THE IMPACT OF TRANSPORTATION COST ON CONSUMERS RETAIL GOODS PRICES

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ABSTRACT

The impact of transportation cost on consumers retail goods prices. The research design used descriptive and survey method of data collection. The population of the study was made of the entire staffs of 7up Bottling Company, Uniliver PLC and Pabod Breweries which was unknown. The sample size of this study is judgmental sample of 100 respondents which comprise of both the senior and junior staffs of 7up Bottling Company, Uniliver PLC and Pabod Breweries in Port Harcourt Metropolis. A total of 100 questionnaires was distributed. The chi-square statistical test was employed this test was used due to the nature of the questionnaire designed for the purpose of the hypothesis testing. Findings revealed that there is a significant relationship between transportation cost and consumer retail goods prices. Based on the findings of the study summary, conclusion and recommendations are made that the dealers should engage the service of transportations jointly to reduce charges, dealers should strive to procure goods from the one source in order to develop good relationship with producers and transporters.

 

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

At first man tried to provide the necessary things to satisfy his needs to engaging in hunting, fetching some selected plants for food and find shelter among tree shades as well as applying plants leaves to cover his nakedness.

In the process of advancement man learnt that he could not provide all his needs by himself. Then the exchange process started. This began as an exchange of goods for goods otherwise called trade by barter. The person who has a particular product in excess of his need of that particular moment would look for the person that has a need for his excess. Produce and at the same time has the produce he lacked so that an exchange could take place (Rizet, C and J Hine 1993).

So the earliest trading or buying and selling practices were done on retail basis through the barter process.

When a common medium of exchange could monthly was inverted the practices of trade by barter became less relevant in the exchange process. When barter was in vogue buyers and sellers did not take a conscious account of the cost and burden of carrying the goods around in search of a market. As money became the means of payment even the service of carrying marketable commodities tot eh market was paid for.

Price has to be put on every commodity using money as the standard of measurement. The seller in calculating the expenses of this business has to add the cost of transporting product from the point of production to the point of consumption.

In the ancient times, man used mostly the best of burden to carry his goods from the point of production to the point of consumption; transportation nowadays has become more sophisticated, convenient, and faster. Some of the mode of transportation includes transport on railway, motor vehicles on road, ship, boats, canoes paddling though water and the airplanes flying the airway. The nature of production items of the order as well as the location of the market and the type of the market will determine the mode of transportation to employ (Riverson JDN and S Carapetis, 1991).

Transportation is involved in every level of production and distribution until the product reaches the final users.

Industrial revolution came into place and led to increasing productive capacity.

Most manufacturers and sellers want to enjoy the benefit of the economy offered by large-scale production and distribution. They also aspire to explore large markets and operate at competitive levels. They have to manage costs and process to be able to operate with efficiency and remain a float. In the Nigerian case, these distribution cost specifically transportation costs are sometimes viewed as some of the factors that account from increasing prices of goods (Sieber,  N  1999).

1.2 STATEMENT OF PROBLEM

There has been a continuous increase in the price of consumer’s goods in Nigeria for many years now. These price increases have been alleged to be as a result of increase in the cost of raw materials, transportation, rent, capital and labour. Among these variable, this study will attempt to determine the degree to which cost of transportation affects process of consumer goods, particularly this study tries to find out the following:

The consumers allege that the increasing prices are indication of the profiting attitude of sellers. On their own side, the seller level the blame of increasing prices on the increasing cost of input materials and facilitating agents. The difficulty now becomes how to determine which of the claims the truth about increasing prices is.

It has been reported that the increasing price have confirmed to make many families unable to fetch their three sure meals daily. The government, labour and consumerists have show concern and made some efforts to bring the price increase under control without making any tangible headway.

1.3 OBJECTIVES OF THE STUDY

The main objective of the study is to examine the impact of transportation cost on consumer goods prices, the specific objectives are as follows:

  1. Determine the effects of transportation cost on the prices of consumer goods in the market.
  2. Ascertain, if it is the desire for excessive gains that influence retailers in fixing prices of goods.

iii. Find out what can be done to alleviate the problems of increase prices of consumer goods in the market.

1.4 RESEARCH QUESTIONS

The following research questions are considered: –

  1. Does cost of transportation contribute substantially to the price increase of retail goods in the market?
  2. Is it desire to make high profit that cause rapid price increase of yams in the market?

iii. Have government efforts at reduction of prices helped to solve the problems of continuous price increase?

  1. Does transportation cost lead to rise in the price of other category goods?

1.5 STATEMENT OF HYPOTHESES

The following hypothesis were formulated to guide the researchers

HO: There is no significant relationship between transportation cost and thr price consumer retail goods

HI: There is a significant relationship between transportation cost and consumer retail goods.

HO: There is no significant relationship between transportation cost and the price of other category goods.

HI: There is a significant relationship between transportation cost and the price of other category goods.

1.6 SIGNIFICANCE OF THE STUDY

This study will be of benefit to economic analysis who would want to trace the causes of inflation to their real sources.

It will be of immense use to marketing and management experts who would want some appropriate solutions to some of their marketing problems efficiency.

It will be an interesting source of material for academicians doing research in retail pricing for retail goods.

It will also be a useful piece of information for government in their regulatory policies of price control and transport management.

It will be a guiding tool for business people who are in the distribution service because this work will teach them how to control costs and make a competitive pricing.

1.7 SCOPE OF STUDY

For goods to reach the ultimate consumers or final users the seller be he the producer, wholesaler or retailer must get the appropriate transport to convey them from point of sale to the point of buyer. This study intends to limit itself to transportation of goods by retailers form their suppliers (producer or wholesalers) to the point of sales of the goods or to the final users in doing this, it will try to ascertain the effect of transportation cost on the prices the retailer fixed for the goods. The scope of the study is confined to some selected manufacturing firms in Port Harcourt metropolis Rivers State, including Uniliver PLC and Pabod Breweries.

1.8 LIMITATION OF THE STUDY

Every research study has certain limitation which fall short of ideas which the researcher has established or recognized given the critical and sensitive nature of the topic under this study the researcher encountered a number of problems which hindered the research work paramount among these constraints is the time frame within which the work was expected to be completed. The time period of completion for the work was too small considering the fact that topic covered the whole transportation sector, beside the cost of embarking on this project work considering the volume of work involve also give its own constraints on the research work as the researcher  was not financially buoyant enough to carry out all the investigation furthermore, their own limitation as most, information sought for were mainly from the management and staffs of the organization in Port Harcourt Rivers State. Finally the availability material for the work also give it own hindrance as the subject matter have been matter of public discussion without proper literature put on ground in books for academic purpose its worthy to mention that the major source of this work was on few textbook.

1.9 DEFINITION OF TERMS

Transport: Take or carry (people or goods) from one place to another by means of a vehicle, aircraft, or ship.

Transportation: It is the movement of people, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline and space. The field can be divided into infrastructure, vehicles and operations.

Consumer: A person who purchases goods and services for personal use.

Retail: Services to customers through multiple channels of distribution to earn a profit. Demand is identified and then satisfied through a supply chain.

Marketing: It is a form of communication between you and your customers with the goal of selling your product or service to them. Communicating the value of your product or service is a key aspect of marketing.

Prices: The amount of money expected, required, or given in payment for something.

 

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