Assessment on the Effect of distribution channel practices on customer

service performance:
The case of Ethio Telecom

Research proposal prepared for partial fulfillment of the requirements

for Masters in business administration (MBA)

University
Department of Business Administration

March 2022
Ethiopia
Contents page
1. Introduction.........................................................................................................................................1
1.1. Background of the study..............................................................................................................1
1.2. Statement of the problem.............................................................................................................2
1.3. Research questions.......................................................................................................................4
1.4. Objective of the study..................................................................................................................4
1.4.1. General objective.....................................................................................................................4
1.4.2. Specific objectives...................................................................................................................4
1.5. Scope of the study........................................................................................................................5
1.6. Significance of the study..............................................................................................................5
1.7. Definition of terms.......................................................................................................................5
2. LITRATURE REVIEW.............................................................................................................................7
2.1. Theoretical Literatures................................................................................................................7
2.1.1. Meanings and Types of Distribution Channels.......................................................................7
2.1.1.1. Meanings of Distribution Channels.....................................................................................7
2.1.2. Types of Distribution Channels.............................................................................................11
2.1.3. Defining and understanding multi-channel product distribution........................................11
2.1.4. Why is it necessary to use Indirect Marketing Channels?....................................................12
2.1.5. Selecting Distribution Channels............................................................................................13
2.1.6. Distribution Channel Systems...................................................................................................14
2.2. Empirical Review...........................................................................................................................15
2.2.1. Distribution Network Practices in Ethiopia.......................................................................15
2.2.2. Direct versus Indirect Distribution....................................................................................16
2.2.3. Intermediaries...................................................................................................................17
2.2.3.1. Distribution with intermediaries..................................................................................17
2.2.4. Distribution Strategy.........................................................................................................18
2.2.5. Distribution strategies and Sales Performance................................................................19
2.3. Conceptual framework...............................................................................................................21
3. Research Design and Research Methodology....................................................................................22
3.1. Research Design........................................................................................................................22
3.2. Data Source and type................................................................................................................22
3.3. Target Population......................................................................................................................22
3.4. Sample size Determination.......................................................................................................22
3.5. Sampling Techniques................................................................................................................22
 3.6. Data Collection Instruments.....................................................................................................22
3.6.1. Questionnaires......................................................................................................................22
3.7. Data collection procedure.........................................................................................................23
3.8. Method of data analysis...........................................................................................................23
4. Time and budget schedule.................................................................................................................24
4.1. Time schedule............................................................................................................................24
4.2. Budget schedule.........................................................................................................................24
References.................................................................................................................................................25
 1. Introduction
1.1. Background of the study
In the current market, direct and indirect sales live together, and the analysis of multi-channel
competition and their consumer behavior differences have acquired especial importance (Yan and
Pein, 2009; Grewal and Levy, 2009). Therefore In its broadest sense, when it refers to the whole
economic system, distribution is the allocation of income and assets within one society. In business
economics, distributions relates to the allocation of goods to the recipients. In general, distribution
includes all activities that enable the transfer of material and/or economic power over tangible and/or
intangible goods from one economic subject to another (Wirtschaftsleyikon24.net, 2011).
Domschke and Schield thus emphasise: “Distribution encompasses a system of all activities that are
related to the transfer of economic goods between manufacturers and consumers. It includes such a
coordinated preparation of manufactured goods according to their type and volume, space and time,
so that supply deadlines can be met (order fulfilment) or estimated demand can be efficiently
satisfied (when producing for an anonymous market)”(Domschke&Schield, 1994).
Jain &Shaakshi (2009) explained distribution as one of the four aspects of marketing strategies in
businesses. Since distribution is the one aspect of marketing strategy, there are different advantages
of usages of multichannel of distribution system as a marketing strategy (Wallace, Johnson &
Umesh, 2009). Kotler & Armstrong (2012) explained the contribution of good distribution strategies
as it can create customer value and competitive advantage for a firm. Another benefit of the
distribution strategy is the objective of adding value to the process of making products and services
available to business and household consumers (Valos&Vocino, 2006).
According to Yan and Pein (2009), retail services can be defined as “all forms of demand-enhancing
services (provided by the retailer), which include immediate customer support, presale advice, pre-
and post-purchase services, in-store advertising and promotions, technical and shopping assistance,
return service, channel assembly services and the overall quality of the shopping experiences”. Note
that these elements are factors that affect the individual’s retailing decisions and are directly
managed by the retailers (Staus, 2011).
For deriving beneficial advantages, a business firm can use a portfolio of marketing channels having
different function, structure and behavior (Valos&Vocino, 2006). Having two or more distribution
channels as the same time is better for both customers and suppliers. This is because customers can
choose the better suited channel and the supplier company can increase products and services sales
coverage and its efficiency (Vinhas& Anderson, 2005) and has a long-term impact on firm
performance and are largely irreversible (Homburg, Vollmayr, & Hahn, (2014).
As Jain &Shaakshi (2009) note supports that distribution channels may not be restricted to physical
products alone but it is important for moving a service from producer to customer in certain sector,
since both direct and indirect channels may be used. And Ethio-telecom‟s is being engaged in sales
activities of products & services by direct and indirect channel of distribution.
The direct channel of the company performs a sales activity of products and services to the overall
customers who can walk-in to the compounds of 173 direct shops throughout the country, whereas
the indirect channels department perform sales of P&S to the final customers indirectly through main
distributors, sub-distributors and retailers in any business areas in which the outlets are ready to sell
products and services of the company.
1.2Back ground of the company
Originally a division of the Ministry of Post, Telephone and Telegraph, what would become the ETC
was established as the Imperial Board of Telecommunications of Ethiopia (IBTE) by proclamation
No. 131/52 in 1952. Under the Derg Regime, the IBTE was reorganized as the Ethiopian
Telecommunications Service on October 1975, which was in turn reorganized on January 1981 as the
Ethiopian Telecommunications Authority. On November 1996, the Ethiopian Telecommunications
Authority became ETC by Council of Ministers regulation No. 10/1996. The subsequent
Proclamation 49/1996 expanded the ETC's duties and responsibilities. For its international traffic
links and communication services, ETC mainly uses its earth station at Sululta which transmits and
receives to both Indian Ocean and the Atlantic Ocean satellites.

The Ethiopian Telecommunications Corporation (ETC) was, until December 2010, the sole
telecommunication service provider in Ethiopia. Based in Addis Ababa, it was the second-largest
state-owned company in Ethiopia, the largest being Ethiopian Airlines.

The Ethiopian Telecommunications Corporation (ETC) was replaced by ethio telecom on December
2, 2010. The new company is also fully owned by the state, but management is outsourced to France
telecom for two years. The government said it outsourced the management as ETC was not able to
meet the demands of the fast-growing telecom need of the country. It also said that telecom services
would not be privatized, at least not soon.

The Ethiopian Government has decided to transform the telecommunication infrastructure and
services to world class standard, considering them as a key lever to the development of Ethiopia.
Thus, ethio telecom is born from this ambition in order to bring about a paradigm shift in the
development of the telecom sector to support the steady growth of our country.
To keep on modernizing the country, the government has decided to focus on the development of
infrastructures and of telecom in general. ethio telecom is born from this desire to provide the
country with an internationally recognized company that will implement state-of-the-art processes
and methods in order to offer the best network and the best quality of services to Customers. ethio
telecom will benefit from the help and from the transfer of knowledge and of know-how of the
world-wide known operator France Telecom. ethio telecom will then implement top class methods
and processes that will help it to be a recognized Customer focused, market oriented, world class
organization.

A management contract is an arrangement under which operational management of an enterprise is

vested by contract in a separate enterprise. Management contract involve helping developing
management skills, to share best practices and to implement them in the given environment. The
Ethiopian government has chosen France Telecom among three other top rates companies to sign the
present management contract. An agreement has been reached with France Telecom in order to
benefit from its international experience and well-known managerial capability. This will help to
faster the modernization of Ethiopian telecommunication and to provide the country with a world-
class organization.

Before December 2010 there were around 950 ETC offices and shops for delivering services, after
the new structural changes there are 214 ethio telecom shops around the country to deliver telecom
services.

The company’s indirect channel of distribution was established on December 2010 after the
management contract signed by France Telecom. The IDC is been engaged in distributing products
and services which are being sold within distribution chain members for supporting communication
technology. Such products and services are; data and voice SIM cards, Voucher cards and Telephone
apparatus (Ethio-Telecom, Indirect Channel Department).
Due to the company’s newness for indirect channels of distribution, it faces management and
distribution difficulties. Such difficulties also explained in different literatures of the indirect channel
of distribution as a complex behavioral system (Kotler & Armstrong (2012), harder to control,
challenging and conflict arises between the channel members. Such company’s channel decision can
directly affects every other marketing decision (Kotler & Armstrong, 2012). Therefore effective
management of their distribution channels (Dong, Tse& Hung, 2010) should be undertaken by
designing effective governance strategies (Stern & El-Ansary 1977). Hence the effective
management of distribution channels should be that simultaneously motivates and controls various
types of distributors (Griffith & Myers, 2005).
Delivery of the product/service to the final consumer in the right place at the right outweighs all other
efforts in marketing (Zikmund&d‟Amico 2001). Unfortunately, many organizations fail to establish
or maintain the most effective distribution strategies (Distribution strategies, 2008).
 1.3Statement of the problem
Distribution Channels have become the most important component of marketing today and are
receiving increased attention. Channels are not only adding value to products and services, but also
create customer and shareholder value, brand equity and market presence for a company. For most
service organizations, consumer marketing and industrial marketing firms, the distribution channel,
or inter organizational network of institutions, comprising of agents, wholesalers, distributors, and
retailers play a significant role in the flow of goods from producers to consumers (Lambert et al,
1998). Different researchers studied different types of distribution practices, for instance,
Markos (2013) studied the distribution practices of MOHA soft drink industry and come up that,
MOHA has used direct and indirect distribution through its own sales force, trucks, agents and sub-
agents throughout the country, respectively. According to his survey study, the (agent) indirect
distribution of the company takes only 15.1%, the direct distribution also used 57.3% of the time,
wholesalers‟ distribution was 3.1% and the remaining % was distributed by “other means of
distribution”. The study further showed that, there is major distribution problem (54.2%) and most of
the respondents were not satisfied (62.6%) by the distribution strategy of the company too.
On the other hand, the Coca-Cola Company has its own distribution channels in which it works the
regular distribution method by relying on trucks and by the network of low cost Micro Distribution
Centers (MDC). The MDCs are an independently owned and run by local entrepreneurs including the
areas of “Hard to reach”. The company has established a systematized process for assessing the need
and locations for MDCs, recruiting owners and operators, and providing assistance with setting up
operations of a new MDC (The Coca-Cola Company, 2015).
According to Strydom, (2015) enumerated that the majority of East African countries telecom service
are owned by the government as monopoly and hence no need to worry about competitive advantage
and, the company needs to have an effective distribution channel for two main reasons. The first
reason is that the company needs to adopt customer relationship marketing perspective to serve its
downstream channel members including the end customers effectively so that negative company
image and associations would not be built. The second reason is that channel members and the end
users will not shift business relationship to potential competitors when the market will be open for
competition in the future.
The above statement supportedby Nehmya ( 2014) who hasstated that Likewise, Ethio telecom
service and goods provision on distribution marketing and through distribution channels to reach the
end customer cannot be said that current distribution channels have performed to the level that meets
industry and stakeholders‟ expectations because there are many chaos in the channels, especially in
the indirect channel, as the researcher’s experience in Ethio telecom’s indirect channel can serve as
an unproven and mere clue about the channels‟ inefficiency. Ethio telecom is a sole telecom operator
in Ethiopia established as a public enterprise on December 1st, 2010, as per the council of ministers
Regulations No. 197/2010. The company aims to provide next generation network services based on
a world class standard information technology services and to build a competent next generation
network-based workforce with appropriate knowledge, skill, attitude, and work culture ( Ethio-
telecom annual report 2005;cited by Mulugeta Adebash 2015).
In Ethio Telecom the distribution channel department is responsible to select the distributors of
physical voucher card and SIM distribution and implement the distribution according to Ethio
Telecom and Distributors agreement. Accordingly distributors are joining Ethio telecom market in 12
region and 6 Zones, the number of distributors exist in each region according to potential market
given from Central statistics agency (CSA). Therefore the proposed study will intend to investigate
the company’s effectiveness of distribution channel strategy on customer service performance to
achieve its goals and objectives.

1.4Research questions
The proposed study will intend to answer the following research questions
 What is the effect of the distribution channel strategy on customer service performance?
 What is the effect of distribution channel design on customer service performance?
 What is the effect of direct distribution channel practices on customer service performance?
 What is the effect of indirect distribution channel practice on customer service performance?

1.5Objective of the study

1.5.1 General objective
The main objective of the proposed study will be to assess the effectiveness of distribution channel
strategy on customer service performance with an emphasis on Ethio-Telecoms’ main-distributors,
sub-distributors and retailers of products and services of the company.

1.5.2 Specific objectives

 To assess the effect of distribution channel strategies on customer service performance.
 To determine the effect of distribution channel design on customer service performance.
  To ascertain the effect of direct distribution channel practices on customer service
performance.
 To explain the effect of indirect distribution channel practices on customer service
performance.

1.6Scope of the study

The scope of proposed study will be delimited to the effectiveness of distribution channel on
customer service performance .To manage the research flow only Ethio telecom main office located
at Addis Abeba will be the subject of the study through assessing how the company will interacts
with its channel actors ( Agent distributors and retailers ).
The subject scope of the study will be also delimited to the company’s customers at Addis Ababa.

1.7Significance of the study

Findings from the proposed study will assist researchers or academicians to provide a good
understanding of the challenging factors that affect the practices of distribution channel sales through
distributors and it also benefits the Ethio telecom in providing clue on the challenging factors in its
distribution channel.
It has a greater benefit for ET top executive management to understand the channel in empirical
ways. It also has a practical significance so as to evaluate the channel performance in an empirical
ways weather it is in the right truck or not, suggest ways and means of tackling the problems on the
decision makings.
To scholars interested to further inquire on the subject can also make use of this distribution channel
research endeavor for other related inquiries. The study will also help as a stepping stone for those
who would like to carry out further exploration in the area of challenges of distribution channels for
other companies.

1.8Definition of terms
Distribution: One of components of marketing mix that in simplest task transfer the product from
the production place to the purchase place to the customer. In other words, the main task of
distribution management is placing the goods in hand of potential customers at the right time and
place. (Roosta, A. Venus, D. Ebrahim, Abdul. ", 2009) Physical distribution - means coordination
of the information and goods flow among the involved parties of the channel, in the way that the
goods are available in the right places, at the right time, in the right quantities, and in a cost-efficient
manner (Fer-rell& Hartline 2011, 265).
Distribution channels: A collection of affiliate organizations and individuals that place product or
service to end-customers. Distribution channels connect the goods producers and customers to each
other. Intermediaries form the components of the distribution channel.
Distributors –Shall mean a legal person or a natural person trader authorized to sell and distribute
Products of Ethio telecom through its distribution chain, (Ethio telecom internal Document) Sub-
distributors –Shall mean natural or legal person, which have entered into contractual relations with
the Distributor with the goal of distributing, promoting and selling of Ethio telecom Products and
Services through own outlets and its retailers, in the assigned territory. The Sub Distributor may
involve in retail activities of SIM card, Handset/apparatus and Dongles. (Ethio telecom internal
Document)
Indirect Channel of Distribution (IDC): It is one kind of channel of distribution when a company
uses one or more levels of intermediaries to help bring its products to final buyers (Kotler &
Armstrong (2012), p. 343).
Multichannel of Distribution (MCD): It is a multichannel marketing occurs when a single firm sets
up two or more marketing channels to reach one or more customer segments (Kotler & Armstrong
(2012), p. 349).
Distribution Chain: It refers to the distributors system of organization of sales of ethio telecom
products to the customers through its Distributors, sub-distributor and retail outlets (Ethio-Telecom,
Indirect Channels Products and Services Distribution Agreement, 2014, p.3).
Retailers -Natural or legal person, which have entered into contractual relations with the Distributor
and/or Sub Distributor with the goal of selling in retail bases to end users only and promoting
products and services of Ethio telecom in the assigned territory.(Ethio telecom internal Document)
 Chapter Two
2. LITRATURE REVIEW
2.1. Theoretical Literatures
Distribution Channels have become the most important component of marketing today and are
receiving increased attention. Channels not only add value to products and services, but also create
customer and shareholder value, brand equity and market presence for a company. For most service
organizations, consumer marketing and industrial marketing firms, the distribution channel, or inter
organizational network of institutions, comprising of agents, wholesalers, distributors, and retailers
play a significant role in the flow of goods from producers to consumers (Lambert et al, 1998). It is
not common among producers to sell their products directly to the end users. A number of
intermediaries, who form a marketing channel called distribution/trade channel, operate between
such producers and the end consumers. (Kotler and Keller 2006)
As Moller and Wilemon (1971) further stated on their book, the development of marketing channel
starts by the existence of intermediaries in the process of exchange. And the structure of marketing
channels is a reflection of the society‟s sociological and economic fabric. The next evolution of
exchange was continued by the operation of centralized exchange which is called a dealer. And then
the now historical development and arrangement of marketing channels was started (Bowersox, and
Copper, 2004) with an arrangement of an independent business as; retailers, wholesalers and
manufacturers for successful and efficient marketing activities.
2.1.1. Meanings and Types of Distribution Channels
2.1.1.1. Meanings of Distribution Channels
The term “distribution channels” can at the moment be replaced by the term “marketing channel”.
“Marketing channel” as a more complex term has been used in the USA since the 1970s, 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 (Tipurić, 1993, 15-16).Distribution or marketing channels are systems of mutually
dependent organizations included in the process of making goods or services available for use or
consumption. Moreover, a marketing channel is "the external contractual organization that
management operates to achieve its distribution objectives “(Rosenbloom, 2004, 8).
There follow some more recent concepts of the distribution channel: „Channel of distribution – The
route along which goods and services travel from producer/manufacturer through marketing
intermediaries (such as wholesalers, distributors, and retailers) to the final user. Channels of
distribution 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. Also known as a
distribution channel, a distribution chain, a distribution pipeline, a supply chain, a marketing channel,
a market channel, and a trade channel. “(Ostrow, 2009, 59).Similarly, distribution channel is defined
by Hill: "Distribution channel – 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,
93).Nevertheless, other types of flows should not be neglected in distribution channels, so that the
following definition is also possible: "Channel of distribution consist 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, Bardi, & Langley, 2003, 106)
These are various routes that products or services use after their production until they are purchased
and used by end users. Therefore, marketing channels, i.e. distribution channels are all those
organizations that a product has to go through between its production and consumption
(Kotler/Wong/Saunders/Armstrong, 2006, 858).
In the so-called consumer marketing channels, the marketing channel system usually includes the
following operators: producer/manufacturer, wholesaler, intermediary, and retailer. On the other
hand, when it comes to business marketing channels, the following are included:
producer/manufacturer, representative or sales subsidiary of manufacturer, business distributor and
business client (Kotler/Wong/Saunders/Armstrong, 2006, p. 861).Different authors describe the
possible options of marketing, i.e. distribution channels in different ways. Nevertheless, the basic
division is into direct and indirect channels. In direct channels, producers/manufacturers sell their
goods directly to individual consumers, while indirect channels include a trading company as well.
An indirect marketing channel can be both short and long. Only one trading company is included in
the short channel (usually, it is a retail company). In the long channel, there are two or more
intermediaries (wholesale and retail companies).
According to Coughlan et al. (2006), distribution channel comprise of different organizations who
are concerned with delivering products and services to the final consumers in the right place at the
right time. Zikmund&d‟Amico (2001) also describe distribution channel as a system that helps to
bring products of the producer to the final consumer. Distribution channels are utilized by the firm to
ensure that products and services are delivered in the right time at a right and convenient place. The
channel of distribution involves middlemen who support the firm to distribute its products and
services to the final consumer. Companies use distribution channels to ensure that their product will
reach customers at the right time and at convenient location. Distribution channels involve
intermediary organizations that help in a process to deliver products to end customers. The main
focus behind distribution channel is to close the gap between where the product is produced and
where the customer/consumer is located (Kim & Frazier, 1996). The producer/manufacturer,
wholesalers and retailers are typically identified as the main actors in the distribution channel
(Coughlan et al., 2006).

So-called vertical marketing systems are formed by joining the functions of separate participants in a
distribution channel. They are the result of competitive and concentration flows, so that some
business systems have expanded by taking over the functions of other channel members. This is the
expansion of activities within certain corporations, i.e. groups, as well as the development of
cooperation types. Therefore, the following basic division of vertical marketing systems is frequently
mentioned: corporate, administered and contractual.
Furthermore, besides vertical marketing systems, horizontal and multichannel marketing systems are
being developed (compare Kotler/Keller, 2008, 486 – 491). In horizontal marketing systems, two or
more vertically unrelated firms join their resources or programs for pursuing new opportunities on
the market (e.g. retailers within a trade centre, retailers within their supply co-operative, banks with
their retail banking services in supermarkets). But, if a certain product is being sold to customers who
do not have the same status, or to customers in different markets (in different countries), it is possible
to establish the so-called multi-channel systems. Nevertheless, the so-called hybrid types of
association, i.e. hybrid marketing channels and multi-channel retailing are gaining in importance
nowadays.
Hybrid marketing channels show that the use of only one channel is not sufficient. Multichannel
architecture optimizes channel coverage, adjustability and control, while at the same time minimizes
cost and conflict. Therefore, various channels for different sized clients should be developed
(Kotler/Keller, 2008, 490). Figure 3 shows hybrid distribution channels.

From the standpoint of economic operators, decisions on marketing channels are considered to be
most important, since the chosen channels directly influence all other marketing decisions. Similarly,
decisions about marketing channels imply relatively long-term responsibilities to other companies
(Kotler, 2001, 529).The importance of distribution channels for producers/manufacturers lies in the
fact that traders need to include their products into their stores’ assortment. Therefore,
producers/manufacturers observe certain types of trading companies, i.e. trading business units and
use them in the development and innovation of their channels.
The importance of distribution channels for economy can especially be seen in the system
development and channel integration. Therefore, vertical marketing systems in the USA, for instance,
cover 70 to 80% of consumer goods market. In such conditions, where vertical marketing systems are
becoming stronger, new competition in retail occurs, since vertical marketing systems can sustain
their production and avoid (even large) producers/manufacturers (Kotler/Keller, 2008, 487, 488).
2.1.2. Types of Distribution Channels
Multichannel Marketing
It is a form of a single firm uses two or more marketing channels to reach one or more customer
segments (Kotler, 2003, p.524). Even if two or more channels are called as “multichannel”, Stern and
El-Ansary (1977, p. 345) described it as “dual distribution marketing” by which a manufacturer or a
wholesaler reaches its final markets with two or more different types of channels for the same basic
products.
Direct Marketing
Jobber and Lancaster (2003, p.186) describes direct marketing as a distribution channel which
attempts to distribute products, information and promotional benefits without an intermediary and
using methods like; direct mail, telemarketing, direct response advertising, electronic media,
catalogue marketing, inserts, door-to-door leafleting and text messaging.
Indirect Channel
It is a kind of a distribution network of independent intermediaries, such as; brokers, agents,
wholesalers, retailers to sell their products effectively to other channel members and/or ultimately to
the end users (Stern and El-Ansary, 1977, p. 26).
Electronic Commerce and Online Channels
Electronic commerce is defined as “the process of buying, selling, transferring or exchanging
products, services, and/or information via computer networks, mostly through the internet and
intranets” (Makame, Kang and Park, 2014). The types of electronic commerce are the following;
Business-to-consumer (B2C), e-banking, business-to-business (B2B), consumer-to-consumer (C2C),
peer-to-peer (P2P), and mobile commerce.
According to Bang, Lee, Han, Hwang and Ahn (2013), in electronic commerce & online channels
products are not able to touch and has no face-to-face communication with the retailer. This is
because both channels are electronic media for which product search and transactions can be
undertaken remotely without geographic distance problem.
2.1.3. Defining and understanding multi-channel product distribution
As per Tsay and Agrawal's (2004) study, multi-channel distribution includes having conventional
intermediaries in addition to the producer's private distribution outlet. This incorporates a producer‟s
private retail outlets, independent intermediaries, on-line producer, sales among others, existing
together in the same distribution channel. Product distribution is an important process of the supply
chain network, and connects the whole firm with its outbound supplies as a whole. Khan et al. (2009)
explain that businesses working effectively relies on how well the distribution hubs and methods are
organized and sorted out. They are of the perspective that distribution procedure permits the flow of
information, products and services easily, at the best prices, which elevates the competitive edge of
the organization. However, poor distribution procedures spread a variety of distractions and
disappointment over the supply chain and ultimately the customer.
Because of the fact that distribution process is vital, securing an effective and efficient distribution
practice is crucial for minimizing the firm's cost, leading to benefits such as increases in sales and
profit (Schary and Backer, 1976). This enhances firm performance since multichannel distribution in
supply management is said to guarantee prompt response to the way information in the market flows,
providing valuable information like customer orders among others (Chow, et al. 2007).
The key factors fueling the use of multi-channel product distribution include the necessity for sales
growth resulting from an extended market coverage that has the potential of improving the
satisfaction of target customers, (Thornton & White, 2001).
2.1.4. Why is it necessary to use Indirect Marketing Channels?
Different researchers stated the importance of distribution channels on their works. An arguments
stated in (Parrish, 1995) paper as “a manufacturing firm cannot be successful without incorporating
channel partner into both their strategic and product planning processes”.
Bowersox, and Copper (2004) explained distribution channel as a motivational factor for functional
performance, reduction of complexity and specialization. Wallace et al., (2009) further stated the
importance from researchers as it can create channel synergies, competitive parity, dependence
balancing, greater market coverage, and ultimately better firm performance through greater sales.
According to Michael (2008), multichannel marketing is “more prevalent and offers many
opportunities to organizations”. Since, Indirect marketing channel is one parts of multichannel of
marketing, for better understanding, it is good to explain the importance of indirect channels of
marketing from different books and journals, as follows;
Kotler and Kevin (2006, p. 472- 473) stated the below functions and roles of channels as a marketing
strategy;
 Many producers may lack the financial resources to carry out direct marketing.

 It can overcome the time, place and possession gap that separate a goods and services from
those who need or want them.
  In some cases direct marketing simply is not feasible. And it can be easier to work through the
extensive network of privately owned network of distribution organizations.

 Producers who do establish their own channels can often earn a greater return by increasing
their investment in their main business. If a company earns a 20% rate of return on
manufacturing and only a 10% return on retailing, it does not make sense to undertake its own
retailing. (specialization)

 They gather information about potential and current customers, competitors and other actors
and forces in the marketing environment.
 They develop and disseminate persuasive communication to stimulate purchasing.

 They reach agreements on price and other terms so that transfer of ownership or possession
can be affected.

 They place order with manufacturers.

 They acquire the funds to finance inventories at different levels of the marketing channels,

 They assume risks connected worth carrying out channel work.

 They provide for the successive storage and movement of physical products.

 They provide for buyers‟ payment of their bills through banks and other financial
institutions.
Parrish (1995) also tried to explain the benefits of manufacturing firm partnering with channels as it
adds value while cutting costs and increases delivery speed. And also added another benefits as
follows:
 Channel partners assist end users by providing increased product availability through rapid
response and customization.

 They serve as consultants by advising end users on how to use products.

 Through the term and conditions of their partnering contracts they are empowered to
provide select warranty and guarantee services.

 They decrease customer search costs through multi-vendor offerings.

2.1.5. Selecting Distribution Channels
As per Armstrong and Kotler (2000), choice of the distribution channel has a huge impact on all
marketing decisions. As a consequence of the significance of distribution channel, various criteria
have been proposed to decide how to pick the appropriate direction in the wider marketing context.
Baines et al. (2008) for instance, propose seven key criteria in connection to deciding the best
channel to employ. These incorporate trustworthiness (consistency of service); time in transit; market
scope; the capacity to offer/operate door to door service; adaptability (taking care of and meeting the
unique needs of shippers); loss and damage performance; the capacity to give more than basic
product delivery service. The greater part of these criteria concurred with Armstrong and Kotler's
(2000) outline of the key effective criteria which have been embraced by the Caterpillar association
which creates heavy plant vehicles for the construction business.
From the viewpoint of Rangan and Jaikumah (1991), there are two fundamental choices when
designing a channel of distribution: a strategic choice and a tactical choice. As per the authors, the
former takes decisions regarding the number of levels between the producer and the client
(consumer), while the latter decides the intensity of the proposed structure and policies for the
management of the channel (Rangan and Jaikumar, 1991). The multifaceted nature of these choices
is compounded broadly by diverse social, economic, cultural and political patterns (Ensign, 2006).
Contrasted with supply chain management, distribution channel appears to have a perspective of
"inside the chain". It is not uncommon for distributional studies to research the seller-buyer
dynamics, and they frequently take either the merchant's point of view or the purchaser's viewpoint
(e.g., Amato and Amato, 2009; Deusenet al., 2007).
2.1.6. Distribution Channel Systems
Channel level is a layer of middle people that are included in procedure to perform channel
undertakings. (Kotler, et al. 2008). Figure 1 demonstrates three fundamental distribution channel
frameworks. The first channel above utilizes direct conveyance system, where items and
administrations are exchanged specifically from maker to buyer. The different channels use
mediators/intermediaries, - retailers and wholesalers to convey their items to last clients.
Source: Adopted from Kotler et al. 2008
2.1.7. Direct versus Indirect Distribution
Distribution is usually done using two main approaches; direct and indirect.
Direct distribution implies that items are dispersed specifically from producer to customer.
Organizations offer their items specifically to clients at client's home, over telephone, on web or at
some other open spot. (Raatikainen 2008, 175). Selling through web, inventories and telesales spares
expenses of keeping up retail locations and utilities and enhances pace of conveyance and logistics
capacities inside of the channel. Direct distribution likewise gives organizations better access
topurchasers and offering through web helps them access markets even on worldwide level (Kotler et
al. 2008)
The other direct channel distribution methodology is immediate retail frameworks: Here the item
producer likewise works their own particular retail outlets. It could also be through individual
offering system; the way to this immediate distribution is that a person whose principle obligation
includes making and overseeing sales is included in the distribution process, for the most part
inducing the purchasers to place orders. This request its self may not be taken care of by the salesman
himself. The last classification of direct distribution methodology includes the assisted marketing
frameworks. Here the producer depends on others (representatives/brokers) to help communicate the
manufactured product to handle the distribution specifically to the buyers.
The indirect channel item distribution methodology includes the producer coming to the final clients
through the assistance of others. These resellers for the most part take responsibility for the product,
however now and again they may offer items on a consignment basis. The intermediaries assume the
obligation of having the products of the manufacturer sold. Distributing indirectly may be in the form
of a single party selling system; these include producers drawing in another party who then offers
and distributes straightforwardly to the last client. These could be vast store based retailers or online
retailers. Distributing indirectly could likewise be various –party offering system; here the
wholesalers buy from the producer and offers the item to retailers. From an marketing point of view,
diverse distribution channels may vary in their capacities to perform different service outputs. The
Internet channel is especially effective in giving data to the client, in this way decreasing the
purchaser's search costs. Offering various reciprocal channels gives a more noteworthy and more
profound blend of customer service, which enhances the overall value proposition of the seller.
(Wallace et al. 2004

2.1.8. Intermediaries
Now and again, rather than making direct delivery to the client, the organization may choose to
utilize intermediaries to enhance their products and to guarantee that items will be closer to target
market. Intermediaries normally have selling experience, customer skills and networks that can give
the organization an advantage than offering the products directly to the customer by doing everything
naturally. Middle people additionally assume an essential part so as to coordinate supply with interest
on bigger amounts of comparable products from makers and breaking them into sums sought for
clients, giving them to clients in correct time and area (Kotler et al. 2008).
2.1.8.1. Distribution with intermediaries
Using intermediaries to distribute a company’s products/services means the firm uses the services of
other organizations such as wholesalers and retailers to make product/services available to the final
consumer. Many organizations see the use of intermediaries as an expensive venture since it
increases the cost of the company. Some argue that using intermediaries will not help the
organization to save cost and improve profitability. However, a number of studies have shown that
intermediaries do not necessarily inflate the cost of the organization. In most cases, the
intermediaries undertake tasks that would otherwise be taken by the manufacturer if it does not
employ the services of intermediaries. For instance an intermediary provides services such as storage
of the manufacturers goods and transportation of such goods to the door step of the final consumer.
Thus, taking away intermediaries and delivering the product directly to the final consumer implies
that the company will have to bear the cost of storage and transportation by itself. It therefore stands
to reason that the company actually wins if it decides to employ the services of responsible and
dedicated intermediaries (Zikmund&d‟Amico2001). The various forms of intermediaries are
discussed below:
Non-store retailing
Kotler et al. (2008) defines non-store retailing as selling products to customers through catalogues
phone-sales, vending machines and internet. Usually, non-store retailing is not intended to replace
traditional stores but rather to complement them. Traditional retail stores are complimented by
web/online retail stores. The online retail store affords consumers the opportunity to order and buy
products online which may be more convenient to the consumer than appearing physically at the
retail shop. Online delivery channels exhibits wide range of products and services for the consumer‟s
consideration physical shops since there is no limit to the space available for display and storage. A
typical example of a successful online distribution is e-bay, which affords consumers the opportunity
to purchase wide range of products and services.
Store retailing
One of the easiest ways to distribute products and services is through retail stores. Manufacturers/
producers do not need to worry when using store retailing. This is because storage, customer service,
delivery and well-maintained premises are taken care of by the retail stores. The retailers also help to
create awareness of the company’s product because if consumers appear in the store wishing to
purchase something different, the product of the company will still be visible for the consumer to
notice, evaluate and consider. Organizations tend to offer their products and services through retailers
with the view of adding value to the company’s products. For the sake of the convenience of
customers, retailers store the products of the company for easy access by consumers. According to
Levy and Weitz (2009), offering the product through retailers is important to the producer since it
will help reduce inventory and transportation costs. Selling through retailers in beneficial for
manufacturers, as they can reduce transportation and inventory costs.
Pop-up stores
Another form of retailing is through the use of pop-up stores. These are stores that are temporal and
are set up at periods when sales are expected to increase. Usually, they are set up at occasions such as
Christmas, Easter and Galantine’s day. Pop-up store affords the company the opportunity to improve
its sales during a particular season without having to worry about renting premises to offer their
products and services to the final consumers. (Loughran, About.com). The extent to which pop-up
stores are becoming popular is making retailers consider this form of retail option. Online companies
that are famous for online delivery such as eBay opened a pop-up store in London in order to access
high-street customers. Even though customers purchase virtual products online that are physically
delivered to them afterwards, it afforded eBay the opportunity to be recognized as one of the busiest
streets in London and therefore promote their brand image. (Guardian 2011, guardian.co.uk; Evans
2012, wsj.com).
2.1.9. Distribution Strategy
According to Hooley et al. (2008), distribution strategy examines how a company’s product/service
reaches the consumer. The choice of distribution strategy is of crucial importance for the company
and it has significant impact on the future survival and success of the organizations
(Zikmund&d‟Amico 2001). Designing a distribution strategy entails selecting the best
intermediaries, ensuring that the product/service is transported at the exact quantity and quality, and
making sure that the products are delivered on time (Thompson & Soper 2007). Choosing the
distribution channel involve the process where producers select how the manufactured products will
reach the final consumer, which is an essential decision to be undertaken by the company.
The objective of a distribution strategy may include sales volumes and profit, expansion in market
share, and cost effectiveness. The company must thrive to deliver the products/service to the final
consumers in the place, time and quantity preferred by the consumer/customer at the minimal
possible cost (Solomon et al. 2009).
The number of distribution levels
Choosing the right distribution strategy begins with selecting the various levels of distribution
channel (Solomon et al. 2009, 504). Hooley (2008, 361) explain that the main focus of distribution
strategy is to decide whether the company’s products should be sold directly to the final consumer or
it will be delivered to the final consumer through intermediaries.
The amount of distributors
After deciding on the right distribution strategy, the other most important decision to be taken is the
extent of the various distribution outlets. In their book The Power of Marketing, Zikmund and
d‟Amico separate three types of distribution, based distribution intensity; intensive, selective and
exclusive distribution strategies (Zikmund&d‟Amico 2001, 368).
2.1.10. Distribution Channel design
Customer first chooses a channel (let say a call center) to start an interaction with a firm. The chosen
channel, provides the customer with information and services that the customer needs. It also creates
a link between the customer and other parts or channels of the company. Unlike the static structures
and flows of traditional marketing systems, multichannel marketing systems are characterized by
such a real time alignment between the customer and different channels in a firm. Marketing
channels decision need to evaluate every aspect of the Design of its marketing channel. According to
Nunes et al, 2003, stated as, demand generation, inventory storage, distribution of goods, providing
credit to buyers, after sales service, product modification and maintenance are some of the functions
that a channel performs. The channel member also called as an intermediary is a member of the
distribution channel excluding the manufacturer and the consumer. Intermediaries come between
these two and perform one or more of the above functions. Thus an enterprise, in planning its
marketing complex, must pay considerable attention to the decisions of product distribution (Rasa
Gudonaviciene& Sonata Alijosiene, 2008).

2.1.11. Operational and business performance

A manufacturer may establish goals for the evaluation of the distributors’ performance. At the
same time, these goals may contribute to the development of the distributors’ capabilities.
Fugate, Stank and Mentzer (2009) analyzed the impact of the operations personnel’s knowledge
of logistics on operational and organizational performance. Their findings show that processes
that stimulate knowledge creation, dissemination, shared interpretation, and responsiveness, have
a positive impact on operational and organizational performance. This happens because these
processes allow the operations personnel to share knowledge and interpretation of their routine
tasks. For similar reasons, all these processes may, to some extent, also enable knowledge
transfer between the manufacturer and the distributors, increasing the amount of knowledge
acquired by the distributors, which, in turn, helps them to perform their activities better.
Prahinski and Benton (2004) stated that performance measurement can be both financial and
operational (non-financial). Operational measurements of performance are usually evaluated by
the traditional competitive criteria of operations strategy, such as quality, delivery, cost, service
and flexibility. On the other hand, business performance is usually analyzed based on
measurements like profitability, market-share and revenues, among others.
Ruiz-Jiménez and Fuentes-Fuentes (2013) showed that product and process innovation mediate
the relations between knowledge integration and organizational performance. The results of this
type of knowledge integration in operations, like selling products, performing maintenance
services in customers’ vehicles, developing relationships with suppliers, intending quality
improvements, can help to reduce costs and/or increase profits, and, therefore, influence business
performance measurements. Thus, operational performance is assumed to be an antecedent of
business performance (Krause et al., 2000; Shin et al., 2000).
2.1.12. Effectiveness as Performance Indicator
Effectiveness can be referred to as a long term firm orientation (Morgan et al., 2004). Scholars often
equate effectiveness to non-economic performance or non-financial measure. It is further emphasized
by Ataollah et al. (2010) that non-financial performance is crucial for a company’s future
performance. Pertinent to distribution issue, Rhea et al. (1987) see distribution effectiveness closely
related to customer satisfaction. For instance, if a customer expects a delivery of an order is on a two-
week time; then, the delivery service is considered effective once the order arrives in less than two
weeks or on the last day of the delivery time. Otherwise, it is said ineffective, when the order reaches
the customer later than the expected time. In fact, the longer the order reaches the customer the less
effective the delivery services on the eyes of the customer will be. Innovation in distribution channel
as in other cases (Rosli et al., 2012; Mukhamad & Kiminami, 2011; Pla- Barber & Alegre, 2007)
would enhance firm performance.
2.1.13. Sales Performance
An understanding of the factors that drive sales performance and how these vary across different
contexts is essential for both managers and researchers in sales and marketing. Twenty-five years ago
Churchill et al. (1985) published a seminal paper on the antecedents of sales performance that has
shaped academic and managerial thinking on sales management and becomes one of the most cited
articles in marketing research (Leigh et al. 2001). Applying a classification scheme of antecedents of
sales performance developed previously by Walker et al. (1977), Churchill et al. (1985) found six
predictive categories to explain marginal variance in sales performance (in order of predictive
validity): role perceptions, skill levels, aptitude, motivation, personal characteristics, and
organizational/environmental variables. In addition, their meta-analysis demonstrated that the type of
products sold moderated the predictive power of these categories for sales performance. Most
empirical research thus far had been looking at enduring personal characteristics as determinants for
sales performance. The basic message of this meta-analysis was that these variables were not the
most important predictors (Churchill et al. 1985, p. 117). Instead, Churchill et al.(1985) suggested
that researchers should investigate “influenceable” determinants of sales performance. Another key
focus they proposed was the dynamic nature of sales.
2.2. EMPIRICAL REVIEW
2.2.1. Distribution strategies and Sales Performance
As indicated by Levi and Weitz (2008), strategic decision on distribution channels is growing in both
popularity and significance in the business world. A number of reasons have been assigned for this
phenomenon. First, because focus has shifted towards the customer, distribution has moved from
being the backwater of strategy to the mainstream, since it is where much of the profit and sales
volumes in many industries can be found nowadays (Wise and Baumgartner, 1999). Put differently,
distribution and its systems have become crucial source of increased sales and competitive
advantage. This phenomenon has been described quite extensively. In the view of expressed
Anderson and Narus (1990), the prosperity and success of a producer/manufacturer and its
distributors hinges on other companies. They further explain that a producer’s/manufacturer’s
success cannot be attained using their own effort; having a good partner in distribution is essentially
vital. Loomba (1996) also express that for businesses to compete effectively in today’s competitive
environment, there is a need for them to re-evaluate their existing distribution and make adjustments
when necessary. Hyvönen and Tuominen (2007) also argue that the changing business environment
has recently challenged many firms to seek out new methods to achieve sustained sales volumes
through market orientation and distribution channel collaboration. Secondly, distribution channel
strategies affect many other aspects of marketing strategies. According to Kotler and Keller (2008),
distribution affects sales, since if the product is not available, it cannot be sold. Most customers will
not wait until it can be reached. Thornton and White (2001) suggest that a multiple-channel strategy
may generate more revenue because firms can use different channels to sell different products. When
a company starts using a new channel, it can expect higher sales growth through this channel than the
channel it has traditionally relied on, because with this new channel a company frequently attempts
to tap into a new market segment and therefore enjoys considerable growth opportunities. Wright
(2002) also posits that a multiple-channel strategy can also reduce costs. Thus, firms with a multiple-
channel strategy may perform better than firms with single-channel strategy. On the other hand, the
literature (Gertner and Stillman, 2001) suggests that the adoption of a new distribution channel may
result in channel conflicts. Additionally, multiple-channel structures can be very difficult to manage
(Stern et al., 1996). According to their arguments, a firm with single-channel strategy would perform
better than one with a multiple-channel strategy.
2.2.2. Distribution Network Practices in Ethiopia
In most of Ethiopian firms products and services are sold through their own outlets or wholesale to
other resellers in cities of the country. Since it is difficult to get paper works on experiences of
distribution networks of firms in Ethiopia, the study has tried to see some as the following;
Sutton and Kellow, (2010) study assessed 50 leading firms in Ethiopia, and in their own study they
tried to describes the history and current capabilities of Ethiopia‟s leading industrial companies
(agribusiness, manufacturing and construction) with the help of the companies profiles. Relating to
the distribution network practices of the 50s leading firms; their study described almost all firms‟
distribution experiences. But for the benefit of discussion, the following firms‟ distribution practices
are explained as “better” practices of distribution.
Markos (2013) studied the distribution practices of MOHA soft drink industry and come up that,
MOHA has used direct and indirect distribution through its own sales force, trucks, agents and sub-
agents throughout the country, respectively. According to his survey study, the (agent) indirect
distribution of the company takes only 15.1%, the direct distribution also used 57.3% of the time,
wholesalers‟ distribution was 3.1% and the remaining % was distributed by “other means of
distribution”. The study further showed that, there is major distribution problem (54.2%) and most of
the respondents were not satisfied (62.6%) by the distribution strategy of the company too.
On the other hand, the Coca-Cola Company has its own distribution channels in which it works the
regular distribution method by relying on trucks and by the network of low cost Micro Distribution
Centers (MDC). The MDCs are an independently owned and run by local entrepreneurs including the
areas of “Hard to reach”. The company has established a systematized process for assessing the need
and locations for MDCs, recruiting owners and operators, and providing assistance with setting up
operations of a new MDC (The Coca-Cola Company, 2015).
According to Strydom, (2015) enumerated that the majority of East African countries telecom service
are owned by the government as monopoly and hence no need to worry about competitive advantage
and, the company needs to have an effective distribution channel for two main reasons. The first
reason is that the company needs to adopt customer relationship marketing perspective to serve its
downstream channel members including the end customers effectively so that negative company
image and associations would not be built. The second reason is that channel members and the end
users will not shift business relationship to potential competitors when the market will be open for
competition in the future.

2.3. Conceptual framework

The conceptual framework designed from the above literature discussions and it shows the
relationship between the dependant and independent variables.

Independent variables Dependent Variables

Distribution channel strategy

Distribution channel design Customer service performance

 Sales performance

Direct distribution channel practice

 Indirect distribution channel practice

Source: (the researcher 2019)

 Distribution channel strategy is the overall approach to distributing products or services

depends on several factors including the type of product, especially perishability; the market
served; the geographic scope of operations and the firm's overall mission and vision. The
process of setting out a broad statement of the aims and objectives of a distribution channel is
a strategic level decision.
 Distribution channel design a firm can design any number of channels they require to reach
customers efficiently and effectively. Channels can be distinguished by the number of
intermediaries between producer and consumer.
 Direct distribution channel practices area distribution system is said to be direct when the
product or service leaves the producer and goes directly to the customer with no middlemen
involved. Direct distribution is when the company either directly sends the product to end
customer or when the channel length is very less.
 Indirect distribution channel practice Indirect occurs when there are middlemen or
intermediaries within the distribution channel. In the wood example, the intermediaries
would be the lumber manufacturer, the furniture maker, and the retailer . Indirect distribution is
when the product reaches the end customer through numerous channels in between.
 3. Research Design and Methodology
3.1. Research Design
This research follows the principle of applied research as it aims at finding a solution for an
immediate problem facing an industrial/business organization. (Abdurazak, Berhanu and Matiwos,
2014). Explanatory studies and descriptive survey designs will be used to allow for the gathering of
information, summarize, present and interpret it for the purpose of clarification (Creswell, (2003).
Whereas, the research approach is quantitative research approach, it is a means for testing objective
theories by examining the relationship among variables. These variables, in turn, will be measured,
typically on instruments, so that numbered data will be analyzed using statistical procedures. The
design will allow the researcher to draw conclusions on the impact of sales promotion practices on
customer satisfaction.
3.2. Data Source and type
There are two types of data, namely primary and secondary data. A researcher might use either both
or one of the types of data depends on the research type and data collected by researcher (Saunders
et.al, 2007). For this research purpose primary data will be collected through standardize
questionnaire. Primary data are originated by a researcher for the specific purpose of addressing the
problem at hand (Malhotra and Birks, 2006). The sources for primary data in the case of the proposed
study will be from Distributors, sub distributors and Employees of Ethio telecom.And also secondary
data will be collected from journals, company publication and other publicized documents.
3.3. Target Population
The target population of the proposed study will be classified in to three, which are the employees of
Ethio telecom main office located at Addis Abeba 512 employees, from 28 agent distributors from
Addis Abeba, from 250 retailers located at Addis Abeba.
Therefore, total target population of the study is 790.
 3.4. Sample size Determination
To determine the sample size of the study, as Polonia, (2013) used the sample size on the analysis of
customer survey and Israel (2013) explains on different sample size formula Taro Yamane’s (1967)
simplified sample size determination formula was used by assuming a 99% confidence level and
P = 1% are assumed as follows: -
n = N/1+N(e)2where:n is the sample size drawn from the entire population,
N is targeted population size ande is the level of sampling error
No Particulars Population Sample size Sampling technique Remark
1 Employees from main office 512 84 convenience sampling
2 Agent distributors 28 28 Simple random sampling
3 Retailers 250 71 Purposive judgmental sampling
TOTAL 790 183

3.5. Sampling Techniques

The researcher principally will usethe probabilistic sampling technique because there are chances of
a member of population being selected for the sample are known or there is an equal chance of being
included. Since stratified sampling is useful in cases where there is a priori information relating to the
heterogeneity of the target population from one group to another (Spanos, 2003).
Probability sampling technique i.e. simple random sampling technique will be emphasized to select
sample represents from Agent distributors, whereas for employees to select sample respondents from
company employee and the reason will intend to employ convenience sampling techniques because
convenience sampling technique allow the researcher to select the sample respondents who have
adequate knowledge about the company’s distribution channels .

3.6. Data Collection Instruments

The primary data for the proposed study will be collected using questionnaires and the reason for
selecting this type of instrument is guided by the nature of the study.
3.6.1. Questionnaires
The questionnaires will consist, both open and closed ended questions that will be designed to
elicit specific responses for qualitative and quantitative analysis respectively. Adequate time will
be given for the respondent to answer questions and the respondent will use semi-structured
questionnaires to avoid misunderstanding or wrong interpretation. The questionnaire will utilize
a five point Likert scale namely Strongly disagree (SD), Disagree (d), Undecided (U), Agree (A)
and Strongly Agree (SA) which will be assigned scores of between 1 and 5. This will allow the
researcher to draw conclusions based on comparisons made from the responses.

3.7. Data collection procedure

Before collecting the data, the instruments of the data will be prepared carefully, and permission
of the selected firms will be taken. Thereafter the objectives of the study will be explained to
subjects. Their willingness to participate in filling questionnaire.As the same time the researcher
will use the test, re-test method to determine the reliability. The main purpose of the test re-test
study is to check on suitability and the clarity of the questions on the instruments designed,
relevance of the information being sought, the language used and the content validity of the
instruments. After being tested for its validity and reliability by using pre-testing survey, then the
questionnaire will be refined and finalized and distributed to respondents.
3.8. Method of data analysis
According to Kothari (2004) this step is essential for a scientific study and for ensuring that we
have all relevant data for making comparisons and analysis. The data collected will be checked
to ensure regularity and accuracy. This will be useful in ensuring that the objectives of the study
are being addressed. Analysis will be done according to the objectives of the study. Thus, data
generate by questionnaire will be cleaned, edited and coded before analysis is done.Then, Data
will be inserted into the computer SPSS package and will be processed using descriptive
statistics to identify the characteristics of variables under study. The study will also use both
correlation and regression analysis in order to explain the relationship between variables and
which variable has an impact.

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