EFFECT OF DISTRIBUTION STRATEGIES ON CONSUMER BUYING BEHAVIOUR
- Project Research
- 1-5 Chapters
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
Background of the Study
Distribution of products usually involves some form of vertical systems where transaction and logistics responsibilities are transferred through a number of levels. The type of distribution systems alcoholic beverage firms needs is influenced by the buying system they use, the number of depots it has, the geographical dispersion of the depots and the characteristics of the merchandise carried. Many companies do not sell their products directly to end users. In mass production and consumption industries in particular, many manufacturers rely on distributors, representatives, sales agents, brokers, retailers or some combination of these intermediaries to distribute their products (Hughes &Ahearne, 2010). These intermediaries (distributers) perform a variety of functions and constitute a marketing channel, that is also referred to a trade channel or distribution channel (Kotler& Keller, 2008). The importance of distribution strategies has grown in recent years, largely due to increased size, improved level of product knowledge, technical competence, specialization and various other factors (Kalafatis, 2000).
Distribution is all about getting your products/services to the right people at the right time with special consideration for profit and effectiveness. Successful marketing does not end when a business has developed a product/service and has found its appropriate target audience with a view to selling it at the 'right price (Global Research Society, 2011). The next issue that needs to be faced is how manufacturers are going to distribute and sell these products/services to the consumers. When a product/service is purchased by a consumer, it may have been bought directly from the business itself, or it may have been bought through a number of intermediaries (Hunt &Nevin, 1998).
In a typical distribution strategy for consumer goods, for example, manufacturers sell to retailers, which sell to consumers in markets. Retailers break bulk, holds inventory, provide shelf space, create promotional displays and advertising, create one-stop-shopping convenience and a pleasant shopping environment, all of which increases demand for the manufacturer’s product (Desiraju and Moorthy, 1997). Retailers gain a central position in many industries thanks to their increasing degree of concentration and internalization,
successful launching of retailer brands and by controlling more and more of the value-adding functions with the distribution supply chain (Elg, 2003).
Distribution in the manufacturing sector for instance involve handling and moving of physical goods within industrial firms and through channel systems (McCarthy, 1978). It also involves the planning and implementation of physical flow of materials and final goods from the point of production to the point of use to meet consumer needs at a profit on the side of the marketer (Gong, Law, Chang&Xin, 2009). A distribution channel is a set of interdependent organizations that help make a product available for use or consumption by the consumer or business user. Armstrong and Kotler (2003) defined distribution channel as a set of inter-dependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business buyer. Researchers have credited distribution channels with the following roles; information gathering and distribution of marketing research and intelligence information, physical distribution negotiation (Ndubisiet al., 2003; Sawhney, 2000).Bagozziet al., (1998) categorises the distribution functions into three: functions for customers; functions for producers; and functions for both customers and producers. Channel distributers 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. In this review two types of channels are identified- for consumer goods and organizational goods.
The existence of distribution strategies has helped to make society more efficient in resource allocation. Most producers use intermediaries both to acquire raw materials for production and to bring their products to market. They try to forge distribution strategies to facilitate the process of making a product or service available for use or consumption by the consumer or business user (Henderson, Dooley&Akridge, 2000). Bagozziet al., (1998) assert that intermediaries create savings, which becomes more dramatic as the number of producer- consumers increases. Armstrong and Kotler (2003) pointed out that intermediaries play an important role in matching supply and demand, while Waxman (2000) argued that by servicing the thousands of indirect partners who were the customers, midrange distribution added true value.
Distribution of products usually involves some form of vertical system where transaction and logistics responsibilities are transferred through a number of levels, Ian (2005). Davidson (2000) argued that distribution is part of merchandising and must be considered in any merchandising system. Distribution management involves; merchandise replenishment, transportation management and distribution center facilities management. The type of distribution system a alcoholic beverage firm needs is influenced by the buying system the alcoholic beverages uses, the number of stores the alcoholic beverages has, the geographic dispersion of the stores, and the characteristics of the merchandise carried.
Some of the distribution systems employed by the retailing companies are; Store direct systems, vendor pre-pack through distribution center systems, the stocking distribution center system, multiple and master/ satellite distribution center system: Store direct system, in this system the merchandise is delivered directly from the vendor to the individual stores, although the merchandise can be ordered at the store level by the central merchandising staff. It is appropriate for high fashion content, significant seasonal fluctuations or high bulk such as paper. Stocking distribution center system employs the distribution center much as a depot. Merchandise is sent from the depot to the individual stores, allocated either by the central headquarters staff or as requisitioned by the store personnel. This system normally reduces costs of goods sold from the vendor because merchandise is ordered and sent to the distribution center in large quantities.Distribution strategy explains the way products are delivered to end customers (Hooley, Piercy &Nicoulaud 2008). Choosing the right distribution strategy is one of the most important choices for marketing and has serious impact on business’ future success. Regardless of what the product or service is, providing it in the right place at the right time outweighs all other marketing efforts. The distribution strategy is a system that helps to bring products from manufacturer to final customer ( Zikmund&d’Amico 2001). Companies use distribution strategies to ensure that their product reaches customers at the right time and at convenient location. Distribution channels involve intermediary organizations that help in a process of delivering products to end customers. Channel level is a layer of intermediaries that are involved in process of perform channel tasks (Kotler, Armstrong, Wong & Saunders, 2008).Creating a distribution strategy involves picking the right intermediaries, ensuring that products are shipped quickly in correct quantities and flawless quality and taking care of product delivery within set deadlines (Thompson &Soper 2007). Selecting the distribution strategy or channel is the firststep to manufacturers in choosing how their products will be sold to their end customers, which is a crucial decision for company to make.
Statement of the problem
The competitive environment facing alcoholic beverages in Lagos State are similar to those identified by Porter (1990) as; threat of new entrants, rivalry among industry players, threat of substitute products and increasing supplier and buyer bargaining power. Since the enactment of alcoholic act 2010 famously known as Mututho laws, which legalized brewing of traditional brews like mnazi, muratina(opaque beer) and chang’aa, genuine manufacturers and distributors have being facing up-hill task to sustain their businesses. Worse still to the demise of the industry was the entrant of cheap and lethal portable 3rd generation spirits.
The effect of this has beena reduction in market share, declining profitability and stiff competition. As a result companies have beenforced to craft strategies in order to sustain or grow their market share, expand to new territories or markets,acquire new technologies, develop brand or line extensions, reduce costs and risks (Oliver, 1995). Alcoholicbeverage companies in Lagos State need to adopt distribution strategies that ensure they reach their marketsefficiently.
According to Ramamurthy (2007) consumers expect that alcoholic beverages will offer the rightmatch in terms of right product offering, quantities, place, time, and price by the right appeal. Retailing inNigeria has gone through a significant change in the last couple of years with a complete shift in shopper’sexpectations and experiences. While the shoppers have remained the same everything has changed and gonemega, ranging from the size of the outlets to the layout, the ambience, the experience, the service, theloyalty, buying behaviour and incentives to the way promotions are done (Hasty and Reardon, 1997). Companies have been forced to build organizations that consistently deliver the best customer offers. This has been made possible by adopting thebest retail distribution strategies, depot distribution strategies, online distribution and direct distribution strategies which identifies the needs and wants of a market place and customizing marketingefforts at the store and the individual level allowing the alcoholic beverages capitalize on differences in theconsumer and competition (Hasty and Reardon, 1997).Randal(1991) argues that by adopting the best retail distribution strategies, depot distribution strategies, online distribution and direct distribution strategies, most companies have managed to get a clear path to beat competition, succeed in difficult markets, increase their sales and profits, but above all increase their customer’s buying behaviour and loyalty.The project research therefore intends to close the research gap by analyzing the effects of distribution strategy in customer buying behaviour among the alcoholic beverages distributors in Lagos State
Objective of the Study
The general objective of this study was to establish the effect of distribution strategies on consumer buying behaviour of alcoholic beverages.
The study was guided by the following specific objectives:
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To determine the effect of retail distribution strategy on consumer buying behaviour.
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To examine the effect of depot distribution strategy on on consumer buying behaviour..
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To establish the effect of online distribution strategy on on consumer buying behaviour.
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To determine the effect of personal distribution strategy on on consumer buying behaviour.
Research Hypothesis
The study was guided by the following research hypothesis:
Ho1: Retail distribution strategy has no effect on consumer buying behaviour..
Ho2: Depot distribution strategy has no effect on consumer buying behaviour..
Ho3: Online distribution strategy has no effect on consumer buying behaviour.
Ho4: Direct distribution strategy has no effect on consumer buying behaviour.
Significance of the study
Properly defined distribution channels will help alcoholic beverages industry stakeholders to fully exploit their competitive advantage and optimize operations whilst ensuring best environmental practices are maintained. It will increase organizational flexibility in terms of meeting consumer requirements in the best and most affordable manner.
Policy makers will be able to ensure that the interests of all stakeholders both internally and externally are met with minimal detriment to the environment. They may also encourage more firms to participate in distribution by offering recognition in form of awards of excellence.
This study will also benefit scholars by providing background material for future research in other sectors or industries, highlighting current trends on distribution practices. They will use the findings for reference purposes in future related studies.
The study is also important to both existing distributors and customers since a defined channel of distribution will be created for an efficient flow of products. The findings will help customers understand the role of intermediaries in providing them with a broader range of products. It also points out the importance of taking a holistic perspective when redesigning distribution strategies.
Limitation of the study
The study focused on Alcoholic beverage companies in Lagos State, Nigeria and therefore cannot be generalized to reflect all beverage companies in the country
Tools used to collect data may have some errors of omission or commission and thus limited the quality of response from the respondent.
Assumptions of the study
The following were the assumptions of this study;
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The target population gave accurate information and,
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The participants cooperated fully
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There was fairness in the distribution of questionnaires.
Scope of the Study
The study focused on the effect of distribution strategies on consumer buying behaviour. The target population of the study was 545 distributors, retailers, wholesalers and bar owners operating Lagos State. The sample size for the study was 225 respondents.
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