Influence of Distributors on Performance of Manufacturer of Fast Moving Consumer Goods (Fmcgs) in Kenya

Abstract

Fast moving consumer goods (FMCGs) are convenience products that are typically purchased on a regular basis.Currently there are many FMCG manufacturers in the market which has resulted in reduction of the market shares of manufacturers as well as profits. There is pressure on manufacturers to ensure that they get their product mix right or risk losing market share. According to IMR (2004), before there was more pull on the consumer side than push from the manufacturer’s side but today the reverse is the case. Initially, most manufacturers used wholesalers, selling products over the counter but due to competition and market dynamics, some manufacturers use distributors who perform additional functions like demand stimulation, providing market information, sorting and physical distribution. This study sought to determine the influence of distributors on performance of manufacturers of fast moving consumer goods in Kenya. The study adopted a descriptive research design since the study intends to gather quantitative and qualitative data. The study considered this design appropriate since it will facilitate gathering of reliable and accurate data that will clearly establish the influence of distributors on performance of manufacturers fast moving consumer goods in Kenya. The population of interest was 40 FMCGs manufacturers in located in Nairobi City County Nairobi where most of the established FMCGs manufacturers in Kenya are based. The study had a sample size of 40 respondents who were served with the questionnaire. Primary data that will be quantitative and qualitative in nature will be collected for this study. A semi-structured questionnaire developed in line with the research objectives was used to collect data from the respondents. Quantitative data collected was analysed using descriptive statistics namely percentages, means, standard deviations and frequencies. Further regression analysis was used to determine the effect of distibutors on performance. Content analysis was used to analyse qualitative data. The study established that distributors play an important role in the performance of a company. The study also found that distributors provide both market and competitor intelligence to the manufacturer. The study further established that distributors help in the market share growth since they have route plans for market coverage and enhance product availability in the outlets within their demarcated areas. The study recommends that policy makers in government, to ensure good road networks to minimise the logistics costs for distributors thus ensuring efficient movement of trucks to outlets. This lowers the cost of goods to the final consumer thus raising living standards. The study further recommends that manufacturers to recruit distributors to achieve both numeric and weighted distribution of their products and hence enhancing all their performance parameters. The study was limited to Nairobi City County though there are some established FMCG companies in other towns in Kenya which were not investigated.