CHAPTER ONE

INTRODUCTION

BACK GROUND OF THE STUDY

          As the economy advances, there is a resultant widening of the gap between producers and consumers, the increase, in output of goods and services necessitates.   The development of channel of distribution they provide time, place and convenience utility for the goals and services provided. 

          In the view of Adirika, Ebue and Nnolim (2001) distribution is demand creation and satisfaction and both directly and indirectly brings down the total cost of marketing organization.   Apart from producing the goods and services required by buyers, pricing and promoting them (ie. Informing buyers about them) marketers have to make these goods and services available to the buyer; that is, place them at his or her convenience, in order to make them seen or perceived, admired, accepted and purchased by them.

          Thus, effective and efficient distribution flow will not only make goods available, but will also do so at the cheapest possible price to the consumer, at the lowest possible cost to the consumer, at the lowest possible cost to the producer or suppliers. Accordingly the distributional strategy and channel employed greatly influences the economic value of goods, both to the distributor and to the consumer especially when and if it’s selection is carefully considered.          

          A manufacturer has the option of selling either directly to the ultimate consumer of it’s products, or through the use of intermediaries in realizing the same objectives considering present marketing environment factors such as the location of the market, the undulating economic conditions within the Nigerian economy as a whole, together with consumer requirements by way of varieties, quantities and time of product requirements, most manufacturers prefer reaching their customers through the use of marketing intermediaries.

          With regard to the use of marketing inter-machineries in reaching ultimate, consumption targets, there are two important end related decision areas having marketing implications and of relevance to the producer or supplier.   The first is a decision on whether or not the use intermediaries for distribution.   The second which options to be adopt, follows only if the decision to the first problem called for the use of intermediaries.

          In deciding the types and nature of the distribution channel options to be adopted, the action is usually given to such important factors as the cost of the channel to the user, the efficiency of the channel, the type and nature of the product.   The type of target market to be saved, the size, location, and purchasing pattern of potential and present customers, availability of alternative marketing intermediaries.   The type of channel options adopted by competitors and the manufacturers available resources.  

          In the bread industry, and considering the nature of the product, choice of distribution channel becomes a very important marketing decision.   Also in this industry the different marketing utilities of distribution economy.   Market coverage, channel control and adoptation to changing environments, interplay and influence the choice decision.   Accordingly, the distribution channel and strategy option adopted by any producer should contribute to the achievement of the overall marketing objective, and therefore meet the company’s objective and the consumers retirement in the sale.

          It is a fact that the bread industry has assumed importance in the Enugu State today.   In this state, bread is one of the staple food items consumed by most people.  The demand for brad and it’s frequency of consumption is high.   This high rate of bread consumption in this state is accounted for by a number of factors.

          In Enugu State, it is usually hot because it is not far from the northern part of the country there by making people to sweat which brings about hunger which makes most of the inhabitants of the state to go for solid and strong foods that will give them strength for instance cold nunards are frequently taken during the hot period irrespective of the time of the day.   And cold drink have a complementary, demand for bread, which goes to explain the wide acceptability of the product in the state. 

          The character of the peoples occupation which among the rural population.   Is mainly farming and white colar jobs also contributes to the high demand for bread.   These occupation require long home in the field as well as food that is light to carry and can be easily and quickly consumed. In these circumstances, bread comes in very hendy.   Among the light food is ideal for breakfast often reasons for the high demand for bread can still be mentioned among unmarried people, bread provides substitute meal where cooking is regarded as very difficult duty. Also, at ceremonies like birthday, sandwich prepared from bread has become a popular entertainment dint of the people.   As bread has assumed prominence as a food item, so also has it’s industry’s importance.   

          It is because of distributions in making this important stable food (bread) available that the research examines distribution channel options/strategies for bread industries in Enugu State.

STATEMENT OF PROBLEM

          Discussion with some retailers (vendors and hawkers) of bread in the Enugu State indicates that supplies of the product are often not delivered on schedule.   Others complain of occasional damage to the product before arrival at their stores.   Still, some are of the opinion that prices charged them are higher than those charged customer purchasing from the producer companies.

          On further investigation, it was realized that delay, in deliveries could result in damage to the product considering the perishable nature of brand.   The condition of most read in Enugu is very deplorable where there are road at all.   They are either met properly maintained or they are completely neglected.  These bad roads have consequently reduced the efficiency of available delivery vehicles since they put them in poor workings condition and equally increase their maintenance cost.   Among other problem inhibiting distribution effectiveness are such variables as the area, covered by most producer/companies distribution network which in most cases is generally large and geographically scattered.   Added to this, the number of delivery vehicles covering these points are meet large enough to ensure distribution effectiveness.   The scheduling and routing plans of most of the producer/companies distribution processes are anything but inadequate.   In some companies, salesmen combine the duties of selling with that of delivery and to complicate matters some companies even surcharge them fro damages and losses.

          Investigation also reveal that increase in delivery cost and overhead expenses including fuel cost, vehicle maintenance and repairs expenses, as well salesmen allowance, have forced up distribution cost.   In some areas major producers experiences weak or no competition for their products in respect of quality, taste, bread preference in addition to these, salesmen have been formed to sell over and above prices fixed by their respective companies without any approval.

          Finding a solution to the above problem becomes the central task of this research work.  

OBJECTIVE OF THE STUDY

          Base on the research problems the following hypothesis are formulated:

1)           Example and analyse the present distributional strategies and channel options available to bread industry in Enugu State with a view to determining the reasons of their inefficiency.

2)           Investigate other distributional strategy and other channel options, that are available for use by the bread industry. 

3)           Formulate, on the basis of finding most efficient distributional strategy and channel options for the brad industry in order to reduce lists, damages and delays of supplies to consumers.

4)           Examine the reasons for scarcity of bread especially during festive period.

5)           Critically look at the impact of warehousing inventory, control customer services on the marketing of bread.

RESEARCH QUESTIONS

1)           Are consumers satisfied with the present distributional options/strategies employed by the bread industry in Enugu State?

2)           Can consumers buy more if alternative distribution channel options that ensure quick delivery at lowest cost and with less damage to the product are employed?

3)           To what extent are bread available in Enugu State?

4)           Does distribution options/strategies employed in Enugu State impact positively on customers patronage?

5)           Does distribution options/strategies adopted by bread industries in Enugu State leads to increase in profit of the organization?  

SCOPE OF THE STUDY

          This study concentrated on distributional option/strategy for bread in Enugu, However in view of time money and other constraints emphases has placed on ten selected bakeries in Enugu Metropolis.   The ten bakeries are:

·                     Oniachi Food Nigeria Limited.

·                     Chuis Nwokocha Bakery

·                     Tea-time Bakery

·                     Ify Bakery

·                     Flora Bakery

·                     Uncle Johes Bakery

·                     Chibueze Bakery

·                     Super Joe Bakery

SIGNIFICANCE OF THE STUDY

          This study is justified by the fact that:-

1)           Bread is consumed by most people within the area of study and the selected organization are major suppliers in their respective areas.   This study will be of help to both consumer and suppliers of bread.

2)           An efficient distribution strategies/channel option for bread would reduce the cost of damage and delayed delivery, and consequently, the market price to the consumer.   It is condemned that efficient distribution for bread will ensure maximum satisfaction to both the ultimate consumer on the one hand and the producer/company on the other, without any party to the transaction being cheated in the process.

3)           A reduction in the price of bread will contribute in no small way to the achievement of the federal military Governments objective of bringing down to price of essential commodities, and so help to minimize the consumer’s cost of living.

4)           It is also expected that since the companies selected for study are privately owned small scale indigenous establishments within the town, the result of the study will equally go a long way to augment the operational performance of the small scale in particular, and the nation in general.   Above all this study will also be of beneficial to both the research and the researcher as the study will provide an indept knowledge and understanding in the area which could stir up further study.