AMBO UNIVERISTY

COLLAGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MARKETING MANAGMENT

ASSESSMENT OF DISTRIBUTION PRACTICES :( IN CASE OF AMBO MINERAL

WATER FACTORY IN AMBO TOWN):

A RESEARCH PROPOSAL SUBMITTED TO THE PARTIAL FULFILMENT FOR

THE BACHELOR OF ART DEGREE IN MARKETING MANAGEMENT

BY: ID
1. Zinabu Mathewos………………….ugr/38281/12
2. Yadesa Indalo………………………ugr/
3. Demeke wubshat……………………ugr/37999/12
4. Kumashi Adeba……………………..ugr/
5. Kenea Enserimu…………………….ugr/
6. Beleta Ababu……………………….ugr/

ADVISER: Seifu Senbeta(MA)

mar ,2023
Ambo, Ethiopia
 Title; DISTRIBUTION PRACTICES :( IN CASE OF AMBO MINERAL WATER
FACTORY IN AMBO TOWN):

Researchers..... Sign
1. Zinabu mathewos
2. Yadessa Indalo
3. Demeke Wubishat
4. Belete Abab
5. Kenea Ensermu
6. Kumeshi Adebe

I
 Table of Contents

ACKNOWLEDGEMENTS.................................................................................................................IV
CHAPTER ONE 1.................................................................................................................................1
Introduction...........................................................................................................................................1
1.1 Back ground of the study.................................................................................................................1
1.1.2 Company back ground..................................................................................................................2
1.2 Statement of the problem.................................................................................................................2
1.3 Research questions...........................................................................................................................3
1.4 Objective of the study......................................................................................................................3
1.4.1 General Objective.........................................................................................................................3
1.4.2 Specific objectives........................................................................................................................4
1.5 Significance of the study..................................................................................................................4
1.6 Scope of the study............................................................................................................................4
1.7 Organization of the study paper.......................................................................................................4
CHAPTER TWO...................................................................................................................................5
Literature Review..................................................................................................................................5
2.1 Definition of distribution.................................................................................................................5
2.2 Empirical Literature Review............................................................................................................7
2.3 Channels of Distribution..................................................................................................................8
2.4 The nature and importance of Marketing channel............................................................................9
2.5 Functions of distribution channel members...................................................................................10
2.6 Number of channel levels..............................................................................................................10
2.7 Types of distribution strategies......................................................................................................12
2.8 Types of Intermediaries.................................................................................................................13
2.9 conceptual framework....................................................................................................................14
CHAPTER THREE...........................................................................................................................15
Research methodology.........................................................................................................................15
3.1 study Area......................................................................................................................................15
3.2 Research Design............................................................................................................................15
3.3 Research Approach........................................................................................................................15
3.4 Target population...........................................................................................................................15
3.4.1 Sample size and sampling method..............................................................................................16
3.5 Type of data and Source of data.....................................................................................................16
3.6 Data collection method..................................................................................................................16

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3.7 Data Analysis methods..................................................................................................................16
3.8 Ethical Consideration.....................................................................................................................17
Chapter 4.............................................................................................................................................18
Work plan and budget break down......................................................................................................18
4.1 Work plan......................................................................................................................................18
4.2. Budget break down.......................................................................................................................19
REFERENCE......................................................................................................................................20
Appendix 1: Questionnaire English Version........................................................................................21

Lists of figures
Figure 2.1……………………………………………….............................…………….11
Lists of tables
Table 2.1……………………………………………………………………………….14
Table 4.1…………………………………………………..............……..............…….18
Table 4.2………………………………………………...................……….........…….19

III
 ACKNOWLEDGEMENTS
First and above all We will like to glorify almighty GOD who is the reason for our success.
Next indeed indented to our families for their continues appreciation and kindness in all the
way that we passe through. Our deepest gratitude goes to our advisor Instructor Seifu Senbeta
(MA) for his enthusiasm and unreserved guidance comments, suggestions and provisions
literature for this continues follow up and patience till the proposal gets the final shape. By no
means will it exaggeration to say that this proposal would not have this shape if this support
was no there.

IV
 CHAPTER ONE 1

Introduction
This chapter presents general facts about fast moving consumer goods, distribution and
distribution channel management. Subsequently the purpose of the research, basic research
questions, objectives and significance of the study, research design and methodology will be
presented. At the end of the chapter the organization of the research will be presented

1.1 Back ground of the study

Marketing was, more than any other business function, deals with customers. Marketing
means the process by which companies create for customers and build strong customer
relationship in order to capture value from customers in return. It consists of the firms
marketing mix, the set of marketing tools the firm used to implement its marketing strategy.
The major marketing mix tools were classified into four broad groups, called the four P’s of
marketing: product, price, place, and promotion. The firm must blend all of these marketing
mix tools into a comprehensive integrated marketing program that communicates and
delivers the intended value to chosen customers. Among these marketing mixes this study
focus on distribution (place).Distribution was one of the marketing mix which facilitate
movement and coordination of supply and demand in the creation of time and place utility in
goods, (Harvard and Cavale 2007:86).
Distribution involves planning, implementing and controlling the physical flow of goods
services and related information from points of origin to points of consumption to meet
customer requirements at a profit in short, it involves getting the right product to the right
customer in the right place at the right time. (Kotler & Armstrong, 2008: 352)
Distribution creates value of benefit that has an impact on the company's market share, total
costs and profitability. Moreover, many scholars have been recommended that physical
distribution play significant role for the enhancement of market share if and only if efficient,
(Harvald & Cavale 2007)

Common distribution marketing strategies were developed as multi years plans with a tactical
plan detailing specific action to be accomplished in the current year. Time horizon covered
by the marketing plan varies by company, by industry and by nation. However time horizon

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are becoming shorter as the speed of change in the environment increases marketing
strategies were dynamic and interactive. Kotler & G.Armstrong (2010)
Marketing distribution system involves careful scanning of the internal and external
environment. Internal environment factor include marketing mix, plus performance analysis
and strategic constraint- external environment include customer analysis , competitor analysis
–target market analysis as well as evaluation any element of technological, economic,
Cultural and Political

1.1.2 Company back ground

As it is stated in its web site Ambo Mineral Water Factory was established 84 years ago in
Senkele locality near a hot spring 130 km west of Addis Abeba. The source of Ambo Mineral
Water is a thermomineral spring, rich in natural calcium, magnesium, potassium,
bicarbonates and carbon dioxide. The water originates in a volcanic fissure which then
peculates through mountainous terrain eventually being tapped at the springs in Ambo.
These springs are located on the cross roads of an ancient, major trade route, and have been
revitalizing travelers, traders, nomads, soldiers and settlers from the beginning of humankind.
“Ambo comes from the Ethiopian highlands, a unique part of the world. It is recognized as
the leading beverage of Ethiopia, a true „Ethiopian Icon‟.”
The factory has dominated 85 percent of the mineral water market. The factory was
nationalized in 1974 and later it was privatized in 2008. South African company, SABMiller
and a local company, Southwest Development forged a joint venture company. The
manufacturing plant had two lines which had a total production capacity of 14,000 per hour.
At a cost of 21 million USD, the two old lines were renovated and another new line was
installed. The new line alone has a production capacity of 24,000
bottles per hour. Some of its products are Ambo mineral water, Ambo flavor, Jiva and an
energy drink called XXL. Currently the company exports its products to the US, Australia,
Djibouti, Yemen and Saudi Arabia. It also generates employment opportunity for a total of
500 people http://ambomineralwater.et (2014)

1.2 Statement of the problem

Distribution Marketing strategy serve as fundamental under pinning of marketing plans

designing to fill market needs and reach under marketing objectives. Company often pay too

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a little attention to their distribution channel, however, sometimes with damaging results. In
contrast, many companies have used imaginative distribution systems to gain competitive
advantage. from the economic systems point of view, the role of marketing intermediaries
were to transform the assortments of products made by producer in to the assortments wanted
by consumers. Kotler & Armstrong (2010)
Even though, there will be a number of problems that will affect the distribution of marketing
strategy some of those are, Shortage of own transportation service to distribute the output at
the customer destination, bad timing promotion, means, take rest or unfavorable condition,
will also affect the customers to shift other company product and finally complexities of
product in the market may also affect customer to change their motive or attitude and
company to change their marketing distribution strategy. P.kotler (2009)
All companies had their own marketing distribution strategy which was a plan that specified
the impact that the organization hope to achieve and demand or product line was a given
target market.
There will be number of factors that affect the marketing distribution strategy designing such
as human power, material, land management, production method. As to their extents of
necessity, these factors will not easily available. Beside this process of combining and using
these factors will the other headache. Balancing production capacity with actual or potential,
the other factors which treat the strength of the factory. , Havard & Cavale (2007)
The reason to select this title in Ambo mineral water factory there is a problem of distribution
strategy to reach the product to the final user and to recognize the overall distribution
practices of the company to fill this performance gap the researcher will study this research.

1.3 Research questions

1. What type of distribution system did by Ambo mineral water factory used?
2. How did Ambo mineral water factory handle its distribution responsibilities?
3. Did the company transportation service satisfy the customer need?
4. What are the factors that affect the distribution system of Ambo mineral water factory?

1.4 Objective of the study

1.4.1 General Objective

The general objective of the study will to assess the overall marketing distribution system of
Ambo mineral water factory in Ambo town.

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1.4.2 Specific objectives

The specific objectives of the study will the following:

1. To identify the type of distribution system of Ambo mineral water factory
2. To identify the mechanisms to handle distribution responsibilities
3. To assess customer satisfaction towards Ambo mineral water’s transportation services
4. To assess the factors that affects the distribution system of Ambo mineral water factory

1.5 Significance of the study

By assessing the distribution practices of Ambo mineral water factory, the study probably
provide to close the gap between customers and the organization. This study might expect to
provide the following results: It probably helps to know and improve current company
distribution strategies. It may serve as a reference material for other researchers seeking deep
study in the area for further investigation. The student research gets experience and
knowledge on how to conduct research. In addition, it may be help the student to gain (B.A)
degree in marketing management.

1.6 Scope of the study

In order to conduct a manageable research, the research will focusing its scope on
geographically, methodologically, and conceptually

Geographically
This research will be conduct in Central part of Ethiopia, in Oromia regional state in west
shewa zone in Ambo town.
Methodologically
The research uses the descriptive research design, because it will design to obtain information
about the current phenomena and to draw conclusion from the fact discoveries.
Conceptually
The research will focus on assessing and identifying the distribution practice of Ambo
mineral water factory in Ambo town.

1.7 Organization of the study paper

The research report will be organized under three chapters as listed below:
Chapter one: Introduction: This chapter contains background of the study, Statement of the
Problem, research question, objectives of the study, significance of the study, and scope and
the organization of research paper

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Chapter two: Review of related literature: This chapter deals with the literature relevant to
the study. It has an introduction, the theoretical and, empirical review
Chapter three: Research Methodology: This chapter describes the approaches and design of
research, population of the study, Sampling techniques, the sources of data, the data
collection, instruments, and the methods of data analysis used,work plan and budget
breakdown.
Chapter four is about data analysis, discussion and interpretation of results.
The last part, Chapter five, is all about conclusions and recommendations.

CHAPTER TWO

Literature Review

2.1 Definition of distribution

A distribution channel is a set of interdependent organizations (intermediaries) involved in

the process of making a product or service available for use or consumption by the consumer
or business user.
Channel decisions are among the most important decisions that management faces and should
directly affect every other marketing decision. For a general term, distribution includes every
function concerned with the transference's of good from the point of or gin unit they come in
to the possession of final buyers. Includes transportation, storage, and merchandising,
promotion of outlet is stocking or dealing in a designated product. According to (Baker 1998)
description
Place: Place is the environment in which the service is as stabled band where the firm and
customer interact and tangible commodities which facilitate performance or communication
of the service place as a number of aspect of concern to the service. Marketing the actual
location of the promises that channels of distribution is concerned the client will be
searching, for physical dues in assessing the success of the company. Another author
(Bewman 2008.)
While selecting my research doing on the distribution channel, that compared the costs, sales
volume and profits expected from alternative channels of distribution. We have to consider
the following things:-

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Market consideration
Number and location of buyers
Size of order
Customer buying habits
Product consideration
Unit value
According to sherlkar, (2004:147) physical means the process of delivering the product to
the user or consumer promptly, safely and in time.

Physical distribution involves management planning action and control of the physical
flows of raw material and finished goods from the point of use consumption to meet
customer need at a profit. It covers all activities in the flow of good between producer and
consumer, James, (2007:60).

Physical distribution as market logistics a physical distribution has recently expanded into
the broader concept of supply chain management. Supply chain management starts earlier
than physical distribution attempts to produce the high input craw material components
convert them efficiently into finished products and dispatches them the final destination.
Kolter,( 2002: 536)

Explains bsoth outer under line on the point which explains physical distribution as
delivering products to consumer promptly safely and in time that is the time and place
utility aspects is regarded as the major task in physical distribution decision makes
process . Physical distribution channels and including such importance of decision areas
customer service inventory controls material handling protective packaging order
processing transportation.

Ware house selection ware housing physical distribution is part of a larger process
distribution which include whole sale and retail marketing as well as the physical
movement of product, lancy, (2007:56).

Physical distribution activates activities have recently received increasing attention from
business manager including small business owners this is due in large that function often
represent almost half of the total marketing costs of a product, Lancy,(2007:56).

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 Explain physical distribution management employed management employed in
manufacturing and commerce to describe the broad range of activates concerned with
efficient movement of finished product from the end of the product line to the consumer
and in some cases include the movement of raw material from the source to the beginning
warehouse material handling packing inventory management order processing and
customer service, Khanna, (2002:14)
According to kumar & meenakshi, (2006:356) physical distribution focuses on the
efficient movement of goods from manufacturing to customers of the product.

2.2 Empirical Literature Review

Though it will difficult to get empirical study on distribution practice FMCG the
researcher tried to see it by referring to some related studies of the cases in America,
China and Africa. From industrial distribution point of view Webster (1976) made a field
study with 31manufacturers in eight states of USA, and realized some factors that
influence intensity of industrial distributor:

1. Total market potential and its geographic concentration;

2. The manufacturer‟s current market share and the intensity of competition;

3. Frequency of purchase

4. Whether lack of availability could interrupt the customer‟s production process;

5. Amount of technical knowledge required to sell or service the product; Booz &
Company (2010) approached the case of distribution in China market with the concept of
going to market (GTM) model, sometimes known as rout to market. It was a model used
in distribution by most FMCG companies to reach their market. Given the vast size and
population of the nation, distribution was a complex undertaking in China. In an effort to
enter China and expand rapidly at a minimum cost, most fast-moving consumer goods
(FMCG) companies defaulted to a wholesaler distribution strategy. To capture the
economic potential of China, however FMCG companies have to consider both direct
distribution and exclusive third-party .To this end therefore analysis must be done on such
elements as the types of products being offered, brand strength, consumer preferences,
competitive environments, retail channels, location of consumer markets (rural, urban, or
anything in between), and profitability expectations. If such an assessment was done well,

7
 an FMCG company can anticipate significant growth and secure profit in the Chinese
market. Nelson, Jane, Ishikawa, and Geaneotes (2009) described the Coca-Cola system
uses the full range of distribution methods in Africa. In the most developed, urban parts
of the continent, the system used the more traditional model of supplying large retailers
such as grocery stores, hotels, universities, and other institutions using delivery trucks
however for a large proportion of its retail customers, particularly in East Africa, where
there were mostly small restaurants or bars, and kiosks, the Coca-Cola system had
adopted a manual delivery approach known as manual distribution center (MDC) working
with small scale distributors to deliver products to small-scale retailers in densely
populated urban areas will be also the case to Ethiopia. Although the exact number of
manual distribution centers (MDCs) changes on a regular basis, as of November 2008
there were 165 MDCs in Addis Ababa and 651 in Ethiopia as a whole, accounted for 83%
of sales nationwide and the rest was delivered by direct sales distribution method. The
Manual Distribution Centers (MDCs): are independently owned, low-cost manual
operations created to service emerging urban retail markets where classic distribution
models are not effective or efficient. It is a central point for warehousing of product with
a manageable coverage area and defined customer base, typically about 150 retail outlets.
To keep costs at minimum distribution of product is mostly manual .e.g. pushcarts.
Outlets served are typically low-volume with high service frequency requirements and
limited cash flow, requiring fast turnaround of stock. (Nelson et al., 2009) Such
distribution model was what Ambo is also currently using but its distributors have neither
a defined customer base nor defined sales territory. One can also pinpoint some weakness
on the model such that It do not mention anything about the challenge such as price
abuse, the conflict among MDC operators, selling competitors‟ product, reluctant to buy
slow moving brands, etc. The time is a little bit old such that it might not reflect the
current reality on distribution practice

2.3 Channels of Distribution

Channel distribution is defined as a system of relationship existing among business that

participate in the process of buying and selling products and serviced. Some of the activities
and in votive great members who take an ownership of the product automatically increase
there is always the possibility that may not able to sell the produce. Subsequently, other
activities while highly importance of the process do not encounter the same level of risk and

8
are more special led in nature. For example when channels. As economy group market
information to another participation intermediaries to perform varies activities increase,
before a company can consider specific elements of channels it has been identified three
channels classification based on dependence :-
Conventional channels
Signal transaction channels and
Vertical marketing systems
Mostly manufacture helps to know the exact quality and quantity of goods required by
required by consumers and he plants his manufacturing schedule according and may get a
benefit of larger order from wholesale.
They make manufacture to maintain a constant level of production by placing orders at
regular interval and demand of the consumer they are also sufficient information which are
quite in tolerant to the company. (BUCKLIN, L. P. 1966)

2.4 The nature and importance of Marketing channel

Few producers sell their goods directly to the final users. Instead, most use intermediaries to
bring their products to market. They try to make a distribution channel – a set of
interdependent organization involved in the process of making a product or service available
for use or consumption by consumers or business users company’s channel decision directly
affect every other marketing decisions. The company’s pricing depends on its works with
national discount chains, uses high quality specialty stores, or sells directly to consumers via
the web. The firms sell force and communication decision depends on how much
persuasions, training, motivation, and support its channel partner needs. Company often pay
too a little attention to their distribution channel, however, sometimes with damaging results.
In contrast, many companies have used imaginative distribution systems to gain competitive
advantage. from the economic systems point of view, the role of marketing intermediaries are
to transform the assortments of products made by producer into the assortments wanted by
consumers. Producers make narrow assortments of products in large quantity, but consumers
want broad assortments of products in small quantities. In the marketing channels,
intermediaries by large quantities from many producers and break them down into smaller
quantities and broader assortments wanted by consumers. These, intermediaries play an
important role in matching supply and demand. In making products and service available to
consumers, channel members add value by bridging the major time, place, and possession

9
gaps that separate goods and service from those who would use them. Kotler, Philip & Garry
Armstrong, (2004)

2.5 Functions of distribution channel members

1. Information: gathering and distributing marketing research and intelligence

information about actors and forces in the marketing environment needed for planning
and aiding exchange.
2. Promotion: developing and spreading persuasive communication about an offer
3. Contact: finding and communicating with prospective buyers.
4. Matching: shaping and fitting the offer to the buyer needs, including activities such as
manufacturing, grading, assembling, and packaging.
5. Negotiation: reaching agreement on price and other terms of the offer so that
ownership or possession can be transferred.
6. Physical distribution: transporting and storing goods.
7. Financing: acquiring and using funds to cover the cost of the channel work.
8. Risk taking: assuming the risk of caring out the channel work.
The question is not weather thus functions need to be performed they must be, but rather who
would perform them. To the extent that the manufacturer performs thus functions, its costs go
up and its prices have to be higher. When some of these functions are shifted to
intermediaries, the producers’ costs and prices may be lower, but the intermediaries must
charge more to cover the cost their work. In dividing the work of the channel, the various
Functions should be assigned to the channel members who can add the most value for the
cost. (Kotler Philip, 2005)

2.6 Number of channel levels

It is the number of flows of intermediaries in the channel. The following figure portrays
channel
structure in terms of length.

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 Figure 2.1 channel structure

Source :Kotler,P. and Keller,K.(2006),Marketing Management

Channels levels is a layer of intermediaries that performs some work in bringing the products
and its ownership closer to the final buyer .the number of intermediaries levels indicates the
length of a channel .companies can design their distribution channel to make products and
services available to customer in different ways.
1) Zero Level channel / Direct Marketing Channel
Consists of a manufacturer directly selling to the end consumer. This might mean door to
door sales, direct mails or telemarketing. Dell online sales is a perfect example of a zero level
channel marketing. 
2) One Level channel
As the name suggests, the one level channel has an intermediary in between the producer and
the consumer. An example of this can be insurance in which there is an insurance agent
between the insurance company and the customer. Even E-commerce is an excellent one
channel level example – wherein the companies tie up directly with E-commerce portals and
then sell in the market.
3) Two level Channel

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Two level channel involves the movement of goods from the company to an intermediary,
from the intermediary to another and then to customer. This is also commonly known as
“breaking the bulk” in FMCG market. A widely used two level marketing channel especially
in the FMCG and the consumer durable industry which consists of a wholesaler and a retailer.
So the goods go from company to distributor, distributor to retailer and retailer to consumer.
4) Three level channel
Three level channel contains three intermediaries namely, distributor, wholesaler and retailer
are present and it is also used for convenience products.
Again the three intermediaries, namely, distributor, wholesaler and retailer are present and it
is also used for convenience products. Served in both the FMCG and the consumer durable
industry, the three level channel can combine the roles of a distributor on top of a dealer and
a retailer. The distributor stocks the most and spreads it to dealers who in turn give it to
retailers.

2.7 Types of distribution strategies

Companies must also determine the number of channel members to use at each level. Three
strategies are available:-intensive, exclusive and selective distribution strategies.( Bonoma
and Kosnik 1990).

Intensive distribution strategies:

They stoke their products in as many outlets as possible in strategies. Producers of convince
products and common raw materials typically seek intensive distribution. These goods must
be available where and when consumers want them. For example, toothpaste, candy, and
other similar items are sold in millions of outlets to provide maximum brand exposure and
consumer convince. Accordingly, Stem, El-Ansary, and Coughlan (1996) "One of the key
elements of channel management is deciding how many sales outlets should be established in
a given geographic area". Despite its importance, distribution intensity has received little
attention in academic research. Within marketing, the primary theoretical thrust links product
class to distribution intensity (Aspinwall 1958; Copeland 1923;Miracle 1965)
Exclusive distribution strategies:
it is a strategy in which the producer gives only a limited number of intermediaries the
exclusive use to distribute its products in their territories. Exclusive distribution is often
found in the distribution of new automobile and prestige goods. Some producer purposely
limits the number of intermediaries handling their products. Exclusive distribution strategies

12
also enhance the products image and allows for higher mark ups. (Couglan, Anderson,
Stern,EL-Ansary,2006)
Selective distribution strategy:
it is a strategy that use of more than one but fewer than all, of the intermediaries who are
willing to carry a company’s products. By using selective distribution strategy, producers do
not have to spread their efforts over many outlets, including many marginal ones. Producer
can develop good working relationships with selected channel members and expect a better
than average selling effort. Selective distribution strategies gives producer good market
coverage with more control and less cost than does intensive distribution. (Michale J. Baker,
2006).

2.8 Types of Intermediaries

A firm should identify the types of channel members available to carry out its channel work.
For example, suppose a manufacturer of test equipment has developed an audio device that
detects poor mechanical connection in machines with moving parts. Company mangers sink
this product would have a market in all industries in which electronic, combustion, or steam
engines are made or used. The company’s current sales force is small, and the problem is how
best to reach these different industries. The following channel alternatives might emerge from
management decisions.
Company sells force: expand the company direct sells force. Assign outside sells people to
territories and have them contact all prospects in the area or develop separate company sells
force for different industries.
Manufacturers agency: hire manufacturers agent are independent firms whose sells force
handle related products from many companies in different regions or industries to sell the
new test equipment.
Industrial distributors: find distributors in the different regions or industries who will buy

and carry the new line of data

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2.9 conceptual framework

Having seen those theories mentioned above, it would be possible to build the following
conceptual frame work for just channel length of the distribution structure which any one
may consider before making decisions on what type of distribution structure to have .i.e. is it
short or long distribution channel.

Factors for distribution strategy Channels of distribution

Consumer habits If short if long
Frequency of purchase Low High
Purchase effort High Low
Rapidity of consumption Low High
Significance of purchase High Low
Waiting time High Low
Product characteristics - -
Replacement rate Low High
Gross margin High Low
Adjustment High Low
Searching time High Low
Unit value High Low
Product complexity High Low
Product life cycle Introduction Maturity
Perish-ability Low High
Market factors - -
Target focus on mass market Low High
Rate of technological change High Low
Intensity of competition High Low
Geographic concentration of market High Low
Company factor - -
Range of product wide Narrow
Order size Large Small
Market share Low High
Size of the firm 14Large Small
 Table 2.1 conceptual frame work

CHAPTER THREE

Research methodology

3.1 study Area

Ambo is located in the Western part of Oromia National state at distance of 126 km West
Addis Ababa and 70 km North West of waliso. Its astronomical location is 7 05 39022 East,
Whist its elevation is around 2400 meters above sea level. The current total population of the
town is estimated to more than 128000. From this, the number of females and male were
around 65300 (51%) and 62800 (49%) respectively. Ambo is found in a wenadega climate
zone. This type of climate is not important for is medium for human habitation and economic
activities. Currently the town is divided administratively in to six sub cities: Hora ayetu, Ya’i
Gada, Torban kutae, Sankale Farisi, Kisosa Oddo, and Its astronomical location is 07 0 41
“North latitude and 037 0 031East longitude. The altitude of area ranges from 2,738 to 2782
meters above sea level. (https://en.wikipedia.org/wiki/Ambo,_Ethiopia#History)

3.2 Research Design

While conducting this research the researcher will use descriptive type of research design in
order to describe all existing things in simple and understanding way.

3.3 Research Approach

the researcher will use both quantitative and qualitative approach. the researcher will uses the
qualitative approach to involve systematic collection of subjective data often under the
condition of minimum control. and will uses quantitative data to involve the systematic
collection of numerical data often under the conditions of considerable control.

3.4 Target population

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The target populations of the study will be employees of marketing department and manager
of Ambo mineral water factory consider as participant of the study. The target populations of
this study were 13 employees and 8 distributors.

3.4.1 Sample size and sampling method

Based on the company data, there were 110 employees in the Ambo branch.
To do the research efficiently, the researcher take a sample from 110 employees select 13
employees and from 8 distributors takes the whole employee, because it will be difficult to
the researcher distribute the question to all the employees of the organization and it will be
costly. To do a good research, the researcher will use simple random sampling because it give
equal chance for every respondent and avoids bias.
Therefore, the researcher will take 13 employees and 8 distributors as a sample size.

3.5 Type of data and Source of data

The researcher will use both primary and secondary types of data sources. Those will be
primary and secondary data to identify the problem will be related to distribution practice.
The primary data will be collect through questioner by conducting both open - ended and
cloth - ended questioner for the participant and primary data based on questionnaires and
interview with the concerning employees, manager and customers of the factory. .Whereas
secondary source of data will be collect from the factory document, report and manual and
other any written document.

3.6 Data collection method

For conducting of the research the researcher will be use both primary and secondary data
from various sources.
The researcher will collect primary source from the employees and agents. questionnaire,
include both close and open ended questionnaire.; because open ended question should
enable respondents to expressing their idea freely and closed ended questions should and
unstructured form.
The researcher also will collect secondary data from company annual report, sales report and
other material.

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3.7 Data Analysis methods

The method of data analysis that the researcher will be use is descriptive methods such as
tabulation, percentage of statistical tools. The data also will be analyzed by both quantitative
and qualitative methods. Questionnaire responses will take to analyze those quantitative data
used tabulation and percentage. The response of the employees for interview will treat as
a qualitative analysis by using paragraphs.

3.8 Ethical Consideration

First all the researchers will get permission from the body to gather data the researcher are
inform the participants the confidentiality and secret and their information and guidance were
provided for participants at right time and place to make familiarization about the purpose
study the necessary data will be collect from the respective respondents and keep
confidentially.

17
 Chapter 4

Work plan and budget break down

4.1 Work plan

Activity November December January February March April

Title 
selection
Selection 
sampling
Data  
collection
Submission 
of first draft
Submission 
of second
draft

Presentatio 
n

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 4.2. Budget break down

Number Descriptions of Amount Unit cost in birr Total cost in birr

item
1 Pen 2 15 30
2 Flash disk 1 250 250
3 Cover page 2 15 30
4 Transportation 6 15 90
5 Print 1 250 250
6 Mobile card 3 15 45

Total cost 685

Table 4.2 Budget breakdown

19
 REFERENCE
Arun Kumer, & Meenakshi, (2006) marketing management: 1st edition Vikas publishing Plc.
Armstrong Gary & Kotler Philip, (2005) marketing management: 10thedn
ASPINWALL, L. V. (1962). The characteristics of goods theory. Perspectives and
viewpoints (pp. 633- 643).Homewood, IL:

Bentley, T. (1990), the business of training, Maidenhead; Mc Graw-Hill

BUCKLIN, L. P. (1966) A theory of distribution channel structure. University of California,
Institute of Business and Economic Research.
BONOMA, THOMAS V, and THOMAS J, KOSNIK (1990) Marketing Management : Text
and Cases. Home-wood, IL: Richard D, Irwin,

BOOZ & COMPANY (2010) Going to Market in China. Greater China

Coughlan a. T., & anderson, e. Louis w. Stern, in adel i. El ansary. 2006. Marketing channels

Creswell, J.w. (2003). Research design; Qualitative, quantitative and mixed method
approaches.
DeVito, J. A. (1986). The communication hand book; A dictionary. New York; Harper & Row.
Havaldar, k. and M. Cavale (2007). Sales and distribution Management
http://www.ambowater.com/news.html(accessed 09.22.2014)
(https://en.wikipedia.org/wiki/Ambo,_Ethiopia#History
Kotler, (2005) Marketing Management. New Delhi: prentice-Hall of India
Private Limited.
Kotler, Philip & Garry Armstrong, (2004)
Philip Kotler, (2004) marketing management: 11th edition publisher Prentice hall Inc.
NELSON J., ISHIKAWA, E. and GEANEOTES, A. (2009) Developing Inclusive Business
Models
Philip Kotler,& Gary Armstrong (2006), principles of marketing: 11th edition publisher
Prentice hall Inc. New Delhi
Philip Kotler & Kevin lane Keller (2006), marketing management: 12th edition publisher
Sherlekar (2004). Marketing Management .Mumbai:Himalaya Publishing. House. New
Delhi: Vikas Publishing House Pvt. LtdPrentice – hall Inc. New Delhi.

STEM, LOUIS, ADEL El-ANSARY, and ANNE COUGHLAN (1996) . 5th ed. Upper
Saddle Creek, NJ: Prentice-Hall,

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Weekley, E. (1967). Etymological dictionary of modern English (vol. 1). New York; Dover
publications.

Appendix 1: Questionnaire English Version

SURVEY QUESTIONNAIRE

A SURVEY OF DISTRIBUTION STRATEGY ON FMCG

Executives BA Degree Class

Ambo University
Department of Marketing Management
College of Business and Economics
This survey aims to assess the distribution practice of Ambo Mineral Water Share Company
as the same time serve as a research project for a partial fulfillment of the requirement for the
award of Executive BA degree. Your participation in the survey and the response you give
provides a critical input to see how the company is doing its distribution work and will
eventually help to improve the service that Ambo gives to you. Hence I kindly request you to
provide frank and right answer to each question. While thanking you in Advance for your
valuable time and contribution, I want to guarantee you that your response will
be treated confidentially.

For any enquiry about this survey, please feel free to call to 0964042487 or
email at
[email protected]

Thank you for your cooperation and participation.

I. Question to the outlet

Instruction: Please circle your answer and/or write brief answer whenever compulsory

Part 1.General Information

1. Outlet type

1. Bar 2.Sook 3.Hotel 4. Restaurant 5.other

2. Year in business

21
1. < 3 years 2. 3-5 years 3.5-8 years 4.> 8years

Part 2.Basic Information

3. How long have you been selling Ambo‟s products?

1. < 3 years 2. 3-5 years 3. 5-8 years 4. > 8years
4. Which Ambo‟s product do you buy most?
1.Ambo Original 2.Jiva 3.Flavour 4.XXL
5.What is the reason to your answer for question number 4?
1. Consumer preference 2.Product supply 3.profit margin
4.Other, specify
6. Where do you get the product from?
1. MDCs 2.Agents 3.company‟s sales truck 4.others,specify
7.If you get the product from distributors ,at what price are you buying it?
1. lower than company‟s 2.higher than company‟s 3.Same as the company‟s
8.How long do you take to get the product you order?
1. Immediately 2.a day 3.1-3 days 4.more than 3 days
9.How many times do you get visited by the sales man per week.?
1.once 2. twise 3. three times 4. evey day
10.How many times do you come across out of stock situation per week?
1.once 2.twise 3. Three times 4.none
11.As compare to competitors like Royal Crown how is your average weekly sale of Ambo
1. less 2.higher 3.Similar
12. What is the reason to your answer for question number 11.You can provide more than one
answer.
1. Service frequency 2. Promotion 3.Quality 4.Price 5.others, specify

22
13. For each of the following questions please evaluate Ambo Mineral Water S.C or the
distributor‟s performance & how it is doing its business
Rate each of the following questions by placing a “/” mark on 1 2 3 4 5
the boxes based on 1. very good 2. good 3. Neutral 4. Bad 5. very bad
Delivery time or speed of the company or distributor

Service/call frequency

Company‟s representative visit and treatment

Supply of product by brand and pack

Promotional support

Problem solving capacity

Over all company‟s support in distribution

B. Question to the Company

A. General Interview Questions

1 Name: and Title
2 How long have you been in the company/business:
B. Specific Interview Questions
1 What are major company‟s objectives in distribution?
2 How many outlets do you have in AA?
3 What kind of distribution structure do you have?/how is your rout to market strategy?
4 How many distributors do you have?
5 How do you select distributors?
6 Do distributors have a defined sales territory?

23
 7 How do you measure/control your distribution effectiveness?
8 Are there tools for rout to market execution e.g. rout schedule with complete lists of
outlets, rout map, rout card etc.
9 What kind of challenges do you come across in your distribution system? if any

C. Question to the Distributors

1 Do you get the right type and quantity of product on time?
2 Do you have any conflict with other distributors? If yes, explain
3 What kind of support do you get from the company?
4 What are the major problems you have with the company?
5 What internal challenge do you have in distribution? e.g. logistic, space, finance,
people,etc.
6 For each of the following questions please evaluate Ambo Mineral Water S.C
performance in distribution.

Rate each of the following questions by placing a “/” mark on the

boxes based on 1 2 3 4 5
1.Very good 2.Good 3.Neutral 4.Bad 5.Worse

Delivery time or speed of the company or distributor

Margin/Discount

Company representatives visit & their treatment

Supply of product by brand and pack

Information flow

Promotional support

Over all company‟s support in distribution

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