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Marketing Strategies and Nigerian Nation’s Development: A Study of Pipelines & Products Marketing Company Limited (1997-2015)

Newman ChintuwaEnyioko*

Medonice Management Consulting and Research Institute, Port, Harcourt, Rivers State, Nigeria

*Corresponding Author:
Newman ChintuwaEnyioko
Medonice Management Consulting and Research Institute
Port, Harcourt, Rivers State, Nigeria
Tel: +234 903 885 8167
E-mail: newmanenyioko@yhoo.com

Received date: June 13, 2017; Accepted date: April 20, 2017; Published date: April 27, 2017

Citation: ChintuwaEnyioko N (2017) Marketing Strategies and Nigerian Nation’s Development: A Study of Pipelines & Products Marketing Company Limited (1997- 2015). J Account Mark 6: 233. doi: 10.4172/2168-9601.1000233

Copyright: © 2017 ChintuwaEnyioko N. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

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Abstract

The study examined marketing strategies and Nigerian nation’s development: a study of Pipelines and Products Marketing Company Limited (PPMC) and some major oil marketing companies in Nigeria from 1997-2015. The paper aims at determining the effect of the petroleum products (pms) produced for sale, the pricing of petroleum products (pms) earmarked for sale by road, the petroleum products (pms) earmarked for sale by road transport on and the bridging of petroleum products on the real gross domestic products in Nigeria from 1997 to 2015. Regression analysis and t-test statistical tools were used to test the hypotheses formulated in this study. The findings of the study revealed that petroleum marketing companies employ marketing strategies within the context of trying to manage a number of tensions or dualities. The study revealed that marketing strategies appropriately applied develop the economy. Conclusively it is evident from this study that: there is no significant relationship between the petroleum products (pms) produced for sale by NNPC, the pricing of petroleum products (pms) earmarked for sale by road, the bridging of petroleum products and the real gross domestic products in Nigeria from 1997 to 2015. However, there is significant relationship between the effect of the petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015. In view of the findings it is recommended that the relevant authorities should exert enough political will to implement effectively and efficiently the Petroleum Equalisation Fund Law so that the benefits of bridging of petroleum product could be harnessed and enjoyed by the citizenry

Keywords

Marketing; Marketing strategies; Petroleum products; Pricing; Distribution; Bridging; Petroleum; Petroleum Equalisation Fund; Nation’s development; Nigeria

Introduction

Over the years Nigeria’s petroleum sector has increasingly become unstable [1]. For example, Ameh [2] pointed out that even with the existence of regulatory agencies, Nigeria’s petroleum sector has experienced a number of problems including scarcity, adulteration, bunkering of products and corruption. Oseni [3] further stated that the sector’s controlling agencies appear to have a number of weaknesses. This view was substantiated by the results of the government investigation after the 2012 oil subsidy crisis [4].

Sunusi [5] argued that the system consists of very incompetent operational management throughout the supply chain, ranging from poor product handling to distribution to final consumers. Ehinomen and Adeleke [6] noted that theft of petroleum products from Pipelines and cross-border smuggling, as well as inefficiencies in handling activities in the jetties and storage depots, all result inconsiderable leakages in the supply chain. Indeed, all these problems, implicitly and explicitly, generate costs, which are offloaded by regulated agency through bridging and then indirectly passed onto final consumers. These costs are undeniably significant and invariably have a detrimental effect on the marketing system of petroleum products, with the public at the receiving end.

The problems of marketing of petroleum products in Nigeria therefore centre on the harsh operating business environment, government’s silence on the issue of an increase in margins; pricing of the petroleum products, product range, quality of the product, breakdown of refineries due to lack of spare parts, obsoleteness, arson, mismanagement and poor maintenance culture, increasing importation of petroleum products into Nigeria, smuggling of petroleum products in and out of the country, faulty distribution network and stiff competition and increasing promotional activities embarked upon by the various oil companies all in the bid to keep customers, attract new ones and outwit competitors and make profit [7].

An econometric analysis of domestic transportation of refined petroleum products in Nigeria by Adenikinju [8] examined the time refined products are transported domestically by road, rail, pipeline and waterway with the objective of determining which mode is more important in domestic carriage of white products since 2000.

Akpieyi [9] revealed that petroleum products distribution by road is faced with short deliveries on a daily basis. In the distribution process, petroleum products are entrusted to the transporter and driver until the point of discharge at the dealers’ premises. It is usually within this stage of the supply chain that short deliveries are experienced, where the quantity loaded is less than what is recorded at the discharge point. It has become a perennial problem in the industry to see short deliveries on a daily basis.

Previous studies tended to focus more on econometric analysis of domestic transportation of refined products by modes of transport, the constraints of petroleum haulage, supply of petroleum products and the significant mode in the domestic transportation of white products in Nigeria. It can be deduced that much academic attention had not been on bridging and distribution performance of petroleum products in Rivers State, Nigeria. There is therefore a gap in this area. It is this gap in knowledge about marketing strategies and bridging of petroleum products for national development in Nigeria that this study intends to fill up.

Akey factor not peculiar to the industry but which affects marketing activity of the sector is the down-turn in economic activities which had depressed energy consumption, resulting in drops in volume of petroleum products sold and hence turnover and profit of all marketers. The reasons for the poor outing of the oil firms included the obvious and over-emphasized marketers’ margin, product outages (scarcity of petroleum products) and the discriminatory product allocation system and pricing. The research problem therefore is to evaluate the contributions of marketing strategies to national development with examples from Nigerian National Petroleum Corporation/Pipelines and Products Marketing Company (NNPC/PPMC) and some major oil marketing companies from 1997 to 2015.

Objectives of the Study

The purpose of the study is to examine marketing strategies and Nigerian nation’s development with emphasis on Pipelines and Products Marketing Company Limited (PPMC) and some major oil marketing companies in Nigeria from 1997-2015. The specific objectives of the study are to:

• Determine the effect of the petroleum products (pms) produced for sale by NNPC on the real gross domestic products in Nigeria from 1997 to 2015.

• Ascertain the effect of the pricing of petroleum products (pms) earmarked for sale by road on the real gross domestic products in Nigeria from 1997 to 2015.

• Ascertain the effect of the petroleum products (pms) earmarked for sale by road transport on the real gross domestic products in Nigeria from 1997 to 2015.

• Explore the nature of relationship between the bridging of petroleum products on the real gross domestic products in Nigeria from 1997 to 2015.

Research Questions

The study seeks to investigate marketing strategies and Nigerian nation’s development with emphasis on Pipelines and Products Marketing Company Limited (PPMC) and some major oil marketing companies in Nigeria from 1997-2015. Therefore the following research questions have been raised for answering:

• What is the effect of the petroleum products (pms) produced for sale by NNPC on the real gross domestic products in Nigeria from 1997 to 2015?

• What is the effect of the pricing of petroleum products (pms) earmarked for sale by road on the real gross domestic products in Nigeria from 1997 to 2015?

• What is the effect of the petroleum products (pms) earmarked for sale by road on the real gross domestic products in Nigeria from 1997 to 2015?

• What is the nature of relationship between the bridging of petroleum products on the real gross domestic products in Nigeria from 1997 to 2015?

Research Hypotheses

The following research hypotheses have been formulated for testing in this study:

Ho1: There is no significant relationship between the petroleum products (pms) produced for sale by NNPC and the real gross domestic products in Nigeria from 1997 to 2015.

Ho2: There is no significant relationship between the pricing of petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015.

Ho3: There is no significant relationship between the effect of the petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015.

Ho4: There is no significant relationship between the bridging of petroleum products on the real gross domestic products in Nigeria from 1997 to 2015.

Study Area (Pipelines and Products Marketing Company Limited (PPMC)

Pipelines and Products Marketing Company Limited (PPMC) Pipelines and Products Marketing Company Limited (PPMC was set up as a subsidiary and strategic business unit of the Nigerian National Petroleum Corporation (NNPC). PPMC is run in conformity with the management culture of total quality in pursuant to the directive of the parent corporation the Nigerian National Petroleum Corporation (NNPC) (Figure 1).

The company’s main assignment is executed using a network of Petroleum Products Pipelines and Storage depots strategically located nationwide. The products pipelines have a total length of about 5120 kilometres. The products are moved through the pipelines by pumping using mainline and booster pumps. A number of pump stations complement pumping of products to desired destinations.

Review of Relevant Literature

The concept of marketing and marketing strategies

Marketing strategies and tactics are concerned with taking decisions on a number of variables to influence mutually-satisfying exchange transactions and relationships. Typically, marketers have a number of tools they can use these include mega-marketing [10] and the traditional 4Ps of marketing, among others. Marketing seems easy to describe, but extremely difficult to practice [11]. Organizational managers in many firms have applied the so-called marketing concept, which may be simple or complex. The marketing concept and variants like the total quality management concept for example, are essentially concerned with satisfying clients’ needs and wants beneficially. Developing and implementing efficient and effective marketing strategies which incorporate relevant dimensions of the marketing concept involve the organic tasks of selecting a target market (customers/clients) in which to operate and developing an efficient and effective marketing ingredient combination. Marketing thought, with its practice, has been moving speedily into the service industry [11]. Literature, partly, centres on the discussion of whether physical product marketing is similar to, or different from, the marketing of service and concludes that the differences between physical product and service might be a matter of emphasis rather than of nature or kind [12]. Marketing is one of the salient and important organic functions which help to service organizations to meet their business challenges and achieve set goals and objectives [13].

Marketing strategy is a significant driving force that distinguishes the success of many organizations not only by well-developed marketing strategies outlining where, when, and how the firm will compete but also by their ability to execute the marketing strategy decision options chosen [14]. The appropriate and effectively implemented marketing strategies are required to productively guide the deployment of the limited available resources via the firm’s marketing capabilities in pursuit of desired goals and objectives [14]. The literature reveals two distinct but related features to marketing strategy content: marketing strategy decisions and marketing strategy decision implementation. Hence, decision makers responsible for the marketing strategy must select which available resources the firm should deploy, where to deploy them appropriately, and set and signal priorities in terms of achieving the various goals and objectives of the firm [12]. These marketing strategies toward firm performance may be either formal, top-down strategies [14] or emergent or improvisational strategies [12]. A firm’s marketing strategy content therefore involves explicit or implicit decisions regarding goal setting, target market selection, positional advantage to be pursued, and timing to attain firm performance [15].

Well-defined strategic marketing objectives are critical feature of marketing strategy in which managers must make decisions about what the objectives and priorities of the firm are, translate these objectives and vision of the firm into marketing-related goal criteria, and set and articulate the desired achievement levels on each goal. This can be complicated to realize by the fact that many goal criteria and levels may be incompatible or at least non-complementary in the pursuit of achieving firm performance. For instance, the firm’s growth revenue and margin growth are difficult to achieve simultaneously. Managers, therefore, have to prioritize objectives that may be in conflict. Since most definitions of strategy concern plans for how desired objectives are to be achieved, such goal setting is clearly important in determining subsequent marketing strategy content decisions. Indeed such goal selection decisions may be one of the most important manifestations of strategic choice within the marketing strategy content [13]. Another important feature of marketing strategy content is the selection of the market. This deals with the segmentation and targeting decisions of the classic STP framework of marketing strategy, which revolves on market segmentation, target and positioning. Specifically, this marketing strategy content decision determines where the firm will seek to compete in order to meet the strategic marketing objectives stipulated.

Adaptation marketing mix strategies

Literature reveals that most studies concentrate on factors that influence the selection of a certain strategy, and they seek to recognize forces that stimulate standardization or adaptation. Nevertheless, the validity of the choice of standardization or adaptation strategy is determined by its potential to improve company performance states that suitability of an international marketing strategy is confirmed by the strategy’s influence on the company performance – economic and strategic benefit, received due to implementation of the chosen strategy [16] (Figure 2).

Marketing planning model takes a more general strategic point of view [16], many of the human and cultural issues being taken into account. Johnson and Scholes’ model is very and based on analysis, choice and implementation. Within this comprehensive framework, marketing strategies are developed from comprehensive portfolio analyses. Many forms of strategy are possible. If one takes the view that the environment is uncontrollable, then it is quite possible that a company will have to be adaptive to the environment.

Adaptation transpires when firms adjust their market strategies when entering foreign markets, even in an era of globalization where many brands and products are nearly universally prevalent. Those adaptation decisions cleave into an adaptation strategy that can influence the firm’s competitiveness and, in turn, its performance in foreign markets in terms of sales, financial and customer performance. Adaptation strategies encompass changing the pricing method, promotional mix and packaging of a product, or even the product itself, in order to fit the needs and preferences of a particular export market. Adaptation happens when any element of the marketing strategy is modified to achieve a competitive advantage when entering a foreign market and thus attain firm performance. Adaptation strategies may not be so complex but a simple tweaking of the logo and the colours of the packaging can achieve the marketing objectives, or may involve developing new products better fitted to the local palate or new financing models more fitting for the local economy or market.

It is crucial for marketers to adjust the marketing mix and marketing strategy to suit local tastes, meet special market needs and consumers’ non-identical requirements [17].

Therefore, in order to formulate and implement efficient and effective marketing strategies, business organizations should have a thorough and continuous understanding of the relevant environment that impacts on their marketing strategies (Figure 3).

Product

The product itself is at the beginning of marketing strategy efforts toward firm performance and is the heart of brand because it is the primary impact on what consumers experience with a product or rather a brand, what they heard about the product from others through word of mouth, and what the firm can win customers about their product in their communications. Therefore, designing and delivering a product or service that fully satisfies customer needs and wants is a prerequisite for successful marketing strategy implementation, regardless of whether the product is a tangible good, service, or organization. According to Keller [11] in order to create brand loyalty, consumers’ experiences with the product must, at least, meet, if not actually exceed, their expectations. Customer satisfaction is determined by exceeding customers’ expectations.

Pricing

The price of an item is clearly an important determinant of the value of sales made. In theory, price is really determined by the discovery of the value perception of the item on sale by customers. Thus far, marketing managers must develop the habit of continually examining and re-examining the prices of the products and services they sell to ensure the firm’s prices are still appropriate to the realities of the current market situation.

Seven additional Ps in marketing

As well as the standard four Ps (Product, Pricing, Promotion and Place), services marketing calls for extra three Ps, totalling seven and known together as the extended marketing mix. These new marketing Ps have been elaborated by Enyioko, (2014:25-32) thus:

People: Any person coming into contact with customers can have an impact on overall satisfaction. Whether as part of a supporting service to a product or involved in a total service, people are particularly important because, in the customer’s eyes, they are generally inseparable from the total service.

Process: This is the process involved in providing a service and the behaviour of people, which can be crucial to customer satisfaction.

Physical evidence: Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible there physical evidence like testimonies and demonstrations are necessary.

Personalization: It is here referred to as customization of products and services through the use of the Internet. Early examples include Dell on-line and Amazon.com, but this concept is further extended with emerging social media and advanced algorithms. Emerging technologies will continue to push this idea forward.

Participation: This is to allow customer to participate in what the brand should stand for; what should be the product directions and even which advertisements to run. This concept is laying the foundation for disruptive change through democratization of information.

Peer-to-Peer: This refers to customer networks and communities where advocacy happens. The historical problem with marketing is that it is “interruptive” in nature, trying to impose a brand on the customer. P2P is now being referred as social computing and will likely to be the most disruptive force in the future of marketing.

Predictive Modelling: This refers to neutral network algorithms that are being successfully applied in marketing problems (both regression as well as classification problems).

The concept of bridging and marketing of petroleum products

Bridging has been defined by Petroleum Equalisation Fund (PEF) Law, [4] as the movement of petroleum products outside a depot district (of a distance exceeding 450 km). The importance of bridging is underscored by the need to ensure equitable product distribution to all parts of the country and consequently prevent shortages. The bridging transportation rates are determined by the distance between the product loading depot and the receiving depot, as bridging trucks report to the nearest depot in the area of discharge for a product audit before a point of discharge is allocated [4]. Bridging volumes and costs have risen tremendously over the years as pipeline, depot facilities have deteriorated, and truck operating costs have increased due to continued depreciation in the value of the Nigerian Naira and other macro-economic factors.

The bridging scheme was originally introduced as a temporary measure during turn-around maintenance (TAM) wherein government sought to encourage and support marketers in transporting petroleum products nationwide. Although bridging was meant to be a temporary solution until the refineries were producing back at full capacity, the state of the refineries has worsened over the years. In addition, pipeline vandalisations by militants and economic saboteurs have been on the increase, to the point where trucks have become the major source of distributing petroleum products in recent times. The initial projection was to have a maximum of 10% of total petroleum products bridged while the remaining portion will be pumped through the pipelines. However, trend analysis indicates that bridging of products have consistently increased over the years to about 40%. There is also a noticeable trend whereby products are bridged from Lagos to the South East and South-South areas of the country to address products unavailability from the refineries in Port Harcourt and Warri.

Contribution of marketing strategies to the development of the economy

Though Marketing is a seeming late comer among the managerial sciences, it is increasingly being accepted and proclaimed as the most important task of any economic organisation and individual. The whole world is fast becoming a marketing world. The president of Pepsi-Cola of America once declared: “Our business is the business of marketing” [10]. Marketing strategies are receiving such accolades today only because of the important role people have come to realise it plays to the benefit of a nation, its organisations and its citizens.

People’s need for goods and services cannot easily be satisfied unless marketing functions are performed. Except in situations where a people or organisation produce the goods and services they need by themselves and do not relate with others economically, they cannot do without buying, selling, transportation, storage and marketing information. Because of the necessity of marketing functions, everybody is involved in marketing [15].

Provision of job opportunities

Marketing provides job opportunities for millions of people in Nigeria today. This is because about half of the country’s population makes a living by carrying out retailing, wholesaling, advertising, personal selling, public relations, transportation and storage activities.

Existence and growth of marketing-related industries

High-growth industries like advertising, public relations, haulage, and marketing research solely derive their existence and growth from Marketing. If these industries are not important or productive, they would not be growing as they are today.

Everybody’s involvement in consumption

Everybody is an actual consumer of one thing or the other at one time or the other. Everyone is also a potential consumer of virtually all types of goods and services. marketing is all about consumers and the satisfaction of their needs for goods and services.

Impact of marketing on people

All over the world, marketing activities affect people’s beliefs, lifestyles, consumption and income. The types of products marketers help organisations to develop, the ways these products are promoted, priced, and distributed, and consumer’s satisfaction or dissatisfaction with these activities go a long way in determining their consumption behaviour [18].

Improved quality of life

Marketing essentially helps to identify and satisfy people’s needs. Because of this, many people can always trace their knowledge and persuasion to patronise the products they now feel much dependent upon to marketing-dominated stimuli like advertising, personal selling, and sales promotion.

Universal and pervasive nature of marketing

Marketing principles and techniques are the same all over the world. Marketing is also pervasive. This means that it is applicable and beneficial to all individuals and groups or organisations, whether small or big, profit-oriented or not. This means that medical doctors, hospitals, clergymen, churches, civil servants, municipals, business organisations and all their personnel (irrespective of their departments and major or primary functions) can all apply the principles and techniques of marketing to their benefits.

Revenue-yielding power of marketing

Though all the activities of an organisation are important, Marketing is the most important. Through its revenue-yielding power, Marketing holds the major key to the survival and growth of any organisation. While all other activities of an organisation generate costs, only Marketing activities bring in the much-needed revenues. Hence, Marketing has been described as the “lifeblood” of organisations.

Improvement of product quality

In today’s age of intensive competition and marketing, organisations have seen the need to differentiate and promote their products more than ever before [10].

Reduction of product prices

Through its promotional tools of advertising, personal selling, sales promotion, publicity, and public relations and the satisfaction of consumers need, Marketing helps to create mass patronage and consumption for products.

Promotion of leisure and non-formal education

Most of Nigeria’s electronic media houses, newspapers and news magazines which provide leisure and non-formal education to a large number of the country’s populace today cannot operate successfully without the revenue they make from the marketing activity of advertising. By advertising and sponsoring programmes like sports, dramas, education in the media, marketing indirectly helps to promote leisure and non-formal education in the society [18].

Acceleration of economic growth

Marketing encourages consumption by motivating people to patronise products created to meet their identified needs. When consumption increases production will increase in response to it. Thus, Marketing helps to increase the tempo of economic activities, create wealth for individuals and organisations as well as accelerates the economic growth of a nation [19]. Thus if Marketing is encouraged by governments at all levels, Nigeria will witness rapid creation of wealth and economic development in the country.

Empirical literature on marketing strategy content studies

Besides their contribution to the selection of appropriate productmarket combinations, marketing researchers also contributed work on the importance of product life cycle in strategy making. As indicated by Anderson [20], strategy should fit with the product life cycle to gain better performance. They found difference determinants of return on investment (ROI) in the growth and maturity stages of product life cycle. While marketing variables determined the ROI in the growth stage, industry variables influenced the ROI in the maturity stage. Product competition and efficiency variables affected the ROI in both stages, even though the effect was much higher in maturity than in the growth stage.

In addition, researchers also investigate environmental and organisational influences on the selection of marketing strategy. Burke [21] reveals that market attractiveness and managers’ reward systems are positively associated with build strategy, but entry barriers and synergy had a negative impact on it. This indicates that managers might choose a build strategy when the market is profitable, has good future prospects and is easy to enter. This intention might be enhanced when the reward system for the managers emphasise short run organisational performance. Since implementing a build strategy might require many resources, it would lead to low levels of organisational synergy. On the other hand, managers might select a hold or pull back strategy when they perceive that the market is not buoyant. Lisa [22] discovers that increases in resource constraints amplified competitive intensity. Lisa also discovers that this increase in competitive intensity makesorganisationsemphasise non-price marketing strategy, though it does not lead to a better performance. Lisa argues for an insignificant relationship between marketing strategy and performance, because a more intensive competition market forces most organisations to engage in intensive promotion and new product development, which suppressed short-term performance.

McDaniel and Kolari [23] investigated the relationship between strategy types and marketing strategy orientation. They discovered significant differences in marketing orientation between Defenders and Prospectors, as well as between Defenders and Analyzers. Prospectors and Analyzers employ more proactive marketing strategy than Defenders. They engage in more activities geared towards new product development, promotion, and marketing research than Defenders. McKee et al. [14] found similar results. They discovered significant differences in marketing tactics among Reactors, Defenders, Analyzers and Prospectors. Organisations with more adaptive strategy types might focus more on marketing efforts. Prospectors, for example, tended to use more scanning and product development efforts than the other strategy types. However, there were no differences between Defenders and Analyzers. Significant differences only existed between Defenders and Prospectors [24]. Defenders tended to organise their marketing department on more functional structure than Prospectors. Rajaratman and Chonko [24] also indicated that centralisation of power seems to exist in Reactors, but not in the others. Prospectors tended to develop a more specialisedorganisation structure and seek greater market penetration and product development. They expended greater effort in marketing than Defenders, Analyzers and Reactors. In relation to marketing effort, Defenders spent more significantly than Reactors.

Finally, they revealed that Reactors had lower performance, either in term of earning/sales growth rate or return on sales/investment than the other three types of business strategy. There were no differences in performance among these three. Marketing researchers have also investigated the importance of the role of marketing strategy in exporting organisations. Burke [21], for instance, discovered that export marketing strategy was the key success factor of export performance in term of export sales, growth, and profits, while market and organisational factors only influenced export sales. Burke [21] also indicated the existence of inter-correlation and association among variables, especially in regard to the characteristics of firms and their markets. This meant that even though those variables did not have any significant relationship with export performance, they still had an indirect influence on it.

In conclusion, to gain superior performance organisations should fit their marketing strategy to the current market environment. Centralisation of power impedes the ability of organisations to be more adaptive and leads to lower performance Orlando [25] Rajaratman and Chonko [24]. To be sensitive to environmental changes, organisations should employ a decentralised marketing structure. This enables marketing managers to easily adapt to environmental changes, and to achieve strategy – environment fit. Table 1 below presents empirical evidence on marketing strategy content research.

Marketing strategies and petroleum products

While the role of marketing in traditional businesses is well understood, the same cannot be said about marketing in the petroleum industry. A search of academic journals done in an attempt to review the literature regarding marketing strategy in petroleum industry yielded surprisinglyfew results. In the words of Onyishi et al. [1]: “Unfortunately, business and marketing scholars have yet to turn muchattention to how to improve the effectiveness and impact of social entrepreneurs in the oil sector”.

Ehinomen and Adeleke [6], in discussing the perils faced by petroleum sector, cited a number of key strategic marketing questions that this sector must answer. It is of importance to note that earlier Opara and Opara [26] have asked similar questions with respect to export marketing strategies. These questions revolve around defining who the customers are, what they value, whether the organization can and should provide what the customers are looking for, and how the organization should position itself to achieve the identified marketing objectives. The literature has also begun to give attention to the notion of marketing in achieving financial self-sufficiency in petroleum industry [27]. Financial self-sufficiency refers to the ability of petroleum sector to gain financial autonomy through income generating activities. Nwokeji [27] argues that adoption of commercial marketing strategies in petroleum industry is necessary in achieving financial self-sufficiency.

The concept of utilizing marketing in the petroleum sector has a long history [10]. Current research into marketing in the petroleum sector suggests that while marketing is viewed in a positive light in many organisations (Wood, 2013), it may still be considered undesirable by some members of that sector.

Pricing and marketing of petroleum products in Nigeria

Eight major companies, two of which are wholly indigenous, namely African Petroleum (AP) and OandoPlc constitute the principal marketers. The other six, National oil and Chemical Marketing Plc, Total plc, AgipPlc,.Texaco Plc and Elf are jointly owned by Nigerians and foreign interests. All the seven companies excluding Elf recorded a combined turnover of N7,289 billion, N9,132 billion, N16 billion and N34 billion in 1992; 1993, and1994 respectively [28]. Elf is excluded for lack of data. In Table 1, the 1966-2005 increase in petrol pump price in Nigeria is presented. This trend was followed by a general decline in volume turnover due to political instability especially the July/August 1994 oil workers strike and the fuel price hike. In 1995, however, pretax profits for the seven major companies were reported to have risen from N2 billion in 1993 to N 5.6 billion, representing a 175% increase [29].

In addition, there are over 800 independent marketers who control about 31.8% of the domestic market. The independents are licensed nationwide to reflect geographical balance. All marketers buy the product from the Pipeline and Products Marketing Company (PPMC), a subsidiary wholly owned by NNPC. Product distribution from the refineries is done through a 4,950-kilometre system of pipelines and twenty storage depots. Trucks and coastal vessels complement the distribution mode while the final point of sale to consumers is mostly at the filling stations. The market was largely deregulated, as individual companies were entirely free to maintain their market quotas in order to meet total national demand. Government continues to regulate the industry in the areas of prices and marketers’ margin. The current pump prices of petroleum products are N75 per litre for petrol, N104 per litre for diesel oil, and N65 per litre for kerosene (Table 2).

Distribution of petroleum products

According to Rajaratnam and Chonko [24], channel of distribution or distribution channel is the path a product takes as it moves from the producer to the ultimate consumer. These are made up of individuals and organizations, which perform one activity or the other that would ensure movement of the product and exchange of its title from the production to the final consumer. Distribution channel is the route or course taken in transferring the title to a product (manufactured or otherwise) from its producer or first owner to its last owner, an industrial user or the ultimate consumer.

Petroleum products could be regarded as consumer or industrial products. It all depends on the intention of the buyer. If the petroleum product is meant for someone’s personal car or for domestic use like kerosene then it is classified as consumer product. But if it is for industrial purchaser with the purposes of industrial machines or commercial vehicles, then it could be seen as an industrial product. This analysis becomes necessary to help us appreciate the number of channel levels or members involved in the distribution.

Kotler [10] listed the following marketing functions that are performed by the members of the channel.

Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.

Promotion: Developing and spreading persuasive communications about an offer.

Contact: Finding and communicating with prospective buyers.

Matching: Shaping and fitting the offer to the buyer’s needs, including such activities as manufacturing, grading, assembling, and packaging.

Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.

Physical distribution: transporting and storing goods

Financing: acquiring and using funds to cover the costs of the channel work.

Risk taking: assuming the risks of carrying out the channel work.

Agent middlemen never own the products, but they do arrange the transfer of title or ownership, [19].

Wood [15] defines a distribution channel as “consisting of the set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user.

Odulari [25] further stated that there are four primary gasoline marketing channels for wholesale distribution. Three of these constitute direct distribution of product including:

• Refiner – operated retail outlet: Refiners directly distribute gasoline to their own retail outlets.

• Lessee dealer: Retail outlets are owned by the wholesale distributors but leased to a gasoline dealer.

• Independent retailer: Retail outlets are owned and operated by independent “open” dealers.

• The fourth channel comprises indirect distribution of product:

• Jobber: Distributors purchase directly from refiners or importers and then sell products to retail outlets.

Theoretical framework (Conflict Theory)

A basic tenet of conflict theory is that if no interdependence exists in a social system there is no basis for conflict. Thus, it could be argued that mutual dependence is the cause of conflict. Channel conflict refers to the opposition of goals, ideas, or performance behaviour that occurs among the management of institutions that make up the marketing channel team [15]. Conflict in the channel can result in a threat to the survival of the channel [30] and detrimental to the effective performance in the system [31]. It could equally be beneficial to the members of the marketing channel Ehinomen and Adeleke [6] if it is used to identify channel weakness the resolution of which leads to the strengthening of the channel. Burke [21] isolates three forms of distributive conflict in the distribution channel: - horizontal competition, inter-type competition and vertical competition. Horizontal competition exists between middlemen of the same type. An example in the oil industry will be a conflict between Oando Petroleum (Nigeria) Limited dealer and a Total (Nigeria) Limited, dealer. In this case, they compete for more patronage by using various methods which in some cases can lead to a price war. Inter-type competition exists between middlemen of different types in the same channel sector. An illustration will be where a Total’s dealer competes with an independent marketer with one outlet. Because the independent marketer will generally enjoy a higher discount rate than the dealer, he, the independent marketer, will tend to sell at a very attractive price to customers and hence the competition that arises is inter type.

On the other hand, vertical conflict occurs between channel members of different levels. An illustration of this is when a dealer of Total (Nigeria) Limited. competes with Total (Nigeria) Limited in the supply of products to its customers. It is apparent that the dealer will not be able to cope in this type of competition because Total (Nigeria) Limited has more resources that the individual dealer who purchases products from Total to resell. One very basic source of channel conflict is the possible difference in the primary business philosophy of channel members. Bachmann and Afrika, [32], is of the view that the key to understanding management’s problem of cross purposes is the recognition that the fundamental philosophies in the lives of the high level corporate manager and of the typical retailer in the distribution system are quite different. The former’s philosophy can be characterized as essentially dynamic in nature, continuously evolving while the latter’s (small distributor’s philosophy), which is in sharp contrast, can be characterized as essentially static in nature, reaching a point and leveling off into a continuously satisfying plateau. These differences could be attributed to the different perceptions of the horizons of the two groups and the possible variations in their aspirations. Walters identifies several primary causes of conflict in the channel. These include roles, issues, perceptions, expectations, decisions, goals and communications among the institutions in the channel. Okpanachi [33] identifies the primary causes of conflict from the view point of distribution channels and group them into:

• Goal incompatibility – where the big marketing companies emphasize high volume to reduce unit overhead costs but involve dealers in uneconomical inventory levels.

• Domain-position-role incongruence such as the inability of the marketing companies to supply products already paid for by dealers due to problems at the NNPC depots and refineries.

• Communication breakdown, where pump breakdowns are communicated to the marketing companies but products are still dispatched because the information was not received.

• Differing perceptions of reality encompassing members’ self perception, members’ perception of channel leader and the leader’s perception of each channel member (Kotler and Keller 2007), and

• Ideological differences resulting from issues which arise out of channel members’ consideration of value. For example, where channel members see the causes of shortage differently [33].

Research Methodology

The study area

The study area is in Nigeria, Nigeria occupies a geographical area of 923.8 thousand square kilometers and with a population of about 167 million people based on the 2006 population census,. Nigeria is made up of over 250 ethnic groups and is richly endowed with oil deposits thereby placing her as the 6th largest producer of oil in the world. The study is narrowed down to the contribution of marketing strategies on nation’s development from 1997-2015.

Research design

In this study, quasi experimental design involving the use of existing data or secondary data was adopted.

Model Specification

RGDP=f (PPPS, PPPES, PPESRT, BPP)

Where;

RGDP=Real Gross Domestic Products

PPPS=Petroleum Products (pms) Produced for Sale

PPPES=Pricing of Petroleum Products (pms) Earmarked for Sale

PPESRT=Petroleum Products (pms) Earmarked for Sale by Road Transport

BPP=Bridging of Petroleum Products

Mathematical specification

This study used the marketing strategies for petroleum products as the independent variables while, Real Gross Domestic Products variable is used as dependent one. The model is therefore specified thus:

Y=bo+b1x1+b2x2+b3x3+b4x4+e

Where;

Y=Real Gross Domestic Products

X1=Petroleum Products (pms) Produced for Sale

X2=Pricing of Petroleum Products (pms) Earmarked for Sale

X3=Petroleum Products (pms) Earmarked for Sale by Road Transport

x4=Bridging of Petroleum Products

bo=The parameter which represents the intercept

b1, b2, b3, b4=The regression parameters are to be used in determining the significance of the effect of each of the independent variables x1, x2, x3, x4 on the dependent variable Y

e=Random disturbance term. These include the variables which (although not specified) in this model may also affect real GDP and also impact on marketing performance of petroleum products in State, Nigeria (1997-2015). They include government policies, political instability, corruption etc., [34]. The dimensions are to be measured in Naira and percentages.

Decision rule: If the regression coefficient is positive and the calculated t-value is greater than the tabulated value, it is an indication that there is positive relationship between the dependent and independent variables. The coefficient of determination (R2) is to be used to measure the rate at which the independent variable is explained by dependent variables. Finally, if the Durbin Watson test is approximately two (2), it shows the absence of autocorrelation.

Sources of data collection

The research instruments to be used in collection of data for this study are secondary data from the National Bureau of Statistics’ Website and Central Bank of Nigeria (CBN) and Nigerian National Petroleum Corporation (NNPC) Annual Statistical Bulletins.

Method of data analysis

Descriptive and inferential statistics were used to analyze the data for this study. The descriptive statistics are normally used for the analyzing and understanding of any treatment of numerical data, which do not involve generalization, while the inferential statistics are used to make generalization, predictions and/or estimations about a given data, [35-46]. In this study, regression analysis was adopted, t-test statistical tools were equally used to test the hypotheses formulated in this study and address the objectives and the research questions. The study made use of the ordinary least square regression analysis to show the extent of the relationship and impact betweenthe marketing strategies (product, pricing, road transport and bridging of petroleum products) and Real Gross Domestic Products [47-59].

Results of the Analysis and Discussion of Findings

Data presentation and analysis5 results from the Two-Stage Least Squares Analysis are as shown in the model summary below. The summary presents the results of the empirical regression estimates for the specified equation in the model (Table 3).

Appendix 2 shows the comprehensive data on the contributions of marketing strategies on nation’s development from 1997 to 2015. In this estimation marketing strategies represented by product, pricing, transportation and bridging of petroleum products have been regressed against the real gross domestic products (nation’s development). All the computations of the regression analysis in this study were based on the secondary data generated from NNPC Annual Statistical Bulletins, National Bureau of Statistics and CBN Statistical Bulletins.

With a p-value of 0.038 (revealed from the regression analysis) and f-statistics value of 3.399 compared to the statistical table value of 3.80, the model is statistically insignificant. The R2 is0.493, meaning that approximately 49.93% of the variability of the independent variables (i.e., products, pricing, transport by road and bridging of petroleum products affect the behaviour of the Nigerian economy from 1997 to 2015 represented by real GDP) in the model. In this case, the adjusted R2 indicates that about 49.93% of the variability of the marketing strategies for petroleum products is accounted for by the model, even after taking into account the characterization of the dependent variable in the model (Table 4).

The coefficients for each of the variables indicates the amount of change one could expect in the marketing strategies for petroleum products given a one-unit change in the value of that variable under consideration, given that all other variables in the model are held constant. For example, the variable - petroleum products produced for sale (PPPS) in Nigeria (1997-2015) of 6.590 (based on B coefficient) there is 57.10% negative effect (beta coefficient) on the economy within the period, assuming that all other variables in the model are held constant. The -1.012 (negative value) changes in pricing of petroleum products earmarked for sale in Nigeria from 1997-2015 really means 101.20% negative impact on the economy which might be compared with the strength of other coefficient(s), say petroleum products earmarked for sale by road transport. The coefficient value for petroleum products earmarked for sale by road transport is 1.042 indicating positive impact of this variable on the economy if efficiently managed. Beta coefficients’ column also known as standardized regression coefficients are used to address the problems raised in the beta column as the results are revealed. Bridging of petroleum products (BPP) variable had a negative impact of -0.260 beta coefficients wise indicating 26% negative impact on the economy within the period 1997-2015. The study has used beta coefficients’ columns here to compare the relative impact of the strength of the various independent variables within the model, the detail results reveal as follows: petroleum products produced for sale (PPPS) in Nigeria (1997-2015)=-0.571 i.e., 57.10% negative impact on the economy; pricing of petroleum products earmarked for sale in Nigeria from 1997-2015=-1.012 meaning 101.20% negative impact on the economy; petroleum products earmarked for sale by road transport (PPESRT)=1.042 meaning 104.20% positive impact on the economy from 1997-2015 and bridging of petroleum products (BPP)=-0.260 i.e., 26% negative impact on the economy from 1997- 2015. This is so because equalising the funds spent on distribution of petroleum products by road transport affects the economy negatively since the spending is not development oriented. In other words, the beta coefficients are the coefficients that one obtains if the outcome and predictor variables were all transformed to standard scores, also called z-scores, before running the regression.

Test of hypotheses

Table 5 gives details of the data analysis concerning the relationship between the marketing strategies of petroleum products represented by (products, pricing, distribution by road transport and bridging of petroleum products) and real gross domestic products (economic growth/development) from 1997 to 2015. The analysis has revealed the t-value for each of the variables indicating the level of significant and the nature of relationship.

The study has earlier hypothesized that:

Ho1: There is no significant relationship between the petroleum products (pms) produced for sale by NNPC and the real gross domestic products in Nigeria from 1997 to 2015.

Ho2: There is no significant relationship between the pricing of petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015.

Ho3: There is no significant relationship between the effect of the petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015.

Ho4: There is no significant relationship between the bridging of petroleum products and the real gross domestic products in Nigeria from 1997 to 2015.

Therefore using the results of the regression analysis the study looked at the coefficient of the independent variables to determine if they are statistically significant, the study also tested sets of variables, using t- test, to see if the set of variables are significant; the results are as follows:petroleum products (pms) produced for sale=-2.192 <2.131(critical value @5%, 19-4 (not significant, pricing of petroleum products (pms) earmarked for sale by road=-2.248 <2.131 (critical value @5%, 19-4 (not significant), petroleum products (pms) earmarked for sale by road=3.051>2.131 (critical value @5%, 19-4 (positive impact and significant), bridging of petroleum products =-0.577<2.131(critical value @5%, 19-4 (negative impact and not significant.

As revealed in the SPSS (17.0) Output reports (appendix 2) the significance of the overall model with all the 4 independent variables based on the F value is 3.399 <3.80@5%; 19-4 and that indicates statistical insignificance. Based on the Decision Rule the study has accepted the null hypotheses 1,2 and 4 namely; there is no significant relationship between the petroleum products (pms) produced for sale by NNPC and the real gross domestic products in Nigeria from 1997 to 2015;

There is no significant relationship between the pricing of petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015 and there is no significant relationship between the bridging of petroleum products and the real gross domestic products in Nigeria from 1997 to 2015. Then rejected the null hypothesis in two (3) namely; there is significant relationship between the effect of the petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015.

Discussions

In summary the research described in this paper has developed a deeper understanding of how marketing strategies are perceived and utilised in petroleum marketing companies, as well as how and which marketing strategies are employed by petroleum marketing companies. Consistent with literature on marketing being viewed in a strong light in the petroleum sector [18], overall, marketing activities are strongly practised positively by petroleum marketing companies – as a way to help achieve financial self-sufficiency. This was a goal common across the petroleum marketing companies in the study, and has been found in other studies involving the petroleum sector such as Wood [15] and Ribadu [36].

The research revealed that petroleum marketing companies employ marketing strategies within the context of trying to manage a number of tensions or dualities. The dualities that petroleum marketing companies face pull the organization in two directions at once – the direction toward economic self-sufficiency as well as the oft-competing direction of achieving the social mission of national economic development. This context appears to have implications for development and implementation of marketing strategy. For example, while there is recognition that engaging in distributional activities and pursuing economic goals is advantageous in the sense that additional revenues improve the ability of the petroleum marketing companies to achieve their social goals, pursuit of such goals may be constrained by expectations of utilizing funding to directly support the social mission of national development even as they constantly engage themselves in hoarding of the petroleum products. Similarly, petroleum marketing companies do not face stiff competition from other organisations performing the same functions because the prices are fixed by the regulatory bodies. Nevertheless, they should strategically position themselves with whom they may wish, or be expected to, cooperate with and face the pushes and pulls from such tensions.

The research presented here is suggestive of several implications for policy makers. First, it suggests that there is a need for governments at all levels to build organizational expertise concerning petroleum marketing companies. Given the important and growing role that petroleum marketing companies are playing in the economies of many nations, it is important that more attention be given to gathering data concerning the numbers and sizes of such organizations so that better understanding of the role that they play within the economies of nations will be possible. As well, there is an important role for governments to create formal designations of such enterprises – this has happened in countries such as the United States and Britain. The research reveals an acceptance of marketing strategies and an appetite for their application by petroleum marketing companies might be limited by their knowledge and skills in developing effective marketing strategies. It would also be useful if social entrepreneurship development centres were established with the goal of building marketing knowledge within petroleum sector.

Conclusion

Marketing of petroleum products is a strategic function that touches the economy of Nigeria. It is therefore very essential that the best practices could be carried on in this sector. Conclusively it evident from this study that: there is no significant relationship between the petroleum products (pms) produced for sale by NNPC and the real gross domestic products in Nigeria from 1997 to 2015; there is no significant relationship between the pricing of petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015 and there is no significant relationship between the bridging of petroleum products and the real gross domestic products in Nigeria from 1997 to 2015 and there is significant relationship between the effect of the petroleum products (pms) earmarked for sale by road and the real gross domestic products in Nigeria from 1997 to 2015

Recommendations

In the light of the findings and based on the conclusions, the following recommendations are hereby adduced:

• In view of the fact that the oil sector is so strategic to the economy of Nigeria and coupled with the fact that huge sums of money are being sunk into oil production and marketing on daily basis, it is recommended that the relevant authorities should exert enough political will to implement effectively and efficiently the Petroleum Equalisation Fund so that the benefits of bridging of petroleum product could be harnessed and enjoyed by the citizenry.

• It is also recommended that the relevant authorities and oil companies should make sure that they imbibe the tenets of marketing rudiments and orientations so that they can appropriately deploy marketing strategies efficiently.

• Government should reinvest the funds generated from oil exportations effectively and efficiently remembering that contemporary marketing involves every on in the organisation. This would engender the systemic-enhancing petroleum distribution strategies in order to improve the standard of living of the masses who have been constantly pauperized by government retrogressive and unyielding policies on petroleum pricing and distribution.

• Government should deregulate oil production through impartial methods that would give the stakeholders / citizenry equal chances to participate in the marketing of petroleum products as they touch the economic strategically.

• It is equally recommended that the government and major oil marketers should not see the recommendation to deregulate oil production and distribution as an attempt to discriminate and do funny dealings leading to total hands-off from governmental responsibility. There are still some strategic responsibilities which the government must as a matter of necessity reserve to itself in the interest of the citizenry/the economy, for instance providing enabling environment, water, healthcare and education etc.

• An integrated approach which is a combination of several marketing strategies. This calls for the establishment of community based integrated approach that needs joint committed efforts from the government and the multinational companies as well as other stakeholders. This integrated approach should focus on: building of human and institutional capacity to improve distribution mechanisms and management.

References

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