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THE ROLE OF MIDDLEMEN IN CHANNELS OF DISTRIBUTION – (A CASE STUDY OF NIGERIA BREWERY 9TH MILE CORNER, ENUGU)
1.1 BACKGROUND OF THE STUDY
A product may be the best in the world, but it will be of little use to the consumer of it is not where they wants it. This is concerned with the place where the consumer can acquire it and time utility function when the need arises.
Distribution is the flow of goods from producer to the ultimate user through channels that are made up of middlemen.
Distribution of goods and services has been an important aspect of marketing in our lives. Though, in the past, the usefulness was not immediately recognized.
Distribution is more than a series of channels between production and consumption. It provides a force, a pump in addition to the part along which goods flow.
Distribution in the 90’s is the most important link for getting goods and services from the producer to the ultimate consumer. Even with a soaring inflationary period, which may break all records in the short history of Nigeria, distribution still is vital to the continued existence of business.
In the olden days when barter was prominent, producers conducted the locater transaction (exchanging goods for goods) and other thing rather than for currently themselves, not utilizing middlemen.
When demand increase, producers found out that they did not have enough time, energy and the expertise needed for effective selling. Furthermore, producers increased levels of output enquired that they direct more attention to the production process. At this point, retailers (a type of middlemen) came into existence.
Producers and middlemen found barter of goods most accept other goods as payment and the “other” goods may not fit the seller needs.
As the economy continued to advance, retailers began to specialize, some for instance offer goods and other, clothing, in addition, wholesaler (another type of middlemen) emerge to meet the retailers need to draw from a large number of producer. This was how middlemen came into the scene as links between producers and consumers. As time went on, there was the need to have agents, distributors, brokers etc., springing from the march roof of wholesalers to be recognized as independent, entering the channel of distribution.
The Nigeria Brewery Limited mentions glory as one of the oldest breweries in the country. It was formed in 1946 with the commissioning of its Lagos branch. Nigerian and some foreigners own it. Before the indigenisation policy precisely, there are 40% Nigeria equity participation. After the indigenization policy precisely in 1978 it raise to 60% equity participation. This represents about 35,143,843 shares out of the total issued and fully paid shares of 58,560,000 at 50k each.
Nigerian Breweries Limited has a total labour force of about 9,700 but that of 9th Mile Corner, Udi branch, has about 500 labour forces. One of the major features of Nigeria Breweries Limited, 9th Mile Corner, Udi Branch is that it is the smallest of all the plants NBL while it is the biggest in comparison with the competitors in the State.
1.2 STATEMENT OF THE PROBLEM
The first step in channel selection is market definition that might by what and where are they? The answer can be elusome. It is also essential. There is no use in choosing a channel better on producer and end user until one knows where the goods are going. In short, channel choice rest heavily on the Nigeria Brewery Limited market segmentations strategy.
Place decisions, one concerned with the location of marketing facilities and the selection and use of marketing intermediaries. Distribution decisions revert a strong influence on the rest of the marketing wise including pricing advertising and sales force priorities.
Place does not just happen, contrary to the dealings as some production oriented businessmen. To be sure there are lost of wholesalers and retailers (middlemen) around. And there are many wholesalers and retail facilities for react to prospective middlemen.
It is critically important that marketers understand channels of distribution and they are able to create distribution facilities that will enable them to reach their market targets effectively.
The problem of defining the consumer, hence the market, can be especially risky at times, particularly if one relies on domestic experience.
Channel select is often little more than accepting the system already established in the market place. An important decision that each producer must resolve is whether or not to utilize middlemen. This decision influence the concern’s setting middlemen are needed to provide answers to social critics who question whether or not middlemen contribute to the well being of consumers and the society at large. The marketers can determine the extent to which middlemen are justifiable by determining how effective they carry out activities that are necessary in marketing a product mix of the organization.
Middlemen are potential candidates for the channel of distribution. In recent times, many who criticize the usefulness of middlemen based on their contention on consumers outcry about the soaring price changed by middlemen for their products. The distribution, especially when it is too long put the consumer in a helpless situation of not been able to demand for a product. The manufacturer has not totaling kept deaf ear to this consumer’s outcry about incessant price increase. And this has resulted in the manufacturer efforts of recognizing the marketing system. In order words, certainly, the length of the chain of distribution in some cases has been necessary for the manufacturer to market his product directly at the doorstep of the consumers. This is only peculiar to certain products.
1.3 SCOPE AND LIMITATION OF THE STUDY
For the fact that the marketing intermediaries perform some valuable functions, it is imperative to find out how important these functions are respectively of the valuable functions. It has been suggested that they should be eliminated as links between producers and the ultimate consumers.
The researcher also intends to find out the following:
I. The role middlemen play on the channel of distribution.
II. How the channel members can be motivated.
III. If middlemen can be eliminated.
Furthermore, undertaking a project work like this kind, it is no doubt a difficult task that needs time, money, energy, patience and adequate materials to be properly executed. Unfortunately, some of these mentioned above and other factors pose to be a clog in the wheel against the success of this project work.
I. The research work on the topic (The Role of Middlemen in the Channels of Distribution) was only restricted to manufacturing, wholesalers and retailers and how the goods finally gets to the consumers, other areas concerning the consumer like the preening method which has no relevant in the study were ignored.
II. The research method and data analysis were restricted to the use of secondary data while the use and important of primary data.
III. Some theories used in the research method were based of purchasing of product whose price has been greatly reduced; the consumer is expected to react greatly to the difference in price changes of existing product and new product above to the modification of the four parts:
(c) Promotion and
but there are exception cases were even if the product currently or sale has a reduced price advantage, the four parts modifies the consumer instead of changing new product and try its features tend to remain old product consumption even with price increase.
1.4 SIGNIFICANT OF THE STUDY
This project work is very much related to the business organizations. No organization is form to run at a loss. The use of goods and services in Organisation partially determines the success of the organization especially when the work is left in their hands without constant monitoring.
It is also enable the researcher to get an in-depth touch the hampering the smooth of the middlemen. It would therefore enable us to offer useful suggestion and contribution in formally be able to know if the criticism that middlemen should be eliminated. Since they merely increase of odd to the cost of product holds.
The findings of the research can be also relevant to the government in the sense that they will be able to intervene in the flow of goods and services to the citizens at the right time, right place and an appropriate and reasonable price.
Other persons to benefit from this project work are students wishing to carry out a detailed work on the project, and Nigerians on general who want to be acquitted with the functions and importance of middlemen cannot be an addition to the cost of a product.
1.5 DEFINITION OF IMPORTANT TERMS
BARTER TRADE - This is exchange of goods to goods.
CHANNEL OF - This is defined as the set of all the
CONTRIBUTION - firms and individuals that take little, or assist in transferring tile, to the particular goods and services as it moves from the product to the consumer.
CONSUMER - This are those that made use of goods produced.
MIDDLEMEN - This can be described as any intermediary
between the producer and consumer of goods, which performs such functions as storage, distribution or transportation.
MARKETING MAX - This is defined as a combination of those
controllable internal marketing variable comprising the four Ps (product, place, price, promotion), which the firm uses to operate successfully within the marketing environment.
PRODUCER - This are those that are engaged in manufacturing of goods.
RETAILER - Are those that buy or bit and sell in bit.
WHOLESALER - Are those people that buy in bulk and sell in bulk.
Ammer, C. and Ammer D. S. (1977): Dictionary of Business and Economics.
New York: The Free Press, A Division of Maclulican Publishing Co. Inc., p. 265.
Hanson, J. L. (1977): A Dictionary of Economics and Commerce. London.
The English Language Book Society and Macdonald and Evans Ltd. p. 133.