This is because the fixed fee
in the two-part tariff does not affect the opportunistic behavior on the part of the
manufacturer and, therefore, will not be accepted by the retailer. Rather, bargaining
takes place on a simple wholesale price, and it affects the market outcome (i.e.,
retail prices). Thus, trading on a simple wholesale price, and not on the more
complex two-part tariff, is an equilibrium outcome.
The greater relative bargaining power of the retailer improves channel
coordination in markets where retailer effort is important. Greater bargaining
power helps the channels members appropriate a greater proportion of the channel
profits. This gives the intermediary a greater part of the channel pie (i.e., greater
residual claim), thereby motivating it to choose a retail price that is closer to the
coordinated level. In other words, greater retailer power can lead to a lower
65
negotiated wholesale price and, therefore, a lower retail price that improves
channel coordination.
Bargaining theory of distribution channel also proved that, greater relative
power of the manufacturer impedes channel coordination. When the bargaining
power of the manufacturer is at an intermediate level, also bargaining process
exactly replicates the standard double-marginalization take-it-or-leave-it offer
outcome. Thus, the standard double-marginalization outcome can be recovered as a
particular case of the bargaining process. The effect of bargaining on small scale
manufacturer profits is interesting. Small scale Manufacturer profits as a function
of retailer or wholesaler power are in the shape of an ―inverted U‖ and are the
highest at an intermediate level of retail or wholesale power. This is because Hall
(2000) examined related issues in the context of the formation of strategic
alliances.
More so, the results by Villas-Boas (1998) can also be interpreted as
evaluating retailer or wholesaler bargaining power. Increase in retailer or
wholesaler power has two opposing effects. Although greater retailer or wholesaler
power reduces the manufacturer‘s share of the total channel pie, it also reduces
double marginalization and enlarges the total channel profits. Consequently, an
increase in retailer power does not necessarily harm manufacturer interests. The
coordinating ability of a powerful retailer can actually benefit the manufacturer.
66
Given that, this study accommodate conditions of demand uncertainty and
possible bargaining after the realization of demand, a marketing strategy that is
also relevant is one in which the product is first delivered to the retailer but may be
returned later to the manufacturer if demand does not materialize. This strategy is
called the ―returns‖ strategy in which retailers carry inventory, and it is in contrast
to the ―noreturns‖ strategy of delivering the product to the retailer or wholesaler
only if there is demand (in which case retailers or wholesaler act as order takers
and do not carry inventory).
This law in relation to small scale manufacturing enterprises shows how
these strategies can endogenously arise as a response to different bargaining power
configurations in the channel. There is also an equilibrium involves retailers
carrying inventory and possible returns in channels with low relative power of the
retailer. This implies that a powerful manufacturer might voluntarily offer returns.
With high manufacturer power, bargaining without product returns results in
extreme double marginalization. By transferring the ownership of the product to
the retailer or wholesaler, the returns contract can strategically influence the
retailer‘s pricing behavior and thereby reduce this extreme double marginalization.
67
Related Empirical Studies
Related empirical study were carried out by many researchers to which
Adegbite, Ilori, Irefin, Abereijo and Aderemi (2006) conducted a study on
Evaluation of the impact of entrepreneurial characteristics of the performance of
small scale manufacturing industries in Nigeria. Major purpose of the study was to
identify the entrepreneurial characteristics and the factors that influence their
transaction to optimum business performance. Structured questionnaire were used
to collect data from the samples of 100 firms randomly selected among the small
scale manufacturing industries. Survey and inferential statistics were used to
examine the relationship between contextual variables and business performance.
Among the major findings are:
1. Human resource factors and the sales revenue were found to be inadequate
and severely inhibited the potential of the entrepreneurs for performance and
growth.
2. Length of years in business and working experience were found to have
positive contribution on their performance
3. Majority of the Personal entrepreneurial characteristics (PEC) of the
respondents made negative contribution on their performance only
demanded for efficiency and product quality, information seeking and
systematic planning and monitoring had positive impact.
68
However, this study is related to the present study since that both studies
focus on the small scale business activities. The study was conducted with sample
but no population was indicated to which the result of the study will be generalized
so the findings of this study will be assimilated with cautions.
Olabisi, Andrew and Adewole (2002) conducted a study on factors affecting
Small Scale Business performance in informal economy in Lagos State in Nigeria:
A gendered based analysis. Major purpose of study was to examine whether there
is difference between factors influencing small scale business performance among
the female-owned enterprises and men-owned enterprises. The population used for
the study comprised of 50 small scale businesses. Survey questionnaire was used
to collect the data from the respondents. Percentages, frequency and chi-square
statistical analyses were used to analyze the results. Some of the findings made
from the study are:
Factors that affect women-owned enterprises are significantly different from
factors that affect men-owned business enterprises.
Most of them had been in the business for 4-6years and most of the
businesses are family owned with individuals contributing funding to the
establishment of the business.
That women owned business reveals that role-model/advisor significantly
affect their business growth.
69
Other factor that affects business performance is inadequate access to
financial resources.
This work is related to the present work because it deals with the factors
affecting performance of small scale business enterprises. The present study also
focus small scale business which is also determine to a great extent the
performance of small scale business. However, the sample used for the study was
too small for the generalization of the results on the total population compare to
the status of area of the study.
Chinonye (2004) conducted a study on women entrepreneurship in Nigeria:
The effect of effect of environmental factors. Purpose of the study was to analyze
the effects of environmental factors on women entrepreneurial development. The
population used of the study consists of 250 women entrepreneurs out of which
120 respondents were randomly selected. A survey questionnaire was used to
collect data from the respondents.
Some of the findings made from the study are:
That environmental factors play a triggering and supportive role to women
entrepreneurial development (WED).
The self empowerment through: reflection, education, training and
development for skills acquisition on computer operations including
internet, public speaking, writing, human relations, legal awareness,
70
economic independence should be encouraged among women
entrepreneurs.
The government should make policies that will positively enhance the
accessibility of women entrepreneurs to the required fund and help the
business support organizations improve their services towards women
entrepreneurial development.
Making available more information on gender issues will also help the
implementation of supportive practices and programmes for monitoring and
evaluating the challenges facing women entrepreneurs in developing
economies and the best way to meet their needs.
This work is related to the present study because it focuses on the
environmental effects on the women entrepreneurship whereas the present study
focus on influence of manufacturing entrepreneur on the small scale business
marketing activities. However, this study is a gender biased because it focuses on
women entrepreneurship alone; instrument used to analyze data collected was not
indicated in the study.
Kimapom (2009) carried out a research work on the influence factors
affecting management of small enterprises in Northeast Thailand. Purpose of the
study was to determine the influence of factors affecting management of small
71
enterprises. The population used was 400 entrepreneurs and the collected data were
analyzed using factor analysis and multiple regression. The major findings include:
That the success of small enterprises depends on the following factors:
knowledge and skills, performance, technology, owner attitude, motivation,
finances and capital, and creativity.
The survivals of the business depend largely on managerial efficiency.
If entrepreneurs want to survive in the age of globalization in the current
industrial climate, they must adopt management techniques suitable for each
situation.
This study is related to the present work because both studies focus on the
factors that influence the business activities of small scale business though varied
in the location and demography.
Onuga (2005) conducted a study on small and medium enterprises (SMEs)
in Nigeria: Problems and Prospects with two purposes:
To find out if the Small scale manufacturing enterprises sub-sector in
Nigeria has performed its critical role of driving the country‘s industrial
transformation and development
To identify remedial measures. Population used for the study was 1500. 300
Small scale manufacturing enterprises entrepreneurs were randomly
selected. A survey questionnaire was completed with personal interviews of
72
the key operators by the researcher using statistical packages for social
sciences (SPSS). The major findings of this study include:
Small scale manufacturing enterprises have played and continue to play
significant roles in the growth, development and industrialization of many
countries. In the case of Nigeria, Small scale manufacturing enterprises have
performed below expectation due to a combination of problems which
ranges from attitude and habits of Small scale manufacturing enterprises
themselves through environmental related factors, instability of governments
and frequent government policy changes and some results.
The top ten problems areas of Small scale manufacturing enterprises in
Nigeria in decreasing order of intensity include: management, access to
finance, infrastructure, government policy, inconsistencies and bureaucracy,
environmental factors, multiple taxes and levies, access to modern
technology, unfair competition, marketing problems and non-availability of
raw materials locally.
However, this study is related to the present study because the present study
as one of the factors manufacturing entrepreneur of small scale business operators
should consider for its existence to be justified. This study used 1500 respondents
as the population but sampled 300 respondents; this sample is not well represented
so the study will be generalized on the population with great caution.
73
Gohari (2007) carried out a study on the effect of e-marketing on the
marketing performance of small scale business enterprise: A comparative study
between Egypt and the U. K. the main objective of the study was to develop a
theoretical model to understand and interpret the use of the e-marketing by small
scale business in the U.K and Egypt and to explore and analyze the level and form
of e-marketing used by the Egyptian and British Small scale business enterprises
and its contribution to marketing performance as measured by financial and
operational performance measures. Data were collected using structured mailed
questionnaires and interviews using statistical analyses techniques to analyze the
collected data. The major findings of the study were:
The majority of researchers depended on survey strategy with a percentage
of 41.7% and 18.8% of the researchers applied case study, 6% applied
exploratory strategy and 3% applied experimental strategy.
The majority of the researchers depended on questionnaires with a
percentage of 60.4% and as 29/6% applied interviews, 6% applied
observation and 4% applied focus group.
Okpan (2006) conducted a study on Investigating brand strategy, brand
equity, and channel strategy on market performance an empirical investigation of
the cosmetic industry a study conceptually investigates the relationship among
company‘s brand strategy, brand equity, channel strategy and market performance.
74
The purpose of the study was to develop a model showing the linkages among
brand strategy, brand equity, channel strategy and market performance. Using
linear structural relations (LISREL), a model of the cosmetic industry was
developed to illustrate these interactions.
The questionnaire was primarily used to conduct the study. The results show
that channel strategy has significant influence on market performance when
retailers make their channel strategy more clearly in marketing channels. And also,
brand strategy has significant influence on channel strategy when company‘s
channel strategy was more supported by its brand strategy. Moreover, when a
customer perceived a better brand equity from a product, brand strategy was able
to influence more on brand equity. Both study investigated channel strategies and
marketing performance However, there was lack of published research to better
understand the linkages between brand strategy and brand equity, as well as
channel strategy and marketing performance used by the study
Norman, Benjamine, Sharon and Raymond (2003) Conducted a study on
Constraints to small-scale production and marketing of processed food products in
Zimbabwe - the case of fruits and vegetables the studies suggested that small-scale
food processing activities represent a potential source of livelihood for the poorest
people in Sub-Saharan Africa. However, a number of factors may constrain the
ability of small-scale enterprises to effectively manufacture and market processed
75
food products. Also to gain more detailed understanding of the requirements for
small-scale enterprises to effectively manufacture and market processed fruits and
vegetables.
The case studies involved in-depth interviews with small-scale horticultural
producers/ processors. A total of 26 case studies were undertaken throughout the
enterprises were involved in the processing of dried fruits, dried vegetables, and
fruit jams/jelly/marmalades. The case study research suggests that small-scale fruit
and vegetable processing has the potential to provide improved returns to
horticultural producers as long as appropriate processing equipment, processing
skills, packaging material, and marketing information are made available. the study
concluded that Despite the widely publicised ‗success‘ stories about Zimbabwe‘s
agricultural production in the 1980s, there is still food insecurity, extreme poverty,
hunger, and malnutrition at household level. Rural households hardly produce
above their subsistence levels owing to poor soils and erratic rainfall patterns in
many areas of rural Zimbabwe.
Summary of the Review of Related Literature
The review of literature was focused on the conceptual and theoretical
framework of small scale manufacturing enterprises operators‘ perception of
marketing channels, level of awareness of different marketing channel, level of
76
utilization of different marketing channels, effectiveness of the marketing
channels, benefits derivable from marketing channels,, review of related empirical
studies.
On conceptual and theoretical framework, the literature, the literature
disclosed that there is no consensus to the definition of small scale manufacturing
enterprises while all authors agree on the definition of distribution channel though
with slight modification.
According to the various authors, marketing channels evolve in all small
scale manufacturing enterprises in Nigeria. Literature on the awareness of
different type of marketing channels shows that all manufacturers in enterprises are
aware of one or more channel of distribution for effective distribution of product.
Literature reviewed on the utilization of different types of marketing
channels by operators indicated that every industry use one or more distribution
channel in selling their product.
The literature so far reviewed revealed that no research work has been
carried out to analyse distribution channels for effective distribution of product by
small scale manufacturing enterprises in Zamfara state. This shows that there is a
gap in research literature. It is this gap this study filled
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CHAPTER III
RESEARCH METHODOLOGY
This chapter is presented under the following sub-headings: design of the
study, area of the study, population for the study, sample and sampling technique,
instrument for data collection, validation of the instrument, reliability of the
instrument, method of data collection and method of data analysis.
Design of the Study
The survey research design was used for the study. Gay (1981) defined
descriptive survey as that used to determine the current status of population by
collecting and analyzing data from a sample or the entire population. Also,
Nworgu (2006) defined descriptive survey research as one in which a group of
people or items are studied by collecting and analyzing data from only a few
people or items considered to be representative of the entire group, or by collecting
and analyzing data from the entire people or items.
The design is appropriate for this study since it obtained data on the analysis
of marketing channels for effective distribution of consumer products by small
scale manufacturing enterprises in Zamfara State.
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Area of the Study
The area of the study was Zamfara State of Nigeria. The state is bounded on
the north and West by Sokoto state, on the South by Niger State and on the East by
Katsina state. The state is chosen for the study because it is where people engage in
various forms of small scale manufacturing business transactions, and there is
concentration of commercial activities in the environment.
Population for the Study
The population for the study was 466. This comprises 21 Marketing
managers, 145 Wholesalers and 247 Retailers, 11 Dealers and 42 Sales agents from
48 small scale manufacturing enterprises in the three senatorial zones of Zamfara
state.
Sample and Sampling Technique
The sample for the study was 186. A simple random sampling technique
was used to select the small scale manufacturing enterprises operators (i.e.
wholesalers, Retailers, Dealers and agents) from the population.
Instrument for Data Collection
The instrument for data collection was a structured questionnaire. The
questionnaire was carefully generated after an extensive review of available
literature based on the specific purpose of the study. The items in the questionnaire
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were organized in accordance with the research questions formulated to guide the
study.
The questionnaire was divided into five sections; A, B, C, D and E. Section
‗A‘ obtained the personal information of the respondents. This section consists of
options and blank spaces which enabled the respondents to provide appropriate
answers to the questions. Section B, contained 13 items that elicited information on
the level of awareness of different types of marketing channels by Small scale
manufacturing enterprises operators for effective distribution of consumer products
in Zamfara State. It was structured on a five-point rating scale of Very Much
Aware (VMA) = 5, Much Aware (MA) = 4, Aware (A) = 3, Somewhat Aware
(SA) = 2 and Not Aware (NA) = 1.
Section C contains 13 items that seek information on the extent of utilization
of different marketing channels by Small scale manufacturing enterprises operators
for effective distribution of consumer products in Zamfara State. It was structured
on a five-point rating scale of Very Highly Utilized (VHU) = 5, Highly Utilized
(HU) = 4, Moderately Utilized (MU) = 3, Somewhat Utilized (SU) = 2 and Not
Utilized (NU) = 2.
Section D, contains 13 items that ascertained the effectiveness of the
channels adopted by Small scale manufacturing enterprises operators for effective
distribution of consumer products in Zamfara State. It was structured on a five-
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point rating scale of Very Highly Effective (VHE) = 5, Highly Effective (HE) = 4,
Effective (E) = 3, Ineffective (I) = 2 and Very Ineffective (VI) = 1.
Section E contains 16 items which sought information on the benefits
derivable from the channels adopted by Small scale manufacturing enterprises
operators for effective distribution of consumer products in Zamfara State. It was
structured on a five-point rating scale of Strongly Agree (SA) = 5, Agree (A) = 4,
Undecided (U) = 3, Disagree (D) = 2 and Strongly Disagree (SD) = 1.
Validation of the Instrument
The instrument was face-validated by three experts in the Department of
Vocational Teacher Education, University of Nigeria, Nsukka. The three experts
were given a copy each of the sets of the questionnaire and were requested to
indicate any irrelevant statement(s) or wrongly written items. They were further
requested to proffer suggestions for improving the instrument in meeting the
purpose of the study. The suggestions of the eperts were integrated into the
modified copy of the questionnaire that was used for data collection.
Reliability of the Instrument
To establish the reliability of the instrument, the validated instrument was
subjected to trial test on 20 small scale manufacturing business operators from
Sokoto State having same demography with the study area. The data obtained from
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the trial testing was analyzed using Cronbach Alpha reliability coefficient to
establish the internal consistency of the instrument for the study.
Method of Data Collection
The questionnaire was administered on the respondents by the researcher
through personal contact and with the help of two assistants trained by the
researcher to enhance the return rate of the instrument from the respondents. The
respondents were given two weeks to study and respond. A repeat visit was made
by the researcher and the assistants to collect the completed questionnaires. With
this method of direct contact with the respondents, hundred percent return rates
were achieved.
Method of Data Analysis
The collected data was analyzed using, mean and standard deviation for
answering the research questions and t-test for testing the hypotheses at 0.05 level
of significance. For level of awareness, the Mean values were as follows:
Response category Point Real limit of number
Very Much Aware (VMA) - 5 - 4.50 – 5.00
Much Aware (MA) - 4 - 3.50 – 4.49
Aware (A) - 3 - 2.50 – 3.49
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Somewhat Aware (SA) - 2 - 1.50 – 2.49
Not aware (NA) - 1 - 1.00 – 1.49
A cut-off point of 3.0 was chosen for decision rule. That is any item having a
mean 3.0 or above was taken as positive while any item with mean below 3.0 was
taken as negative. Positive in this study means that the respondents were aware of
the different types of marketing channels in selling their product to customers.
For extent of utilization, the mean values were as follows:
Response category Point Real limit of number
Very Highly Utilized (VHU) 5 - 4.50 – 5.00
Highly Utilized (HU) 4 - 3.50 – 4.49
Moderately Utilized (MU) 3 - 2.50 – 3.49
Somewhat Utilized (SU) - 2 - 1.50 – 2.49
Not Utilized (NU) - 1 - 1.00 – 1.49
A cut-off point of 3.0 was chosen for decision rule. That is, any item having
a mean 3.0 and above was taken as positive while any item with mean below 3.0
was taken as negative. Positive here means the respondents effectively utilized
different types of marketing channels in selling their product to customers.
For channel effectiveness, mean values were as follows:
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Response category - Points Real limit of number
Very Highly Effective (VHE) - 5 - 4.50 – 5.00
Highly Effective (HE) - 4 - 3.50 – 4.49
Effective (E) - 3 - 2.50 – 3.49
Ineffective (I) - 2 - 1.50 – 2.49
Very Ineffective (VI) - 1 - 1.00 – 1.49
A cut-off point of 3.0 was chosen for decision rule. That is, any item having
a mean of 3.0 and above was taken as positive while any item with mean below 3.0
was taken as negative. Positive here means the respondents are effectively using
different types of marketing channels in selling their product to the customers.
For benefits derived from the channels adopted, the mean scores were as follows:
Response category Points Real limit of number
Strongly Agree (SA) 5 4.50 – 5.00
Agree (A) 4 3.50 – 4.49
Undecided (UD) 3 2.50 – 3.49
Disagree (D) 2 1.50 – 2.49
Strongly Disagree (SD) 1 1.00 – 1.49
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Hypotheses
The t-test was used to test the null hypotheses at 0.05 level of significance to
determine the acceptance or rejection of the hypotheses. Where the t-calculated
was less than the t-table, the null hypothesis was accepted but where the t-
calculated was more than the t-table the null hypothesis was rejected.
Note: the p-value is the same as the sign two-tailed value and is always compared
with the significant level of 0.05. Alternatively, reject the null hypothesis of non-
significant difference if the t-cal is less than the t-cal, if otherwise accept.
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CHAPTER IV
PRESENTATION AND ANALYSIS OF DATA
This chapter presents the analysis of data collected for the research work.
The data is presented based on the research questions and the null hypothesis (H0)
that guided the study. The findings and discussions of major findings were also
presented in the chapter.
Research Question 1
What are the levels of awareness of different marketing channels adopted by
small scale manufacturing enterprises operators?
To answer this research question, data relevant to this question were
analyzed and presented as shown in Table 1.
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Table 1
Mean and Standard Deviation of the Respondents’ Responses on the levels `of awareness of different marketing
channels adopted by small scale manufacturing enterprises operators.
S/N ITEM STATEMENT X SD REMARKS
1. The Direct channel of distribution where manufacturers sell their
products direct to the consumer?
3.61 1.26 Much Aware
2. The internet as a direct means of meeting the consumer needs? 4.81 0.45 Very Much Aware
3. Producer – retailer in selling products to consumer 4.00 1.08 Much Aware
4. Manufacturer – wholesaler – retailer channel as a channel of taking
products to the end user.
3.59 1.28 Much Aware
5. Manufacturer-agent-retailer-customer in selling products. 3.53 1.37 Much Aware
6. e-mail in selling products to the end user 3.38 1.45 Much Aware
7. Mail as direct channel in selling products to the end user.
3.54 1.35 Much Aware
8. Telemarketing in selling product to the end user
3.94 1.09 Much Aware
9. Catalogs as direct channel of moving products to the consumer 4.11 0.10 Much Aware
10. Manufacturer- wholesaler in selling product to the consumer 4.21 1.01 Much Aware
11. Producer-agent-wholesaler-retailer-customer channel in your business. 4.32 0.78 Much Aware
12. Face-to-face in selling product from the consumer to customer 4.26 1.00 Much Aware
13 Direct-response advertising in your business 3.45 1.07 Much Aware
N = 186 X = Mean SD = Standard Deviation
87
Table 1 revealed that the respondents are aware of all the 13 items on the
levels of awareness of the direct and indirect marketing channels adopted by small
scale manufacturing enterprises operators. This is because, the mean responses of
the respondents in all the items ranged from 3.38 to 4.81 which are greater than the
cut-off point of 3.00. The standard deviation of the items ranged from 0.45 to 1.45
which indicated a consensus of opinion by the respondents.
Research Question 2
What is the extent of utilization of direct and indirect marketing channels
adopted by small scale manufacturing enterprises operators?
To answer this research question, data relevant to this question were analyse
and presented as shown in Table 2.
88
Table 2
Mean and Standard Deviation of the Respondents’ Responses on the extent of utilization of direct and indirect
marketing channels adopted by small scale manufacturing enterprises operators.
S/N ITEM STATEMENT X SD REMARKS
To what extent do you utilized:
1 The Direct channel of distribution where manufacturers sell their products
direct to the consumer?
4.00 1.02 High Extent
1. The internet as a direct means of meeting the consumer needs? 1.00 0.65 Very Low Extent
2. Producer – retailer in selling products to consumer 4.12 0.92 High Extent
3. Manufacturer – wholesaler – retailer channel as a channel of taking
products to the end user.
4.24 1.00 High Extent
4. Manufacturer-agent-retailer-customer in selling products. 4.11 0.93 High Extent
5. e-mail in selling products to the end user 1.00 0.67 Very Low Extent
6. Mail as direct channel in selling products to the end user. 1.00 0.65 Very Low Extent
7. Telemarketing in selling products to the end user. 1.00 0.59 Very Low Extent
8. Catalogs as direct channel of moving products to the consumer. 1.00 0.72 Very Low Extent
9. Manufacturer- wholesaler in selling product to the consumer. 4.23 1.00 High Extent
10. Producer-agent-wholesaler-retailer-customer channel in your business. 4.56 0.66 High Extent
11. Face-to-face in selling product from the consumer to customer. 3.11 1.58 High Extent
12. Direct-response advertising in your business. 3.36 1.37 High Extent
N = 186 X = Mean SD = Standard Deviation
89
Table 2 showed that the respondents agreed that small scale manufacturing
enterprises extensively used 8 out of 13 direct and indirect channels of marketing
in distributing their products and do not utilized internet, mail, catalogue, email
and telemarketing in moving products to the end user. This is because, the mean
responses of the respondents in the 8 items ranged from 3.11 to 4.46 which are
greater than the cut-off point of 3.00 while that of 5 items ranged from 1.00 to 1.5
which is below the cut-off point of 3.00. The standard deviation of the 8 items
ranged from 0.66 to 1.58 which indicated a consensus of opinion by the
respondents on the 8 items. On the other hand, the standard deviation of the
remaining 5 items ranged from 0.59 to 0.72 which indicated diverse opinion of the
respondents on the items.
Research Question 3
How effective are the direct and indirect distribution channels adopted by
small scale manufacturing enterprises operators?
To answer this research question, data relevant to this question were
analyzed and presented as shown in Table 3.
90
Table 3
Mean and Standard Deviation of the Respondents’ Responses on the effectiveness of the direct and indirect
distribution channels adopted by small scale manufacturing enterprises operator.
N = 186 X = Mean SD = Standard Deviation
S/N ITEM STATEMENT X SDX REMARKS
1 The Direct channel of distribution where manufacturers sell their products
direct to the consumer in your enterprises?
3.76 1.22 Much effective
2 The internet as a direct means of meeting the consumer needs? 1.02 0.52 Not effective
3 Producer – retailer in selling products to consumer
3.50 1.21 Much effective
4 Manufacturer – wholesaler – retailer channel as a channel of taking products
to the end user.
3.65 1.18 Much effective
5 Manufacturer-agent-retailer-customer in selling products. 3.72 1.26 Much effective
6 e-mail in selling products to the end user 1.00 0.67 Not effective
7 Mail as direct channel in selling products to the end user. 1.04 0.56 Not effective
8 Telemarketing in selling product to the end user 1.17 0.63 Not effective
9 Catalogs as direct channel of moving products to the consumer
1.00 0.67 Not effective
10 Manufacturer- wholesaler in selling product to the consumer
4.05 1.11 Much effective
11 Producer-agent-wholesaler-retailer-customer channel in your business.
3.81 1.19 Much effective
12 Face-to-face in selling product from the consumer to customer 3.34 1.08 Much effective
13 Direct-response advertising in your business 3.35 1.09 Much effective
91
Table 3 indicated that for items 27,29,30,31,36,37,38 and 39 the respondents
are in the opinion that these marketing channels adopted by the small scale
manufacturing enterprises are very effective. This is because, the mean responses
of the respondents in the 8 items ranged from 3.34 to 4.05 which are greater than
the cut-off point of 3.00. The standard deviation of the items ranged from 1.08 to
1.26 which indicated a consensus of opinion by the respondents. On the other
hand, the respondents‘ responses indicated ineffectiveness of items 28, 32, 33, 34,
and 35. This is because, the mean responses of the respondents in these 5 items
ranged from 1.00 to 1.17 which are lower than the cut-off point of 3.00. The
standard deviation of the items ranged from 0.52 to 0.67 which indicated a
disagreement in opinion of the respondents.
Research Question 4
What are the benefits derived from the direct and indirect channels adopted
by small scale manufacturing enterprises operators?
To answer this research question, data relevant to this question were
analyzed and presented as shown in Table 4.
92
Table 4
Mean and Standard Deviation of the Respondents’ Responses on the benefits derived from the direct and
indirect channels adopted by small scale manufacturing enterprises operators.
S/N ITEM STATEMENT X SD REMARKS
1 Channel of marketing reduces the amount of work that must be done by both producers and consumers. 4.53 0.67 Strongly Agree
2 Channel of marketing helps manufacturing enterprises reduce costs 4.17 1.05 Agree
3 Producers use intermediaries because they create greater efficiency in making goods available to target
market.
4.63 0.69 Strongly Agree
4 Marketing channel helps enterprises to communicate with customer as well as their products and services. 4.59 0.65 Strongly Agree
5 By shifting the responsibility for stock holding further down the chain, a manufacturer can reduce the
amount of their own funds tied in stocks.
4.49 0.80 Agree
6 Marketing intermediaries transform the assortments of product made by producers in to assortments
wanted by the customer.
4.33 0.99 Agree
7 Intermediaries through their contacts, specialization and experience usually offer the company more than
it can achieve on its own.
4.72 0.56 Strongly Agree
8 A distributor or retailer selling more than one manufacturer products spread the distribution costs, which
should achieve some economies of scale.
3.72 1.23 Agree
9 Marketing channels allow the producer and the channels members to do what they each know how to do
best in higher volumes.
3.28 0.77 Agree
10 Channel of marketing intermediaries exist because they offer value in making goods more available and
accessible to the targeted market or consumer.
3.42 1.30 Agree
11 Channels of distribution make products available when, where and in the sizes and quantities that
customer wants them.
4.68 0.59 Strongly Agree
12 Distribution channels provide a number of logistics or physical distribution functions that increases the
efficiency of the flow of goods from producer to customer.
4.74 0.53 Strongly Agree
13 Marketing channels create efficiencies by reducing the number of transactions necessary for goods to
flow from many different manufacturers to large numbers of customer
4.34 1.01 Agree
14 Distribution channel members move the goods from the production site to other locations where they are
held until they are wanted by the customer.
4.39 0.86 Agree
15 Channel of distribution make the purchase process easier for both customers and manufacturers. 4.78 0.49 Strongly Agree
16 Well-chosen channels constitute a significant competitive advantage, while poorly conceived or chosen
channels can doom even a superior product.
4.83 0.47 Strongly Agree
N = 186 X = Mean SD = Standard Deviation
93
Table 4 revealed that the respondents agreed with all the 16 items on the
benefits derivable from the direct and indirect marketing channels adopted by
small scale manufacturing enterprises operators. This is because, the mean
responses of the respondents in all the items ranged from 3.28 to 4.78 which are
greater than the cut-off point of 3.00. The standard deviation of the items ranged
from 0.47 to 1.23 which indicated a consensus of opinion by the respondents.
Null Hypothesis 1
H01 There is no significant difference in the mean responses of the
Marketing Managers and Wholesalers on the level of awareness of the
t direct and indirect marketing channels by small scale manufacturing
enterprises operators in Zamfara State.
To test this null hypothesis, data relevant to it were analyzed and presented
as shown in Table 5
94
Table 5
t-test Analysis of the mean responses of the Marketing Managers and Wholesalers on the level of awareness of the
different marketing channels by small scale manufacturing enterprises operators in Zamfara State.
Note: S=Significant NS=Not Significant
df= 120 p= 0.05 Rmks = Remarks
S/N ITEM STATEMENT X1 SD1 X2 SD2 t-cal t-tab value
RMKS
1. The Direct channel of distribution where manufacturers sell their products
direct to the consumer.
4.10 1.38 4.16 1.39 -0.39 0.73 NS
2. The internet as a direct means of meeting the consumer needs? 3.41 1.35 3.34 1.46 -0.33 0.75 NS
3. Producer – retailer in selling products to consumer 3.47 1.47 3.71 1.41 -1.23 -1.23 NS
4. Manufacturer – wholesaler – retailer channel as a channel of taking
products to the end user.
4.12 1.37 4.14 1.38 -0.08 0.98 NS
5. Manufacturer-agent-retailer-customer in selling products. 3.88 1.47 4.14 1.36 -1.31 0.19 NS
6. e-mail in selling products to the end user 3.58 1.35 3.65 1.36 -0.38 0.70 NS
7. Mail as direct channel in selling products to the end user. 3.67 1.48 3.37 1.66 1.33 0.19 S
8. Telemarketing in selling product to the end user 3.65 1.45 3.27 1.71 1.24 0.17 S
9. Catalogs as direct channel of moving products to the consumer 3.4 1.26 3.51 1.79 1.28 0.16 S
10. Manufacturer- wholesaler in selling product to the consumer 4.25 1.33 3.56 1.58 3.22 0.00 S
11. Producer-agent-wholesaler-retailer-customer channel in your business. 3.29 1.32 3.79 1.29 -2.73 0.75 NS
12. Face-to-face in selling product from the consumer to customer 4.09 1.05 4.35 0.87 -2.01 0.06 NS
13 Direct-response advertising in your business 4.15 1.32 4.05 1.45 0.50 0.62 NS
95
Data presented in Table 5 revealed that each of the 13 items in awareness of
different marketing channels had a calculated t-value less than the t-table value of
1.96 at 0.05 level of significance and 120 degree of freedom. This indicated that
there is no significant difference in the mean responses of the Marketing Managers
and Wholesalers on the level of awareness of direct and indirect marketing
channels by small scale manufacturing enterprises operators in Zamfara State.
Therefore, the null hypothesis (H0) of no significant difference was upheld at 0.05
level of significance.
Null Hypothesis 2
H02 There is no significant difference in the mean responses of the Sales Agents
and Retailers on the extent of utilization of the direct and indirect marketing
channels by small scale manufacturing enterprises operators in Zamfara
State.
To test this null hypothesis, data relevant to it were analyzed and presented
as shown in Table 6.
96
Table 6
The t-test Analysis of the mean responses of the Sales Agents and Retailers on the extent of utilization of the
direct and indirect marketing channels by small scale manufacturing enterprises operators in Zamfara State.
S/N ITEM STATEMENT X1 SD1 X2 SD2 t-cal t-tab value
RMKS
1 The Direct channel of distribution where manufacturers sell
their products direct to the consumer? 4.04 0.89 3.81 1.20 1.21 1.96 NS
2 The internet as a direct means of meeting the consumer needs? 4.37 0.88 4.06 1.12 1.72 1.96 NS
3 Producer – retailer in selling products to consumer 4.18 1.02 3.93 1.26 1.22 1.96 NS
4 Manufacturer – wholesaler – retailer channel as a channel of
taking products to the end user. 3.97 1.15 3.89 1.22 0.38 1.96 NS
5 Manufacturer-agent-retailer-customer in selling products. 4.09 1.10 3.83 1.40 1.13 1.96 NS
6 e-mail in selling products to the end user 4.03 0.96 4.20 0.90 -1.02 1.96 NS
7 Mail as direct channel in selling products to the end user. 3.99 1.19 3.72 1.30 1.17 1.96 NS
8 Telemarketing in selling product to the end user 3.69 1.23 3.50 1.31 0.83 1.96 NS
9 Catalogs as direct channel of moving products to the consumer 4.22 0.81 3.98 1.19 1.32 1.96 NS
10 Manufacturer- wholesaler in selling product to the consumer 3.85 1.24 3.72 1.37 0.56 1.96 NS
11 Producer-agent-wholesaler-retailer-customer channel in your
business. 3.75 1.35 3.48 1.27 1.12 1.96 NS
12 Face-to-face in selling product from the consumer to customer 3.94 1.11 3.61 1.28 1.53 1.96 NS
13 Direct-response advertising in your business 3.84 1.13 3.65 1.31 0.86 1.96 NS
Note:
S=Significant NS = Not Significant
df= 120 p= 0.05 Rmks = Remarks
97
Data presented in Table 6 revealed that each of the 13 items in extent of
utilization of the direct and indirect marketing channels had a calculated t-value
less than the t-table value of 1.96 at 0.05 level of significance and 120 degree of
freedom. This indicated that there is no significant difference in the mean
responses of the Sales Agents and Retailers on the extent of utilization of the direct
and indirect marketing channels by small scale manufacturing enterprises operators
in Zamfara State. Therefore, the null hypothesis (H0) of no significant difference
was upheld at 0.05 level of significance.
Data presented on Table 6 revealed that 8 out of the 13 items were not
significant. However, there was a significant difference of the mean responses of
the two groups of respondents on five items. With this result, the null hypothesis
was upheld for 8 items and rejected for 5 items.
Null Hypothesis 3
H03 There is no significant difference in the mean responses of the wholesalers
and distributors on effectiveness‘s of the channels adopted by small scale
manufacturing enterprises operators in Zamfara State.
To test this null hypothesis, data relevant to it were analyzed and presented
as shown in Table 7.
98
Table 7
The t-test Analysis of the mean responses of the wholesalers and distributors on effectiveness’s of the
channels adopted by small scale manufacturing enterprises operators in Zamfara State.
Note:
S=Significant NS=Not Significant
df= 120 p= 0.05 Rmks = Remarks
S/N ITEM STATEMENT X1 SD1 X2 SD2 t-
cal
t-tab value
RMKS
26 The Direct channel of distribution where manufacturers sell their
products direct to the consumer in your enterprises? 3.96 1.18 3.65 1.33 1.35 1.96 NS
27 The internet as a direct means of meeting the consumer needs? 3.75 1.16 3.59 1.30 0.71 0.01 NS
28 Producer – retailer in selling products to consumer 4.56 0.70 4.56 0.60 0.03 1.96 NS
29 Manufacturer – wholesaler – retailer channel as a channel of taking
products to the end user. 3.76 1.09 3.54 1.27 1.06 1.96 NS
30 Manufacturer-agent-retailer-customer in selling products. 4.12 1.27 3.78 1.09 1.78 1.96 NS 31 e-mail in selling products to the end user 3.66 1.29 3.52 1.42 0.58 0.01 NS
32 Mail as direct channel in selling products to the end user. 3.91 1.23 3.76 1.26 0.67 0.06 NS
33 Telemarketing in selling product to the end user 4.40 0.88 4.39 0.83 0.05 0.04 NS 34 Catalogs as direct channel of moving products to the consumer 3.87 1.17 3.89 1.21 0.10 0.09 S 35 Manufacturer- wholesaler in selling product to the consumer 3.85 1.28 3.67 1.33 0.78 1.96 NS 36 Producer-agent-wholesaler-retailer-customer channel in your business. 4.16 1.06 3.91 1.17 1.26 1.96 NS
37 Face-to-face in selling product from the consumer to customer 3.93 1.19 3.71 1.24 0.92 1.96 NS 38 Direct-response advertising in your business 4.54 0.76 4.44 0.84 0.69 0.05 S
99
Data presented in Table 7 revealed that each of the 13 items in effectiveness
of the direct and indirect marketing channels had a calculated t-value less than the
t-table value of 1.96 at 0.05 level of significance and 120 degree of freedom. This
indicated that there is no significant difference in the mean responses of the
wholesalers and distributors on effectiveness of the channels adopted by small
scale manufacturing enterprises operators in Zamfara State. Therefore, the null
hypothesis (H0) of no significant difference was upheld at 0.05 level of
significance.
Discussion of Findings
The findings of the study had been organized and discussed according to the
research questions answered and hypotheses tested.
1. Awareness of direct and indirect marketing channels by Small scale
manufacturing enterprises operators in Zamfara State
The study revealed that small scale retail and wholesales business operators
was aware of the direct and indirect marketing channel. The finding was in
consonance with Osuala, (2004) who opined that most business organizations are
aware of direct and indirect marketing channel. This is because, both direct and
indirect marketing channel are growing at an incredible pace and few concepts
according to Etgar (2007) have revolutionized business more profoundly than
direct and indirect marketing channel. Similarly, Joseph and Daniel (2009)
100
observed that most small business manufacturing industries seems to show the
highest awareness and interest in direct and indirect marketing channel in moving
their products to the consumer. Stressing on the essence of awareness of marketing
channel Trepper (2000) argued that small business manufacturing enterprises‘
operators need at least a basic understanding of direct and indirect marketing
channel to help them in satisfy their customer needs. Still in support of the findings
of this study, he emphasized that managers at all levels of organizations need to
grasp the basics of direct and indirect marketing channel and to understand why it
is important to their organizations. Diwan and Sharma (2000) stated that almost all
firms are interested either of the direct and indirect marketing channel, this interest
explains the level of awareness of the channels.
According to Garner (1999) marketing channel is causing earthquake in
many boardrooms today, stressing the point that small business manufacturing
operators are aware of the channels and hence are able to select the appropriate
channel to suit their businesses. Buttressing the findings of this study, the Pew
Research Center (2002) iterated that different marketing channels are becoming
popular and convenient. The findings of this study however, was at variance with
Daniel (2011) who observed that lack of awareness, poor understanding and
inability to use appropriate marketing channel have been largely perceived as
101
inimical factor impeding small business manufacturing operators from utilizing the
appropriate channel of marketing.
2. Utilization of direct and indirect marketing channels by Small scale
manufacturing enterprises operators in Zamfara State
It was found from the study that some types of marketing channel was not
utilized by small business manufacturing operators despite its benefits. The study
discovered that small business manufacturing operators do not utilize internet for
buying and selling activities, receiving and processing payments, restructuring
organizational functions, creating public awareness, customer service billing
logistic and operations, providing information, promoting the organization‘s
products and services and ordering inventory from the suppliers. This finding is in
conformity to that of Vaage (1993) who stated that it is rather unfortunate that
while the developed countries of the world are effectively utilizing internet, the
developing countries especially African countries are still battling in the inchoate
stage. In support of the findings of this study, Hanson and Kalyanam (2007) opined
that the initiatives for internet abound, but only crude forms of application yet. Lin
and Lu (2000) are in support of this finding when they stressed that there is
seemingly slow internet penetration and ecommerce applications are yet to mature
from egoism to functionality. In the opinion of Miller (2007), the author lamented
that in many parts of sub-Saharan regions, some 90 percent of individuals have yet
102
not connected to the internet. According to Hall (2000), little movements have
been made over the past two decades- Africa has just 3 percent of the world‘s
television sets, 2 percent of the world daily newspapers and 6 percent of the
world‘s radio receivers while the world‘s richest countries are forging ahead in the
technological race.
However the findings of this study deviates from that of Nyong and David
(2004) who opined that internet is showing significant results in the world as it is
greatly utilized in advanced countries in moving company‘s products to the end
user. For instance, according to Benghman (2004), the total expenditure on
ecommerce (advert alone) in the United States of America amounted to $139
million, Japan $1.8 million and United Kingdom $985,000. Ittyerah, (2009)
confirmed this point by iterating that internet is used by consumers to buy a
product or service, reach markets, promote products and services, customer service
and billing, inventory management as well as place and make orders from the
supplier to the company‘s front door.
3. Effectiveness of the direct and indirect marketing channels adopted by
Small scale manufacturing enterprises operators in Zamfara State
It was revealed by the study that some factors constrained the effective
utilization of some marketing channel. Such factors as identified by the study
include: cost, computer, crime, culture and language, technology infrastructure,
interconnectivity, trade rules and laws, taxes and other monetary issues, lack of
103
professional staff, lack of understanding and lack of personal assistance at the
website. So many authors are in support of this finding. For instance, according to
Trepper (2000), cultural and language barriers pose major constraints to internet
application. This point is buttressed by Hisrich (2004), who confirmed that
technical or cultural problem is predominant with the application of the internet.
In his view while giving kudos to the findings of this study, Chenery (1997),
wrote that security is the biggest worry for organizations participating in internet
marketing. Diwan and Sharma (2000), maintained that lack of skilled personnel is
an obstacle to internet marketing adoption, while Trepper (2000), added that
another major problem facing the world of internet marketing is that of achieving a
critical mass of infrastructure. According to Trepper (2000), costs such as those for
hardware, software, data, procedures and personnel are associated with internet
implementation. Supporting the finding on cost, Diwan and Sharma (2000) found
that many firms who have not explored issues of ecommerce have said that they
are concerned with the start up cost involved and enumerated connection cost to
the internet, hardware/software cost, set-up and maintenance cost as a problem.
4. Benefits derived from the direct and indirect marketing channels
adopted by Small scale manufacturing enterprises in Zamfara State
According to the findings of this study, many benefits are derived from the
effective utilization of either the direct or indirect marketing channel in moving
products to the customer. This finding is in line with the works of who opined that,
104
the benefits accruing to businesses using marketing channel are enormous and
broad ranged (Diwan and Sherma,2000) developing an on-line presence and selling
products via the appropriate channel brings undoubted benefits. However, this
study found that the following benefits can be derived from the utilization of
ecommerce: increase production and sales. This finding is consistent with the
findings of Diwan and Sharma (2000) who reported that another major incentive
for marketing channel adoption is the desire to achieve greater production and
distribution. According to them, effective utilization of marketing channel supports
advanced design and manufacturing concepts as well as facilitates new kinds of
on-demand marketing concepts through a wide range of products, and increase
production. Nash (2005) submitted that marketing channel presents opportunities
to ensure a better match of production level to demand.
It was found that direct marketing channel reduces time and costs. This
finding is in consonance with Levine (2006) who submitted that direct marketing
channel reduces marketing and sales cost. According to Cox (1997) businesses
save cost by using appropriate channel of marketing to handle transactions.
Kalakota and Whinston (1999) opined that most companies in the developed
countries are building ecommerce websites to reduce cost through online sales and
customer support. Osuala (2004), writing on the benefits of either the direct or
indirect marketing channel to businesses stressed that marketing channel helps
105
small business manufacturing organizations cut costs while improving the quality
of services. Still in support of this finding, Trepper (2000) asserted that small
business manufacturing enterprises which employ direct marketing channel enjoy
lower costs per business transaction. Still on the issue of lower costs/time, Osuala
(2004), stated that marketing channel enables small business manufacturing
organizations operate at lower cost while maintaining or even increasing sales.
According to him, direct marketing channel reduces business cycle time by
increasing the speed and accuracy of transaction processed with fewer or no
intermediaries people. Contradicting one segment of the finding of this study,
Sleight (2000), setting up shop to sell on the internet is of low cost and quick
process compared to opening premises in the real world. Trepper (2000) explained
that direct marketing channel, organizations outrightly eliminate the middlemen
thus reducing inventory and its attending costs and eventually the price of the
products. Hanson and Kalyanam (2007) and David and Wendy (2008), are all in
support of this finding that direct marketing channel reduces time and costs.
Furthermore, the study revealed that direct channel leads to breakdown to
barriers of distance and form. This finding is in support of Afuah and Tucci (2003)
who posited that electronic commerce promised to provide users with unparallel
choice and convenience in an environment without geographical and temporary
restrictions. Diwan and Sharma (2000) iterated that direct marketing channel is
106
difficult to contain within geographically defined trade areas. While Diwan and
Sharma concluded that with the direct channel of marketing, the barriers of time,
distance and form are broken down, and businesses are able to transact the sale of
goods and services 24 hours a day, 7 days a week and 365 days a year with
consumers all over the world.
The findings of the study showed that direct channel of marketing eases
communication with customers. This finding is in consonance with the findings of
Brien (2002), who explained that managers, entrepreneurs and professionals can
electronically exchange data and information anywhere in the world with other
users and customers. Still in support of this finding, David (2005) asserted that
businesses can use marketing channel to improve communication with customers
and partners
Hypotheses
The findings pertaining to the hypothesis one (H01) revealed that there was
no significant difference in the mean responses of small scale retailers and
wholesalers on the level of awareness of direct and indirect marketing channel in
small scale manufacturing enterprises. However, significant differences existed in
the mean responses of the two groups of respondents on all the 13 items. The
hypothesis of no significant difference was upheld for all the 13 the items: The
hypothesis was however rejected for the following items: the fact that small scale
107
manufacturing enterprises relies on the internet, catalogue, direct mail, email for in
moving their products to the consumer..
The results on null hypothesis two (H02) showed that there was no
significant difference between the mean responses of Agents and Retailers on 8
items. Therefore, the null hypothesis of no significant difference was upheld.
However, significant difference existed in the mean responses of the two groups on
5 items. The null hypothesis was rejected for these items and upheld for the other 8
items as can be seen from data on table 6
The result of the test revealed that there was no significant difference in the
mean responses of wholesalers and distributors in hypothesis 3 (H03). See table 7.
108
CHAPTER V
SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS
Re-statement of the Problem
In Nigeria, the small business enterprises are under increasing pressure to
improve their performance level (Normah, 2006). Previously, the enterprises used
to compete based on the price and quality, but now they have to compete across all
competitive aspect including marketing channels in the current economic
environment (Gunasekaran, 2003).
Distribution channels according to Gaski (2004) refers to the system of
marketing institutions through which goods, products or services are transferred
from the original producers to the ultimate users or consumers. Most frequently a
physical product transfer is involved, but sometimes an intermediate marketing
institution may take title to goods without actually handling them. To this effect,
Frances and Stephen (2006), viewed marketing channels as the structure linking a
group of individuals or organizations through which a product or service is made
available to the consumer or industrial user.
It has been observed by many researchers that, in Zamfara state small scale
manufacturing enterprises have not performed creditably well and hence have not
played the expected vital and vibrant role in the economic growth and development
of the state. This is due to inability of the small scale manufacturing enterprises to
109
identify their strengths and weaknesses in their marketing channel in distributing
their products to the end user. This situation has been of great concern to the
government, citizenry, operators, practitioners and the organized private sector
groups. If level of awareness, extent of utilization, effectiveness and benefits
derived of/from the direct and indirect marketing channels adopted by the
operators of small scale manufacturing enterprises could be identified will yield to
an improvement in the sector. This situation prompted the researcher to carry out a
study on Analysis
The study is therefore designed to find out the level of awareness of direct
and indirect marketing channels by Small scale manufacturing enterprises
operators, extent of utilization of direct and indirect marketing channels by Small
scale manufacturing enterprises operators, effectiveness of the direct and indirect
marketing channels adopted by Small scale manufacturing enterprises operators
and benefits derived from the direct and indirect marketing channels adopted by
Small scale manufacturing enterprises operators. The study utilized a survey
design, answered four questions and tested four hypotheses at 0.05 level of
significance. A stratified simple random sampling was used to select 188
respondents for the study. The instrument was face validated by 20 small scale
manufacturing enterprises operators in Sokoto state. The reliability coefficient of
0.81was calculated using the Cronbach Alpha reliability test. The questionnaire
110
was administered by personal contact and help of two research assistants while the
research questions were answered using mean and standard deviation responses
and hypothesis tested using t-tested.
Summary of Findings
Based on the data analyzed, the following findings were made:
1. Small scale manufacturing enterprises operators were aware of the direct and
indirect marketing channels in distributing their products to the consumer.
They are aware of their existence, meaning, categories and the fact that
every organization will need to know its basics for future operations.
2. Small scale manufacturing enterprises operators in Zamfara state agreed
that they were not utilizing internet, catalogue, email and direct mail in
distributing products to the end user.
3. Small scale manufacturing enterprises operators
4. Small scale manufacturing enterprises operators in Zamfara State perceived
the following as the benefits derivable from direct and indirect marketing
channel utilization in distributing their products:
a. Channels of marketing reduces the amount of work that must be done by
both producers and consumers.
b. channel of marketing helps manufacturing enterprises reduce costs
111
c. Producers use intermediaries because they create greater efficiency in
making goods available to target market.
d. Marketing channel helps enterprises to communicate with customer as
well as their products and services.
e. By shifting the responsibility for stock holding further down the chain, a
manufacturer can reduce the amount of their own funds tied in stocks.
f. Marketing intermediaries transform the assortments of product made by
producers in to assortments wanted by the customer.
g. Intermediaries through their contacts, specialization and experience
usually offer the company more than it can achieve on its own.
h. A distributor or retailer selling more than one manufacturer products
spread the distribution costs, which should achieve some economies of
scale.
i. Marketing channels allow the producer and the channels members to do
what they each know how to do best in higher volumes.
j. Channel of marketing intermediaries exist because they offer value in
making goods more available and accessible to the targeted market or
consumer.
5. There was no significant difference in the mean responses of small scale
manufacturing of Marketing Manager and Wholesalers on the awareness of
112
direct and indirect marketing channel on seven items while there was a
significant difference in their mean responses at three items.
6. There was no significant difference in the mean responses of the Sales
Agents and Retailers on the extent of utilization of the direct and indirect
marketing channels by small scale manufacturing enterprises operators in
Zamfara State.
7. There was no significant difference in the mean responses of the wholesalers
and distributors on effectiveness of the channels adopted by small scale
manufacturing enterprises operators in Zamfara State.
Implications of the Study
The findings of this study have far reaching implications for business
enterprises especially small scale manufacturing enterprises as it will expose to the
procedure of accessing the internet for distributing products to the consumer.
Marketers, policy makers, teachers and students would find in this study literature
that would create awareness, develop and improve direct and indirect marketing
channels. The findings also have positive implications for customers as knowledge
gained from the study will help them get products/services with ease.
113
Conclusions
From the findings of this study, it was concluded that small scale
manufacturing enterprises operators in Zamfara state are aware of both
direct and indirect channels of marketing; perceive that there are some
benefits derivable from the effective utilization of either of the channels for
distributing products to the end user but do not utilize the internet, fax, email
and direct mail in building up their businesses.
Recommendations
Based on the findings made and conclusions drawn from the study, the
following recommendations were made:
1. Stake holders in manufacturing enterprises should beep up sensitization
programme to raise the visibility of direct and indirect marketing channels
through education and skills of the operators for effective distribution of
products to the end user.
2. An adequate training scheme should be developed by the federal ministry of
Commerce and Industry to enhance small scale manufacturing enterprises
operators‘ versatility in the area of distribution channels.
114
3. The federal ministry of Commerce and Industry should encourage indirect
channels of marketing such as email, internet for manufacturing enterprises
for effective distribution of products to the customers.
4. The manufacturing environment should be made conducive enough (in terms
of cost, security) to allow ease of entry and exit of the intermediaries/
customers so that the enterprises can enjoy the benefits accruing from the
use of the adopted channel.
5. Existing barriers to the use of internet, email, direct mail by the
manufacturing enterprises should be removed to boost productivity.
6. There should be reform (restructuring) of small scale manufacturing
enterprises, as it is important not only to improve productivity performance
within the sectors, but also promote productivity improvements in upstream
sectors like medium scale and large scale manufacturing enterprises.
Suggestions for Further Study
The following suggestions were made for further research in other states of
Nigeria:
1. Analysis of the marketing channels adopted by the small business
manufacturing enterprises for effective distribution of products.
2. Impacts of marketing channel on the economic development of the state.
115
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Dept of Vocational Teacher Education
University of Nigeria Nsukka
21st
January, 2012
…………………………………………………………………………
…………………………………………………………………………
………………………………………………………………………..
Dear Sir/Madam,
REQUEST FOR INSTRUMENT VALIDATION
I am a postgraduate student in the Department of Vocational Teacher
Education , University of Nigeria, Nsukka, currently undertaking a research project
on :―ANALYSIS OF MARKETING CHANNELS FOR EFFECTIVE
DISTRIBUTION OF PRODUCTS BY SMALL SCALE MANUFACTURING
ENTERPRISES IN ZA MFARA STATE ―
Attached is a draft copy of the questionnaire instrument for the study, topic
of the study, purpose of the study and Hypotheses. You are please requested to vet
the items for clarity, relevance, and total coverage for consistency and stability.
Please use the plain sheet provided for general comments and suggestions
you deem necessary, concerning any aspect of the topic not covered in the
instrument. Your responses will be held in strictest confidence.
Yours faithfully,
Karami, Lawali
125
APPENDIX A
QUESTIONNAIRE
UNIVERSITY OF NIGERIA NSUKKA
FACULTY OF EDUCATION
DEPARTMENT OF VOCATIONAL TEACHER EDUCATION (BUSINESS)
RESEARCH TOPIC: ANALYSIS OF MARKETING CHANNELS FOR
EFFECTIVE DISTRIBUTION OF
PRODUCTS BY SMALL SCALE MANUFACTURING ENTERPRISES IN
ZAMFARA STATE.
SECTION A: GENERAL INFORMATIO N
Please complete the following questionnaire items by checking (√ ) in brackets as
appropriate
1. Status:
Marketing manager ( )
Retailer ( )
Wholesaler ( )
Sales Agent ( )
2. Name of
Industry:………………………………………………………………………
…………
126
Research Question One;-What are the levels of awareness of small scale
manufacturing enterprises operators of different marketing channels used for
effective distribution of products?
Please check (√) to indicate your level of awareness of different types of
marketing channels with the following items
Key: very much aware (VMA)
Much aware (MA)
Aware (A)
Somewhat aware (SWA)
Not Aware (NA)
S/N ITEM STATEMENT VMA MA A SWA NA
HOW MUCH ARE YOU AWARE OF:
1. The Direct channel of distribution where
manufacturers sell their products direct to the
consumer?
2. The internet as a direct means of meeting the
consumer needs?
3. Producer – retailer in selling products to
consumer
4. Manufacturer – wholesaler – retailer channel
as a channel of taking products to the end user.
5. Manufacturer-agent-retailer-customer in
selling products.
6. e-mail in selling products to the end user
7. Mail as direct channel in selling products to
the end user.
8. Telemarketing in selling product to the end
user
9. Catalogs as direct channel of moving products
to the consumer
127
10. Manufacturer- wholesaler in selling product to
the consumer
11. Producer-agent-wholesaler-retailer-customer
channel in your business.
12. Face-to-face in selling product from the
consumer to customer
13 Direct-response advertising in your business
Research Question Two;-to what extent do small scale manufacturing enterprises
operators utilize marketing channels for effective distribution of products?
Please check (√) to indicate your level of utilization of different marketing
channels for effective distribution of products with the following items:
Key: Very Highly Extent (VHE)
High Extent (HE)
Moderate Extent (ME)
Low extent (LE)
Very low Extent (VLE)
S/N
ITEM STATEMENT VHE HE ME LE VLE
To what extent do you utilized:
14 The Direct channel of distribution where
manufacturers sell their products direct
to the consumer?
15 The internet as a direct means of
meeting the consumer needs?
16 Producer – retailer in selling products to
consumer
17 Manufacturer – wholesaler – retailer
channel as a channel of taking products
to the end user.
128
18 Manufacturer-agent-retailer-customer in
selling products.
19 e-mail in selling products to the end user
20 Mail as direct channel in selling
products to the end user.
21 Telemarketing in selling product to the
end user
22 Catalogs as direct channel of moving
products to the consumer
23 Manufacturer- wholesaler in selling
product to the consumer
24 Producer-agent-wholesaler-retailer-
customer channel in your business.
25 Face-to-face in selling product from the
consumer to customer
26 Direct-response advertising in your
business
Research Question Three: What are the effectiveness of the distribution channels
adopted by small scale manufacturing enterprises operators for effective
distribution of products?
Please check (√ ) to indicate the level of effectiveness of each marketing channel to
the small scale manufacturing enterprises.
Key: Very effective - VE
Effectively - E
Somewhat Effective - SE
Little Effective - LE
Not Effective - NE
129
S/N ITEM STATEMENT VEU EU SEU NEU
NEU
How effective is:
27 The Direct channel of distribution
where manufacturers sell their products
direct to the consumer in your
enterprises?
28 The internet as a direct means of
meeting the consumer needs?
29 Producer – retailer in selling products
to consumer
30 Manufacturer – wholesaler – retailer
channel as a channel of taking products
to the end user.
31 Manufacturer-agent-retailer-customer
in selling products.
32 e-mail in selling products to the end
user
33 Mail as direct channel in selling
products to the end user.
34 Telemarketing in selling product to the
end user
35 Catalogs as direct channel of moving
products to the consumer
36 Manufacturer- wholesaler in selling
product to the consumer
37 Producer-agent-wholesaler-retailer-
customer channel in your business.
38 Face-to-face in selling product from
the consumer to customer
39 Direct-response advertising in your
business
130
Research Question Four; What are the benefits derived from the channels
adopted by small scale manufacturing enterprises operators for effective
distribution of products?
Please check (√ ) indicate your level of agreement with the following items:
Key: Strongly Agree - (SA)
Agree - (A)
Undecided - (U)
Disagree - (D)
Strongly Disagree - (SD)
S/N ITEM STATEMENT SA A U D SD
40 Channel of marketing reduces the amount
of work that must be done by both
producers and consumers.
41 channel of marketing helps
manufacturing enterprises reduce costs
42 Producers use intermediaries because they
create greater efficiency in making goods
available to target market.
43 Marketing channel helps enterprises to
communicate with customer as well as
their products and services.
44 By shifting the responsibility for stock
holding further down the chain, a
manufacturer can reduce the amount of
their own funds tied in stocks.
45 Marketing intermediaries transform the
assortments of product made by producers
in to assortments wanted by the customer.
46 Intermediaries through their contacts,
specialization and experience usually offer
the company more than it can achieve on
its own.
131
47 A distributor or retailer selling more than
one manufacturer products spread the
distribution costs, which should achieve
some economies of scale.
48 Marketing channels allow the producer
and the channels members to do what they
each know how to do best in higher
volumes.
49 Channel of marketing intermediaries exist
because they offer value in making goods
more available and accessible to the
targeted market or consumer.
50 Channels of distribution make products
available when, where and in the sizes and
quantities that customer wants them.
51 Distribution channels provide a number of
logistics or physical distribution functions
that increases the efficiency of the flow of
goods from producer to customer.
52 Marketing channels create efficiencies by
reducing the number of transactions
necessary for goods to flow from many
different manufacturers to large numbers
of customer
53 Distribution channel members move the
goods from the production site to other
locations where they are held until they
are wanted by the customer.
54 Channel of distribution make the purchase
process easier for both customers and
manufacturers.
55 Well-chosen channels constitute a
significant competitive advantage, while
poorly conceived or chosen channels can
doom even a superior product.
132
APPENDIX B
The table of population distribution of the respondents
Number of Small scale manufacturing Enterprises and Number of Operators
in the Three Senatorial District of Zamfara state
Senatori
al
District
S/N Name of Enterprises No.
of
M/M
No.
of
W/S
No.
of
RT
No.
of
S/
A
No.
of
DL
Total
No. of
Resp.
GUSAU
CENTR
AL
1. SAN yogourt Gusau 1 5 10 2 - 18
2 Nasiha Yogourt Gusau 1 6 9 1 - 17
3 Ni‘ima Automatic Bread 1 5 10 2 - 18
4 Jamil Yogourt Gusau 1 7 10 2 - 20
5 A.G.F. Special Bread 1 7 12 3 - 23
6 Sardauna Bread Gusau 1 7 13 2 - 23
7 Zamfara Textile 1 11 19 4 3 38
8 Gusau Oil Mill 1 7 9 1 1 19
9 Zaitun Oil Mill 1 5 8 1 15
10 Rikiji Oil Mill 1 3 7 1 12
11 Zamfara Integrated Venture 1 5 8 1 1 16
12 Gusau Sweet Factory 1 5 8 1 1 16
GUSAU
NORTH
1. G.A.P. Ginnery 1 6 11 2 1 21
2. Garewa Table Water 1 8 10 2 - 21
3 Mallaha Ginnery 1 7 14 2 1 25
4 Marmaro Table Water 1 9 15 3 - 28
5 Mayanchi Ginnery 1 8 14 3 1 27
GUSAU
SOUTH
1 Primier flour mill mafara 1 10 16 3 1 31
2 Zamfara fertilizer blending
plant
1 8 17 3 1 30
3 Nura yoghurt mafara 1 9 15 2 - 27
4 Zaitun oil mill Bakura 1 7 12 1 - 21
Total 21 21 145 247 42 11 466
Key: m/m- marketing managers, DL- Dealer
W/S- Wholesalers
RT- Retailers
S/A- sales Agent