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DISTRIBUTION CHANNELS AND SALE'S VOLUME OF BAMBURI CEMENT IN LOCAL AND FOREIGN MARKET OF BAMBURI CEMENT NAIVASHA KENYA BY KIMANI MARY NJERI BBA/41544/91/DF A RESEARCH REPORT SUBMITTED TO THE SCHOOL OF BUSINESS AND MANAGEMENT IN PREPARATION FOR REQUIREMENTS FOR THE NARD OF BACHELOR OF BUSINESS MANAGEMENT OF I(AMP ALAINTERANATIONAL UNIVERSITY APRIL 2012

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DISTRIBUTION CHANNELS AND SALE'S VOLUME OF BAMBURI CEMENT IN

LOCAL AND FOREIGN MARKET OF BAMBURI CEMENT NAIV ASHA KENYA

BY

KIMANI MARY NJERI

BBA/41544/91/DF

A RESEARCH REPORT SUBMITTED TO THE SCHOOL OF BUSINESS AND

MANAGEMENT IN PREPARATION FOR REQUIREMENTS FOR THE

NARD OF BACHELOR OF BUSINESS MANAGEMENT

OF I(AMP ALAINTERANATIONAL UNIVERSITY

APRIL 2012

DECLARATION

I kimani mary njeri , declare that this research report is my original work and has never been submitted

to any institution or university for any award

Signature .. . .. ~~ . ...... . . .. ...... Date .. ~;1}~~/.?-:0/2. .... ......... . ..

ii

APPROVAL

This is to acknowledge that this work has been under my supervision as a university supervisor.

Signatu~ ....... date .. Q3.~J~?.. L?Q.J .. !T.

DR. Kibuuka Muhammad

iii

DEDICATION

I dedicate this work to my guardian Francis sarpong and all members of Calvary church, my

sisters janet , tabby, my dear one Christopher gitau , leah wanjiku ,kahumbu and all the people

who supported me during my education time .I thank you for the love and care you showed me. I

love you all.

iv

ACKNOWLEDGEMENT

I thank the almighty God who gave me life and courage throughout my education time. My

special thanks to my guardian Francis Sarpong and all members of charismatic church, Leah

wanjiku ,Christopher gitau, kahumbu, and all people who have been praying for me and

contributed towards my education.

I would like to appreciate my supervisor Dr. Kibuuka Muhammad who has been of great help to

me in writing my proposal thank him for supp01i and advice.

I also wish to thanks the management and staff of Kampala International University for the good

time and support they offered me during my three years in campus especially the deputy

principle Dr. Olutayo Oswonso. To all my friends especially Christopher, janet, tabby, jimiya

and Sylvia; I thank you so much for your support, advice and courage you gave during education

time in Kampala International University

v

TABLE OF CONTENTS DECLARATION .......................................................................................................................................... ii

APPROVAL ................................................................................................................................................. iii

DEDICATION ............................................................................................................................................. iv

ACIZNOWLEDGEMENT ............................................................................................................................ v

LIST OF TABLES ..................................................................................................................................... viii

DEFINITION OF TERMS ........................................................................................................................... ix

CHAPTER ONE ........................................................................................................................................... I

INTRODUCTION ........................................................................................................................................ I

I .0 Introduction ............................................................................................................................................. I

1.1 Background ofthe study ......................................................................................................................... I

1.2 State1nent of the proble1n ........................................................................................................................ 3

I .3 Purpose of the study ................................................................................................................................ 3

1.4 The objectives of study ........................................................................................................................... 3

I .5 Research question .................................................................................................................................... 4.

1.6 Hypothesis ............................................................................................................................................... 4

Geographical scope ....................................................................................................................................... 4

Context scope ................................................................................................................................................ 4

Tiine scope .................................................................................................................................................... 5

1.8 Significance of study ............................................................................................................................... 5

To the Governinents ...................................................................................................................................... 5

To the Inanager .............................................................................................................................................. 6

CHAPTER TWO .......................................................................................................................................... 7

LITERATURE REVIEW .............................................................................................................................. 7

2.0. Introduction ............................................................................................................................................ 7

2.1 The theoretical review ............................................................................................................................. 7

2.2 Conceptual review ................................................................................................................................... 8

2.3 Relationship between distribution channel and sale's volume of a product ......................................... 16

1 .8 Conceptual fra1ne work ......................................................................................................................... 17

CHAPTER THREE ..................................................................................................................................... l8

vi

METHODOLOGY ............................... ............................ ..... ...................................................................... 18

3.0. Introduction .......................................................................................................................................... 18

3.1. Research design .................................................................................................................................... 18

3.2. Study population .................................................................................................................................. 18

3 .5. Data type ... ....... ........................................................... ...... ............ ... .................................... .......... ...... 19

3 .6. Data collection instrument ...................................................................................... .................. ..... ...... 20

3 .6 .1. Questionnaire ....... ........ ... .......................... ...... ......... ............................. ....... .............. ....................... 20

3 .6.2. Interview .. .... .................. .. ..... ............... ....................................................................... ... .. .... ............. 20

3.8. Data analysis ........................................................................................................................................ 21

3.9. Limitation ofstudy ............... ........ ......... .. ...................................................................... .............. ......... 21

CHAPTER FOUR ................ ... .... ...... ............................... .. .... ... ..... ........ ................. ............ .......... ............. . 22

RESEARCH FINDINGS ............................................................................................................................ 22

4.0 Introduction ........................................................................................................................................... 22

4.1 Profile characteristics of respondents .............. ........... ... .............. : ......................................................... 22

4.2 Distribution channels utilized by Bamburi cement Naivasha Kenya ... ...... ...... ............. ........................ 24

4.3 Level of sales volume at local market and foreign markets ............................................................ 27

CHAPTER FIVE ...... .. ................................. : ............ .... ..... ................. ...................... ................... ... ............. 32

SUMMARY, CONCLUTIONS AND RECOMMENDATIONS ............................................................... 32

5.0 Introduction ................. .............. .................................... ........................ ................................................ 32

5.3RECOMMENDATIONS ....................................................................................................................... 34

REFERENCE ...................... ............................................ ..... ..... ....................................................... ........... 35

vii

\

LIST OF TABLES

Table 4.1 profile of respondent .................................................................. 25

Table 4.2 distribution channels utilized by bamburi cement Naivasha Kenya .............. 27

Table 4.4 relationship between distribution channel and sales volume at local market and foreign

market. ...................................................................................... . ........... 29

viii

DEFINITION OF TERMS

Distribution channels: are set of interdependent organization involved in the process of making

a product or service available for the user of consumption by the consumer or business user

Performance: is normally reflected in terms of volumes which could be expressed m

quantitative, physical and this is a measure in total revenue produced or unit sold of the

effectiveness ofthe selling effort of the firm

Foreign markets: are referred to as unity management, policy and organization as a guide to the

major decisions governing the growth of an enterprise, global conceptual of trade relations and

development, and an environment with institutions based on internationalism.

Local markets: These are unit management, policy and organization as a guide to the major

decisions governing the growth of an enterprise of trade relations and development, and an

environment with institutions these are markets within the country

ix

1.0 Introduction

CHAPTER ONE

INTRODUCTION

This chapter presents the background of the study, problem statement, objectives of the study,

research questions, hypothesis and the scope of the study and the significance of the study

1.1 Background of the study

Distribution channels are set of interdependent organization involved in the process of making a

product or service available for the user of consumption by the consumer or business user

(Kotler & Armstrong 1994).

According to (Michael , 2001), distribution channel consist of the set of people and firms

involved in the transfer of title to a product as the product moves from the producer to the

ultimate consumer or business user. A channel o distribution always includes both the producer

and the final customer for the product in its present form as well as any middlemen such as

retailers and wholesalers.

Julian, (2000) Argue that distribution channels are all about how to get your products and

services to the markets through the best routes or distribution channels. It covers the whole

process including accessing brands, crating differentials and improving the business distribution.

Distribution channels often require assistance of others in order for the marketer to reach the

market. When choosing a distribution strategy, a marketer should determine what value a

channel member adds to the firm's product

1

Distribution affects profits and competitiveness since it contributes up to 50% ofthe final selling

price of some goods. These affects cost competitive well profits since margins are queued by

distribution costs. Controlling the flow of product and services products requires careful

consideration as it determines the performance at the market place.

The sales volume performance of the product at the local and foreign market depends fully on

the distribution channel. The nature and composition of the channel route influence the

performance. For instance excel company manufacturing limited is critical on the foreign market.

They justify this by expanding their distribution channel.

According to Hokey, (1996) distribution channels and sales volume of a product in the local and

foreign markets are two factors that go together in pride. They are interwoven, for example, the

frustrated us policy maker and brine strategies have been crying foul for years over the

difficulties channel 1 often experience which are symbolic of much barrier which are hard to be

considered by westerner. This limits the performance of their products in the Japanese market.

In contrast to the US distribution channel which is open, independent and margin driven, the

Japanese distribution channel often characterized by a very complicated network of relation

driven middlemen who are interacting closely with fellow trade wholesale broker, importers and

retails (hokey 1996)

Sales volume is the number of sold units of sales in a certain period of time. Sales unit are

usually physical case, but in some other units which is basically product in shape of usual sale

pack. Evaluation of the likely impact on profit and sales of different trade offs between sales

volume and one or more profit factors such as price or cost of sale

2

1.2 Statement of the problem

The sale's volume had a significant reduction of about 20% (80%-60%) for the past two years

(2009-2011). Indicators of these decrease includes; a decrease in sales cycle length which

reduces the average sales cycle, reduction of the targets potential markets and the reduction in

buyers milestone, that is, the budget, the need, the people and time. These may lead to decline in

sale's volume of Bamburi cement resulting to a reduction in revenue earned and this can force

Bamburi Company to downsize. This low sales volume can be caused by poor quality, poor

brand image, and lack of awareness about the product, poor distribution system, lack of after

sale's services, and lack of customer satisfaction. In my study, I will concentrate on distribution

system as a major cause ofBamburi cement's low sales volume.

1.3 Purpose of the study.

The purpose of this study was to examine the effects of distribution cannels on the sale's volume

performance of product in local and foreign markets.

1.4 The objectives of study

1. To determine the profile of respondent in terms of age, gender, years of experience with

the company

2. To determine the degree of distribution channels utilized by Bamburi cement Naivaisha

Kenya

3. To determine the level of sales volume ofNaivaisha cement factory

3

4. To establish whether there is a significant relationship between the degree of distribution

between the degree of distribution channels and the level of sales of Bamburi Naivasha

cement factory Kenya.

1.5 Research question

1. What is the profile of respondent in terms of age, gender, years of experience with the

company?

2. What is the degree of distribution channel utilized by bamburi cement Naivaisha Kenya?

3. What is the level of sales volume ofNaivaisha cement factory?

4. What is the significant relationship between the degree of distribution channels and the

level of sales ofBamburi Naivasha cement factory Kenya?

1.6 Hypothesis

There is no significant relationship between distribution channels and sales of Bamburi Naivasha

cement factory

Geographical scope

The research was conducted in the Eastern part of Africa and will included the markets of Sudan,

Uganda, Rwanda and Burundi and study will cover the distribution channels that are in the

region especially the eastern Africa.

Context scope

The study covered the relationship between distribution channel and the sale's volume

performance of product in the local and foreign market. The research tried to examine the factors

4

that were affecting the nature of distribution channel chosen and the possible causes of sale's

volume product performance in different local and foreign market.

Time scope

Due to the large distance to be under study, the study will took at least six months from the date

of its approval

1.8 Significance of study

To the Governments

The study was to help the government to design the right measures that would make their

policies attainable like chapter cost o construction and the improvement o economic

development. This was palatable as the East African governments were or a long time working

on reducing cost of doing business which includes the construction cost.

Also the governments would be interested in knowing where there are, linkages in their tax

systems and the matters emanating from the skewenes of the channels.

This study was to help them identify these areas and if need be put forward the measures that

would see them not loss tax and other revenues in these manner.

To the researcher

The study was to form a basis or further study into the concept and in turn adding to work that

already is available.

5

Studies were to be assisted by this study and other researchers who will be interested in the

distribution channels and the sale's volume performance of the products in the local and foreign

markets.

To the employees and other stake holders in the industry

The employees were to use this research work to determine if their products are really reaching

the consumers or not. They were to be interested in knowing these as when their products reach

their targets, they would be able to predict continuity and a stable employment but if they find

that their products are not reaching their consumers, they would be able to gauge that they have a

short life at the company.

To the manager

This research was to help them evaluate the effectiveness of their efforts in the organization and

also see areas where they need to cut offthe costs so as to increase on the profitability

6

CHAPTER TWO

LITERATURE REVIEW

2.0. Introduction

In this chapter, the theoretical review, conceptual review and the relationship between

distribution channels and the sales volume.

2.1 The theoretical review

According to theory Pride and Farrel,(1989) a distribution channel of marketing in a group of

individual and organization that direct the flow of products from producers to consumers. He

further emphasizes that the consumers should be the ultimate drivers of all marketing channels

activities. Charles, (2004) Argue that a distribution channels is a business structure of

interdependent organization that reach from the point of product origin to the consumer with the

purpose of moving products to their final consumption destination. Me added that distribution

channel facilitate the physical movement of goods through the supply chain and encompassing

the process involved in getting the right product to the right place at the right time. Distribution

is one of the four aspects of marketing; a distribution business is the middlemen between

manufactures and the retailers or industrial consumers.

After a product is manufactured it's stored in company's warehouse, then the product is sold to

the retailers who sell it to the final consumers. The other three market mix elements are product,

price and promotion (http: //wikipedia.or index)._Daniels and Radebaugh, (2001) state that

distribution is the course, physical path or legal title that goods take between production and

consumption. A distribution channel is sometimes called a trade channel, is the route takes by the

7

title goods as they move from producer to the ultimate consumer or industrial user. A channel

will include the products as well as the agent and middlemen involved in the transfer title

(William 1971).

2.2 Conceptual review

Performance

Performance is normally reflected in terms of volumes which could be expressed in quantitative,

phys To establish whether there is a significant relationship between the degree of distribution

between the degree of distribution channels and the level of sales of Bamburi Naivasha cement

factory Kenya and this is a measure in total revenue produced or unit sold of the effectiveness of

the selling effort of the firm (www.marketing.organ.com/).

Local markets

These are markets as unit management, policy and organization as a guide to the major decisions

governing the growth of an enterprise of trade relations and development, and an environment

with institutions. these are markets within the mode

Foreign markets

Houssiaux, (1999) noted three essential conditions for the establishment of foreign markets as

unity management, policy and organization as a guide to the major decisions governing the

growth of an enterprise, global conceptual of trade relations and development, and an

environn1ent with institutions based on internationalism.

8

Distribution channels available

When a product is ready for the market, the next step in the market process is to determine what

methods and channels will be used to bring the products to the market. This involves establishing

policies and strategies including the selection of distribution channels and providing for physical

distribution and handling. Often there may be a chain of intermediaries each passing the product

down the chain to the next organization before it reaches the final user. This process is known as

the channel and each element at this channel will have their own special needs (Armstrong

1996).

Santon, (1971) Argue that for one to understand a channel, one should first understand that it is a

structure. A structure is an organism that has a dimension of length, breadth and depth. It has

shape and usually complex.It is organized to perform a certain duty. A distribution structure may

represent a choice an1ong alternatives channels of distribution or varying marketing situation

faced by different markets, which are a retailers, wholesalers, producer or agent within the

structures.

Kotler, (1995) says that distribution channels can be described by the number of level involved

He broke them down into direct and indirect channels of distribution. The direct distribution

channel is where there is no middlemen providing the services only the producer and the ultimate

consumer exists. It is mainly common with services providers and manufactures of perishable

products like fast food stores users direct channels (Zikmund and D'Amico 1992).

Direct channels are more efficient when buyers are large and well defined, selling requires

extensive negotiations in that for the product to be sold, and negotiations that go for a long

period are required. This does not allow for indirect channels since the negotiation are between

9

the producer and consumer. Price per unit is high and product is technical, the product is highly

perishable and many intermediaries are involved, the product may go bad before reaching the

final consumer hence inconveniences the flow of the channel. Indirect distribution channel

involves at least one intermediary who may either he a retailer, wholesalers and agent or

combination of all. Indirect channels are more commonly used and can be organized according

to the nature of goods and services, that is, consumer or industrial (Kotler and Armstrong 2002).

The following are some of the channels that can be used to reach the consumer:

Channel 1 is where the product moves directly from the producer or manufacturer to the

consumer without any intermediary involved.

Channel 2 is where there is one intermediary and that is the retailers who act as the link between

the producer and the consumer.

Channel 3 is where there are two intermediaries, the wholesaler and the retailers who act as the

link between the producer and the consumer.

Channel 4 is the one that has three intermediaries before the manufacturer wholesalers and

retailer product reaches the final consumers

Dual distribution

To be able to cover diverse markets, a distribution may use more intermediaries for a single

product. That is, movement of products through two more distribution channels to reach the

same target market. This enables a firm to maximize their coverage in the market place or

increase the cost effectiveness of its marketing efforts (Boone and Kurtz 1998).

10

According to Kerin and Berkowitz, (2003) the following factors will influence the time of

distribution channels that can be used: citizen attitudes towards owing their own store cost of

paying retail workers, labor legislation differential affecting chain stores and individually owned

stores trust the owners have in their employees, the efficiency of postal systems and financial

abilities to carry large inventories.

Importance of distribution channels

According to Zikmund and D'Amico, (1992) increasing level of competition, cost consciousness

brought on by the word and national economic development and consumer concerns with

efficiency in marketing are among the main research on why distribution has become increasing

imp01iant to organization in recent years. Kotler and Armstrong, (1996) Argue that distribution

channels play an important role 1 transforming the assortment of products made by producers

into the assortment wanted by consumers. Producers make narrow assortments of products in

large quantities, but consumers want broad assortment of products in small quantities. There in

distribution channels, middlemen buy the large quantities of many producers and breaks them

down into smaller quantities and broader assortments wanted by consumer hence matching

supply and demand.

Distribution channels are intermediaries that make selling of goods and services more efficient

because they minimize the number of sales contact to reach a target marker (Roger 2003). Boone

and Kurtz, (1998) views distribution channel as a way of standardizing exchange transaction by

selling expectation for products and the transfer process itself. Channel members tend to

standardize payment terms, delivery schedule, price and purchase lots. In recent years firms have

put the increasing emphasis on physical distribution activities, the major reasons is that physical

11

distribution expenses are quite sustainable in many industries, and therefore this costs highlights

the needs for the efficient distribution channels. Since distribution is the new major frontier of

cost cutting and much money saved in distribution, it therefore has a leverage effect on profit

(Baker 1985).

Kibera, (1996) views distribution channel as a middlemen and queues that economy except a

very primitive one, it is other economically feasible or convenient for produce to deal directly

with the ultimate consumer, distribution channel reduce the amount of work that must be done by

both producer and consumer

Selections of distribution channels

Global markets face many additional complexities in designing the channel of distribution. This

is due to the unique distribution system that evolved in each country over time and changes

slowly (Kotler 1996).Radebaugh and Daniels, (200 1) Argues that when the product performance

is slow, it is usually more economical for a company to handle distribution by contracting with

the external distributors. By doing this however the loss some amount of control, therefore

managers should asses periodically whether the product performance has grown to a level where

the company can handle distribution from within or not. Etzel, (200 1) says for a company to

reach prospective customers, it needs distribution channels that not only meet customers need but

also provide a differential advantage. To achieve this, the company has to design channels that

satisfy customer and outdo competition through such approaches as specifying the role of

distribution, selecting the type of channels, determining intensity of distribution and choosing

specific channel members.

12

Choosing one channel over another is a matter of making trade off aiming three factors, that is,

the number of outlets where the products is available, the cost of distribution, and the control of

the product as it moves through the pipeline to the final customer (Rachman 1993). The final

choice follows careful analysis of market, product, producer and competitive factors. All of these

factors have important and often interrelated effects. The overriding consideration however, is

where, when and how consumers choose to buy the goods and services. Consumer orientation

dominates channel decisions (http://www.apple.com/).

Factors to consider when selecting distribution channels

According to Kotler and Armstrong, (1995) for a product to perform well in local and foreign

markets, the following factors should be considered when choosing distribution channels. The

product characteristic that is, whether it is highly priced in terms of high technological

requirement or whether it requires complex after sales services. The company's objective for

example when is to realizes its main competitive edge in her distribution channels, it may

franchise abroad but also maintain its own distribution outlet to serve as a franchise.

In market characteristic, the geographical location and size of the market are important in

channel selection. As a role of a target market is concentrated in one or more specific area, then

direct selling tlu·ough sales force is appropriate. When the markets are more widely dispersed,

intermediaries would be less expensive (Charles 2004). Products that are more complex,

customized, and expensive tend to benefit from shorter and more direct marketing channel s.

Product life cycle is also an important factor in choosing a market channel. The choice of a

channel may change over the life of a product. Another factor is the delivery of a product;

perishable products have relatively a fairly short distribution channels (Michael2001).

13

Several factors pertaining to the producer itself are important to the selection of a distribution

channel. Producer with large financial, managerial and marketing source are better able to use

more direct channels. On the other hand smaller weaker firms must rely on intermediaries to

provide these services for them. Furthermore the producer must consider how well an

intermediary performs the marketing function. A producer may become less competitive when

an intermediary fails to adequately promote the firms products. Producers that offer a broad

product line have the financial and marketing resources to distribute and promote their products

are more likely to use a shorter channel of distribution. This is because a firm can conduct

marketing research studies to maintain its own network of distribution centers (Boone and Kurtz

1990)

Baker, (1995) Argues that fundamentally the channel decision reqmres resolution of often

conflicting forces or cost and control. Cost is readily understood though it is sometimes difficult

to qualify and several aspect of control has already been stated. However the concept of control

must be broader to recognize the fact that a firm's ability to exercise control is a function of its

competitive strength over other channel members. It is thus usual to find that one channel

member of distribution dominates and is regarded as the locus of channel control. In the final

analysis however, the determining fate is the economic advantage, that is how channel members

can perform at the lowest cost is essential in selecting the channel since the lower the cost the

greater the profitability.

Sale's volume of products in local and foreign markets

Performance of a product is usually reflected in the sales volume of the products in a particular

period of time. For a product to perform well it must keep up the trend in the market so as to

14

perform better in today's competitive market. Firms should therefore stay ahead of the

competition by use appropriate technology since buyers are impractical. Firms could base their

performance forecast on individual territory then the company adds up the individual estimates

to arrival at an overall forecast and eventually this enables the firm to known the rough estimate

for the product sales volume expected in a certain period ( Kotler and Armstrong 1999).

For a company to achieve its objective good product performance, it has to make near accurate

and effective forecast. Product performance forecast is the process of organizing and analyzing

information in a way that make its possible to estimate what you performance will be

(www.cbscong/serviet ).

In order to increase the performance of a product firms should provide incentives to their

distribution forces to enhance their efforts. This can be through distributor meeting that's

provides social occasions channel to meet and talk with top management. Other incentive could

be bonus; cash reward for a firm to register positive product performance, a commentary should

ensure the above mentioned factors (modern 1993).

Factors affecting sale's volume product

According to Fuhrman, (1986) communication is the glue that holds the working relationships

together. Effective communication between the manufactures and the distributor not only

provide direction but also facilitate efficient allocation and management of resource in the

channel. Without this sharing of information, the relationship is prone to high levels of

unce1iainties and conflict which is bound to hinder products performance.

15

Most production organizations have defined a products strategy that will differentiate them

through the strength of the production personnel with business performance with the customer.

They believe this strategy will give them a sustainable distinct competitive advantage in this

unpredictable business environment (Kibera 1996).

Kotler (1998) asserts that for a firm to achieve its performance forecast for the expected level of

firm's performance based on chosen marketing plan and an assumed marketing environment, this

forecast becomes a basis for production planning, workforce size as well as financial

requirements.

2.3 Relationship between distribution channel and sale's volume of a product

Daniels and Radebaugh, (200 1) Argues that a company may accurately assess market potential,

design goods and services for that market, price them appropriately and promote to potential

consumers, however it have little likelihood of reaching to its performance potential if it does not

make the product conveniently available to the customer, to achieve this it can be done by

choosing appropriate and effective distribution policies. The major objectives of distribution

channels are to reduce cost while increasing customer services. This customer services is very

important because customers are ultimately the source of all profits. Physical distribution is a

vital element in the performance of a product the efficient the system the more a product

performs well (Pride and Farrel 1989).

Physical distribution accounts for about half of all market cost and have a significance effect on

consumer satisfaction; therefore effective markets are effectively involved in the design and

control of distribution systems (http: //www.awmanet.org/). Adequate distribution channels

increase the efficiency of transactions, which generate customer value. Di stribution channels

16

minimize stocks outs and thereby using customer perceived value of the product which adds to

customer satisfaction. Hence the organization that offers effective distribution is bound to have

its products perform well. Adequate distribution channels also imply a wide coverage of the

market hence the product will be carried by many outlets implying increased products

performance (kotler and Armstrong 2001 ). Stem and El-ansery, (1992) recognize that only

market channels satisfy demand by supplying goods and services at right place, quantity and

price but also stimulate demand through promotional activities of the units constituting them.

This leads to increased market share, sales growth and consequently profitability.

Distribution channels also smoothens the flow of goods and services by creating possessive and

time utilities. This helps in bridging the discrepancies between assorted products demanded by

the customer (kotler &Armstrong, 2005). Effective distribution channels are important in

realizing the performance of a product. However, increasing performance through ensuring

adequate distribution channels increases cost, conversely, and inadequate distribution may lower

the level of customer service hence low performance. This requires appropriate guidelines in the

foreign markets to achieve critical balance between cost and level of customer service (Rose

2005).

1.8 Conceptual frame work

INDEPENDENT VARIABLE DEPENDENT VARIABLE

Efficiency of Distribution channel Sale's volume

• people • Local sales • firms • Foreign sales • producer

17

3.0. Introduction

CHAPTER THREE

METHODOLOGY

This chapter dealt with the research design, sampling procedures which included simple random

and purposive sampling, sample size, method of data collection which include interviews and

questionnaires, research procedures and the method of data analysis.

3.1. Research design

This study adopted a descriptive correlational survey design. The researcher seeks to establish

significant problems. This was done by collecting information about the factors that influence the

sale's volume performance of product in local and foreign market. The research constructed

questions that were to solicit the desired information and identify the respondents to be surveyed.

The researcher was identified by the means by which the survey was to be conducted and

summarize the data in a way that provided the designed descriptive information. The study

involved the managers from Bamburi Cement Kenya that channel their products to local and

foreign market.

3.2. Study population

The study population will be 138 respondents. Which will come from various departments for

instance marketing depmiment with employees, human resource department with employees,

finance department with employees, accounting department with employees and employees for

ordinary job. Simple random sampling was used to select respondents from the selected

depmiments. This was attributed to the simplicity of the method to determine sampling size for it

18

gave the respondents an equal chance of being selected therefore minimizing the biasness in the

research.

3.3 Sampling size

The study from various departments will include the following employee's for instance

marketing department with 30 employees, human resource department with 20 employees,

finance department with 10 employees, accounting department with 8 employees and 70

employees for ordinary job.

Marketing Human resource Finance department Accounting Ordinary jobs

department department department

30 20 10 8 70

3.5. Data type

Data collection will be from two main sources: primary and secondary. Secondary included

relevant documents and reports.

Secondary data was collected by reviewing available literature/publication in relation to the

topic of study which supports the dependant variable. The research employed the techniques to

pick information that is available from these reports. The research will be conducted from the

books, the past record of bamburi cement

Primary source was to include data collected from selected respondents. Primary data was to be

gathered using the following instruments. The structured questionnaire was administered to

enable the researcher analyze the effects of distribution channel on foreign markets success.

19

3.6. Data collection instrument

3.6.1. Questionnaire

The semi structured questionnaire was the main instrument of the study to be administered to the

staff of the selected firm. This method was preferred because of its ( 1999). Both open and closed

ended questionnaire was administered, this is because closed ended questionnaire were easier to

analyze since they were in an immediate usable forms and again each item is followed by

alternative answers. Open ended questionnaire permitted a great depth of response, when a

respondent were allowed to give a personal response, usually reasons for the response given was

to be directly or indirectly included. They were also simpler to formulate mainly because the

researcher did not have to labor to come up with appropriate response categories.

3.6.2. Interview

Interviews will be administered to the management of the firm concernmg the impacts of

distribution channels on sale's volume of products in local and foreign markets. Structured

interviews will be designed in such a way that more specific and truthful answers that relate the

topic are got. Interviews have been preferred because according to Gupta (1999), they give an

opportunity to probe detailed information on an issue. Interviews will make it possible to obtain

data required to meet specific objectives of the study. Interviews were more flexible than

questionnaire because the interview could adapt to the situation and get as much information as

possible.

20

3.8. Data analysis

The data will be analyzed using frequencies and percentages distributions for profile of '· r .

responderiis·\~ terms of. age, gender and years of experience with the company. Means and

standarq deviation to determine the degree of distribution channels utilized by Barnburi Cement ~·· .. ,, ,.

NaivasHa Kenya and to determine the levels of sales volume of Naivasha Cement factory.

Pearsons linear correlation coefficient to establish whether there is a significant relationship

between the degree of distribution between the degree of distribution channels and the level of

sales ofBamburi Naivasha cement factory Kenya

3.9. Limitation of study

The supply producers used may easily be dismissed for proving survey which is extreme. Also

the researcher experienced a problem with questionnaire in that the respondents were difficult to

categorize and hence difficulty to analyze. Questionnaire was also difficult where the

respondents failed to avail themselves to give the researcher the information and in the filling of

the questionnaire, claiming to be busy.

The scope also limited the researcher in getting information from respondents during time of

interviews and filling in the questionnaires as the responded always claimed that the questions

were outside their powers.

The researcher overcome this limitation by using intensive sampling that is sampling involving

selection of cases that manifest the phenomenon of interest intensely but not extremely.

21

.,

4.0 Introduction

CHAPTER FOUR

RESEARCH FINDINGS

This chapter presents the finding of the study which investigated on channel distribution and

sales volume by Babumuri cement Naivasha Kenya. There are three different sections; the first

section describes the profile characterises of respondents. The third section presents level of sales

volume at local level and at the foreign markets

4.1 Profile characteristics of respondents.

Respondent were described according to age, gender and number of years spent in the company.

Respondents were asked through a closed ended questionnaire to provide information on through

a closed ended questionnaire to provide information on their profile characteristics and their

responses were summarized using frequencies and percentages as indicated

22

Table 4.1 Profile of respondents

Age frequency Percentages

Below 20 15 11

20- 35 75 54

40-49 40 29

60-above 8 6

Total 138 100

Age frequency Percentages

Males 89 65

Females 49 36

Totals 138 100

Number of years spent frequency Percentages

Below 5 22 16

5-9 years 66 48

lOand above 50 36

Total 138 100

Results in table 4.1 indicate that regarding age, most respondents were in the age bracket of 20-

39 years (54%) and these were followed by 40- 49 years (29%) and these were followed by age

below 20 years while those above 60 and above were few (6%).this indicates that most

employees are middle adult age and this will help to get good results

This table also shows that most respondents(65%) are male while female were only (36%).this

indicates that there is gender imbalance in the employees of Bamburi cement Naivasha Kenya

23

and this may be due to nature of work, education gaps between men and women and other

factors .

It is also indicated in the table number of year spent in the company, results indicates that most

employees have worked between 5 -9 years(48%),who gave us sufficient information about my

research since they are familiar with all activities in the company , followed by 10 and above

years 36% and finally below 5 years (16%)

4.2 Distribution channels utilized by Bamburi cement Naivasha Kenya

The second objective of this study was to determine the degree of distribution channels utilized

by bamburi cement, for which 1 0 different questions were asked in the questionnaire in trying to

achieve this objective in each of the 13 questions respondents were asked to indicate the extent

or degree to which each of the channels is utilized in each item. All items were carefully

selected for each answer , 1 very rarely or not at al1,2 rarely utilized,3 fairly utilized, 4 frequently

used,5 very frequently used. Respondents were asked to tick the alternative that describes best

feelings and perceptions. Their answers were summarized using frequencies, percentages and

means as indicated in table 4.2.

24

Table 4.2 distribution cannels utilized by bamburi cement Naivasha Kenya

Distribution channels VRU RU FU FRU VFU MEAN

utilized

1 Own outlets 00 00 20(15) 39(28) 79(57) 27.6

2 Retailers 00 00 20(15) 49(36) 69(50) 27.6

3 Wholesalers 00 9(7) 59(43) 40(29) 30(22) 27.6

4 Manufacturers 00 00 00 00 00 00

5 Suppliers 00 00 00 00 00 00

6 Private individuals 00 13(9) 125(91) 00 00 27.6

7 Registered firms 00 13(10) 125(90) 00 00 27.6

8 Own marketers 00 00 00 18(13) 120(87) 27.6

9 Local agents 00 00 00 8(6) 130(94) 27.6

10 Foreign agents 00 00 00 38(28) 1 00(76) 27.6

totals 220 .8

Legend

1. VRU = very rarely or not utilized at all

2. RU = rarely utilized

3. FU =fairly utilized

4. FRU =frequently utilized

5. VRU =very frequently used

Figures in bracket refer to percentage

According to table 4.2, regarding distribution channel utilized through own outlets, majority

rated it was very frequently utilized with 79(57), 39(28) was rated as very frequently utilized,

and fewer 20(15) rated own outlet was fairly utilized. own outlet was not utilized at all neither it

was rarely utilized since none rated it with mean of 27.6 .regarding distribution through retailers

majority indicated was very frequently utilized with 69(50), 49(36) was rated as very frequently

25

utilized, and fewer 20(15) rated own outlet was fairly utilized with 27 .6. Distribution through

retailers was not utilized at all neither it was rarely utilized since none rated it. Regarding

distribution through wholesalers majority indicated it was fairly utilized with 59(43), most

indicated it was frequently utilized with 40(29), fewer with 30(22) frequently utilized ,less9(7)

rated it was rarely utilized and none rated it was very rarely utilized with mean of27 .6 .none

indicated distribution through manufacturer and suppliers were utilized. Regarding distribution

through private individual majority 125(91) indicated it was fairly utilized, fewer 13 (9)

indicated that it was rarely utilized, none indicated that it was very frequently utilized, frequently

utilized and very frequently utilized with a mean of 27.6. Regarding distribution through

registered firms majority 125(90) indicated it was fairly utilized, fewer 13(10) indicated that it

was rarely utilized; none indicated that it was very frequently utilized, frequently utilized and

very frequently utilized with a mean of 27.6. Regarding distribution through own marketers

majority 120(87) rated it was very frequently utilized, fewer 18(13) rated it was frequently

utilized and none rate it was fairly utilized, rarely utilized and very rarely utilized with mean of

27.6. Regarding distribution through local agent majority 130(94) rated it was very frequently

utilized, fewer 8(6) rated it was frequently utilized and none rate it was fairly utilized, rarely

utilized and very rarely utilized with mean of27.6. Regarding distribution through foreign agents

majority 100(76) rated it was very frequently utilized, fewer 38(28) rated it was frequently

utilized and none rate it was fairly utilized, rarely utilized and very rarely utilized with mean of

27.6

26

4.3 Level of sales volume at local market and foreign markets

VLS L M H VH MEAN

1 Daily sales 00 00 20(14) 87(63) 31(23) 27.6

2 Weeldy sales 00 00 19(14) 90(65) 29(21) 27.6

" Monthly sales 00 00 18(13) 91(66) 29(21) 27.6 .)

4 Annual sales 00 00 39(28) 79(57) 20()15 27.6

5 Level of company gross profits 00 00 39(28) 89(65) 10(9) 27.6

6 Rate of company turn over 00 00 13(9) 95(69) 30(22) 27.6

7 Level of company net profit 00 5(4) 43(31) 75(54) 15(11) 27.6

8 Sales volume in the central region 5(4) 6(4) 10(9) 79(54) 45(29) 29.0

9 Sales volume in the eastern 00 10(9) 45(29) 43(31) 5(4) 20.6

regiOn

10 Sales volume m the northern 20(15) 25(18) 45(29) 43(31) 5(4) 27.6

regiOn

11 Sales volume m the southern 6(4) 36(26) 43(31) 45(29) 9(10) 27.8

region

TOTAL 298.2

FOREIGN MARKETS

1 Daily sales 00 14(1 0) 20(14) 56( 41) 48(35) 27.6

2 Weekly sales 5(4) 16(12) 22(16) 62(45) 35(25) 28

" Monthly sales 6(4) 18(13) 25(18) 52(38) 37(27) 27.6 .)

4 Annual sales 2(2) 4(3) 35(40) 45(29) 32(28) 23.6

5 Sales volume in Uganda 00 3(2) 30(22) 65(47) 40(29) 27.6

6 Sales volume in Congo 00 00 33(24) 40(29) 65(47) 27.6

7 Sales volume in Tanzania 10(9) 20(12) 65(47) 40(29) 3(2) 27.6

9 Sales volume in Rwanda 20(15) 25(18) 45(29) 43(31) 5(4) 27.6

10 Sales volume in Burundi 6(4) 36(26) 43(31) 45(29) 9(10) 27.8

I Total

I I 1272.6 I

I

27

Legend

1. VLS = very low sales

2. L =low

3. M =moderate

4. H =high

5. VH =Very high

6. Figures in bracket refer to percentage

Regarding sales volume in the northern region majority indicated it was high with 45(29), more

43 (31) it was moderate, few 36(26) it was low, fewer 9(10) it was very high and less6 (4) with

overall mean 27.8

Regarding sale volume at through weekly sales majority indicated it was high with 90(65),more

29(21) it was very high, fewer 19(14) it was moderate and none indicated that it was low and

very low sales with overall mean 27.6. Regarding sale volume at through monthly sales majority

indicated it was high with 91 ( 66), more 29(21) it was very high, fewer 18( 13) it was moderate

and none indicated that it was low and very low sales with overall mean 27.6. Regarding sale

volume at through annual sales majority indicated it was high with 79(57), more 39(28) it was

moderate, fewer 20(15) it was very high and none indicated that it was low and very low sales

with overall mean 27.6. Regarding sales volume through level of company gross profits majority

indicated it was high with 89(65), more 39(28) it was moderate, fewer 1 0(9) it was very high

and none indicated that it was low and very low sales with overall mean 27.6. Regarding sales

volume through rate of company turn over majority indicated it was high with 95(69), more

30(22) it was very high, fewer 13(9) it was moderate and none indicated that it was low and very

28

low sales with overall mean 27.6. Regarding sales volume through level of company net profit

majority indicated it was high with 75(54), more 43(31) it was moderate, fewer 15(11) it was

very high, less5 (4) it was low and none indicated that it was very low with overall mean 29.0

.Regarding sales volume in the central region majority indicated it was high with 79(54), more

45291) it was very high, few 1 0(9) it was moderate, fewer 6 ( 4) it was low and less 5( 4) was very

low with overall mean 20.6 .Regarding sales volume in the eastern region majority indicated it

was moderate with 45(31 ), more 43 (31) it was moderate, few 1 0(9) it was low, less 5 ( 4) it was

very high and none indicated it was very low with overall mean 20.6 .Regarding sales volume in

the northern region majority indicated it was moderate with 45(29), more 43 (31) it was high,

few 25(18) it was low, fewer 20(15) it was very low and less5 (4) with overall mean 27 .6.

Regarding sales volume in the southern region majority indicated it was high with 45(29), more

43 (31) it was moderate, few 36(26) it was low, fewer 9(10) it was very high and less6 (4) with

overall mean 27.8

Also according to table 4.3 regarding sales volume at foreign market through daily sales majority

indicated it was high with 56(41), more 48 (35) it was very high, few 20(14) it was moderate,

fewer 14(1 0) it was very high and none indicated that it was low, with overall mean

27.6.Regarding weekly sales majority indicated it was high with 62(45), more 35 (25) it was very

high, few 22(16) it was moderate, fewer 16(12) it was low and less 5(4)indicated it was low, with

overall mean 28 . Regarding monthly sales majority indicated it was high with 52(38), more 37

(27) it was very high, few 25(18) it was moderate, fewer 18(13) it was low and less 6(4)

indicated it was very low, with overall mean 27.6 .. Regarding annual sales majority indicated it

was high with 45(29), more 35( 40) it was moderate, few 32(28) it was very high, fewer 3( 4) it

was low and less 2(2)indicated it was very low, with overall mean 23.6 Regarding sales volume

29

in Uganda majority indicated it was high with 65(47), more 40(29) it was very high, few 35(40)

it was moderate, fewer 3(2) it was low and none indicated it was very low, with overall mean

27.6. Regarding sales volume in Congo majority indicated it was very high with 65(47), more

40(29) it was high, few 33(24) it was moderate and none indicated it was low and very low, with

overall mean 27.6.Regarding sales volume in Tanzania majority indicated it was moderate with

65(47), more 40(29) it was high, few 20(12) it was low, fewer 10(9) it was low and less 3(2)

indicated it was very high, with overall mean 27.6. Regarding sales volume in Rwanda majority

indicated it was moderate with 45(29), more 43(32) it was high, few 25(18) it was low, fewer

20(15) it was very low and less 5(4) indicated it was very low, with overall mean 27.6 Regarding

sales volume in Burundi majority indicated it was high with 45(29), more 43(31) it was

moderate, few 36(26) it was low, fewer 9(10) it was very high and less 6(4) indicated it was very

low, with overall mean 27.8

The relationship between distribution channel and sales volume at local market and

foreign bamburi cement Naivasha Kenya

The researcher 4th objective was to establish whether there is a significant relationship between

the degree of distribution channels and sales volume at local market and foreign markets

Bamburi Naivasha cement factory Kenya, for which the researcher stated null hypothesis that

there is no strong relationship between distribution channel and sales volume at Bamburi cement.

To achieve this objective and to answer this hypothesis ,the researcher correlated the means for

distribution channel in table4.2 and the means of level of sales volume in local market and

foreign markets in table 4.3,using the Pearson's correlation coefficient(r).results of this analysis

are summarized in table 4.4 below;

30

Table 4.4 relationship between distribution channel and sales volume at local market and

foreign

Variables Mean R-value Sig. value

Distribution chmmel 220.8 0.997 0.000

Sales volume 285

Results in table 4.4 indicate that there is a positive significant relationship between distribution

channel and sales volume at local market and foreign Bamburi cement and this indicate by a

positive person's coefficient (r- value) of0.997and a significant value O.OOO.these results led to a

conclusion that distribution channel affects sales volume at local market and foreign markets as it

was in the case for Bamburi cement Naivasha. Also, basing on these results, the researcher

rejected the null hypothesis and accepted the alternative hypothesis that there is a significant

relationship between distribution chmmel and sales volume at local market and foreign for the

case of Bamburi cement Naivasha Kenya. The null was rejected because the sig. value of 0.000

was far lower than the minimum sig .value of 0.05,which the acceptable level of significance in

social science for researchers to reject the null hypothesis.

31

CHAPTER FIVE

SUMMARY, CONCLUTIONS AND RECOMMENDATIONS

5.0 Introduction

This chapter shows the summary of study findings, conclusion and recommendations to the local

community as well as the government and other stakeholders on how to empower women and

reduce poverty among them.

5.1 Summary of the findings

This study set out to determine the relationship between channel distribution and sales volume

using Bamburi cement as a case study. It was guided by four objectives which included

determining the l.To determine the profile of respondent in terms of age, gender, years of

experience with the company2.To determine the degree of distribution channels utilized by

Bamburi cement Naivaisha Kenya3.To determine the level of sales volume ofNaivaisha cement

factory4.To establish whether there is a significant relationship between the degree of

distribution between the degree of distribution channels and the level of sales of Bamburi

Naivasha cement factory Kenya.

Results using frequencies and means showed that 1. The degree of distribution channel utilized

was very frequently utilized having equal mean 27.6.the most distribution channel used in

Bamburi are own outlets 57% very frequently utilized and 15% fairly utilized, retailers, where

50% very frequently utilized and 36% frequently utilized, wholesalers where 43% fairly utilized

and 22% very frequently utilized, however both wholesalers and manufacturers were not utilized

at all. However, results showed private individuals 91% fairly utilized and 9% rarely utilized.

The san1e applied to registered firms 90% fairly utilized and 13% rarely utilized. Also own

marketers 87% very frequently utilized and 13% frequently utilized. The same applied to local

32

agent 94% very frequently utilized and 6% frequently utilized. Also the same applied to foreign

agent 76% very frequently utilized and 28% frequently utilized.

Bamburi cement distribution channel was rated frequently utilized and this indicated by the total

response 298 which falls under fairly utilized fairly utilized and very frequently utilized on

answering scale. ii regarding level of sales at local market Bamburi cement was rated as a high

volume sales in most item for example daily sales (mean 27.6),annual sales (mean27.6),sales

volume in the northern region (mean 27.6).however Bamburi cement was rated with high sales

volume with (overall mean 298)

Also regarding level of sales at foreign market Bamburi cement was rated having high level sales

volume on most items (mean 27.6) for example Bamburi cement daily sales (mean

27.6)'monthly sales(mean27.6)sales volume in Uganda(27.6),sales volume in Burundi (mean

27.8) and weekly(mean 28).however sales volume in foreign markets of Bamburi cement was

rated moderate with annual sales(mean23.6).on the overall sales volume both local and foreign

markets was rated high (overall mean 285)

IiiOfinally results indicated that there is a positive significance relationship between distribution

channel and sales

5.2 Conclusion

volume in Bamburi cement (R=0.998, sig =0.000)

Basing on the findings of the study, the researcher concluded that distribution channel of

Bamburi cement is frequently utilized own outlets, retailers, wholesalers, private individuals,

registered firms, own marketers, local agents and foreign agents. However manufacturers and

suppliers were not utilized at all.

33

Regarding sales volume at local market, Bamburi cement has high volume of sales, daily sales,

mmual sales, and in northern region. On the hand Bamburi cement has low sales volume in

Eastern region.

Regarding sales volume at foreign markets Bamburi cement has high level volume of sales,

daily sales, weekly sales, monthly sales, sales volume in Uganda, Burundi on the other hand

Bamburi has moderate sales volume; annual sales.

5.3RECOMMENDATIONS

Basing on the finding is of the study, the researcher recommends that Bamburi cement is to

improve on channel distribution and help to achieve its vision, mission, goals and objectives.

The following should be done;

Bamburi cement should utilize its distribution channel thoroughly so as to enable it distribute its

product on time and help the organization achieve its vision, mission and objectives. It should

also offer extended help in making product reach the consumers doorstep and also at the lowest

possible cost. Availability of the product to the consumer when they need it is very crucial to the

increase of sales volume Bamburi cement factory.

Bamburi cement should try to come up with initiatives in which they can start helping people

with economic problems. These may include putting up income generating projects and giving

interest free loans to individuals who should mobilized into groups.

34

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36

Questionnaire

Section A PROFILE QUESTIONS

1. AGE ; below 20, 20- 35, 40- 49, 60 and above

2. Gender; maleLJ female LJ

3. Number of years spent in the company

Below 5 5-9 10 and above

Section B

Distribution channels utilized by Bamburi cement Naivasha Kenya

Please rate the extent or degree to which each of the channels is utilized by your company.

Your answer will rage between

1. =very rarely or not utilized at all

2. = rarely utilized

3. =fairly utilized

4. =frequently utilized

5. =very frequently used

37

1

2

3

4

5

6

7

8

9

10

Please according to the rate o degree to which charmels is utilized by your

company

Own outlets 1 2 3 4 5

Retailers 1 2 3 4 5

Whole salers 1 2 3 4 5

Manufacturers 1 2 3 4 5

Supplies 1 2 3 4 5

Private individuals 1 2 3 4 5

Registered firms 1 2 3 4 5

Own marketers 1 2 3 4 5

Local agents 1 2 3 4 5

Foreign agents 1 2 3 4 5

38