DISTRIBUTION CHANNELS AND SALE'S VOLUME OF BAMBURI …
Transcript of DISTRIBUTION CHANNELS AND SALE'S VOLUME OF BAMBURI …
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. .... ......... . ..
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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.
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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
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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).
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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
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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.
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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).
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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
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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.
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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
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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
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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
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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.
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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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(hp//. business.corn./)
(hp en. ikipedia.org/index./)
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(http :1/www. arnnet. corn.)
(http ://www.apple.corni!)
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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