Marketing strategy of vegetable distribution system
This research paper examines the overall marketing strategy of a consumer product of vegetable distribution system. More specifically, this study addresses the marketing strategy of Colombo district. This paper will deeply analyze the effectiveness of the vegetable distribution system and customer satisfaction on that and also the success and failure of the system. The research will carry out by way of self completed questionnaire to identify the households’ attitudes on vegetable distribution system and awareness on that. Other than households’ responses, an interview will carry out data will analyzed by giving high concentration to the prevailing practical situations and thereby the conclusions will carry on.
In the current modern world marketing touches all of us every day of our lives. This marketing system facilitates the traditional exchange systems and also provide us high standard of living consists of many large and small companies, where all looking for success. Therefore to emphasize the significance of marketing in this present era is important. The specific research study is also based on the marketing aspect, which is analyzing the vegetable distribution system in a specific area. This paper especially analyzes the current distribution system in Colombo district using the relevant theory and current news. Also I am interested in evaluating customer satisfaction on that system. Through this study I can find the cost effectiveness in this study and also I can find out the success or failure on the distribution system. So that it will help to find the solution for the problem it means we can find the reason for the failure so it will help to find the solution for the failure and we can recommend the best strategy.
1.2 Background of the Study
1.2.1 Vegetable Distribution System in Sri Lanka
The conservative Vegetable Distribution system in Sri Lanka is having High public sector involvement, Markets were stagnate and less dynamic, Low or no processing (no value addition), High price instability Long supply chains with little integration, High wastage, Low accountability in the system, Large number of supply chain partners, operating independently, High market uncertainties at both producer consumer ends. The Emergence of a new demand and responsive supply Chain increases the competition the reason for the Changes Includes Rapidly growing urban population, rising income levels, changing socio-cultural environment, Changing taste and preferences, Explosive growth in information/communication capacity, High level of coordination/ integration of stakeholders and business orientation in the marketing system.
1.2.2 Vegetable Distribution System in Colombo
For Vegetables to reach the Colombo consumer it must pass through many hands and often through a number of channels. Several participants are involved in a variety of marketing, negotiation and organizational systems. Each of these participants has their own need for infrastructure, services and legislative and regulatory support. The Main Components of vegetable Distribution Systems in Colombo district is vegetable comes into cities utilizing a variety of transport modes such as head loads, hand and animal drawn carts, small vehicles, large trucks, trains, and river and seagoing vessels. All these modes need to be accommodated in terms of facilities and access. Then vegetable is usually distributed to one or a number of wholesale markets. Other thing is from the wholesale markets the vegetable is distributed to a variety of retail outlets such as retail food markets, local food shops, and modern supermarkets. It can be seen in the Following diagram.
Commission agent at the Colombo wholesale
1.3 Objectives of the Study
Objectives of this Investigation are,
To evaluate the performance effectiveness of the Retail Shop (in terms of customer satisfaction, Reasonable Price, Freshness and Quality product availability, Located in convenience Place, method of collecting information and transferring)
To discover the cost effectiveness in Distributing Vegetables.
To identify the reasons for success and failure of performance of Distribution system.
Identifying (Marketing Strategies) Solutions for the problems identified during the investigation.
1.4 Research Question
My research question is the Empirical Study on Vegetable Distribution System in around Colombo Metropolitan Area. I select this topic because I’m very much interested in marketing area. This study will give the knowledge of the current vegetable distribution system in Colombo and how effective this system for the consumer. In Sri Lanka vegetable is a main food used in the day to day life. It has the high demand comparing to the other product. So it is important to know the system of vegetable distribution. Sri Lanka is a developing country many people are not affordable to buy high price products but it is not the issue in Sri Lanka but also most of the country. People are looking for high quality product with lower price. Effective distribution system can provide the people high quality product with low price. Distribution system means how the product make available for the people. It is very much important to know about the marketing channel because various channels used to distribute the product to the consumer. Vegetable are transformed from the farmer to wholesaler and wholesaler to retailer and retailer to consumer. It is important for the marketing channel how ability to deliver the vegetables quickly to the consumer with the lower cost.
The city of Colombo in Sri Lanka does not have dedicated wholesale markets for products with the existing three markets for grains, fruits and vegetables and fish conducting both wholesale and retail trading. Although originally recognized as wholesale markets the incorporation of retail actions due to inadequate planning of retail markets has meant that the markets are now highly congested and the whole area around and inside the markets is severely affected by traffic congestion during the morning hours. Buyers frequently spend over two hours in the market to purchase. Maintenance of greatly used facilities is difficult and the inadequate drainage has resulted in flooding and damage to road surfaces. Sri Lanka has an international trade deficit in vegetables, mainly because of high imports of onion and chilies from India. The country could save much foreign exchange by encouraging domestic production of vegetables. For this, however, a systematic effort would be required to identify the vegetables most suited for production in Sri Lanka, and to identify barriers limiting their cultivation. More transport facilities will be needed for bringing production to wholesale areas and then to retail markets. This movement will result an increasing traffic congestion and pollution. Higher transportation costs, a main component of food prices, will contribute to increasing food prices for the metropolitan poor.
I am interested to identify how effective the distribution system for vegetable in Colombo area currently. How they are satisfying the customer in that particular area. I need to identify the customer perception on the available distribution system. Whether, customer satisfied through this system. If the particular distribution system satisfies the customer or if it is very efficient and effective I can find the reason how it is effective and the strategy of the system. If not we need discover the reason for the failure of the distribution system on that particular area. My hypothesis for the research is:
Ho: Vegetable Distribution System in Colombo is Effective.
H1: Vegetable Distribution System in Colombo is Not Effective.
CHAPTER 2: LITTERATURE REVIEW
It is highly important that the theoretical aspects on which the study is based are clearly understood. It is especially emphasis on basics of marketing, distribution system etc. which are significant for this study.
According to American Marketing Association (2007) Marketing is an organizational function and a set of process for creating, communicating and delivering value to customer and for managing customer relationships in ways that benefit the organization and its stakeholders.
2.1.1 Activities Included in Marketing
Marketing activities are various and it also varied because they fundamentally include everything need to deliver the product into the customers hands. The marketing activities are
Designing the product – to design a product we need to do a market research. Through that we can identify the customer needs and wants according to the customer desires we can design the product.
Promoting the product - how we are going to introduce the product to the market. It includes advertising, marketing communications etc.
Setting a price – it is important to capture the market producing in low cost will give high profit. People expect high quality product with lower price if we satisfy them only we can survive in the market. (Mary, [no date]).
2.1.2 Marketing Strategy
A marketing strategy identifies customer groups which a business can serve well than its target competitors. Providing tailors product offerings, prices, distribution, promotional efforts, and services toward those market segments to capture the market. Preferably, the strategy should address customer needs that offer adequate potential profitability. A good strategy helps a business to focus on the target markets it can serve best. By analyzing the product portfolio and customer segment, assess distribution channel we can generate our own customer strategy (Angele, 2000).
2.1.3 Marketing Plan
When we developed a marketing strategy, it is written down as a marketing plan. The plan frequently go further than the strategy, it includes detail such as budgets. We need to develop a marketing strategy before write a marketing plan. The marketing strategy is to understand and match the capabilities of business opportunities available in the market. So we need to collect more information regarding that such as: data about the market ( size, growth, Potential customer), Competitive data ( Direct competitors, product and price of competitive product) (Matt, 2010).
2.1.4 Target Market
Owners of small businesses usually have limited resources to spend on marketing. Concentrating their efforts on one or a few key market segments gives the most return from small investments. We should select to whom we are going to market. Target marketing method is help to reach the customer efficiently. (Chelle, 1994). It is also no agreed that health of the company is largely depends on Customer behavior and attitude needs. (Margret, 1985).
2.1.5 The Marketing Mix
Marketing mix is a choice of the organizations to bring a product or service to market. In order to achieve marketing goals we need to have a strategy. The marketing mix elements help to determine the strategy (Gummesson, 2002). The marketing mix elements are:
In marketing selecting the price is one of the strategies. We need to identify the cost of production and other cost to determine the price. Right price will maximize the profit.
It is the way to introduce the product to the market. It includes advertisement.
Product strategy may include developing a highly specialized product and high quality product to the customer in a attractive way. Like special packing etc.
It is the way of distributing the product to the customer.
People in the market cannot be underestimated. People have the direct impact on the product perceived. People are the important element in the marketing because products are for the people. (Mind Tools 1994).
It is the manner of handling sales process and after-sale service it help to achieve marketing strategy.
Showing the tangible product to the customer is giving the chance to the customer to make a decision. Customers like to know about the product through the smell and touching. Offering free trial or advertisements are physical evidence.
The marketing mix model helps to decide how to take a new offer to the market. Through that we can evaluate the current marketing strategy (Clarity Marketing, 2005).
2.2 Distribution System
Initially it is necessary to consider about what is Distribution system. Frequently there may be a chain of intermediaries; each passing the product down the chain to the next level, before it finally reaches the consumer. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs. The Distribution system is also clear-cut as a set of interdependent organizations involved in making a product or service available to consumers or industrial users. Usually a number of different institutions are involved in a distribution Channel because such specialization increases the efficiency by marketing activities are performed.
The Main thing is to select the distribution aspect is that marketing of a product highly depend on its distribution efficiency, even the best Quality, Brand, Price, Promotion will not be successful if the product wouldn’t reach the consumer hands by utilizing a good distribution system. Therefore the distribution systems are very important where the channel management leads to attain the product availability, cost effectiveness, Promotional activity, Channel member’s satisfaction etc. The cost of selling and distributing is becoming high due to high transport charges wages and commissions etc. But the benefits are not sure that it is achievable, so it is important to achieve the maximized benefit and minimized cost through good distribution systems.
Companies can design their distribution channels to make products and services available to customers in different ways. The figure below shows some examples of channel levels for consumer marketing channels:
In the figure first one is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies also market direct to consumers. The remaining channels are "indirect-marketing channels". Second one is contains one intermediary. In consumer markets, this is usually a retailer. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. They sell their goods directly to large retailers such as Comet, Dixons and Curry’s which then sell the goods to the final consumers. Third one is contains two intermediary levels - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producer’s goods and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This arrangement tends to work best where the retail channel is fragmented - i.e. not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler. A good example of this channel arrangement in the UK is the distribution of drugs.
Distribution is important because it affects the sale of the product. It also affects the competitiveness as well as profit because the margin is squeezed by distribution cost. Delivery is the part of activity that influencing the customer satisfaction (MMC learning [no date]).
2.2.1 Functions of a Distribution Channel
The main function of a distribution channel is to provide a link between production and consumption. Organizations form any particular distribution channel. So that they can overcomes the major problems. Members of the Marketing channel perform many key functions:
Information – Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.
Promotion – Developing and spreading persuasive communications about an offer.
Contact – Finding and communicating with prospective buyers.
Matching – Shaping and fitting the offer to the buyer’s needs, including such activities as manufacturing, grading, assembling and packaging.
Negotiation – Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.
Physical Distribution – Transporting and storing Goods
Financing – Acquiring and using funds to cover the costs of the channel work.
Risk Taking – Assuming the risks of carrying out the channel work
The first five functions help to complete transactions; the last three help fulfill the completed transactions.
2.2.2 Importance of Channel Members
Many producers lack of financial services to carry out direct marketing; these direct marketing would require many producers to become middlemen for the in order to achieve mass-distribution economies.
The use of retailer or middlemen largely boils down to their greater efficiency in making goods available to target markets. Through their contacts, experience, specialization and scale of operation, middlemen usually offer the firm more than it can achieve on its own.
From the economic system’s point of view the role of middlemen or a retailer is to transform the assortment of products made by producers into the assortments wanted by consumers, Producers make narrow assortment of products in large quantities, but consumer want broad assortments of products in small quantities. In the distribution channels, middlemen but the large quantities of many producers and break them down into the smaller quantities and broader assortments wanted by consumers. Thus middlemen play an important role in matching supply and demand.
2.2.3 Goals of Logistics System
Some companies state their logistics objective as providing maximum customer service at the least cost. Unfortunately, no logistics system can both maximize customer service and minimize distribution costs. Maximum customer service state that fast delivery, large inventories, flexible assortments, liberal returns policies, and other services. All those activities are raising distribution cost. In contrast, minimum distribution costs imply slower delivery, smaller inventories, and larger shipping lots – which represent a lower level of overall customer service.
The goal of marketing logistics should be to provide a service to targeted level of customer at the lower cost. A company must first research the importance of various distribution services to customers and then set desired service levels for each segment. The objective is to maximize profits. Therefore, the company must consider the benefits of providing high quality of product and services against the costs. (Kotler and Amstrong 1992) .
2.3 Related Research Findings
It has found that as in many European countries, the food retailing industry in France is dominating powerful companies. The research aimed at examining the idea that small producers are limited or even totally lacking in the supplier portfolios of bunch merchandisers in France. The common principles used by the retailers to select manufacturers are summarized. It has discussed using evidence from ten companies. Choosing a supplier is a critical step in a distribution firm's buying process. It is a influential factor not only in the firm's competitiveness but also in its corporate image. In the French food distribution channel, manufacturer’s products advertise directly to customers but sells to retailers. Retailers prefer to purchase from the suppliers who capable of launching large advertising. These are seem to be the required conditions for the retailer to sell large quantities of products to consumer. As a result the supplier incurs extra cos. Since the ability to assurance stock yield depends on marketing resources and skills, French mass merchandisers concentrate mainly on assessing the potential marketable performance of the various manufacturers. In conclude that because they do not spend much on sales promotion programs small producers find difficulties in competing with larger producers in making sales in the distribution channel (Gilles, 1996).
Natilia (2010) states that how the food supply and distribution systems took place in Accra, Ghana compare to Colombia. His study also made some recommendation to the policymaker to improve the efficiency of market distribution system. He analyzed the success, failure and challenges of urban food market in Accra. He also emphasis the market reform strategies on his research.
Ross (1995) states that according to his research on marketing strategy he found the dynamic of appliance retail business also he estimated major customer decision making criteria.
CHAPTER 3: METHODOLOGY OF THE STUDY
3.1 Research Design
The most suitable research method is determined by the research problem and the objectives of the research problem. According to that the Descriptive research method will be used to perform the research study, since the research problem is based on evaluating the performance of a Retailer in distributing Vegetables around Colombo Metropolitan. And also it is a kind of a basic research because it is being conducted primarily to improve the understanding of general issues in distributing vegetables. And also secondary data such as journal articles will be used. The Reason for selecting Descriptive Research method is because it describes the phenomenon as they exist and also used to identify certain information on the Characteristic of a particular Situation or problem.The study will be conducted as a qualitative study by using primary and secondary data.
3.2 Data Collection Techniques. (Methods & Tools)
The type of data will be used for this specific study is mainly primary data. The Study is based on the Colombo Metropolitan. Therefore the primary data for the research will be collect within the Colombo Metropolitan region. Secondary data will used to analyze the relationship between the customer satisfaction and the sales volume of the vegetable. It is a qualitative research The Data will be collect from consumers. Data will be collected by Personal Interviews with the retailer and Questionnaires are distributed to consumers of that specific area. A questionnaire will be developed with questions based on the customer’s perception on Vegetables. Under interviewing people both the open ended question and closed ended question will include.
The whole Colombo Metropolitan area is defined as the universe for this study, and the sampling unit is basically the vegetable consumers of that area. The Sampling Frame that is the source list from which the sample may be drawn is set with in the Colombo metropolitan. The size of the sample is 100 vegetable consumers. The non Probability technique will be applied in order to obtain a representative sample from the sampling frame the sampling unit which is vegetable consuming individuals especially the home makers. The consumers above age of 25 are included in the sample, because according to the research topic these consumers will be the best sample to achieve the efficiency and reliability. The sample does not afford any basis for estimating the probability that each item in the population has of being included in the sample.
3.3 Analysis of the Empirical Data
The Data will be code and analyzed by using statistical software program, and also the data will be analyzed using analytical techniques such as mean, mode and averages. Appropriate graphs and charts will be use to interpret and present data in this study. Since the ordinal Measurement will indicate the relative position of two or more objects it will be used in this investigation to rank the Customer satisfaction factors and other factors. Using the information from the questionnaire can conclude the results of this research. This research methodology follows the research onion.
(Sources: Mark, 2006)
3.4 Significance of the Study
Competition between retailers has increased due to new super markets operation in the surrounding area and also due to Economical Condition of the country including Cost of living, inflation, Transport cost etc. Factors which is affect the firms profitability and to meet the customers expectation and satisfaction. Therefore it is important to analyze the problems faced by the retailer in distributing vegetables and give him a solution for the problems.
The significance of this research is to identify whether the retailer can meet the customer expectation and satisfy them continuously and also to identify the exact problems prevailing during the research period how the distribution system effecting and then providing solutions, analyzing the cost benefits or cost effectiveness for the consumer.
3.5 Limitation of the Study
Being an individual assignment, the effort exerted in to this study will be limited. Specially in selecting of the sample it is very difficult to take a complete representative sample as the population is high.
The significant lack of secondary data specially in competitors data will be a major limitation to analyze data
Because of the qualitative research it will very much time consuming.
Financial limitation also there.
I can conclude that by conducting this research I can improve my knowledge in the distribution system on Colombo area. It will help me to apply these findings in other area too. I can identify the distribution system in a particular area and how effective that system also how that distribution system provide the customer satisfaction. Through this study I also can identify the success and failure of the distribution in a particular area and I can find the reason for that. It will help me to identify and recommend the solution for the existing problems.
CURRICULAM -VITAE OF
12, Longford Gardens
To become an individual who possess a wider knowledge and ability on things what she does and uses it for the enhancement of the work place and the society.
1. Name in Full : Lenita Jency Shakthivel
2. Gender : Female
3 Date of Birth : 3rd June 1983
4 Nationality : Sri Lankan
5. Married / Single : Single
6. School Attended : St.Anne’s Girls Maha Vidyalaya Colombo -13.
Doing Post Graduate Diploma in Management Studies at Icon College, London.
B.Com (Special) Degree
University of Sri Jayewardenepura
G.C.E A/L Examination (2002)
Accounting A, Economics A, Business Studies A.
G.C.E O/L Examination (1999)
5 Distinctions include Mathematics (1&11), Religion, Tamil and Science (1). 5 Credits including Science (11), Commerce, Social, Arts and English
Computer Literacy Completed MS Office
Completed DIPLOMA IN ENGLISH at Nalravi English Language Centre.
Studied SAGE Accounting Package
Following Post graduate Diploma in Management Studies in London.
EXTRA AND CO-CURRICULAR ACTIVITIES
Secured Places in athletic meets
Secured Place in Essay Competition
Served as a Games Captain.
Participated in English Speech.
I have worked at Belcon agency Ltd (Shipping Company) as an accounts trainee for 1 year.
I have worked at People’s Bank Dam Street for 1 year under the internship program.
(Customer Serve and Cheque Clearings)
I have worked as an Assistant Accountant at SPS Enterprises for 1 year
(Book Keeping and Customer serve)
I hereby affirm that the above particulars furnished by me are true and accurate to the best of my knowledge.
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