1

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

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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

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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

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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

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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

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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.

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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

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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

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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.

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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