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THE ROLE OF MIDDLEMEN IN CHANNELS OF DISTRIBUTION

ABSTRACT

This project work is titled “the role of middlemen in channels of distribution” a case study of Nigerian Brewery, Enugu. An important element in the marketing made of any firm is the system of marketing channels through which products and services are distributed to their ultimate consumers and services or final user.  A marketing channel is a loosely connected system comprising of manufacturer, middlemen and the ultimate consumers.  Wholesalers and retailers are the functional middlemen for manufacturers. The researcher described the problem under study and the relative importance of the study.  There are also the definitions of channel of distribution and that of middlemen who are involved in the distribution of goods and services to their place of use.  It is seen here that taking channel decision is very vital to a firm and to some extent determines the success of a product in its lifetime.  Types of middlemen were also discussed in the distribution system. The research work also listed the functions of middlemen their importance in Nigeria and the problems of middlemen in the Nigeria economy. The methodology for this research work is the use of secondary data such as textbooks, journals, and informal discussion with informed people. Important findings were singled out to enable conclusions to be drawn, that since the middlemen operate in the channels distribution, the public has always view them with some suspicion e.g. that most of the goods they pray for carry marketing cost instead of production cost which is being caused by the middlemen. In the light of the recommendations were made, that is, instead of the middlemen to be eliminated from the channels of distribution their functions should be improved.  However, it is the researchers hope that of the recommendation made are properly implemented the consumer will have a smile on their faces.

CHAPTER   ONE

INTRODUCTION

1.1  BACKGROUND TO THE STUDY

A product may be the best in the world, but it will be of little use to the consumer of it is not where they wants it.  This is concerned with the place where the consumer can acquire it and time utility function when the need arises. Distribution is the flow of goods from producer to the ultimate user through channels that are made up of middlemen. Distribution of goods and services has been an important aspect of marketing in our lives.  Though, in the past, the usefulness was not immediately recognized. Distribution is more than a series of channels between production and consumption.  It provides a force, a pump in addition to the part along which goods flow. Distribution in the 90’s is the most important link for getting goods and services from the producer to the ultimate consumer.  Even with a soaring inflationary period, which may break all records in the short history of Nigeria, distribution still is vital to the continued existence of business.

In the olden days when barter was prominent, producers conducted the locater transaction (exchanging goods for goods) and other thing rather than for currently themselves, not utilizing middlemen. When demand increase, producers found out that they did not have enough time, energy and the expertise needed for effective selling.  Furthermore, producers increased levels of output enquired that they direct more attention to the production process.  At this point, retailers (a type of middlemen) came into existence. Producers and middlemen found barter of goods most accept other goods as payment and the “other” goods may not fit the seller needs. As the economy continued to advance, retailers began to specialize, some for instance offer goods and other, clothing, in addition, wholesaler (another type of middlemen) emerge to meet the retailers need to draw from a large number of producer.  This was how middlemen came into the scene as links between producers and consumers.  As time went on, there was the need to have agents, distributors, brokers etc., springing from the march roof of wholesalers to be recognized as independent, entering the channel of distribution.

The Nigeria Brewery Limited mentions glory as one of the oldest breweries in the country.  It was formed in 1946 with the commissioning of its Lagos branch.  Nigerian and some foreigners own it.  Before the indigenisation policy precisely, there are 40% Nigeria equity participation.  After the indigenization policy precisely in 1978 it raise to 60% equity participation.  This represents about 35,143,843 shares out of the total issued and fully paid shares of 58,560,000 at 50k each. Nigerian Breweries Limited has a total labour force of about 9,700 but that of 9th Mile Corner, Udi branch, has about 500 labour forces.  One of the major features of Nigeria Breweries Limited, 9th Mile Corner, Udi Branch is that it is the smallest of all the plants NBL while it is the biggest in comparison with the competitors in the State.

1.2   STATEMENT OF THE PROBLEM

The first step in channel selection is market definition that might by what and where are they? The answer can be elusome.  It is also essential. 

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