Effects of Sales and Distribution Expenses on Organizational Performance in Nigeria’s Consumer Goods Sector
DOI:
https://doi.org/10.52812/msbd.66Keywords:
Sales and distribution, Marketing and sales, revenue, return on equity, gross margin, NigeriaAbstract
The end goal of any organization is to deliver value to the consumers. This can be achieved by ensuring quality products get to the consumer through efficient sales and distribution channels. There are several costs associated with sales and distribution, including costs relating to the moment production is complete to the point it gets to the consumer and everything in between, including the cost associated with making the products attractive or desirable to consumers. These costs related to sales and distribution have the potential to impact some metrics of organizational performance. This study examines the impact of such costs on revenue, return on assets, and return on equity and gross margin in the Nigeria consumer goods sector from 2013 to 2021 in 14 companies. The results revealed that sales and distribution cost has (a) moderate to high positive association to revenue; (b) very high positive association to gross margin (c) and no established relationship with Return on Asset and Return on Equity. The study also revealed that alcoholic beverage companies spend comparatively more on sales and distribution costs. Ultimately, this results from this study when combined with future studies can help identify points of maximum efficiency in the sales and distribution cost, i.e. the point where maximum returns in terms of revenue and profit is reached before equilibrium or decline happens for every sales and distribution expense.
References
Abdullahi, D. (2015). Effect of advertising on the sales revenue and the profitability of selected food and beverages firms in Nigeria. International Journal of Economics, Business and Finance, 3(3), 1-16.
Agbeja, O., Adelakun, O., & Akinyemi, D. (2015). Analysis of the effect of advertising on sales and profitability of company. International Journal of Novel Research in Marketing Management and Economics, 2(3), 81–90.
AMA. (2013). The Four Ps of Marketing. American Marketing Association. https://www.ama.org/marketing-news/the-four-ps-of-marketing
Arazu, O. W., Mobosi, I. A., & Mba, I. C. (2022, August). Real sector performance amid financial globalization: The Nigeria growth prospects. African Social Science and Humanities Journal, 3(4), 137–148. https://doi.org/10.57040/asshj.v3i4.286
Assaf, A. G., Josiassen, A., Mattila, A., & Kneževic Cvelbar, L. (2015, 7). Does advertising spending improve sales performance? International Journal of Hospitality Management, 48, 161-166. https://doi.org/10.1016/j.ijhm.2015.04.014
Baines, P., Fill, C., & Rosengren, S. (2017). Marketing. SAGE Publications Ltd. ISBN: 9780198809999
Balat, J., Brambilla, I., & Porto, G. (2009, 6). Realizing the gains from trade: Export crops, marketing costs, and poverty. Journal of International Economics, 78(1), 21-31. https://doi.org/10.1596/1813-9450-4488
Bhowmik, A., Hossain, K., Vangpadith, V., & Chowdury. N., (2020). Analyzing the Impact of Advertising and Sales Promotion Costs on Sales Revenues and Profits of DSE Listed Ceramic Companies in Bangladesh. Global Journal of Management and Business Research, 20(D2), 11–17. Retrieved from https://journalofbusiness.org/index.php/GJMBR/article/view/3291
Bolton, R. (1989). The relationship between market characteristics and promotional price elasticities. Marketing Science, 8(2), 153–169. https://doi.org/10.1287/mksc.8.2.153
Day, G., & Fahey, L. (1988). Valuing market strategies. Journal of Marketing, 52(3), 45-57. https://doi.org/10.2307/1251449
Dinesh, V., & Sharma, A. (2019). Marketing margin, price spread and marketing efficiency analysis on different poultry farms. International Journal of Current Microbiology and Applied Sciences, 8(06), 1039-1046. https://doi.org/10.20546/ijcmas.2019.806.127
Dora, H. (1966). Distribution Cost Analysis. Management Services: A Magazine of Planning, Systems, and Controls, 3(5), Article 8. https://egrove.olemiss.edu/mgmtservices/vol3/iss5/8
Hardesty, S., & Leff, P. (2010). Determining marketing costs and returns in alternative marketing channels. Renewable Agriculture and Food Systems, 25(1), 24-34. https://doi.org/10.1017/S1742170509990196
Haryanto, T., & Retnaningrum, M. (2020). The impact of marketing expenditure on firm performance. Jurnal Manajemen Bisnis, 11(2), 188–201. https://doi.org/10.18196/mb.11297
Jackson, S. (2017). Statistics plain and simple (4th ed.). Boston, MA: Cengage Learning.
Konak, F. (2015). The effects of marketing expenses on firm performance: Empirical evidence from the bist textile, leather index. Journal of Economics, Business and Management, 3(11), 1068–1071. https://doi.org/10.7763/JOEBM.2015.V3.335
Kosan, L. (2014). Accounting for marketing: Marketing performance through financial results. International Review of Management and Marketing, 4(4), 276–283. https://www.econjournals.com/index.php/irmm/article/view/955
Kotler, P., & Keller, K. L. (2009). Marketing management. Upper Saddle River, NJ: Pearson Prentice Hall. ISBN: 9780136009986
KPMG. (2016). Fast moving consumer goods – sector report. KPMG Africa Limited. https://assets.kpmg.com/content/dam/kpmg/br/pdf/2016/09/fast-moving-consumer-goods.pdf
Mardiyanto, H. (2009). The Essence of Financial Management [Intisari manajemen keuangan]. edisi pertama. Jakarta: Grasindo. ISBN 978-979-025-584-5
Markota, L., Barac, Z., & Knezovic, V. (2015). Impact of promotional costs on company’s profitability. Journal of Accounting and Management, V(2), 19–30. https://hrcak.srce.hr/153496
McKinsey. (2020). Perspectives on retail and consumer goods. Issue 8. McKinsey & Company https://www.mckinsey.com/
Mulky, A. G. (2013). Distribution challenges and workable solutions. IIMB Management Review, 25(3), 179-195. https://doi.org/10.1016/j.iimb.2013.06.011
Mwanza, P., & Ingari, B. (2015). Strategic role of distribution as a source of competitive advantage in fast-moving consumer goods in Kenya. International Journal of Scientific and Research Publications, 5(10), October 2015. https://www.ijsrp.org/research-paper-1015/ijsrp-p4678.pdf
Polit, D., & Beck, C. (2017). Nursing research: generating and assessing evidence for nursing practice. Lippincott Williams & Wilkins. ISBN: 978-0-7817-7052-1.
Richard, P. J., Devinney, T. M., Yip, G. S., & Johnson, G. (2009). Measuring organizational performance: Towards methodological best practice. Journal of Management, 35(3), 718-804. https://doi.org/10.1177/0149206308330560
Sarker, M. A. H., & Rahman, M. (2017). Consumers’ Purchasing Decision Toward Fast Moving Consumer Goods (FMCGs): An Empirical Study. The Comilla University Journal of Business Studies. 4(1). https://ssrn.com/abstract=3515850
Schaefer, H. P. (1958). The Distribution Cost Problem. The Accounting Review, 33(4), 625-631. https://www.jstor.org/stable/241101
Scott, D. (2009). The New Rules of Marketing and PR: How to Use News Releases, Blogs, Podcasting, Viral Marketing, and Online Media to Reach Buyers Directly. Gildan Media. ISBN: 978-1119070481
Sharma, J., & Husain, S. (2015). Marketing Expenses & Profitability: Evidence from Telecom Sector in Kingdom of Saudi Arabia. European Journal of Business and Management, 7(35), 66–70. https://www.researchgate.net/publication/31575435
Srinivasan, S., Pauwels, K., Hanssens, D., & Dekimpe, M. (2004). Do Promotions Benefit Manufacturers, Retailers, or Both?. Management Science, 50(5), 617–629. http://www.jstor.org/stable/30046102
Srivastava, R., Shervani, T., & Fahey, L. (1998). Market-Based Assets and Shareholder Value: A Framework for Analysis. Journal of Marketing, 62(1), 2–18. https://doi.org/10.2307/1251799
Ullah, Z., & Khan, M. (2019). Impact of interest rate spread on the profitability of all commercial banks in Pakistan. Indian Journal of Economics and Development, 9(12), 1-6. https://doi.org/10.17485/IJED/v9.2020.70
UN. (2022). World Population Prospects. United Nations population division. https://population.un.org/wpp/
Weber, J. A. (2002). Managing the marketing budget in a cost-constrained environment. Industrial Marketing Management, 31(8), 705-717. https://doi.org/10.1016/S0019-8501(01)00191-2
.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Science Insight
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Creative Commons Non Commercial CC BY-NC: The work is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License which permits non-commercial use, reproduction and distribution of the work without further permission provided the original work is properly attributed.