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Abstract
The main objective of the study is to examine the effect of transportation cost on retail goods prices in Rivers State. The study was designed to focus on selected firms in Port Harcourt, Rivers State where primary data, via questionnaire were collected. Therefore, the sample size of this study is judgmental sample of 30 respondents which comprise of both the senior and junior staff of Uniliver PLC and Pabod Breweries, Port Harcourt. A self-designed questionnaire on the effect of transportation cost on consumer retail goods price was used and administered for the collection of data from the respondents. The data collected were processed electronically with Statistical Packages for Social Sciences (SPSS) using Chi-Square statistical tools. From the analysis, it was observed that transportation cost influences retail goods prices in Rivers State. Based on the above, the following recommendations were made among others: that retail organization should employ engineers as a way of reducing operation cost and its ravaging effect on the price of their goods, that government should ensure the construction of good roads to reduce traffic congestion as this has adverse effect on retail goods prices in the area, ant that government and corporate organizations should ensure the provision of electricity, waste management costs and other social amenities to reduce the maintenance cost of retail goods among others.
Table of Content
Title Page i
Cover Page ii
Declaration iii
Certification iv
Dedication v
Acknowledgements vi
Abstract vii
Table of Content viii
CHAPTER ONE 1
INTRODUCTION 1
1.1 Background of the Study 1
1.2 Statement of Problem 3
1.3 Objectives of the Study 3
1.4 Research Questions 4
1.5 Statement of Hypotheses 4
1.6 Significance of the Study 5
1.7 Scope of Study 5
1.8 Limitation of the Study 6
1.9 Definition of Terms 6
CHAPTER TWO 8
REVIEW OF RELATED LITERATURE 8
2.1 Conceptual Framework 8
2.1.1 Concept of Transportation Cost 8
2.1.1 Dimensions of Transportation Cost 12
Vehicle Operating Cost 12
Costs of Travel Time 13
Traffic Congestion Cost 14
Maintenance Cost 15
2.1.3 Concept of Retail Goods Prices 16
2.1.4 Dimensions of Retail Goods Price 17
i. Inflation 17
ii. Consumer Price Index 19
iii. Producer Price Index 21
2.1.5 The Impact of Transport Costs on Consumer Retail Goods Prices 21
2.2 Theoretical Framework 23
2.2.1 Arbitrage Pricing Theory 23
2.3 Review of Related Empirical Studies 23
2.4 Summary of Literature Review 25
CHAPTER 3 26
RESEARCH METHODOLOGY 26
3.1 Introduction 26
3.2 Research Design 26
3.3 Population of the Study 26
3.4 Sampling Techniques Used 27
3.5 Sample Size 27
3.6 Source of Data 27
3.6.1 Primary Source (s) of Data 27
3.6.2 Secondary Source of Data 27
3.7 Research Instrument for Data Collection 27
3.8 Validity and Reliability of Instrument 28
3.9 Techniques for Data Analysis 29
CHAPTER FOUR 30
DATA PRESENTATION AND ANALYSIS 30
4.1 Introduction 30
4.2 Presentation of Question/Items in the Questionnaire and Analysis of Responses 30
4.3 Testing of Hypotheses 36
4.4 Discussion Findings 40
CHAPTER FIVE 42
SUMMARY, CONCLUSION AND RECOMMENDATIONS 42
5.1 Summary 42
5.2 Conclusion 43
5.3 Recommendation 43
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
As life started mankind begin to nurse the need for basic necessities of life for physiological satisfaction as food, shelter, safety, among other things.
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 (Gerber and Martin, 2012).
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 such as money was introduced, 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 used the beast 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 market will determine the mode of transportation to employ (Riverson JDN and S Carapetis 1991).
As money is the standard of measurement, the seller when calculating the expenses of their business has to add the cost of transportation of goods from the point of production to the point of consumption (Lee and Lu, 2016).
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 for increasing prices of goods (Sieber, 1999).
1.2 Statement of Problem
There has been a continuous increase in the price of consumer 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 the price of retail goods.
The consumers allege that the increasing prices of retail goods are indication of the profiting attitude of sellers (Collier and Barnes, 2015). On their own side, the seller level the blame of increasing prices on the increasing cost of transportation, input materials and facilitating agents. The difficulty now becomes how to determine which of the claims portrays the truth about increasing prices of retail goods.
The government, labour and consumerists have shown concern and made some efforts to bring the price increase under control without making any tangible headway. It is based on the foregoing, that the researcher seeks to examine the effect of transportation cost on retail goods prices in Rivers State.
1.3 Objectives of the Study
The main objective of the study is to examine the effect of transportation cost on retail goods prices in Rivers State. The specific objectives are as follows:
1. To examine the extent to which vehicle operation cost associate with retail goods prices in Rivers State.
2. To examine the extent to which cost of travel time associate with retail goods prices in Rivers State.
3. To examine the extent to which traffic congestion cost and restrain cost associate with retail goods prices in Rivers State.
4. To examine the extent to which Maintenance cost associate with retail goods prices in Rivers State.
1.4 Research Questions
The following research question is considered:
1. Does vehicle operation cost associate with retail goods prices in Rivers State?
2. Does cost of travel time associate with retail goods prices in Rivers State?
3. Does traffic congestion cost and restrain cost associate with retail goods prices in Rivers State?
4. Does maintenance cost associate with retail goods prices in Rivers State.
1.5 STATEMENT OF HYPOTHESES
The following hypothesis were formulated to guide the researchers
HO1: There is no significant relationship between vehicle operation cost and retail goods prices in Rivers State.
HO2: There is no significant relationship between costs of travel and retail goods prices in Rivers State.
HO3: There is no significant relationship between traffic congestion cost and restrain cost and retail goods prices in Rivers State.
HO4: There is no significant relationship between maintenance cost and retail goods prices in Rivers State.
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
The study is delimited under the following heading: content scope, geographical scope and unit of analysis.
Content Scope: The content scope of this study involves an investigation to ascertain the relationship between transportation cost and retail goods prices of some selected firms in Port Harcourt metropolis Rivers State, including Uniliver PLC and Pabod Breweries. The dependent variable is retail goods prices, measured by inflation, consumer price index and producer price index. While independent variable is transportation cost measured by vehicle operation cost, costs of travel time, traffic congestion cost and maintenance cost.
Geographical Scope: This study is delimited in Port Harcourt Rivers State with references to selected firms in Port Harcourt metropolis Rivers State, including Uniliver PLC and Pabod Breweries.
Unit of Analysis: The unit of analysis in this research involves both senior and Junior staff of selected firms which include Uniliver PLC and Pabod Breweries at the time of carrying out the study.
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 gave its own constraints on the research work as the researcher was not financially buoyant enough to carry out all the investigation. 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.
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.