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CHAPTER 2: LITERATURE REVIEW

Literature Review of relevant earlier academic, scholarly and research work is an essential

component of any academic project, as a good literature review creates a strong foundation, based

on which knowledge in the domain can be further built and expanded. It identifies areas where

further research is needed and opens up opportunities to extend, ratify, generalize or contest earlier

research findings and conclusions. An exhaustive literature review has been carried out covering

the domain which is provided in the following sections, leading to the section on Research Gaps

identified. Care has been taken to ensure that the review is not restricted by narrow geographic

boundary to any country or region. Stress has been given to more recent publications in reputed

international journals, as they in turn have reviewed previous work and have built on past work.

The review was however restricted to publications in English language only. The literature review

carried out is concept centric or domain centric. Out of the vast number of papers reviewed only

those papers propounding concepts relevant to the study has been included in the subsequent

sections. The literature review attempts to report and inform all the relevant advances in

accumulated knowledge in the domain However, papers of higher relevance or which appeared to

present breakthrough concepts have been discussed at somewhat greater length.

Dr.Singh J., and Saikh (2012) has studied that, the


marketers must understand the role of family in influencing
the buying of consumer durables more particularly in the
rural areas. The marketers must design their advertising
messages as well as visuals in such a way that these
penetrate well into the minds of the family members. Only
then they can have positive endorsements of their products
in a highly competitive environment. Marketers must take
significant steps in crafting and presenting credible and
persuasive advertisements. It seems that people are
consistently losing faith and confidence in the mass media
advertising of consumer durables. It would be more
appropriate if marketers make best use of social media that
can be used as an interactive advertising through authentic
story-telling.

1,Chintagunta and Jain (1992) developed a dynamic model


for determining equilibrium marketing investment levels
for channel members and a framework for understanding
the effects of channel dynamics on difference in profits
resulting from coordinated marketing interventions. They
have concluded that when the manufacturer and channel
member followed a coordinated strategy, it resulted in
enhanced marketing effort levels by channel members
resulting in higher total channel profits and that there is
greater need for such coordinated strategy when
discounts, rates, carryover effects of marketing efforts
and goodwill interactions between manufacturers and
channel partners are high.
2. Boyle et. al. (1992) developed measures of the following
six influence strategies in marketing channels - 1. Promise:
Source certifies to extend specified reward contingent on
the target's compliance, 2. Threat: Source informs the
target that failure to comply will result in negative
sanctions. 3. Legalistic plea: Source contends that target
compliance is required by formal agreement. 4. Request:
Source asks target to act; no mention of subsequent
sanctions. 5. Information exchange: Source supplies
information with no specific action requested or otherwise
indicated. 6. Recommendation: Source stresses that
specific target action is needed for the latter to achieve
desired outcomes. They examined association of the
influence strategies on channel relationship and alternative
channel governance structures (market, administered,
franchise, and corporate). The results confirmed the
predicted 50 negative association between relationalism
and the following influence strategies: threats, promises,
legalistic pleas and requests.

3. Bandyopadhyay and Robicheaux (1998) extended the


study of the impact of six influence strategies of suppliers
on their dealers in USA and in India – information
exchange, recommendation, request, promise, threat and
legal pleas and found that in India, recommendation and
legal pleas, which demand compliance of the terms of
agreement between them, had positive impact on dealer
satisfaction. The researchers acknowledge that with
increasing competition, recruiting and retaining channel
intermediaries is challenging and conclude that by using
proper influence strategies marketers will be able to attain
the desired channel performance levels while keeping
channel partners satisfied. The study lacks generalizability
as it has been tested in only electric lighting industry, in
only two countries.
Continuing on the same vein, variables like culture,
reward and compensation systems, leadership and degree
of external market competition were found by Franco and
Bourne (2003) to influence channel performance. Further
variables like perception of organizational orientation,
culture, internal emphasis on financial and marketing
related achievements were tested by Paswan (2003) and
found to play a profound role in channel management
decisions.
Trust, respect and concern for mutual welfare in
relationship with channel intermediaries are of great
strategic importance to improve channel 51 performance.
The concept of equity in channel relationship thus provides
a new approach in which channel relationships are included
in the firm’s strategic planning and implementation.
4.Mathur (2013) proposed five key drivers of channel
equity - communication, trust, commitment, dependence,
and customer orientation and that relationship specific
investment will have favourable impact on the drivers of
channel equity and would enable firms to build their
channel equity. The favourable impact of relationship-
specific investments is moderated by the relationship
phase, and external uncertainty. The domain of channel
strategies discussed hitherto has been restricted to
manipulation of factors like power and influence.

5. The concept of generic strategies was applied by Wren


(2007) to the domain of channel management. He
examined the relationship of different channel structures;
specifically channel power, control and vertical integration
on the choice of generic channel strategies of cost
leadership, differentiation, focus, and combination
strategies. He developed propositions that firms which are
highly vertically integrated would choose a low cost
strategy, whereas those with low levels of vertical
integration would choose a differentiation strategy and
those with moderate levels of vertical integration would
choose a combination strategy.
CHAPTER TWO LITERATURE REVIEW 2.1
Introduction This chapter reviewed related literature on
assessing the sales and distribution network of Fast Moving
Consumer Goods (FMCGs) in the Kumasi metropolis
using some selected companies. Some of the areas around
which literature was reviewed are: Overview of
Distribution Network, Effectiveness of Distribution
Network, Information Technologies in distribution
channels, Distribution Strategy, Actors and players in
Distribution Network, Distribution Policy, Designing an
effective Distribution Network, Fast Moving Consumer
Goods, Challenges of distribution network and finally
Empirical Evidence of distribution network of FMCGs.

2.2 Overview of Distribution Network The term


distribution channels is sometimes replaced by the term
marketing channel because the intermediaries include not
only those who participate in the physical flow of a product
from the manufacturer to the end user, but also those that
have a role in the transfer of product ownership, as well as
other intermediary institutions that participate in the value
distribution from production to consumption. Therefore, it
is assumed that there are three types of marketing channels
which are communication channels, distribution channels
and service channels (Kotler and Keller, 2008). Channels
of distribution therefore provide downstream value by
bringing finished products to end users. This flow may
involve the physical movement of the product or simply the
transfer of title to it (Ostrow, 2009). Similarly, distribution
channel is defined as one or more companies or individuals
who participate in the flow of goods and services from the
manufacturer to the final user or consumer (Hill, 2010). 9
Nevertheless, other types of flows should not be neglected
in distribution channels since distribution consists of one
or more companies or individuals who participate in the
flow of goods, services, information, and finances from the
producer to the final user or consumer (Coyle et al. 2013).
These therefore are various routes that products or services
use after their production until they are purchased and used
by end users (Kotler et al. 2006).

A distribution channel is a method of getting a product to


its consumer (Keller, 2008). These channels are part of a
company's marketing mix, each business' unique
combination of product, price, promotion, and place
(Clow, 2007). Distribution affects the place or path through
which consumers can buy and receive the product. A
channel of distribution may be an on-site store, a virtual
store, a retailer, a wholesaler, an agent, a telemarketer, or
direct mail. Product distribution (or place) is one of the four
elements of the marketing mix. Distribution is the process
of making a product or service available for use or
consumption by a consumer or business user, using direct
means, or using indirect means with intermediaries. The
other three parts of the marketing mix are product, pricing
and promotion (Bikram, 2013).

In addition, distribution systems in the fastest-developing


areas can develop and reconfigure quickly while those in
less developed, often rural areas, do not evolve at all
(Hounhouigan et al. 2014). The traditional operational
definition of a distribution network is a firm’s ability to
structure, manage and exert control over its distribution
channels and partners (Alon et al., 2012). This definition
envisions the management of business relationships within
a distribution channel as a conflict in which the channel
leader struggles to control its distribution partners and to
minimise the level 10 of uncertainty in its business
relationships. A different view of distribution which
focuses more on co-operation and control issues emerges
in the work of scholars who have adopted a network
perspective or intend to study business relationships more
in depth (Khojastehpour & Johns, 2014).

According to Gadde (2010), a distribution network has


three main dimensions which are actors, activities and
resources. The actors dimension refers to entities
(producers/manufacturers, exporters, distributors and
agents) that contribute to value creation in the distribution
process. The activities dimension consists of the
coordinated actions carried out by the actors (such as order
fulfillment, sales, inventory management and post-sales),
and finally the resources dimension refers to the bundle of
resources and capabilities on which the actors rely to carry
out the distribution activities (Jensen, 2010). Distribution
of products takes place by means of channels. Channels are
sets of interdependent organizations called intermediaries
involved in making the product available for consumption.
Merchants are intermediaries that buy and resell products.
Agents and brokers are intermediaries that act on behalf of
the producer but do not take title to the products (Aaker,
2009).