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APPRAISAL OF THE DISTRIBUTION SYSTEM OF MADE IN NIGERIAN PAINTS

10,000 3,000

(A STUDY OF THREE SELECTED PAINTS MANUFACTURING COMPANIES IN ONITSHA)

Product Description

CHAPTER ONE

 

1.0       Introduction

1.1       Background of the Study

The distribution function is one of the marketing variables in the marketing mix.  It is therefore, a marketing function, which aims at getting goods and services from the manufacturer to the ultimate consumer, transferring titles and physically moving the products in the process (Adirika, 2001:193).  Distribution is the process of getting products and services from producers to consumer/user, when and where they are needed.  It creates time, place and possession utilities and the transfer of ownership utility for the consumer or users to enjoy the form utility.  “It is often said rightly that production remains incomplete until goods or services concerned reach the final consumer.  Again, unless products are distributed and delivered in the right amount, at the right time, in proper conditions, buyers may be reluctant to buy” (Achison, 2000:180).

The unprecedented growth witnessed in the paint industry in Nigeria since the last two decades has led many Nigeria paint manufactures to show more concern for the market of their products.  Unless a product is properly channeled, it cannot reach its target market/customers, it cannot achieve the required sales volume, the planned market share and profit goals of the firm may not be realized too.  It is the facilitation of this sort of accessibility that is the major function of a firm’s channel of distribution.

Distribution system is a set of facilitating agency including order processing, material handling, warehousing, inventory management, clearing and forwarding companies and transportation used in the movement of products from producers to consumers and end users.  Planning an efficient and effective distribution system can be a significant decision in developing an overall marketing strategy.

A company that places the right products in the right place, at the right time, in the right quantity and price and with the right support services is able to sell more than competitors who fail to accomplish these goals or objectives.  These apart, distribution is an important variable in marketing strategy because it can decrease costs and increase customer satisfaction.  Infact, speed of delivery along with services and dependability is often as important to buyers as price of products.  In order to obtain better result, physical distribution activities should be integrated with marketing channel decision.  This research work which is on the distribution system of some selected Made in Nigeria Paints in Onitsha, Anambra State was conducted with the objective of evaluating how paint manufacturers move their end products to the final consumer or users.  The selected paint manufacturers which the researcher based on include Citizen Chemical Industries Nig. Ltd, Ages Enterprises Nigeria Ltd and Jacbon Industries Ltd.  A survey conducted by the researcher shows that the distribution of paints by the manufacturers in Anambra State is mostly through marketing intermediaries and channel members who constitute the distributors and retailers of the paint products. Such method of distribution makes the products to be available only at strategic locations in towns and industrial markets within Onitsha, Anambra State.  This promotes competition, making the industry to be highly competitive.  As a result, it becomes proper and necessary for every paint manufacturer to formulate and adopt a cost effective distribution system that will guarantee better customer patronage through improved customer services in order to secure vantage competitive edge over other competitors.  The fundamental questions at this juncture are: Do these adopted means of distribution offer the best services to the customers?  And how efficient are these in terms of total cost minimization?

Most paints producers came into existence sequel to the ban placed on importation of paints and allied products into the country.   In addition, the introduction of Structural Adjustment Programme (SAP) and availability of the basic raw material gave an added impetus to the establishment of the industry.

The selected paint makers make the following kinds of paints: Duntop Coat, Gloss or Oil Paints, Textured Coating (Texcote), Emulsion Paints, and Wood Finishing.  The three selected paints makers are: Citizen Chemical Industry Nig. Ltd.  This was established in 1980’s and today has largest share of paint market in Onitsha – Anambra State.  The factory is located at KM2 Nkpor/Obosi Road Onitsha.  Its products are Dunlop Coat, Citizen Gloss Paint, Citizen Texcote, Citizen Emulsion, Citizen Wood Vanish and Citizen Glue.

Ages Enterprises Nig Ltd is the producer of Home Pride Super, Delux Emulsion and Home Pride Executive.  Its factories are located along Enugu – Onitsha Road near New Motor Parts Market, Nkpor, and Odume Layout Obosi.

Jacbon Industries Ltd is the producer of Bonalux Paints and its factory is at Obosi Road, Onitsha.

With regard to the profile of these companies, one can see that they offer the same lines of products.  The difference is only on the brand names.  They are therefore, engaged in competing for customers patronage and for any of them to achieve competitive advantage over the others, it has to improve its distribution system strategy.

Therefore, the makers of paint products should gear efforts towards seeking information about the consumers needs, designing appropriate paints products of different sizes, properly packaged in the manner most acceptable to the consumer, promoted through appropriate media, get them to the points where the consumers will buy with ease using appropriate channels at a price agreeable and affordable to the potential consumers.

 

  • Statement of the Problem

In carrying out this study, some problems were identified from the background and they include: Inadequate provision of the customer services by paint manufacturing companies; There is problem of inadequate coverage of the target market; There is inadequate physical distribution network of paint companies; There is problem of low demand of the product and poor patronage; Inadequate application of Inventory Control Measures.

 

  • Objectives of the Study
  1. To identify if the paint customers are satisfied with the product and distribution policy.
  2. To evaluate the physical distribution strategy adopted in the marketing of paints by the companies of study.
  3. To determine the physical distribution network of the three selected paint companies.
  4. To determine the extent of demand of the paint products and patronage.
  5. To know if the Inventory Control Measures are applied.
  6. To make recommendations that will help to improve the distribution system and marketing of made in Nigeria Paints.

 

  • Research Questions
  1. What type of Distribution Systems are adopted by the three selected paints companies?
  2. Is the physical distribution network of the three selected paint companies efficient?
  3. What is the level of demand and customers patronage of paints in the three selected paint companies?
  4. Are the customers of the three selected paint companies satisfied with the products?
  5. What are the Inventory Control measures used by the three selected paint companies?
  6. How efficient is the distribution system of the selected paint companies?

 

  • Formulation of Research Hypotheses

The following hypotheses were formulated:

  1. H01: Efficient and effective distribution system does not lead to customers’ satisfaction.

H1:       Efficient and effective distribution system leads to customers’ satisfaction.

  1. H0: The profitability of the paint business does not depend on the effective distribution network and marketing.

H1:       The profitability of the paint business depends on the effective distribution network and marketing.

  1. H0: High cost of distribution does not lead to high cost of paints in the market.

H1:       High cost of distribution leads to high cost of paints in the market.

 

  • Significance of the Study

The study will show whether it is advisable to paint manufacturers to continue with their present physical distribution system or to discard it.  Efficiency in the distribution system of paint companies will bring about increase in the sale of paint products, which will result in increase in profit to the companies.  This increase in profit may induce the companies to expand or lead to increase in the shareholders fund/dividend.

Increase in profit resulting from good physical distribution management will bring about increase in the workers salaries and entitlements and these will lead to high standard of living.  This will in turn motivate workers to high performance and productivity.  Efficiency in the physical distribution management of paint companies sought by this study will take care of the interest of the paint user by suggesting measures of setting any problem of unsteady supply of paint products caused by the present distribution system.

Moreover, efficiency in the physical distribution management sought by this study definitely, improves the economic development of Nigeria, considering the wide spread of social and economic problems caused in the past when Nigeria were importing paints.

 

  • Scope of the Study

The study centres on the appraisal of the distribution system of Made in Nigeria Paints.  And this is a study of three selected paint manufacturing companies in Onitsha, Anambra State.

 

  • Limitations of the Study

This study is limited to Onitsha, Anambra State, due to financial and time constraints.  It is pertinent to mention here, that Onitsha is chosen because it is one of the major commercial cities in the country.  For this reason, it is densely populated and this therefore makes it a good representative of paint manufacturers and users.

Furthermore, time for the submission for the project and other logistics arrangements did not permit the researcher to extend this study to other cities in the country.

 

  • Definition of Terms
  1. Production: Production is the creation of goods and services which possess utility that are capable of satisfying human wants.
  2. Industry: An industry is a group of companies/organization that produces similar or identical goods and services.  Example is the Paint Industry.

iii.       Utility: Utility is the ability of goods and services to satisfy human wants.  It can also be regarded as the quality of being useful.

  1. Efficient: This means performing duties well. According to Peter Drucker: Efficiency means doing things right.
  2. Effective: This means able to bring about the result intended.  It also means able to do the right thing (Peter Drucker).

 

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