a comparative study on the factors affecting sales
TRANSCRIPT
A COMPARATIVE STUDY ON THE FACTORS AFFECTING SALES
PERFORMANCE OF DIRECT AND INDIRECT DISTRIBUTION
CHANNELS (IN THE CASE OF ETHIO- TELECOM)
A RESEARCH PAPER SUBMITTED TO COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT IN THE PARTIAL FULFILMENT OF MASTER
OF BUSINESS ADMINISTRATION (MBA)
By:
Mohammed Ahmed
Advisor:
Shifera Bekele (PhD)
May, 2018
Debre Berhan, Ethiopia
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DEBREBERHAN UNIVERSITY
SCHOOL OF GRADUATE STUDIES
A COMPARATIVE STUDY ON THE FACTORS AFFECTING SALES
PERFORMANCE OF DIRECT AND INDIRECT DISTRIBUTION
CHANNELS
(IN THE CASE OF ETHIO- TELECOM)
By:
Mohammed Ahmed (ID: PGBEE/81/08)
APPROVED BY BOARD OF EXAMINER
______________ _____ _________________________
DEAN, GRADUATE STUDIES SIGNITURE AND DATE
___________________ _______________________________
ADVISOR SIGNITURE AND DATE
_____________________ _______________________
EXTERNAL EXAMINER SIGNITURE AND DATE
________________ ____ _____________________
INTERNAL EXAMINER SIGNITURE AND DATE
___________________ ________________________
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DECLARATION
I, Mohammed Ahmed, declare that this research is my original work; and prepared under the
guidance of my Advisor Shiferaw Bekele (PhD). All sources and materials used for the thesis
have been duly acknowledged. I also confirmed that to the extent of my knowledge there is no
any research that have been previously done or presented yet on the title entitled as „‟The
comparative study on the factors affecting the direct and indirect distribution channels in the case
of Ethio-Telecom” for the purpose of earning any degree.
Name: ______________________________
Signature ____________________________
Date ________________________________
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DEDICATION
To my parents and my family for the encouragement and support during this course, specially, to
my dear wife Alem Mustafa, I thank you for her wise guidance and your understanding to serve
our children by taking any challenge or tireless homework throughout the entire MBA program
including this research.
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Acknowledgements
First of all, the journey of searching knowledge is paying cost, time consuming and continuous
process being able to engage manifestation of pursuing further studies to know more about
researches and it would not have been easy without any academic support from various people
who have given constructive idea and comment for this study. In this context I recognize for all
people to give your support and provided me corrective data for the process of the research. My
special thanks and gratitude is extended to Shifera Bekele (PhD) for his advice and direction
throughout this study. His comments have a great value to the accomplishments of this research
work. I would like also to express great thanks to Ethio-telecom staffs and non-staffs‟
distribution channel members for their assistance while I have distributed and collected the
questionnaire.
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ABSTRACT Since the telecom service provider in Ethiopia is monopolized, customers have no choice to go
elsewhere even when their need is not met. These customers will migrate to another service
provider when the market might be opened for competition even if the service provider improves
its distribution channel system. Otherwise it leads to total loss of business beyond in the long
run. On the other hand, such unresponsive practice of service provision would also lead to
decrease company image, though the market may not be open for competition in the future. So,
product and services distribution channel sales performance strategy has leads to poor
satisfaction with both direct and indirect distribution channel members. The aim of the study is
to compare the sales performance of direct and indirect distribution channel in the case of Ethio-
Telecom. (Subscriber Identity Module Card and Voucher card distribution). The study was
performed in quantitative and qualitative research approaches and both descriptive and
explanatory research design were used. The data were collected from 256 respondents (direct
and indirect staff, distributors, sub distributors, retailers and customers) through questionnaires
and interviews. The findings of the study show the combination of both direct and indirect
distribution channels improve sales performance of the Ethio-telecom. Comparatively, indirect
distribution channels have more significant impact on the sales performance of Ethio-telecom
than direct channels. However, Ethio-telecom is not properly and fully utilizing indirect
distribution channels to improve sales performance. Customers‟ satisfaction, market coverage,
promotional strategy, using the opportunities and minimize the impacts of direct and indirect
distribution channels have to give attentions for increasing the sales performance of Ethio-
telecom. The policy implication suggests, the policy makers/governments should have to
privatize Ethio-telecom product and services distribution in order to improve telecom services
and satisfy the need of customers. The practical implications that should be taken are improving
the capacity of distributors and intermediaries, use sophisticated way of indirect distribution
channels, update pricing and use proper promotional strategies.
Keywords: Customer Satisfaction, Direct Distribution Channels, Ethio-Telecom Products/
Services distribution, Indirect Distribution Channels, Market Coverage
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Table of Contents
DECLARATION ............................................................................................................................ ii
DEDICATION ............................................................................................................................... iii
Acknowledgements ........................................................................................................................ iv
ABSTRACT .................................................................................................................................... v
LIST OF ACRONYMS .................................................................................................................. x
LIST OF TABLES ......................................................................................................................... xi
LIST OF FIGURES ...................................................................................................................... xii
CHAPTER ONE ............................................................................................................................. 1
1. INTRODUCTION ................................................................................................................... 1
1.1. Background of the Ethio-Telecom ................................................................................... 1
1.2. Background of the Study .................................................................................................. 2
1.3. Statement of the Problem ................................................................................................. 4
1.4. Objective of the study ...................................................................................................... 6
1.5. Research Questions .......................................................................................................... 6
1.6. Significance of the Study ................................................................................................. 6
1.7. Scope of the Study............................................................................................................ 7
1.8. Definition of terms ........................................................................................................... 7
1.9. Limitations of the study.................................................................................................... 8
1.10. Organization of the Paper ............................................................................................. 9
CHAPTER TWO .......................................................................................................................... 10
2. REVIEW OF RELATED LITERATURE ............................................................................. 10
2.1. Introduction .................................................................................................................... 10
2.2. Distribution Channels ..................................................................................................... 11
2.2.1. Types of Distribution Channels .............................................................................. 11
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2.2.2. Role of Distribution channel ................................................................................... 12
2.2.3. Distribution channel and sales Performance measurement .................................... 13
2.2.4. Opportunities of Direct and Indirect Distributions Channels ...................................... 14
2.3. Distribution Strategy ...................................................................................................... 18
2.4. Product and Service Promotion on the distribution channel .............................................. 18
2.4.1. Personal Selling ...................................................................................................... 18
2.4.2. Public relations........................................................................................................ 19
2.4.3. Short Message Service (SMS) ................................................................................ 19
2.4.4. Audio-visual ............................................................................................................ 19
2.5. Factors affecting direct and indirect distribution channel sales performance ................ 20
2.5.1. Management commitment ...................................................................................... 20
2.5.2. Motivational ways of distribution channels ............................................................ 21
2.5.3. Sales person Performance in the distribution channels ........................................... 21
2.5.4. Distribution Channel flexibility .............................................................................. 22
2.5.5. Promotional strategy for sales performance ........................................................... 23
2.5.6. Sales Support on the distribution channel ............................................................... 23
2.5.7. Product and service availability in the distribution channel ................................... 24
2.7.8. Customers satisfaction in the distribution channel ...................................................... 24
2.7.9. Market coverage in the distribution channels .............................................................. 26
Geographic Accessibility ....................................................................................................... 26
The numbers of Intermediaries (Outlets) ............................................................................... 26
2.6. Empirical investigation .................................................................................................. 28
2.7. Conceptual Framework ...................................................................................................... 28
CHAPTER THREE ...................................................................................................................... 30
3. RESEARCH METHODOLOGY .......................................................................................... 30
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3.1. Introduction .................................................................................................................... 30
3.2. Research Design ............................................................................................................. 30
3.3. Target Population and sample size determination.......................................................... 31
3.4. Sampling Technique and Procedures ............................................................................. 34
3.5. Type of Data Source ....................................................................................................... 34
3.6. Data Collection Methods and Measurements................................................................. 34
3.7. Data Analysis Techniques .............................................................................................. 35
3.8. Reliability and validity ................................................................................................... 36
3.8.1. Reliability Test ........................................................................................................ 36
3.8.2. Validity Test............................................................................................................ 37
3.9. Ethical Considerations.................................................................................................... 37
CHAPTER FOUR ..................................................................................................................... 38
4. DATA ANALYSIS, PRESENTATION AND DISCUSSION ............................................. 38
4.1. Demographic Characteristics of the Respondents .......................................................... 38
4.2. Direct and indirect distribution channels sales performance. ........................................ 39
4.3. Results of Correlation Analysis...................................................................................... 43
4.4. Multi Regression Assumption and output ...................................................................... 45
4.4.1. Multi Regression Assumption Test ......................................................................... 45
4.4.2. Multi Regression Analysis Output .......................................................................... 49
4.5. Regression output of direct and indirect distribution on sales performance .................. 51
4.6. Factors Affecting Sales Performance ............................................................................. 53
4.6.1. Management Commitment and Sales Performance ................................................ 53
4.6.2. Motivational Factors and sales performance .......................................................... 53
4.6.3. Sales Support and Sales Performance ..................................................................... 54
4.6.4. Distribution Flexibility and sales performance Sales ............................................. 55
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4.6.5. Sales Person Performance and Sales Performance ................................................. 56
4.6.6. Promotion strategy and Sales Performance ............................................................ 56
4.6.7. Product and Service Availability and Sales Performance....................................... 57
4.6.8. Customer Satisfaction in the direct and indirect distribution channel .................... 59
4.6.9. Market coverage in the direct and indirect distribution channels ........................... 60
4.7. Comparative Analysis of Direct and Indirect Distribution Channels for Sales
Performance .............................................................................................................................. 62
4.8. Opportunities of Direct and Indirect Distributions Channels......................................... 63
4.9. Challenges of direct and indirect distribution channels ................................................. 64
CHAPTER FIVE .......................................................................................................................... 65
5. Summary of Findings, Conclusions And Recommendations ............................................... 65
5.1. Summary of findings ...................................................................................................... 65
5.1.1. Factors affects sales performance ........................................................................... 65
5.1.2. Impacts of Distribution Channels on the Sales Performance .................................. 65
5.1.3. Opportunities of Direct and Indirect Distributions Channels ................................. 65
5.1.4. Product and Service Promotion for sales performance ........................................... 66
5.1.5. Challenges that hinders the distribution channels ................................................... 66
5.2. Conclusion ...................................................................................................................... 66
5.3. Recommendations .......................................................................................................... 68
5.4. Suggestions for Further Research .................................................................................. 69
REFERENCES ............................................................................................................................. 70
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LIST OF ACRONYMS
AL……………………………………………………Alternative Channel
CAAZ…………………………………………..…. Central Addis Ababa Zone
CAF……………………………………………….…Customer Acquisition Form
DC…………………………………………………. Direct Channel
EAAZ………………………………………….……. Eastern Addis Ababa Zone
E-CAF…………………………………………........ Electronic customer acquisition form
ET …………………………………………………... Ethio-Telecom
ETC…………………………………………………...Ethiopian Telecommunication Corporation
IDC…………………………………………………Indirect Channel
IV……………………………………………………. Independent Variable
NAAZ………………………………………….……. Northern Addis Ababa Zone
POS……………………………………….…………Point of Sale
P&S……………………………………………………Products and services
RSD…………………………………………………...Residential sales division
SAAZ………………………………………….……...Southern Addis Ababa zone
SIM-card……………………………………...…..… Subscriber Identity Module card
SPSS……………………………………………......…Statistical package for social science
SWAAZ………………………………………………South West Addis Ababa zone
WAAZ………………………………………………...Western Addis Ababa zone
VC………………………………………….................Voucher card
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LIST OF TABLES
Table 1: Target Population and respondents ................................................................................. 32
Table 2: Sample Size Determination ............................................................................................ 33
Table 3: Proportionate Distribution of direct and indirect distribution channels ......................... 33
Table 4: Reliability Test................................................................................................................ 36
Table 5: Respondent Profile.......................................................................................................... 38
Table 6: Sales Performance of Ethio-Telecom Products/services ................................................ 40
Table 7: Indirect distribution Channel Voucher Cards Sales Performance .................................. 40
Table 8: Residential Sales Performance Report 2016/17 ............................................................. 41
Table 9: Voucher Card in the year 2009/10 .................................................................................. 42
Table 10: Zero order Correlation Matrix among the variables under Study. ................................ 43
Table 11: The overall correlation output ...................................................................................... 45
Table 12: Assessing Multicollinearity .......................................................................................... 47
Table 13: Test for Independence of Residuals .............................................................................. 48
Table 14: Pearson Correlation ...................................................................................................... 48
Table 15: Model Summary ........................................................................................................... 49
Table 16: ANOVA Table for Multiple Regressions ..................................................................... 49
Table 17: The beta coefficient ...................................................................................................... 50
Table 18: Impacts of Direct and Indirect Distribution Channel on Sales Performance................ 51
Table 19: Multicollinearity of all Variables .................................................................................. 52
Table 20: Two variable Multicollinearity ..................................................................................... 52
Table 21: Promotion strategy of direct and indirect distribution .................................................. 58
Table 22: Customers Satisfaction in the direct and indirect distribution channels ....................... 59
Table 23: Market Coverage in the direct and indirect distribution channels ................................ 60
Table 24: Comparative analysis of direct and indirect distribution channels ............................... 62
Table 25: Opportunities of Direct and Indirect Distribution Channel .......................................... 63
Table 26: Factors Affect Indirect and Direct Distribution Channels ............................................ 64
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LIST OF FIGURES
Figure 1: Conceptual frame work ................................................................................................. 29
Figure 2: Voucher Card and sales per channels ............................................................................ 41
Figure 3: Voucher Cards in the year 2009/10 ............................................................................... 42
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CHAPTER ONE
1. INTRODUCTION
This chapter composed of background of the study, statements of the problem, objectives of the
study, research questions, significance of the study, and scopes of the study, Definition of terms,
limitations of the study and organizations of the paper
1.1. Background of the Ethio-Telecom
Originally a division of the Ministry of Post, Telephone and Telegraph, what would become
Ethiopian telecommunication corporation (ETC) was established as the Imperial Board of
Telecommunications of Ethiopia (IBTE) by proclamation No. 131/52 in 1952. Under the Dreg
Regime, the Imperial Board of Telecommunications of Ethiopia was reorganized as the
Ethiopian Telecommunications Service on October 1975, which was in turn reorganized In
January 1981 as the Ethiopian Telecommunications Authority. In November 1996, the Ethiopian
Telecommunications Authority became Ethiopian Telecommunication Corporation by Council
of Ministers regulation No. 10/1996. The subsequent Proclamation 49/1996 expanded the
Ethiopian Telecommunication‟s duties and responsibilities. For its international traffic links and
communication services, Ethiopian Telecommunication Corporation mainly uses its earth station
at Sululta which transmits and receives to both Indian Ocean and the Atlantic Ocean satellites
network(ITU,2008).
Ethio -Telecom, previously known as the Ethiopian Telecommunications Corporation (ETC), is
an integrated telecommunications product and services provider in Ethiopia, providing internet
and telephone services. Ethio Telecom is owned by the Ethiopian government and maintains a
monopoly over all telecommunication product and services in Ethiopia.
Based on Government Report, Ethio-Telecom was one of the "Big-5" groups of state owned
corporations in Ethiopia, along with Ethiopian Airlines, the Commercial Bank of Ethiopia,
Ethio-Insurance, and the Ethiopian Shipping Lines.
Ethio -Telecom was managed, on a management contract arrangement from 2010 to 2013 June,
by France Telecom, and was required to comply with Ethiopian Government orders. The
government said it outsourced the management as Ethiopian Telecommunication Corporation
was not able to meet the demands of the fast-growing country. It also said that
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Telecommunications product and services distribution would not be privatized, at least not in the
near future.
This study is conducted in case of Ethio-Telecom which was previously known as the Ethiopian
Telecommunication Corporation (ETC) and its‟ operation head quarter is located at Churchill
road, in front of main post office. (www.ethiotelecom.et)
1.2. Background of the Study
In the current globalized world, companies can be competent if they satisfy their customers. One
key factor for customer satisfaction is distribution of their products and services. It is important
to note that the monopoly in telecommunication products and services is justified as being
optimal for socio-political objectives, such as assuring universal access to the rural and remote
areas to enhance national economic performance. The distribution channels of products and
services supporting important sectors such as education, investment and trade effectively. The
Ethiopian Telecommunication Agency (ETA) or Ethio-Telecom currently was institutionalized
with the objectives of promoting the development of high quality, efficient, reliable and
affordable telecommunication products and services in the country.
Ethio-Telecom product and service distribution can be competent based on their distribution
practices of the direct and indirect distribution channel sales performances. One of the key
marketing strategies for company‟s customer satisfaction is distribution of their effective
distribution channels of products and services. The good distribution strategies can create
customer value and competitive advantage for a company. In addition, good distribution strategy
could be important for adding value to the process of making products and services available to
the business and household consumers (Kotler & Armstrong, 2012). From this it is possible to
conclude that distribution channel system of products and services builds stable sales
performance. Since distribution channels have a long run character and to build them it is
necessary to have a consistent structure. Hence, even though the current market for Ethio-
telecom is a monopoly and no need to worry about competitive advantage, the company needs to
have an effective product and service distribution channels to generate strong sales performance
as business oriented and service giving company in order to generate continuous revenue.
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According to (Nehmya, 2014), Ethio-telecom should improve its product and service distribution
channel for two main reasons. The first reason is that the company needs to adopt customer
relationship marketing perspective to serve its distribution 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. Even though
proper distribution of products and services sales performance can be considered as a soul for
companies, developing successful strategy distribution in today‟s competitive environment as
complex process. Globalization and market expansion of intensified distributions in the
competitors of their products and services for the customers to re-examine their current strategies
and inherent weakness of these strategies and their inability to address current challenges and
opportunities (Stem et al. 2006).
Companies can use multichannel marketing, direct marketing, indirect marketing or electronic
commerce and online marketing to distribute their products and services. From these types of
distribution channels Ethio-telecom implements direct and indirect distribution channels to
distribute its products and services (Nehmya 2014). A direct channel of distribution describes a
situation in which the producer sells a product directly to a consumer without the help of any
intermediaries. A direct chain of distribution may involve face-to-face sales, computer sales or
mail order but does not involve any form of distributor other than the original producer. Indirect
distribution is a chain of intermediaries through which a product moves in order to be made
available for purchase by a consumer. An indirect channel of distribution typically involves a
product passing through additional steps as it moves from the manufacturing business via
distributors to sub-distributor and then retail stores. In indirect channels of distribution there are
one or more middlemen between the manufacturer and consumers. There is no direct contact
between the producers and the customers. But it cannot be said that Ethio -telecom current
distribution channel of products and services have performed to the level that meets according to
the customer‟s expectations because there are many complains and problems in the SIM –card
and voucher card distribution channels process .
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The study were conducted to make comparative study on factors affecting the direct and indirect
distribution channel sales performance in the case of Ethio- telecom products and service
distribution specifically SIM-card and Voucher card distribution for the channel members.
1.3. Statement of the Problem
According to economic distribution channel theory, the “ideal” distribution system is one
determined by exploring what the consumers want in terms of service outputs from the
distribution channel, how much they are willing to pay for a given service level, how the services
can be provided to them, and what the costs of the alternative distribution channels are (Stern et
al., 2006). As a result they argue that it can be determined which distribution system most
efficiently meets the customers wants and it can be pointed out that the distribution channel
strategy adopted by a firm should take a customer perspective and analyze the output from the
commercial part of the different distribution channels and relates it to the customer costs and
benefits from the different channel levels of product and service offered by the available
distribution channels (Cohen et al., 2003).
As a given company distribution channel of products and services is one of the key elements of a
company's success in selecting the proper distribution channel strategy. Proper distribution is a
focal point in both supply chain and marketing channel structure. The distribution strategy
decision is usually based on finding the most profitable way to reach a market (Ford and
Mottner, 2003). Successful distribution channel strategy selection, implementation, and
management can help to meet the shopping needs and habits of the target customers efficiently
under the cost constraints of the seller. In addition, they can also mitigate the disadvantages
caused by distribution channel problems such as market violation among different groups in the
channel structures. According to Porter (2005), organizational competitive advantage can be
achieved if the firm implements a value-creating strategy that is not simultaneously being
implemented by any current or potential competitors. This can be interpreted to mean that
sustained competitive advantage results from strategic assets; which Barney (2001) regards as
those are internally controlled and permits the firm to formulate and implement strategies that
expand its distribution channels in the direct and indirect sales process of the company.
According to Nehmya (2014), the monopoly telecom service provider in Ethiopia customers
have no choice to go elsewhere even when their need is not met. These customers will migrate
5
to another service provider when the market might be opened for competition even if the service
provider improves its distribution channel system. Otherwise it leads to total crisis beyond loss
of business in the long run. On the other hand, such unresponsive practice of service provision
would also lead to decrease company image, though the market may not be open for competition
in the future. So, product and services distribution channel sales performance strategy has leads
to poor satisfaction with both internal and external channel members. The external customers
(channel members) are experiencing stiff channel conflicts. The internal customers (staffs
working on the distribution channels) are facing management problems emanating from the
nature of the distribution channel design itself and they have dissatisfied in their job. Distribution
of products and service performance in Ethio-telecom is challenging business to meet the
demands of internal and external channel members far more than by merely offering product and
service package in both distribution channel strategy. Improved sales performance cannot be
expected without having an effective distribution channel in place where all channel members
and stakeholder staffs are satisfied.
In the case of Ethio-telecom, studies have been conducted on the issues about indirect
distribution channels such as appropriateness of indirect distributions channels (Nehmya, 2014),
determinants of indirect distribution channel sales (Fissaha, 2015) and outsourcing of voucher
and SIM-card selling services for quality indirect distribution (Fasika, 2016). However, there are
no researches under direct distribution channel for sales performance and comparing the direct
and indirect distribution channels for sales performance were not included in those studies. In the
past three years the distribution channel division sales performance of Ethio-telecom was being
below the targeted level which might be because of the distribution channel system and inability
to address all the distribution channel market coverage. In addition to this the practices of these
two distributions channel are not engaging effectively to achieve the targeted sales performances
(Summarized from GTP 2016 and 2017 Annual report). To the extent our knowledge, this
research could be planned to fill this gap and to improve the direct and indirect distribution
channels for sales performance that leads to generate continuous sales performance for the
company. Therefore; this study is designed to compare the performance of direct and indirect
distribution channel of Ethio-telecom with their sales performance.
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1.4. Objective of the study
The general objective of the study was to compare the sales performance of direct and indirect
distribution channel in the case of Ethio- Telecom.
The specific objectives of the study were the followings;
To assess the nature of the relationship between the determinants factors that affects the sales
performance
To identify the opportunities of direct and indirect distribution channels of Ethio-telecom
products and services.
To assess the levels of market coverage of direct and indirect distribution channels
To assess the levels of customer satisfaction in the direct and indirect distribution channels of
Ethio-telecom products and services.
To identify the challenges that hinders direct and indirect distribution channels for sales
performance of Ethio-telecom products and services.
1.5. Research Questions
The following are research questions derived from the research problem:
What are the nature of the relationship between the determinants factors and the sales
performance of the company?
What are the opportunities of direct and indirect distribution channels of Ethio-telecom
products and services?
What are the levels of market coverage on the direct and indirect distribution channels for
sales performance?
What are the levels of customer satisfaction on the distribution of Ethio-telecom products
and services?
What are the challenges that hinder direct and indirect distribution channels for sales
performance of Ethio-telecom products and services?
1.6. Significance of the Study
Improving the Distribution Channel of Ethio-telecom plays a very important role in achieving
the distribution channel market coverage and sales performance for the effectiveness of both
direct and indirect distribution of a company. It has more benefit to evaluate as Ethio-telecom in
the correct ways of distribution of products and services for decision making. To suggest the
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right distribution channels and most efficiently ways for the customers‟ needs as Ethio-telecom
follows problem solving for product and service distribution. For the company‟s direct and
indirect distribution channels are the two main and broad residential sales divisions in general.
To assess the positions of their sales performance can help the company to improve the overall
image and to increase annual profit of Ethio-telecom and finding out the effect of direct and
indirect distribution channel system on annual profit by comparing the sales activities of the two
distribution sales performances of the company.
Therefore, The Company provides solutions for the current distribution channel constraints to
develop efficient marketing strategy and innovative distribution channels strategy of product and
service distributions. For the community effective distribution channel creates customer
satisfaction and reduce time wastage for customers to search products and services in the process
of distribution of Ethio-telecom. For the researcher could have some contributions in the existing
knowledge about distribution channels with further research as like to comparative study in the
sales division as well as marketing strategy research more over in different company in Ethiopia.
1.7. Scope of the Study
This study limited on the comparative study on the direct and indirect distribution channel sales
performance in the case of Ethio-telecom in the six zones of Addis Ababa, the capital city of
Ethiopia. This is the fact that the highest distribution channel transactions are taken as the direct
and indirect distribution channel system. Studding those zones represents the overall part of the
country due to the fact that the zonal distribution channels have including areas out of Addis
Ababa in different directions. Ethio–telecom has six zonal and eight regional distribution
channels throughout the country. So, the researcher were focused the direct and indirect
distribution channel of Ethio-telecom only the zonal offices by assessing the distribution channel
sales performances. The study adopted descriptive and explanatory study in order to assess the
performances of their sales activities of both direct and indirect distribution channels specifically
SIM-card and Voucher card distribution channels.
1.8. Definition of terms
Channel: Different path through which products and services delivered for end users.
Channel member: a number of levels characterize from the simplest level to the longest channel
participants
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Coverage: Market size of the distribution system.
Indirect distribution channel: Type of distribution with chain of intermediaries through which
a product or services moves in order to be made available for purchase by a consumer.
Direct distribution channel: A direct channel of distribution describes a situation in which the
producer sells a product or services directly to a consumer without the help of any
intermediaries.
Distribution channel: The route along which goods & services travel from producer to the final
user.
Distributor: It is a legal entity authorized by an agreement to sell and distribute Ethio- telecom
products through its distribution chain (Ethio-Telecom, Indirect Channels Products and Services
Distribution Agreement, 2014).
Service: It is defined as an activity that meets the needs of a user or can, be applied by a user.
To be effective, services should possess these attributes like: available and timely at time and
space scales that the user needs.
Sub-distributor: It is legal person, which have entered into contractual relations with the
Distributor with the goal of distributing, promoting and selling of Ethio-telecom products
through its retailers, in the assigned territory (Ethio-Telecom, Indirect Channels Products and
Services Distribution Agreement, 2014).
Retailer: It deals with the activities involved in selling products and services to ultimate
customers. And the buying motive for a retail sale is always personal or family satisfaction
stemming from the final consumption of the item being purchased (Stern, and Ansary, 1977).
Prepaid SIM: It is a normal type of mobile service, in which a subscriber needed to pay or
recharge regularly in advance for getting talk time, data and other services with in a stated
validity period, offered through Ethio telecom's SIM Card (Ethio Telecom, 2015).
Voucher card: It is a scratch-able card used for recharging any pre-paid services offered by
Ethio-Telecom (Ethio Telecom, 2015).
1.9. Limitations of the study To accomplish this study, it needs long time in searching detail knowledge and collecting enough
data from the respondents. Availability of enough time for research work was questionable due
to the fact that the researcher was also doing employer‟s tasks in the company. In addition, Lack
of seriousness on research response by many participants in the study, because the participants
9
give their response carelessly without being attention of the research topic that have not provided
detailed views to some question.
Finally, the other limitations of this research was that Financial constrain, as the researcher is
self-supported and the company have not given any funding in this case few sources of funds
affected the possibility of doing extensive research. To solve this constraint the researcher
decided to reduce the unnecessary cost and use short cut to finish the whole process of the
research.
1.10. Organization of the Paper
The research was organized in to five chapters. The background of the study, Statement of the
problem, research questions, objectives of the study, significance of the study, Scope and
limitation of the study, and Organization of the paper have been discussed in the first chapter.
The second chapter discusses theoretical literature, conceptual frame work and empirical
evidence. Third chapter were expressed about the methodology of the study including data type
and source, method of data collection and measurement, research design and sampling
procedure, data processing and method of data analysis. Fourth chapter were discussed about
discussion, interpretations and findings of the research. The conclusion and the recommendation
have been dealt with in the final chapter.
10
CHAPTER TWO
2. REVIEW OF RELATED LITERATURE
2.1. Introduction
Distribution Channels have become the most important component of marketing strategy today and are
receiving increased attention especially product distribution and service giving company. Distribution
Channels not only add value to products and services, but also create customer satisfaction and market
coverage to increase sales performance for a company. The distribution channel comprising direct and
indirect distribution channel plays significant role in the flow of products and services for the customers
as the channel members performs very well. The idea and origin of marketing distribution channels
was started historically from the classes of business men and a distribution intermediary service
of middle men‟s, according to Moller & Wilemon (1971). The development of marketing
channel starts by the existence of intermediaries in the process of exchange and the structure of
marketing channels was a reflection of the society‟s sociological and economic development.
The next evolution of exchange was continued by the operation of centralized exchange which is
called a dealer. And then the historical development and arrangement of marketing channels was
started (Bowersox, and Copper, 2004) with an arrangement of an independent business as;
retailers, distributor and manufacturers for successful and efficient marketing activities.
The functions of distribution is to provide for the company in the accomplishment of the task of
delivering the product and services at the right time, place, and quantity in the minimum cost
(Bucklin, 1966).Although the distribution problem was one of the first issues analyzed by the
marketing researchers in the beginning of the 20th century (Bartels, 1965), the distribution
problem has an enormous importance in the marketing literature and managerial contexts today.
Empirical research in this area must be set up to develop more profitable ways for the companies
to reach the market penetration in the distributions of products and services. The experience of
many organizations over the past several years demonstrates that indirect distributions. Channels
can be critical to expanding market coverage and to address products and services to the end
users. This has been particularly true in the electronics, communications and technology sectors.
These changes in the distribution channel include both direct and an indirect distribution channel
has enabled companies to better targeted sales performances and expands into new markets
development (Global Technology Distribution Council, September, 2008).
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2.2. Distribution Channels
According to the Stern & El-Ansary (1977), distribution channels is a marketing or distribution
channel in an inter organizational system comprised of a set of interdependent institutions and
agencies involved with the task of moving anything of value from its point of origin, extraction,
or production to points of consumption for the end users. However, Mehta, et al, (2000) also
defined it as “the external contractual organization which firms operate to achieve their
distribution objectives.” According to Kotler (2003), “a distribution system is a key external
resource. Normally it takes years to build, and it is not easily changed. It ranks in importance
with key internal resources such as manufacturing, research, business, field sales persons and
facilities. It represents a significant corporate commitment to large numbers of independent
companies whose business is distribution- and to the particular markets they serve. It also
provides a commitment to set of policies and practices that constitute the basic activities from
production to consumption on which the products and services delivered for end users on the
process of distribution channel to create and to set long-term sales performance under the
channel members and the stakeholder.
2.2.1. Types of Distribution Channels
2.2.1.1. Multichannel Marketing
It is a form of distribution channels which uses two or more marketing channels to reach one or
more customer segments in the distributions of products and services (Kotler, 2003). Even if two
or more distribution channels are called as “multichannel”, Stern and El-Ansary (1977) described
it as “double distribution marketing” by which a manufacturer, producer or distributor reaches
its final products and services for the availability of markets with two or more different types of
channels for the same basic products and services.
2.2.1.2. Direct distribution channel
Jobber and Lancaster (2003) describes direct marketing as a distribution channel which attempts
to distribute products, services, information and promotional benefits without any intermediary
and using methods like; direct mail, telemarketing, sales in specific shops, direct response
advertising, electronic media, catalogue marketing, inserts, door-to-door distribution and direct
text messaging.
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2.2.1.3. Indirect distribution Channel
It is a kind of a distribution network of independent intermediaries, such as; distributors, sub-
distributors, retailers, agents, to sell their products and services effectively to other channel
members and/or ultimately to the end users (Stern and El-Ansary, 1977).
2.2.1.4. Electronic Commerce and Online Channels
Electronic commerce is defined as “the process of buying, selling, transferring or exchanging
products, services, and/or information by internet connection 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), electronic customer question form(E-CAF), and mobile
commerce. Optimal distribution systems are flexible and are able to adjust the correct
distribution channel conditions over both the short and long terms product and service
distribution.
2.2.2. Role of Distribution channel
Different researchers stated the importance of distribution channels on their works. Bowersox
and Copper (2004) explained distribution channel as a motivational factor for functional sales
performance, reduction of complexity and specialization delivery of products and services.
Wallace et al., (2009) further stated the importance from researchers as it can create channel
collaborations, competitive uniformity, need 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, direct and
Indirect marketing channel are two parts of multichannel of marketing, for better understanding,
it is good to explain the importance of both channels of marketing from different books and
journals, as follows;
Kotler and Kevin (2006) stated the below functions and roles of channels as distribution channel
strategy;
It can overcome the time, place and possession gap that separate products 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
13
Producers who do establish their own channels can often earn a greater return by
increasing their distribution in the main business
They provide for the successive storage as well as for the movement of products and
service delivery
Ensure availability and market coverage across the given territory
Achieve sales performance and revenue objectives complying with distribution of
product and services being closer to the end user.
Parrish (1995) also tried to explain the benefits of distribution channel with partnering as it adds
value while cutting costs and increases delivery speed and also added another benefit as follows:
They serve as awareness by advising end users on how to use products and services.
Through the term and conditions of their partnership they provide warranty and
guarantee of products and services.
They decrease customer search time lost in getting products and services through long
distance.
2.2.3. Distribution channel and sales Performance measurement
Performance may be defined as the sum of all activities that leads managers to taking appropriate
actions in the present that will create a performing organization in the future.
Performance standards are designed to measure the performance activities that the company
considers most important ways. Setting standards of performance for the sales channels in the
evaluation process requires consideration of the nature of the selling job (Bradley, 2003). Setting
performance standard for sales relies upon company products and dealership network and the
marketing channels through which company effort to push the product into market. Performance
standards of marketing strategy is easy way to measure the progress made for the
accomplishment of the sales organization objectives which may vary according to company‟s
marketing situation but the general objective is to increase the sales volume, profit and growth.
According to Zoltners et al., (2004) Performance standard can be done in two forms: quantitative
and qualitative. The quantitative type measures success in achieving profit objectives such as
sales generated in terms of volume number of customer generated which includes high user
segment, low user and moderate user segments to gauge the progress sales quota is expressed in
absolute terms for the specific territory. In quantitative methods, the number of factors to be
14
considered while using the evaluation process such as sales revenue achieved, profit generated,
sales potential, number of customer served, distribution capacity percentage, high progress sales
quota, amount of sales per year. (Farris et al, 2006).
The second aspect of performance of standards is its qualitative form, comprising of measuring
which includes the management commitment, motivational ways of distribution, sales person
performance, and distribution flexibility, creating awareness of customer need, sales support on
distribution channel, and product and service availability of distribution channels (Farris et al.,
2006).
2.2.4. Opportunities of Direct and Indirect Distributions Channels
2.2.4.1. Monopolized distribution on the market Products and Services
Monopolies exist because of barriers to entry into a market that prevent competition with in the
distribution of products and services through the different company. In addition the product and
service distribution has controlled by either private or public company owned to distribute
telecom products and services in the distribution channels provider without any competitive
access giving company (Dawson, 1995).
The growth rate is continuing at a fast speed and new value added products and services are
driving to increases the sales performance to be highest. At the same time, technological
advancement has changed the company of distribution channel members involved to maximize
the customer satisfactions and market coverage of the company. The sales performance has
grown every year even if distribution channel provider in monopolies without any competitive
access providers in the distribution channels Therefore, companies need to operate using
cutting-edge technological developments and should operate with leading new type of
distributions channels where technology developments are taking place. Because, in the current
decade globalization has already become a reality than a refrain and hence the distribution „s
channel position itself used to exploit the opportunities and to reduce the distribution channel
impacts through maximizing of sales performance and advancement that might occur in related
to other competitors(Burt and Spark,1997).
15
2.2.4.2. Availability of Network Service Providers
The Ethio-Telecom network has made available a number of technical solutions and enough
national and international capacities to provide Fixed, Mobile Internet and Data services.The
broadband network is also used to provide a range of applications including videoconferencing,
Internet/intranet access and IP solutions for a variety of government, banking and private
institution customers. Several universities in the country are connected by optical fiber optic
network to support education program (Information and Communications, 2009).
Ethio-Telecom is made in all sectors of network providers such as; wireless technology, 3G
internet, broad band internet, and satellite communications being throughout the country. So are
changing the needs, demands and expectations of the customers of Ethio- telecom. Hence, Ethio-
Telecom needs to increase the sales performance by creating new products and services meeting
these demands. They also stated that satellites and optical fibers connections, among other
technologies, contribute significantly to the fastest distributions of products and services.
Standardization and innovations in the technology systems have become global issues it is
observed that Ethio-Telecom being an integral part of global communications network and
critical for organizations as well as individuals has now become essential to socioeconomic
activities. There is an increased focus on consistency and an interrupted network services for the
customers. In the current information age, information retrieval is gaining importance with
network systems. Hence, addressing these diverse issues will be important for the upcoming of
Ethio-Telecom product and service distribution channels. Technological changes affect
marketing channels, too, of course. We explained how the Internet has changed how products are
bought and sold. Many companies like selling products on the Internet as much as consumers
like buying them. For one, an Internet sales channel gives companies more control over how
their products are sold and at what prices than if they leave the job to another channel partner
such as a retailer. The mandatory requirements infrastructures for Ethio-Telecom Products and
services are available in different stations in the country (ITU, 2010).
These infrastructures are Optical Fiber Network, 3G data connections, availability of different
stations and sub-stations, access of road services, availability of banks and data center.
Availability of Network Service Providers (NSPs) is very important to provide Ethio-Telecom
fast services delivery, high quality products/Services, minimum errors and less duplication of
16
human efforts. This is also the golden opportunity to facilitate direct and indirect distribution
channels of Ethio-Telecom products and services to end users. Unsatisfied demand of customers
of Ethio-Telecom products and services also encourage Ethio-Telecom to highly work on the
direct and indirect distribution channels of the products/services. With the current situation, like
demand for foods or others basic needs, societies are highly eager to get Ethio-Telecom Products
and services. However, Ethio-Telecom is pure monopoly of such products/services, encouraged
to work on improvement of direct and indirect distribution channels is the only measure. For
Direct distribution channels, Ethio-Telecom provides the availability of those network
infrastructures to achieve its sales performance and increases customer satisfaction.
The direct and indirect distribution channels networks is significantly affected by the
interruptions of network in their sales performance to distribute products and services for the
channel members as well as the end users to use it..
2.2.4.3. High Demand of Products and Services
The direct and indirect distribution channels speed up the highest sales performance by
supplying products and services in the right location, at the correct quantity and price to
stimulate demand through promotional activities of all the channel members. The company starts
by examining ways in which distribution systems are designed and how channel policy is
determined, depending on the degree of market exposure sought by a company.
2.2.4.4. Monetary and Non-Monetary Benefit for distribution
Both monetary and non-monetary incentives can be effective for the distribution channel
members, but to varying degrees. Monetary incentives tend to be more effective when the
employee is actually motivated by cold, hard cash or additional forms of payment that increase
his total compensation value for sales performance . However, non-monetary incentives can be
just as effective in motivating employee behavior (Citing Bob Nelson, the so-called guru of
thank you). This indicates that one of the most important rewards that workers report receiving is
simply praise and recognition from the people they work for.
For direct and indirect distribution the company gives those types of benefits monthly based on
the involvement of their sales target and reward or recognition annually by selecting or
evaluating consecutive sales performance. By creating the influential and best sales performer in
17
the distribution channel members compared to each other‟s the annual reward as awarded for the
best and consistent sales performers like Laptop and Smartphones. An increment of commission
payment was also for those distribution channels that have created a 100% + sales performance
accomplishment with in the entire year. And the annual reward affects the sales performance for
the distribution channel members to provide competitive advantages among the best and the
lowest sales performers (Dong et al., 2010).
Ethio-telecom delivers their products and services through direct and indirect distribution
channels. However, dominating the market with poor quality, delay services, high cost and
limited market coverage resulted in public mistrust and customers dissatisfactions.
2.2.4.5. Availability of Infrastructures
The access on infrastructures in the products and services distribution continued in order to speed
up economic and investment expansions through transport time to time. Availability of
infrastructures in the recent times has dramatically changed the challenges of telecomm
products and services distributions to delivers with in right time and place which enabled to
address products and services at such incredible speeds by supporting the adoption of innovative
technologies. Customers can stay in their environments and get every products and services
when all the availability of infrastructures have connected to their village‟s .The opportunities to
buy any products and services without travelling long distance to cooperate in nearest market and
simplified by the company according to the new entrant innovations increases. Hence it has
become tremendously important to successful operation of almost every organization around the
country, large or small, in both the direct and indirect distributions channels over the most
remote areas and trans-border organizations because availability of infrastructures have its
opportunities for increasing the sales performance of the distribution channels for the
company(Rosewell, 2012).
Therefore in the distribution of direct and indirect distribution channels Ethio-Telecom have an
opportunity of infrastructure plays a significant role in directing the location of plants. After land
availability, highways, industrial zones, commuting convenience, and environmental restrictions
are almost equally important.
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2.3. Distribution Strategy
An element of international marketing strategy, concerns activities involved in process of
making products and services distribution available for the right customers at the right time and
in the right place (Doole & Lowe, 2012).
2.4. Product and Service Promotion on the distribution channel
Promotion or creating awareness relates to all the communication tools that the marketers use in
the distribution channels. According to (Whalley, 2010) in his strategic marketing book stated
that, promotion includes all of the tools available to the customers for marketing
communications. Promotion, which involves marketing strategy, is also meant to have an
influence on a brand‟s image as with the marketing communications has its own promotional
ways to deliver all the necessary information‟s with their products and service distributions
channels.
The most commonly elements of the promotional ways used to deliver product and service
distribution such as personal selling, public relations, Short Message Service (SMS), Audio-
visual, Sponsorship and printed materials.
2.4.1. Personal Selling
Personal selling is an effective way to manage personal customer relationships. The sales person
acts on behalf of the organization. They tend to be well trained in the approaches and techniques
of personal selling. Personal selling is highly persuasive and is often used in markets where
personal choice figures strongly in the purchase. (Whalley, A., 2010). Compared to other types
of promotion, personal selling is the precise form of communication because it assures
companies that they are in direct contact with an excellent prospect. In the process of personal
selling there is a one-to-one contact is highly advantageous and using personal selling as
promotional ways that might have more benefits for distributions of products and services the
company sales performance.
The educational level and background of the sales persons of the company was also assessed in
trying to show its impact on sales performance
Improving individual‟s sales performance by training is a key management task. The sum of the
parts being more efficient and effective in selling lies in increasing the number of sales, in
improving the quality of personal selling and in good communication. The reason for training is
19
to improve Performance by increasing sales, reducing costs and adopting better work practices
(Donaldson, 1998).
2.4.2. Public relations
Public relation is defined as the deliberate, planned and sustained effort to establish and maintain
mutual understanding between an organization and its publics, institute of public relations.
Public relations can be split into proactive communications designed to build understanding and
reactive communications designed to counter misunderstanding (Whalley, 2010).
Not only must the company relate constructively to customers, suppliers, distributors, and
retailors, it must also relate to a large number of interested publics. A public is any group that has
an actual or potential interest in or impact on a company‟s ability to achieve its objectives. Public
relations include a variety of programs to promote or protect a company‟s image or individual
products and services. The wise company takes concrete steps to manage successful relationships
with its key distribution channel systems (Kotler and Keller, 2012).
2.4.3. Short Message Service (SMS)
Short message service or SMS is a popular promotional ways because it permits target market
selectivity in the distribution channels, can be personalized, is flexible, and allows early testing
and response measurement. Although the cost per thousand is higher than for mass media, the
people reached are much better prospects. The success of direct mail, however, has also become
its liability so many marketers are sending out direct-mail pieces that mailboxes are becoming
full; leading some consumers to disregard the blizzard of solicitations they receive. In
constructing an effective direct-mail campaign, direct marketers must choose their objectives,
target markets and prospects, offer elements, means of testing the campaign, and measures of
campaign success (Kotler and Keller, 2012).
2.4.4. Audio-visual
Ensuring widespread access to radio and television broadcasting is important for a number of
economic and non-economic reasons both in the distribution channels as well as to update and
aware about products and services for customers .broadcasting with audio-visual promotional
ways is a significant value for addressing the information‟s about products and services in its
own opportunities for increasing sales performance and it can produce significant spill-over
benefits in many related marketing penetrations . Moreover, radio and television broadcasting
continues to be the major source of information in general, it constitutes a principal source of
20
information that has no knowledge about products and services before in the distribution
segments of the population which becomes particularly important in times of new channel
members involvement to increase the sales performance of both distribution channels. (Ferell ,
2011).
2.5. Factors affecting direct and indirect distribution channel sales performance
The factors that have been an impact on distribution channel sales performance can be vary
between countries, cultures, societies, companies and in the international standards. And so many
literatures were done on the international level so as to examine the relationships based on the
similarities and differences of factors within and across countries. (Valos and Vocino, 2006) said
that research in distribution channels has highlighted a “distribution channel performance metric
inconsistency” because of the fact that different distribution channel systems and different
channels necessary for a particular organizations performance measurement. Here below some of
factors that hinder direct and indirect distributions channels discussed in related literatures with
regard to distribution channel and sales performance are compiled with great relations in the
distribution channel systems of Ethio-Telecom.
2.5.1. Management commitment
Although there have been numerous studies on the direct relationship between management
commitment and sales performance. However, there have been few studies conducted treating
under management commitment influencing sales performance that maximize revenues from
existing customers and systematically identify, convert, and manage new prospects well to allow
a business in growing faster (Futrell, 2006). Performance may be defined as „the sums of all
processes that have lead Managers to taking appropriate actions in the present that will create a
performing organization in the future. The channel management process is not complete without
the effective management commitment to increase the sales performance of the company and the
distribution channel members in which they have been practiced (Louis W. Stern and Adel I. El-
Ansary, 1982).
Management commitment by citing others literature can be summarized as a desire to maintain a
valuable relationship to increase sales performance (Griffith et al., 2000) on which the
cooperation can be encouraged and the mutual activities of distribution channel members
increased. (Shoham et al., 2008) said “commitment is central to all the relational exchanges
21
between the top management and its various partners participated in the distribution products and
services
‟‟. On the other hand, (Parrish, 1995) discussed the channels partners need of manufacturers and
if the needs of those partners fulfilled commitment can be succeeded. (Schwepker, 2013) found
that distribution channel management commitment to providing all the channel members
positively related with outcome of the sales performance.
2.5.2. Motivational ways of distribution channels
Verbeke et al., (2011) explained the motivational impact on sales performance in the product and
Services distribution channel system requires higher motivations benefits for the sales people.
Demirag, (2011) supports the motivational factor and said “sales incentives may usually help
firms stimulate market demand and increase sales performance. He also said that if the order size
is exceeding sales quota, the distribution channel members are entitled to receive payment as a
promotion. Whereas Brettel et al., (2011) explained the incentive that is needed to pay
facilitating effective products and services distribution according to the volume of distribution
channels increases the sales performance of the company .
Dong et al., (2010) discussed incentive designs are the economic governance mechanisms to
facilitate organization performance (i.e., economic reward, punishment) in which the desired
distribution channel performance can be achieved its objectives. Whereas, Mehta et.al, (2000)
considers “paying higher motivational allowances, offering higher trade discounts, supplying
strong advertising and promotional support, and providing training for distribution channel
members” are the commonly used motivational strategy with in the distribution channel process
of products and services for increasing the sales performance of the company.
2.5.3. Sales person Performance in the distribution channels
Individual sales in distribution channel are considered intra-individual factors that affect the
company sales performance. Although there are many factors that contribute to salesperson
performance, it has been acknowledged that sales skills are one of the key individual–level
determinants that contribute to sales performance. As Brown et al. (1998) considered the
superior goal-setting abilities of competitive sales person in distribution channel; they suggested
that managers use such information to determine training needs. Without identifying which came
first, competitiveness or effective goal setting, they encouraged managers to train the sales
22
person in distribution channel system how to achieve the objectives of the sales performance.
Otherwise, the sales person in distribution channel would tend to set do-your-best ineffective
goals with no relationship between goal setting and sales performance. Moreover, many
researchers have emphasized the importance of salespersons skill levels in relation to their
performance (Churchill et al., 2000). To examine the selling skills dimensions sales performance,
namely, interpersonal, salesmanship, technical and marketing skills and the influence they have
upon sales person performance leads to increase or reduce the overall sales performance of the
company.
2.5.4. Distribution Channel flexibility
Yu et al., (2013) explained distribution flexibility as it is composed of product and service
logistics as well as the relationship flexibility for adjustments when the distribution channel
process is rigid to deliver the products and services for end users. According to (Samaha et al.,
2011) channel member flexibility refers to a willingness to be adaptive or adjust ,to create,
extend, or modify its own resource base distribution, in addition to its partner‟s resources the
response rate to changing conditions so as to generate competitive benefits and sales
performance enhancements. On the same way (Yu et al., 2013) define relationship flexibility
with three facets: “a bilateral expectation of willingness to make adaptation, a type of
coordinative modification, and an ability to manage with changing circumstances.” Whereas,
logistics flexibility of products and services involves material and information flow and
demands flow in activities such as distribution and ongoing transportation (Samaha et al., 2011)
and (Yu et al., 2013) explained logistic flexibility the same as; flexibility in storage, delivery,
transportation, and inventory. Therefore, logistic flexibility directly affects the supply or
distribution channel ability of the market and influence downstream distributors‟ operations, the
focal firm will meet downstream product delivery expectations. Thus, the higher the level of
logistics flexibility, the higher the level of channel member satisfaction with the relationship will
be, with additional influences on purchasing loyalty intentions as indicated in the customer
satisfaction that loses the sales performance of the company. Distribution flexibility will have a
significant positive effect on relationship satisfaction. Relationship satisfaction will have a
significant positive effect on long term relationship orientation. Therefore, Distribution
flexibility and Relationship flexibility have positive impact on distribution performance (Yu et
23
al., 2013). Distribution Channel member cooperation and distribution flexibility significantly
enhanced channel member performance (Samaha et al., 2011).
2.5.5. Promotional strategy for sales performance
Lack of awareness is also a factor in the distribution channel sales performance due to the fact
that products and services no longer restricted but may also include elements of awareness rising
about availability of products and services to increase sales performance by providing
repurchasing decision for consumers such as delivery of products and post-sales service. Because
creating distribution channel awareness for certain products and services to use their potential
benefits. Effective awareness of products and services on its availability also one that has to be
increasing once a consumer need, and accepts a product, but making a product affordable used to
overcome the challenge of lack of awareness. The new customer grows to using it and develops
their own habits for including their interest to use the products and services awareness.
Belch and Belch (2003) use of promotional activities enables a company create a brand image
and inform customers about their products and services. In addition, Uva, (2000), states that a
product and service promotional objective include; providing product information, stimulating
demand, increasing store traffic, differentiating products, building a brand image, reminding
current customers about product benefits.
2.5.6. Sales Support on the distribution channel
According to Shoham et al., (2008), support types are described as the following; “providing
technical guidance, addressing materials or advertising, training, and visits by the management ‟
personnel, free samples, and solve their problems raised in the distribution channel process”.
Sufficient level of support determines sales performance; to the contrary, insufficient and
adapted level of support might be hindering the performance of distribution channel of products
and services. They founded that positive significant outcome on the impact of standardized
representatives‟ support on performance and it has a significant outcome with cooperation of the
company and management commitment (Shoham et al., 2008).
Mathur (2013) again discussed by reviewing others literature and it is summarized as sales
support is a genuine concern of partner‟s well-being and incentives to increases their
willingness and believing of another partner honestly, reliably, frankly, keeping promises and
fulfillment of obligation which can make the relationship to be retained and sustained. Chang
24
and Wang (2008) discussed on their study that support, mutuality, communication, and
interaction are positively associated with channel sales performance.
2.5.7. Product and service availability in the distribution channel
Distribution of products and services means coordination of a goods flow among the involved
channel members in the way that the products and services are available in the right places, at the
right time, in the right quantities, and in a cost-efficient manner (Fer-rell & Hartline 2011). It
involves not only movement of products and services, but also available for the consumers in the
distribution channel directly or indirectly by using the correct warehousing (storage),
transportation, inventory quantities, category etc. (Graham 2007). The product and service
availability for the customers have mutual cooperation between the company and the channel
members as well as the end-users to receive desired level of sales performance. The distribution
flow are minimized and easily addressed, the desired information flow is achieved as the number
of sales, inventory requirement of product and service availability increased to achieve the
targeted sales performance of the company.
2.7.8. Customers satisfaction in the distribution channel
Customer Satisfaction is the fulfillment response from customers. It is a judgmental response that
a product or service feature, or the product or service itself, provides a pleasurable level of
consumption-related fulfillment. (Oliver 1977). In modern business philosophy business should
be customer oriented and the implementation of the main principles of continuous improvement,
justifies the importance of evaluating and analyzing customer satisfaction. In short, customer
satisfaction is considered as baseline of standardize and excellence of sales performance for
many businesses. It also helps to identify the potential market opportunities (Evangelos and
Yannis, 2010). Customer satisfaction is significantly influenced by the customer‟s evaluation of
product or service distributions channels. To provide excellent distribution channel, an
organization needs to exceed customer expectations. An important factor in providing good
service is to keep promises always and give guarantee for products and services that should be
delivered timely.
The distribution of products and services of accompany significantly influenced by the quality of
the products and services, as well as the interpersonal relationship between the customers and the
organization providing products and services. Quality product and Service plays a significant
role in the mutual benefits for the company and the customers.
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2.7.8.1. Low price of products and services
Price is one of the key factors of the distributions of products and services as it represents what a
company earns in return for its efforts. Its setting is to be regarded with care as both
undercharging (lost margin) and overcharging (lost sales) can have dramatic changes for the
sales performance. When setting price has been change and would react to a Small change of
price with a large change in demand. An inelastic product is not as price sensitive and a change
in price would only lead to a small change in demand. Looking at the industry, especially in the
low price and simplest distributions of products and services, price is a very decisive factor for
sales. Customers that want to buy a cheap car will be more prices sensitive. Therefore,
competing with price in this sector will have a positive effect on figures. Further, there is a lot of
competition in the market with excess capacity, which leaves the customer with a lot of choice
and buying power. Generally, products and services in the lower price segments can be regarded
as elastic as a lower price would increase sales by gaining consumers from the competition. An
example for this would be the successful pricing policy of the Japanese and the Koreans vehicles
distribution.
Product and service Quality
It is the major tool in positioning our direct and indirect distribution channels. It encompasses
two key elements (Shaw, 2011).
1) Quality level - how it is made or perceived, and
2) Quality uniformity - how it performs over its life. Service quality is a measure of how Well a
delivered service matches the customer‟s expectations establishing valid and reliable service
performance measures describes the degree of achievement (Kundenbindun: 2008).
Quality of the product and service of the company is dissatisfied by customers because of
frequent network failure in addition to the accessibility and availability of the company product
and service with in the distribution channels of the company.
2.7.8.2. Guarantee and warranty of products/services
Perceived-value pricing- An increasing number of companies now base their price on the
customer‟s perceived value. Perceived value is made up of a host of inputs, such as the buyer‟s
image of the product performance, the channel deliverables, the warranty quality, customer
support, and softer attributes such as the supplier‟s reputation, trustworthiness, and esteem.
26
Value pricing- In recent years, several companies has adopted value pricing: They win loyal
customers by charging a fairly low price for a high-quality offering. Value pricing is thus not a
matter of simply setting lower prices; it is a matter of reengineering the company‟s operations to
become a low-cost producer without sacrificing quality, to attract a large number of values for
customer‟s satisfactions that leads to increases sales performances (Kotler and Keller, 2012).
2.7.9. Market coverage in the distribution channels
It is referred to as distribution intensity and as the number of distribution capacity used by
accompanies within its trade areas that can serve customers in a certain market place (Stern et al.,
2006). Distribution Channel selection depends on Coverage of Market Size and geographic
accessibility. The sales volume and intermediaries required in a specific geographical area that
influences the distribution channel market coverage or market exposure strategy. The market size
and Distribution channel coverage should constantly be able to meet the delivery requirements in
terms of time and place with accessible market. It is important to work with many distributions
channel members to deliver products and services at the right time and place to create customer
satisfaction as well as to increase distribution channel sales performances.
Geographic Accessibility
The distance, the time taken and the cost of reaching each destination by different modes of
transport (Handy and Niemeier, 1997).
The numbers of Intermediaries (Outlets)
Placing an intermediary in the distribution channel brings to the manufacturer both benefits and
losses. The distribution channels intermediaries have a much stronger personal relationship with
the customers. They will hold the company images to address the products and services by
increasing their sales for the channel members expect to be exposed to competitive to each
other‟s. Where the retail purchase is significant the retailers will often offer credit to the
customer which requires consideration in pricing decisions. Retailers will give the final selling
price to the product but will also do their own marketing or will increasingly arrange co-
operative marketing with the producer (Whalley, 2010). At the retail level of distribution,
channel selection also involves the number of retailers, in a given geographical market, carrying
a seller‟s products. Retail coverage may be intensive, selective or exclusive. Intensive
distribution attempts to sell products through every available outlet in a given geographical area.
Exclusive distribution reduces coverage to a single store, or chain, in the desired market.
27
Selective distribution provides coverage between every outlet available and a single outlet by
offering a firm‟s products to a select group of outlets in a chosen area. (Shaw, E., 2011).
Intermediaries of a channel specialize in more than one function. Their inclusion primarily
depends on their superior efficiency in the performance of basic marketing tasks. Such
intermediaries, through their experience, specialization, contacts and scale of operation, offer
other channel members more than they can achieve on their own. However, this type of
specialization leads to some important behavioral concepts. The connections made by
intermediaries are not only for the physical movement of goods, they also help with the
transaction title flows and information communication flows. Communication with intermediary
may be needed to coordinate advertising campaigns instituted by a manufacturer, furthermore,
they providing information of customer to the manufacture. Language and culture separation,
plus geographical barrier are the addition reason for using intermediary in exporting (Czinkota &
Ronkainen, 2007).
Intermediaries provide services from business to business. The B2B services are expanding day
by day and companies are like to outsource their different operations to other companies and
they just want to focus and invest one particular capability.
There are many way B2B businesses are take place and internet is now one of the main source of
providing services. There are many firms which are providing services to buyers and sellers
many famous web portals like www.alibaba.com, ecplaza.com etc. Many other companies which
have their personal contacts from buyers and seller and they arrange businesses from them get
their share from the deals.
Distribution coverage
The operation of transportation determines the efficiency of moving products. The progress in
techniques and management principles improves the moving load, delivery speed, service
quality, operation costs, the usage of facilities and energy saving. Transportation takes a crucial
part in the manipulation of logistic. Reviewing the current condition, a strong system needs a
clear frame of logistics and a proper transport implements and techniques to link the producing
procedures. The role of transportation in logistics for the reference of further improvement
Without well-developed transportation systems, logistics could not bring its advantages into full
play. A good transport system in logistics activities could provide better logistics efficiency,
reduce operation cost, and promote service quality. A good transport system performing in
28
logistics activities brings benefits not only to service quality but also to company
competitiveness (Wintson, 2010).
2.6. Empirical investigation
Different companies in Ethiopia distributed goods and services through traditional ways by their
own shops or their mechanisms of distribution channel system for other resellers in cities of the
country. Since it is difficult to acquire paper works on experiences of distribution networks of
goods / products and services in Ethiopia, the study has tried to discussed some empirical review
as the following; Markos (2013) has been investigated on his research the distribution practices
of MOHA soft drink industry and concluded that, MOHA has used direct and indirect
distribution channel 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 with the
integrations of 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).
2.7. Conceptual Framework
According to Bogdan and Biklen (2003) a conceptual framework refers to the result of when a
researcher conceptualizes the relation between variables in the study and shows the relationship
between them graphically or diagrammatically. To compare the direct and indirect distribution
channels sales performance, the researcher used nine common dimensions that lead to Ethio-
Telecom sales performance. The dimensions discussed under the literature review in the next
29
chapter two. Therefore, the conceptual framework of the study was developed by the researcher
in the following diagram;
Figure 1: Conceptual frame work
Source: Developed by t
Direct distribution
channels
Sales performance of
Ethio-Telecom
Management commitment
Motivation factors
Sales person performance
Distribution flexibility
Promotional strategy
Sales support
Product and service
availability
Customer satisfaction
Market coverage
Indirect distribution
channels
30
CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1. Introduction Under this chapter, the Research design, Research approach, Target population and sample size
determination of the study, sampling technique, Data sources, methods of data collection and
measurement, the research validity and reliability as well as the research ethical considerations
were presented.
3.2. Research Design
The purpose of this research was to conduct the comparative study on the factors affecting direct
and indirect distribution channels sales performance of Ethio- telecom, specifically, SIM-card
and Voucher card distribution. To this effect, both descriptive and explanatory research method
were used. To secure dependable information both qualitative and quantitative methods were
employed. Johnson (2006) suggested that there is no hard and fast rule to use the one and reject
the other instead prevailing trends for the use of both designs in a single study. Aronson (1990)
also described that each data collection instrument has its own weakness and strengthens.
On the other hand, Mugenda (2003) defined descriptive research design as a systematic,
empirical inquiring into which the researcher does not have a direct control of independent
variable as their manifestation has already occurred or because the inherently cannot be
manipulated. Due to the nature of this study objective, the researcher used descriptive and
explanatory research design together. This is because of the descriptive research design used to
describe the profile collected about distribution channel strategy and role of distribution sales
performance as a source of competitive advantage in fast growing interests of distribution
channels of products and services. The explanatory research design helps to determine the
impacts of distribution channels on sales performance of Ethio-telecom products and services.
More over the explanatory research studies also used because causal relationship between
variables under consideration. As Saunders et al., (2009) explained with the same as about the
concepts of the study, the emphasis here is on studying a condition or a problem in order to
explain the relationships between variables.
The quantitative or qualitative strategies are those that involve collecting and analyzing both
forms of data in a single study due to the nature of the research problems, the study adopted with
31
the mixed research approaches of both qualitative and quantitative data have been applied.
Qualitative research approach assumes that to elaborate social reality within the respective direct
and indirect distribution channels and therefore investigating the reality has an effect and
converts the interview information without numerical data. Leedy and Ormrod (2005) said that
qualitative researchers believe that the researcher‟s ability to interpret and make sense of what he
or she sees in critical for understanding in any social phenomenon. A quantitative approach is
one in which the investigatory primarily uses postpositive claims for developing knowledge i.e.,
cause and effect thinking, reduction to specific variables and hypotheses and questions. Because
of this the researcher used quantitative approach so as to make use of statistical analysis by
applying systematic measurements and statistics.
3.3. Target Population and sample size determination
For the study, the target population from which the researcher comprises in the direct and
indirect sales division staffs who are working only in the six Addis Ababa zones at different
positions of Ethio-telecom and the distributors, sub-distributors, retailers are included from
indirect distribution channel. Non-staff population also considered because the indirect
distribution channel performance is achieved by mainly with the integration of those participants.
In addition, customers also included to assess the level of their satisfaction in the direct and
indirect distribution channels. The populations of the study were workers of the company in both
direct and indirect distributions channels of the company. The workers can be managers,
supervisors, sales person, sales coordinators, POS- Coordinators, and main- distributors, sub-
distributors and retailers out of the company who are working in the indirect distribution channel
side with legal contract agreements for distribution of products and services. Ethio-Telecom
Direct distribution channel have 214 outlets and 1526 staff members throughout the country out
of those 50 shops and 438 staff members are found in the six zones of Addis Ababa (Residential
sales division compiled by the researcher Feb, 2018).
Ethio-Telecom indirect distribution has organized by three distribution channel members, main-
distributor, Sub-distributor and retailors. Throughout the country the indirect distribution
channels Have 140 staff members, 78 main-distributors, 150 sub-distributors and 7664 retailers
which are certified participated in the distributions of products and services distributions all over
the country. From those numbers of population 38 staff members, 27 main-distributors, 74 sub-
32
distributors and 282 certified retailers which have been fulfilled the ten criteria guidelines in the
indirect distribution chain members worked in the Addis Ababa zones. According to the
researcher‟s scope the target populations of the study included in the samples were the channel
members who are working in the direct and indirect distribution channels only found the six
Addis Ababa zones listed in the table below.
Table 1: Target Population and respondents
Name of distribution channel No of population
Direct distribution channel staff in the six
zones of Addis Ababa
Staff population 438
Indirect distribution channels staff in the six
zones of Addis Ababa
38
Indirect non-staff distributors Main -distributor 27
Sub- distributor 74
Retailer 282
Customers in the Direct & indirect distribution channels 42
Total population 901
From the given information in the above table, it is possible to understand that, the total
populations of the study were 901. Among those populations the researcher selects the
representative as a sample consecutively. Based on the total target populations expressed
previously in the direct and indirect distribution channels staffs as well as non-staff members
participated in distribution. The researcher has been selected based on Taro Yamane (1973)
formula. Sample size determination formula for direct and indirect distribution channels can be
calculated based on the following formula.
Where: n = the sample size
N = the population size, and
e = is the level of precision or sample error
5% of the total population have been used.
33
= 280 Total Samples for the study.
Based on the given population and calculated sample size, the researcher identify the target
sample using proportional stratified sampling for direct, indirect distribution channel and
customers as stated below.
Table 2: Sample Size Determination
Name of distribution channel Type of distribution No of
population
Total Sample
population
used
Percentage (%)
Direct distribution channel staff Direct and Indirect
Staff population
438 120 47
Indirect distribution channels
staff
41 13 5
Indirect non-staff distributors Main distributor 27 10 4
Sub- distributor 74 26 10
Retailer 282 72 28
Customers in the Direct & indirect distribution
channels
42 15 6
Total population 901 280 100
Table 3: Proportionate Distribution of direct and indirect distribution channels
Zone
DC
Staff
IDC
IDC
staff
Distributor Sub-
Distributor
Retailor Customers Total
populations
Central (CAAZ 62 5 3 10 34 7 121
Eastern (EAAZ 78 8 4 13 52 7 162
Northern (NAAZ) 76 6 5 12 48 7 154
Southern (SAAZ 71 8 4 11 38 7 139
South Western (SWAAZ) 75 6 5 13 56 7 162
Western (WAAZ) 74 7 6 15 54 7 163
Total Population 436 43 27 74 282 42 901
Samples from each
distribution
133 16 9 22 86 14 280(Samples)
Percentage (%) 48% 5% 3% 8% 31% 5% 100%
Source: Compiled from residential sales division by the researcher
34
3.4. Sampling Technique and Procedures
The researcher used multi stage sampling. The researcher selected purposive sampling of six
zonal offices managers of direct and indirect distribution channels in Addis Ababa out of the
other regions. The second stages have been used simple sampling proportionally from direct and
indirect distribution channel respondents. The third stages were used convenience sampling for
customer has come to buy products and services in the direct and indirect distribution channels.
This has been helping the researchers to give the population for equalize their chance of
respondent to all channel members on the base of their characteristics from the total population
selection proportionally for the research judgment according to zonal offices and features of
direct and indirect distribution channel divisions.
3.5. Type of Data Source
Both types of data sources (primary & secondary) were employed to get the necessary
information from the direct and indirect distribution channel divisions. The primary data were
collected through survey method from Ethio-Telecom workers, non-staff stakeholders and
sampled customers. Secondary data was gathered mainly from Ethio-Telecom residential sales
division reports, website of the company portals, past and recent data which are exist in the form
of official documents, published and unpublished journal articles, annual reports, contractual
agreements, Books, and empirical literatures about the main issues under distribution channel
concerning sales performance was referred to get genuine information.
3.6. Data Collection Methods and Measurements
In order to collect the needed data for this research, both primary and secondary resources were
used. The primary data was collected through distribute structured close ended and open-ended
questionnaires and semi-structured interview on the study in order to get their opinions about the
sales performance of direct and indirect distribution channels. A pilot-study test was conducted
with distributed 20 questionnaires of each distribution channel. The response converted into
statements. These statements then placed on scale (1-5point Likert-type) and used in developing
the questionnaire for final study. The suitability of the statements for the study, however, has
been judged by applying appropriate statistical techniques (reliability test) before adapting to the
final round. An item pertaining to performance with overall product and service distribution
experiences in the past journeys was also being introduced. Structured close ended questionnaires
35
are one method of collecting large amount of data from a sample population in economical ways
(Saunders et al., 2009), the researcher distributed structured close-ended questionnaire to the
individuals who have found in different positions of direct and indirect channel of distribution.
The questionnaires‟ was prepared within two languages i.e., in English for company distribution
channel staff because all the company distribution channel staff have minimum Diploma holders
and above to analyze or respond the questionnaire simply on the other hand the Amharic
version distributed for main-distributor, Sub-distributor and retailors because those respondents
Hence, the respondents made to be able to describe their attitudes, behaviors, trends and
experiences while they have been engaged in distribution chains of products and services of
Ethio-Telecom.
Interviewer administered questioner were used to collect the intended information from the Head
of each sub-division of Ethio -telecom managers. The reasons for interviewer administered
questioner are; a) due to the presence of interviewer increases the response rate, b) The
interviewer can probe for more specific answer in the event the questioners misunderstood, c) the
reliability of responses is increased through the completion of responses by explaining and
checking, d) the interview has control over the questioning and can ensure that the respondent
does not answer out of the context and, e) the interviewer can standardize the interviewer
environment by making certain interview was conducted in privacy and making an assurance to
the respondents that information has been provided in order to treat with confidentiality.
3.7. Data Analysis Techniques
After the data is collected, researcher has pursued certain successive procedures. Firstly,
quantitative data which collected through structured questioner analyzed by using various feature
of Statistical Package for Social Science (SPSS) version 20. Then the data collected through
interview, were analyzed qualitatively and by combing with compatible questioners. The
researcher collected the relevant information‟s from various written documents concerning about
direct and indirect distribution channels from the previous strategic plan, reports of sales
performances, and documents from the company. The responses were obtained from the
respondents and analyzed by using SPSS. Inferential and descriptive analysis of the survey data
was carried out to see the response rate of the questionnaire. In addition, tests for
homoscedasticity and normality have been conducted and the data examined their normality and
linearity. Multiple Linear regression analysis will be carried out to determine if there exist any
36
significant impacts of independent on the dependent variables, and to see the predictive power of
the independent variable on the dependent variable. The collected data were edited and
organized so that it was become easy for analysis. The edited data were tabulated using
percentages and averages were computed for scale items. Descriptive analyses together with
multivariate (factor and multiple regression techniques) analyses were used. All the scale items
with a factor loading of 0.5 and above were accepted for final analysis. Appropriate statistics
were used to analyze the distribution differences between direct and indirect sales divisions.
3.8. Reliability and validity
3.8.1. Reliability Test
It is the consistency and stability quantitative measurement instruments. Reliability issues were
addressed by carrying out a major elements analysis and calculating the coefficients of
Cronbach‟s alpha.
Table 4: Reliability Test
Reliability Statistics
S.№ Variable Name Cronba
ch's
Alpha
Cronbach's Alpha in
Standardized Items
№ of
Items
(α) reliability
ranges
1 Sales Performance .831 .834 7 Good
2 Management Commitment .801 .803 4 Good
3 Motivational ways .734 .734 5 Acceptable
4 Sales Person Performance .722 .723 5 Acceptable
5 Creating Awareness(Promotion) .704 .706 4 Acceptable
6 Sales Support .766 .764 4 Acceptable
7 Distribution Flexibility .756 .756 3 Acceptable
8 Product and Service Availability .738 .738 4 Acceptable
9 Customers satisfaction .759 .765 5 Acceptable
10 Market coverage .879 .789 6 Good
Total/ Average .756 47 Acceptable
Source: Survey questionnaires, 2018
37
3.8.2. Validity Test
The validity of a research is a conceptual and scientific soundness, the test committed on the
reducing or minimizing the effect of unnecessary influences, variables and explanations that
might reduce the accuracy of the ultimate findings. After the researcher has constructed the
questionnaire, pilot test was done with persons who have knowledge of the area by allowing
them to read it. These persons provided comments on Amharic translated questions on its doubts,
the length, the structure and word missing type. This is done to ensure that the questionnaire is
clear to respondents and can be completed in useful way. Then, the instrument was evaluated by
academic advisor prior to the data collection so as to maintain its validity and to increase the
truthfulness and usefulness of the conclusions in which it results in greater confidences of the
research.
3.9. Ethical Considerations
The willingness of individuals to collect the necessary information has played significant role for
the successful completion of this research. For this reason, while conducting this research the
researcher has been tried to make sure that treating their voluntary agreements and request the
company by addressing letter of permission written from Debre Berhan University to respond the
questionnaire and to give the correct information they provide with honesty and respect. These
are some vital ethical principles that the researcher strictly has been followed.
38
CHAPTER FOUR
4. DATA ANALYSIS, PRESENTATION AND DISCUSSION
Among the 280 distributed questionnaires, only 256 questionnaires were returned. Totally,
256/280=91.4% of questionnaires were returned. So, analysis was made based on 256 returned
questionnaires and 20 conducted interviews.
4.1. Demographic Characteristics of the Respondents The backgrounds of target respondents for questionnaires are presented below.
Table 5: Respondent Profile
Profile Items Frequency Percentage (%)
a.
Sex of the respondents
Male 189 74
Female 67 26
Total 256 100%
b. Age of respondents 18-25 years 67 25
26-35 years 126 50
36-49 years 58 23
50 years and more 5 2.0
Total 256 100
c.
Educational backgrounds of
respondents
12th
grade complete 44 18
Graduate diploma 94 36
Degree 108 42
Masters 10 4
Total 256 100
d.
Working experience on Ethio-
telecom products /services
No experience 28 11
1-4 years 123 48
5-9 years 82 32
10 years and more 23 9
Total 256 100
e.
Occupation and target groups
Direct distribution staffs 96 38
Indirect distribution staffs 16 6
Distributors 9 4
Sub distributors 20 8
Retailers 101 39
Customers 14 5
Total 256 100
f.
Monthly Income in birr
Up to 2000 79 31
2001-4000 108 42
4001-7000 41 16
More than 7000 28 11
Total 256 100
Source: Survey questionnaires, 2018
39
As the above table 4.1, backgrounds of respondents showed that majority of the respondents are
males. Males are more engaged in activities / services of Ethio-telecom. Most of the
respondents (97%) are in the range of age 18-49 years. This indicates most of the respondents are
in the productive age that directly improves the service and products of Ethio-telecom Company.
Educational background of the respondents reveals that most of them are literate and educate
workers and customers (10th
Grade complete, college graduate, and diploma, degree and masters
holders). This is the golden opportunity for Ethio-telecom to improve products and services. The
experience of workers, distributors, sub-distributors and retailers are very important to improve
the distribution services of Ethio-telecom products and services. Most (89%) of respondents have
more than 1-year experience. They are well experienced to improve distribution channels, to
attract customers, to advertise products and to provide necessarily services. Those respondents
who are engaging on direct distribution channels are 38%. Those respondents who are engaging
on indirect distribution channels are 57 % and Customers 5%. This indicates more of target
stakeholders are engaged on indirect distribution channels. However, it is not adequate to
improve the services and products of Ethio-telecom products and services. Majority of
respondents have more than 2000 monthly income.
4.2. Direct and indirect distribution channels sales performance.
The concept of marketing channels is not limited to the distribution of physical goods but also
important on products and services (Kotler, 2003). In the marketing of products and services, it is
generally useful to adopt a broadened perspective of channel activities. Furthermore, the critical
decision on the availability & accessibility of products and services within the specific location
and outlet is needed (Stern and El-Ansary, 1977). Due to the increasing numbers of the country
population the mobile SIM -card subscriber has been increased. The sales performance of SIM
and Voucher card distribution needed to be increased by expanding market coverage to distribute
products and services throughout the country. Ethio-Telecom‟s direct and indirect distribution
channel on pre-paid SIM and Voucher card sales performance in the year 2016/2017 listed under
the below table.
40
Table 6: Sales Performance of Ethio-Telecom Products/services
Product & service
Targeted Sold Performance SIM-Card
Direct channel 4,496,215 2,697,725 60%
Indirect channel 7,236,750 5,065,725 70%
Voucher –Card Objective Sales Performance
Direct channel 118,287,864 73,338,478.68 62%
Indirect Channel 22,750,107,108 16,942,022,430 74%
Residential sales Annual performance report (July, 2016-June, 2017)
Table 7: Indirect distribution Channel Voucher Cards Sales Performance
Voucher Card performance by indirect distribution channel
Channel Targeted Sold Percentage (%)
Distributor 8,671,607,108 5,704,808,410 66%
Sub-distributor 4,100,000,000 3,013,294,200 73%
Retailor 9,288,000,000 7,525,663,710 81%
Alternative channels 690,500,000 690,500,00 100%
Total 22,750,107,108 16,942,022,430 74%
Residential sales performance report (July, 2016-June, 2017)
41
Figure 2: Voucher Card and sales per channels
As the manual documents of Ethio-telecom reported the voucher cards distribution through
indirect distribution channel is increasing. However, it is not sufficient for the large geographical
coverage, huge population, and high demand and improves the sales performance.
Table 8: Residential Sales Performance Report 2016/17
No. Product & service Targeted Sold Performance
1. Subscriber identity card (SIM)
Direct distribution Channel 4,496,215 2,697,725 60%
Indirect Distribution Channels 7,236,750 5,065,725 70%
2. Voucher Card Objective Sales Performance
Direct distribution Channel 188,287,865 122,387,112.5 65%
IDC 29,396,818,000 22,047,613,500 75%
Residential sales performance report (July, 2017-April, 2018)
0
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
7,000,000,000
8,000,000,000
9,000,000,000
10,000,000,000
Distr Sub-distr Retailer Altve
Target 8,671,607,108 4,100,000,000 9,288,000,000 690,500,000
Sales 5,704,808,410 3,013,294,200 7,525,663,710 690,500,000
Am
t in
Bir
r
VC Sales Per Channel
42
Table 9: Voucher Card in the year 2009/10
Voucher Card Year 2009 Year 2010 Growth Targeted 22,750,107,108 29,396,818,000
23% Sold 16,942,022,430 22,047,613,500
Deviation (5,808,084,678) (7,349,204,500) Performance 74% 75%
Figure 3: Voucher Cards in the year 2009/10
Residential sales performance report (July, 2017-April, 2018)
As the manual documents of Ethio-telecom revealed that the SIM card distribution and the
Voucher cards distribution is increasing with the country high demand. Ethio-telecom highly
encourages the indirect distribution; however, direct distribution cannot sufficiently improve the
sales performance.
-
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
Year 2009 Year 2010
Objective
Sales
43
4.3. Results of Correlation Analysis
Cohen and Manion (1989) have suggested three approaches in the interpreting the magnitude of
relationship between predictor and criterion variables. These three approaches are examining the
strength of relationship, examining statistical significance of relationship and examining the
square of the correlation coefficient. Usually when an attempt is made to explain the nature and
degree of relationship between independent and dependent variables, these techniques are
employed. As far as this study is concerned, the data gathered are interpreted using these
techniques.
In order to see the strength of relationship between predictor variables (Management
commitment(MC), Motivation(MO), Sales person performance(SPP), Distribution
Flexibility(DF), Promotional strategy (PS), Sales support(SS) ,Product /service
Availability(PSA),Customer satisfaction(CS) and market coverage (MAC) with the criterion
variable (Sales Performance) and among the predictor variables themselves .(Management
commitment, Motivation, Sales person performance, Distribution Flexibility, promotion strategy,
Sales support and Product Availability, Customer satisfaction and market coverage ), zero-order
correlations among the variables was employed. Inter-correlation matrix is mainly used to
evaluate the magnitude and strength of relationships between predictor variables (Management
commitment, Motivation, Sales person performance, Distribution Flexibility, Creating
awareness, Sales support and Product/ service Availability).
Table 10: Zero order Correlation Matrix among the variables under Study.
No SP MC MO SPP DF PS SS PSA CS M
RC
1 Sales Performance(SP) 1
2 Management
Commitment(MC)
-.618**
1
3 Motivation(MO) .519**
.458**
1
4 Sale-Person Performance(SPP) .574* .432 .321
* 1
5 Distribution Flexibility(DF) -.601**
.507* .417
* .379* 1
6 Promotion strategy (PS) .559** .474* .376* .211 .145 1
44
** Correlation is significant at the 0.01 level (2-tailed).
* Correlation is significant at the 0.05 level (2-tailed).
As can be seen from the above table, Sales Performance was positively and significantly related
to Management Commitment (r= -.618, p< .01), Motivation (r=.519, p<.05), Sale-Person
Performance (.574*), Distribution Flexibility (.601
**), Promotional strategy (.409
*), Sales
Support (.568**
), Product Service Availability (.631*), Customers satisfaction (r=.601) and
Market Coverage (r=.511).
In addition, each of the predictor variables was positively correlated with each other and some of
the predictor variables were significantly correlated with each other. MC was positively and
significantly correlated with MO, DF, SS and PSA (r=.458**
, r=.415*, r=.585
* at p< .05
respectively). MO was positively and significantly correlated with SPP, DF, PS and PSA
(r=.321*, r=.417
*, r=.325
*, r=.419
*, p< .05 respectively). SPP was significantly correlated with
DF (r=.379*,
r=.305*, r=.321
*at p< .05). DF was significantly correlated with PS and PSA
(r=.145*, r=.306
*; p<.05 respectively). PS was significantly correlated with SS and PSA
(r=.220**
and r=.316**
; p<0.05 respectively). Finally, PSS was significantly correlated with SS
(r=.215*; P<0.05).
Since the results of inter-correlations among MC, MO, SPP, DF, SS and PSA revealed that each
of the predictor variable was significantly related to Sales performance, partial correlations were
computed to identify the strength of relationship between each of the predictor variable and
criterion variable that was free of the effect of other variables in the study. The overall
correlation output shows distribution channels (indirect and direct distribution channels) highly
correlated with the sales performance (r=0.796 or 79.6%).
7 Sales Support(SS) .468 .415**
.325 .305 .258 .220 1
8 Product Service
Availability(PSA)
.631**
.558**
.419* .321* .306
** .276
** .215
** 1
9. Customers satisfaction (CS .601** .498 .435* .412* .342** .308* .213* .168* 1
10. Market Coverage (MRC) .511** .432* .418* .331* .286** .276** .194* .143* .186 1
45
Table 11: The overall correlation output
Correlations
Distribution Channel Sales Performance
Spearman's rho
Distribution Channel
Correlation Coefficient 1.000 .796
Sig. (2-tailed) . .001
N 256 256
Sales Performance
Correlation Coefficient .796 1.000
Sig. (2-tailed) .001 .
N 256 256
Source: SPSS output, 2018
4.4. Multi Regression Assumption and output
4.4.1. Multi Regression Assumption Test
4.4.1.1. Normality Distribution Assumption
Multiple regressions require the independent variables to be normally distributed. The normal
distribution of the data can be described by the skewness and kurtosis statistics. As to Smith and
Wells (2006) kurtosis is a property of a distribution that describes the thickness of the tails. The
thickness of the tail comes from the number of scores falling at the extremes relative to the
Gaussian distribution. However, skewness is a measure of symmetry, or more precisely, the lack
of symmetry. A distribution, or data set, is symmetric if it looks the same to the left and right of
the centre point. All the skewness and kurtosis statistics needed to be within the acceptable
ranges of ± 1.0.
46
Table 11: Normality Test Distribution
N Skewness Kurtosis
Statistic Statistic Std. Error Statistic Std. Error
Management Commitment 256 -.502 .152 -.690 .303
Motivation 256 -.345 .152 -.541 .303
Sales Person Performance 256 -.268 .152 -.606 .303
Distribution Flexibility 256 -.698 .152 .540 .303
Creating Awareness 256 -.591 .152 .665 .303
Sales Support 256 -.683 .152 .400 .303
Product Service Availability 256 -.273 .152 -.397 .303
Customers Satisfaction 256 -.321 .152 .518 .303
Market Coverage 256 -.412 .152 -.395 .303
Valid N (listwise) 256
Since all the values of skewness and kurtosis for each variable are within an acceptable range
(±1.0), the data is said to be normally distributed.
4.4.1.2. Linearity Relationship Assumption
The others very important an assumption for computing multi regression is testing the linear
relationship between independent and dependent variables. As the below scatter figure 4 shows
that, there is exist relationship between the determinants of sales performance and sales
performances. This indicates unit increases of one or all predictor‟s influences respective
increment for the sales performances of distribution channels.
Figure 4: Scatter Plot Linearity Assumption Measures
Source: SPSS of survey questionnaires, 2018
47
4.4.1.3. Multicollinearity of the Regressor Variables
Multicollinearity can be measured either by correlation matrix or VIF and degree of tolerance.
Even if the Variance inflation factor (VIF) and the degree of tolerance assumption were also met,
for this particular study the correlation matrix was presented. The correlation matrix of the
independent variables can show the errors of Multicollinearity if the correlation between each
independent variable is higher than .80 (Hair, Anderson, Tatham and Black, 2006). According to
those scholars, the acceptable range for Multicollinearity is less than .80. If the correlation
among the independent variables is greater than 0.8, there is multi collinearity problem.
However, the correlation among independent variable is less than 0.8, Multicollinearity problem
is not our concern
Table 12: Assessing Multicollinearity
Source: SPPS output of Survey Questionnaires, 2018
4.4.1.4. Independent of residuals Assumption
The other tool test for multi regression test assumption is independent of residuals. The
independence of residuals can be tested by Durbin-Watson statistics. The value of the Durbin-
Watson statistic lies within the interval of „0 to 4‟. As the rule, the residuals are independent (not
correlated form one observation to the other one) if the Durbin-Watson statistic is approximately
No SP MC MO SPP DF CA SS PSA CS MRC
1 Sales Performance(SP) 1
2 Management
Commitment(MC)
-.618**
1
3 Motivation(MO) .519**
.458**
1
4 Sale-Person Performance(SPP) .574* .432 .321
* 1
5 Distribution Flexibility(DF) -.601**
.507* .417
* .379* 1
6 Promotional strategy(CA) .559** .474** .376* .211 .145 1
7 Sales Support(SS) .468 .415**
.325* .305* .258 .220 1
8 Product /Service Ava.(PSA) .631**
.558**
.419* .321* .306
** .276
** .215
** 1
9. Customers satisfaction (CS) .601** .498 .435* .412* .342** .308* .213* .168* 1
10. Market Coverage (MRC) .511** .432* .418* .331* .286** .276** .194* .143* .186 1
48
2, and an acceptable range is 1.50 - 2.50 (Muluadam, 2015). For the study, the output value of
Durbin-Watson is 1.976; approximate to 2, indicating that there is no correlation among the
residuals.
Table 13: Test for Independence of Residuals
Model Summary Durbin-Watson
Model R R Square Adjusted R Square Std. Error of the Estimate 1.976
1 .796a .6336 .6254 .546
a. Predictors: (Constant), Management commitment, Motivation, Sales Support,
Sales person performance Distribution Flexibility, Product availability, Creating
Awareness, customers satisfaction and Market Coverage
b. Dependent variable: sales performance
Source: SPSS output of Survey questionnaires, 2018
Generally, four step-by-step pre-model suitable assumption tests were found and acceptable.
Since those four assumptions of multi-regression analysis were met, the next procedure is to
process the output of multiple regressions. Those output are the model summary (R, R2 and
adjusted R2), the model fit (ANOVA) and the beta coefficient (standardized and unstandardized
beta). The overall correlation of all variables on sales performance is 0.6336 or 63.36%.
Table 14: Pearson Correlation
Correlations
Distribution Channel Sales Performance
Distribution Channels
Pearson Correlation 1 .6336
Sig. (2-tailed) .001
N 256 256
Sales Performance
Pearson Correlation .6336 1
Sig. (2-tailed) .001
N 256 256
Source: SPSS output of Survey questionnaires, 2018
49
4.4.2. Multi Regression Analysis Output
4.4.2.1. The Model Summary
Table 15: Model Summary
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .796a .6336 .6254 .546
c. Predictors: (Constant), Management commitment, Motivation, Sales Support, Sales
person performance, Distribution Flexibility, Product availability, Promotion strategy,
customers satisfaction and market coverage
d. Dependent variable: sales performance
As the above model summary shows 63.36% of sales performance were explained by the
combination of Management commitment, Motivation, Sales support, sales person performance,
distribution flexibility, product and services availability, promotional strategy, customer‟s
satisfaction and market coverage. This indicates most of the significant variables that affect sales
performance were included.
4.4.2.2. Testing the model fit through ANOVA
The study concerns the combined prediction of two or more independent variables on the
dependent variable.
Table 16: ANOVA Table for Multiple Regressions
Model
Sum of
Squares
Df Mean
Square
F R2 Sig.
1
Regression 153.873 7 21.982 6.891*
.6336 .000b
Residual 1078.269 338 3.190
Total 1232.142 345
a. Dependent Variable: Sales Performance
b. Predictors: (Constant), Product Service Availability, Sale Person
Performance, Management Commitment, Motivation, Distribution Flexibility,
Creating Awareness, Sales Support, customers satisfaction and market coverage
The multiple regression analysis is considered to be appropriate to apply in this study. So, in
50
order to see the combined contribution of all the variables together and the relative contribution
of each variable in the prediction of Sales performance a multiple regression analysis was carried
out. All the predictor variables are employed simultaneously.
4.4.2.3. The Beta coefficients (standardized and unstandardized coefficient)
Table 17: The beta coefficient
Coefficients a
Model Unstandardized Coefficients Standardized Coefficients t Sig.
B Std. Error Beta
1
(Constant) 1.317 .339 3.879 .000
Management Commitment -.176 .074 -.219 -2.361 .010
Motivation .110 .096 .174 1.442 .050
Sales Support .019 .055 .011 .179 .090
Distribution Flexibility -.164 .049 -.166 -3.321 .010
Sales Person Performance .171 .052 .215 3.301 .010
Promotional strategy .195 .070 .169 2.788 .060
Product & Service Availability .268 .046 .280 1.457 .010
Customer Satisfaction .280 .103 .351 2.714 .070
Market Coverage .284 .082 .288 3.441 .010
a. Dependent Variable: Sales Performance
Let β1 represent management commitment, β2 represent Motivation β3 represent sales support,
β4 refers to distribution flexibility, β5 sales person performance, β6 refers to creating awareness,
β7 refers to product and service availability, β8 refers to customers satisfaction, β9 refers to
market coverage, a-refers to constant variables and e-refers to error terms. Then, the multi
regression model represented by;
Y=a+β1X1+ β2X2+ β3X3+ β4X4+ β5X5+β6X6+β7X7+ β8X8+ β9X9+e
This implies
Y=1.317+ -.176X1+.139X2+.010X3+-.164X4+.171X5+.195X6+.068X7+.280X8+.280X9+e
51
4.5. Regression output of direct and indirect distribution on sales
performance
As the literature reviews and empirical findings shows both direct and indirect distribution
channels have their own impacts to increase the sale performance of products/services
distribution. In case of Ethio-telecom, the impacts of both direct and indirect distributions were
presented in the following table.
Table 18: Impacts of Direct and Indirect Distribution Channel on Sales Performance
Variables Model
Indirect Distribution Channel
.649***
(10.443)
Direct Distribution Channel
.1221
(2.525)
(Constant) 1.317**
(3.353)
R2 .6336
Adjusted R2 .6254
F 4.570
***p< 0.01 **p< 0.05 *p<0.1
As the outcome of regression analysis reveals that direct and indirect distribution channels
positively affect sales performance of Ethio-telecom. Both direct and indirect distribution
channels positively affect the sales performance of Ethio-telecom products and services.
However, the coefficient of indirect distribution channels (.649 or 64.9%) is large and covers
large portion of sales performance of the company. This indicates, indirect distribution channel
significantly positively affects the sales performance of Ethio-telecom products and services
distribution. The coefficient of direct distribution channel is also (.1221) or 12.21% indicates
direct distribution has positive impacts on sales performance but insignificant. Comparatively,
indirect distribution channels can improve sales performance of Ethio-telecom than direct
distribution channels. Finally the interaction variables were added overall impact were analysed
.The pair-wise correlation matrix of the independent variables can show the errors of
Multicollinearity if the correlation between each independent variables is higher than .80 (Hair,
Anderson, Tatham and Black, 2006). According to those scholars, the acceptable range for
Multicollinearity is below 0.80. To test the Multicollinearity of all variables dimensions of
52
distributions channels on the sales performance, the results of Tolerance value and VIF was
presented as the following;
Table 19: Multicollinearity of all Variables
Coefficients a
Model Collinearity Statistics
Tolerance VIF
1
Management Commitment .273 1.664
Motivation .149 2.024
Sales Support level .395 1.681
Distribution Flexibility .458 1.044
Sales Person Performance .089 2.175
Creating Awareness .412 1.405
Products and services availability .493 1.260
Customers Satisfaction .073 1.706
Market Coverage .386 2.087
a. Dependent Variable: Sales Performance
While separately indirect and direct distribution channels Multicollinearity was tested, it was
presented as the following;
Table 20: Two variable Multicollinearity
Coefficients a
Model Collinearity Statistics
Tolerance VIF
1
Indirect Distribution Channels .645 1.036
Direct Distribution Channels .587 1.036
a. Dependent Variable: Sales Performance
The tolerance value or VIF of all the variables less than 10. The Tolerance value is less than
0.08. Therefore, Multicollinearity is not the concern. The degree of independent variables is
between -0.7 and 0.7. It is possible to use all independent variables simultaneously.
53
4.6. Factors Affecting Sales Performance
4.6.1. Management Commitment and Sales Performance
Results of the correlation analyses have indicated that there exists a statistically significant
correlation between management commitment and sales performance. The partial correlations
also indicated that management commitment was statistically correlated with sales performance
even after the other independent variables were partial out. The multiple and stepwise regression
analyses results have indicated that management commitment has a significant contribution to
the prediction of sales performance of Ethio-telecom. Empirically, Schwepker, (2013) found
that management commitment to providing superior customer value is negatively related with
outcome sales performance (b = -.176, p < 0.01). According to Mathur (2013), Griffith et al.,
(2000), Simintiras, (2012), Shoham et al., (2008), Schetzsle and Drollinger (2014) discussions, if
the channel partners needs are fulfilled; commitment is a desire to maintain a valuable
relationship in the long-term basis and a central to all relational exchanges. So that cooperation,
satisfaction, retention of customers can be gained. And the final goal of them, mutual
profitability, can be achieved. However, managers are not committed to improve the indirect
distribution channels.
The interview results were indicated that consistent management commitments with the
increased response rate and supervision program among the direct and indirect distribution
channels were necessary. Management commitments have also significant impacts on the sales
performance of the distribution channels. Due to the fact that there is negative strong relationship
between the management and the distribution channel members. In addition to this, product and
service distribution of Ethio-telecom raised some complain from the distribution channel
members due products and services not achieved in the required time and place.
4.6.2. Motivational Factors and sales performance
For the relationship between motivation and sales performance results of the correlation analyses
have indicated that there exists a statistically significant correlation between the two variables.
The partial correlations also indicated that motivation was statistically correlated with sales
performance even after the other six independent variables were partial out. The multiple and
stepwise regression analyses results have indicated that motivation has a significant contribution
54
to the prediction of sales performance. The proportion of variance accounted for by motivation
on sales performance of Ethio-telecom product and services was the largest (4.8%).
The result of this study is in agreement with various studies. Newman et al. (1988) found that
the relationship between academic goal orientation and various school outcomes is logical.
According to these evidences such as grades and academic performances are more likely to be
affected by academic goal orientation than other outcomes like commitment and assessment.
Many researchers conducted in indicated that goal orientations facilitate creativity and academic
performance (Sue, 2001). Verbeke et al., (2011); Demirag, (2011); Brettel et al., (2011), Dong et
al., (2010) and Mehta et al., (2000) wrote motivation has strong relations with sales performance
of Telecome companies. Fissaha (2015) also found that one of the factors that affect sales
performance for indirect distribution channel of Ethio-telecom was motivational factors showed
the first relative importance (r=.11%) with a statistically significance level of (P<.05).
According to the interviewee answered about the motivational factors have its own impacts for
the sales performance of Direct and indirect distribution channels; But Ethio-Telecom provides
monetary benefits such as attractive salary for workers, cash rewards and bonus. Non-monetary
benefits such as mobile phone, laptops, 3G data dongle and EVDO services. For indirect
distribution channels, monthly commission payments and cash rewards have been given for
intermediaries like distributors, sub-distributors and retailers as the monetary benefits based on
the sales performance evaluation results. Non-monetary benefits for indirect distributors are
smart phone, Lap tops and free 3G data services to speed up the sales performance of the
distribution channels.
4.6.3. Sales Support and Sales Performance
For the independent variable sales support, results of the correlation analyses have indicated that
there exists a statistically insignificant correlation between sales support and sales performance
of Ethio-Telecom products and services. The result of the partial correlation also indicates that
sales support was insignificantly correlated with sales performance after the contribution of the
rest six variables partial output. Results of the multiple and stepwise regression analyses also
indicated that sales support insignificantly to the prediction of sales performance. As compared
to the other variables in the study, the proportion of variance accounted for by sales support on
sales performance was 1.9%. This could be due to the reason that sales support is a means to
55
sales performance success (Mooney, 2005). Typically, studies found a positive impact of sales
support factors on sales performance (Regnerus, 2000). The result of this study is also in
disagreement with many research works, which demonstrated significant and positive
relationship between sales support and sales performance. A study by Oh (2006) found that sales
support has a significant impact on sales performance.
The interviewee replied that the sales support in the direct and indirect distribution channel were
not enough specially in the indirect distribution channels is weak because the numbers of indirect
distribution POS-Coordinators are very small to address all the distributors, sub-distributors and
retailers .Therefore the direct and indirect distribution channels have significant impact on the
sales performance by the activities sales support.
4.6.4. Distribution Flexibility and sales performance Sales
For the independent variable distribution flexibility, results of the correlation analyses have
indicated that there exists a statistically significant correlation between distribution flexibility
and sales performance. But the result of the correlation indicates distribution flexibility was
negatively correlated with sales performance after the other six independent variables partial out.
Management and distribution channels has negative impacts on the sales performance because it
is negatively correlated (r=-.601 or -60.1%). Results of multiple regression analyses also
indicated that distribution flexibility negatively and significantly to the prediction of sales
performance. The result of this study is in agreement with many studies. According to Samaha
et al., (2011) and Yu et al., (2013) study, distribution flexibility is composed of logistics and
relationship flexibility is significantly correlated with sales performance.
As the interviewee replied that about distribution flexibility of the company, there was some
inflexibility from the direct distribution channels side to do with integrations of indirect
distributions channels when there was a shortage of SIM Card & Voucher card distribution. At
that time the company do not facilitate with in the fast time to give solution for the problem in
hand such situations in the distribution channel decrease the sales performance of direct and
indirect distributions.
56
4.6.5. Sales Person Performance and Sales Performance
For the independent variable sales person performance, results of the correlation analyses have
indicated that there exists a statistically significant correlation between sales person performance
and sales performance. The result of the partial correlation indicates sales person performance
was significantly correlated with sales performance after the other six independent variables
partial out. Results of multiple regression analyses also indicated that sales person performance
does add significantly to the prediction of sales performance. This result is in congruent with
other researches. For many companies, salespersons are the most important marketing tools in
the interface between the companies and their customers.
Operating at the interface between the organization and its environment, salespersons perform
important boundary-spanning roles (Baldauf & Cravens, 2002). Good salespersons may offer
substantial performance improvements in today‟s increasingly competitive business
environment. A top-quality salesperson who maximizes revenues from current existing
customers and systematically identifies and manages new prospects well will allow a business
entity to grow faster than its competitors (Futrell, 2006). Such efforts are particularly important
in an environment where valuable customers have many more options and choices than ever
before. Considering the pivotal role played by salesperson in ensuring continued growth of sales,
therefore, hiring highly skilled sales personnel organizations becomes critical (Churchill et al.,
2000; Ingram et al., 2004; Futrell, 2006). Moreover, many researchers have emphasized the
importance of salesperson‟s skills level on salesperson performance (Churchill et. al., 1985;
2000; Rentz et. al., 2002).
The interviewee was said that about the sales person performance has significant impact on the
distribution channels when the activities and speed to distribute product and service plays a great
role by maximizing the accessibility of distribution channels achievements. In addition to this
according to the system knowledge and attitudes of the sales person increases or decreases as the
sales target achieved or not.
4.6.6. Promotion strategy and Sales Performance
For the independent variable creating awareness, results of the correlation analyses have
indicated that there exists a statistically significant correlation between creating awareness and
sales performance. But the result of the partial correlation indicates creating awareness was
57
strongly correlated with sales performance after the other six independent variables partial out.
Results of multiple regression analyses also indicated promotion strategy affect significantly to
the prediction of sales performance. The finding of the current research is also in congruent
with other researches. Consumers‟ awareness of a brand is regarded essential for any brand‟s
success (see. e.g. Teixeira 2014). Clear objectives are required for social media marketing
communication promotes sales performance. Additionally, it is important to understand the
importance of creating awareness to improve sales performance (Valtari & Kärkkäinen 2016).
According to the interview respondent ethio- telecom can able to create a good image about
product and service distribution by short message services and audio-visual promotional ways.
But in the case of personal selling and public relation promotional ways the company have not
done more to enter more distribution channel sales performance.
4.6.7. Product and Service Availability and Sales Performance
For the independent variable product service availability, results of the correlation analyses have
indicated that there exists a statistically significant correlation between product service
availability and sales performance. But the result of the partial correlation indicates product
service availability was not correlated with sales performance after the other six independent
variables partial out. Results of multiple and stepwise regression analyses also indicated creating
awareness does not add significantly to the prediction of sales performance. The finding of the
current research is also in congruent with other researches. Consumers‟ awareness of a brand is
regarded essential for any brand‟s success (see. e.g. Teixeira 2014). Clear objectives are required
for social media marketing communication promotes sales performance. Additionally, it is
important to understand the importance of creating awareness to improve sales performance
(Valtari & Kärkkäinen 2016).
In this study an investigation was also made to see the combined predictive power of
Management Commitment, Motivation, Sale-Person Performance, Distribution Flexibility,
Creating Awareness, Product and Service Availability, customers satisfaction and market
coverage in predicting sales performance. The multiple regression models used to examine the
combined prediction of these predictor variables on sales performance revealed that all variables
combined together accounted for about 63.36% of the explained variance in sales performance.
58
Five of the independent variables (Motivation, sales person performance, promotion strategy,
product and service availability, customers satisfaction and market coverage) and have an
independent significant contribution to the explained variation in sales performance. Relative to
other variables in the study, market coverage has the highest contribution to the prediction of
sales performance of Ethio-Telecom products and services followed by customer‟s satisfaction
and product and service availability respectively. Those products and services should be properly
advertised and promoted.
The interviewee replied that about product and service availability in the direct and indirect
distribution channel are moderately enough but sometimes there is shortage of SIM and voucher
–card. Especially the SIM-card distribution in the indirect distribution channel has problem due
the quality device and network interruption. In the indirect distribution channels, the voucher
card distributions have more access than direct distribution channel.
Table 21: Promotion strategy of direct and indirect distribution
Descriptive Statistics
No. Promotional instruments and strategies N Direct distribution Indirect distribution
N Mean Standard
Deviation
Mean Standard
deviation
A. Personal Selling 256 4.00 1.090 3.84 1.090
B. Public Relation 256 3.64 .894 3.75 .894
C. Short Message Service (SMS) 256 4.00 .888 4.00 .888
D. Audio Visual Advertisement 256 3.75 .908 3.89 .908
E. Sponsorship 256 3.24 1.078 3.59 1.078
F. Printed Materials 256 3.96 .792 3.77 .792
Valid N (listwise) 256
Compiled from survey questionnaires, 2018
As the above descriptive results shows short message services (SMS), Audio visual
advertisements, having good public relations with stakeholders and printed materials are the
instruments that are important for Ethio-Telecom products and services promotions. Above all,
Short Message Services (SMS) is the most suitable, less cost, large geographical coverage, and
frequently used instruments to advertise products and services of Ethio-Telecom. Personal sellers
(seller‟s promotion) are also another method of promotion of Ethio-telecom products and
59
services in both direct and indirect distribution channels. Sellers should be sociable, hear
customer‟s grievances, provide updated knowhow on utilization, protection of products and
services and communicated with key-stakeholders and customers. For the long-term strategy,
having good public relations and sponsorship on the different events is very important to
dominate the market share, continue to be profitable, serve the society, and win the competition.
As the interview conducted with Ethio Telecom officials shows that TV Ads, Radio Ads, Print
Ads and Exhibition seminars are Ethio-Telecom best advertising strategies that are currently
practiced. The promotional strategy for direct and indirect distribution channel used both Audio-
visual and SMS.
4.6.8. Customer Satisfaction in the direct and indirect distribution channel
Customer‟s satisfaction is also significantly and positively correlated to the sales performance of
Ethio-telecom products and services distribution.
Table 22: Customers Satisfaction in the direct and indirect distribution channels
Descriptive Statistics
No. Customer satisfaction variables N Direct distribution Indirect distribution channels
Mean Std. deviation Mean Std. Deviation
A. Fast Service Delivery 256 3.76 .930 4.00 .930
B. Low Price of Products 256 3.24 1.049 3.24 1.049
C. SERVIQUAL and Product Quality 256 3.74 .972 3.94 .972
D. Sales Promotion 256 3.46 1.001 3.46 1.001
E. Guarantee and Warranty of Product / Services 256 3.44 1.027 3. 28 1.027
F. Low Transportation Cost 256 3.18 .987 3.76 .987
Valid N (listwise) 256 4.00
Compiled from survey questionnaires, 2018
As the above descriptive results shows fast service delivery is highly important to satisfy the
need of customers for direct and indirect distribution channels. In modern context, Ethio-telecom
products and services are equivalently demanded with some basic and necessity goods. Ethio-
Telecom with the consideration of customers benefits and increases the sales; they reduce the
price of products /services. Price reduction through discount of product/services offer, free SMS
during holidays, reduces the prices of Telecom supplied mobiles and others electronics and
reduce the cost of airtime. Service/products quality is also the main factors that determine the
60
customer‟s satisfactions. Through direct and indirect distribution channels with safety protection,
labeled, guaranteed, fast and timely distribute products or provide services. If Ethio-Telecom
products/services have good quality, it encourages direct and indirect distribution channels to
increase sales performance and profitability of the organization. Sales promotion is also
important to attract customers and enhance direct and indirect distribution channels. The sellers
should have properly promoted the exact features of products, service that will be delivered,
location, means of access, intermediaries and necessary measures and protections. Reasonable
and timely sales promotion reduces transportation costs, unnecessarily risks,
As the above table 13 descriptive results of direct and indirect distribution channel shows that
the customer satisfaction of indirect distribution channel more than direct distribution channel
due to service delivery is highly nearest to their living environment . Customer satisfaction by
the service quality and guarantee in the direct distribution channel are more than indirect
distribution channel‟s customer satisfaction.
4.6.9. Market coverage in the direct and indirect distribution channels
Market coverage also significantly and positively correlated with sales performance of Ethio-
telecom products and services. Indirect distribution dominates the national market and more
market coverage than direct distribution. Let us see the following two table descriptive results of
respondents in comparison to each other.
Table 23: Market Coverage in the direct and indirect distribution channels
Descriptive Statistics
No. Market Coverage variables N Direct Distribution Indirect distribution channels
Mean Std. Deviation Mean Std. Deviation
A. Market Size 256 3.25 .738 4.00 .738
B. Geographic Accessibility 256 3.14 .874 3.69 .874
C. Availability of Intermediaries 256 3.36 .968 3.56 .968
D. Numbers of Outlet Distribution Channels 256 3.70 0.968 3.86 0.968
E. Product and Service Demand 256 3.40 .888 3.75 .888
F. Transportation Coverage 256 3.69 .828 4.00 .828
Valid N (listwise) 256
Compiled from survey questionnaires, 2018
61
Since Ethio-telecom is pure monopoly in Ethiopia, the product and service of Ethio-telecom
should be access to all parts of the country through direct and indirect channels. Ethio-Telecom
dominates local and national markets due to absence of competition. Customers has no others
options to switch loyalty to others aggressive competitors. Due to its monopoly on the markets,
they should have to diversify and expand their distribution channels without losing service
quality, profits, equity and demand.
Products and service demand is also another key instrument for the market coverage of direct
and indirect distribution channels. Due to market monopoly of Ethio-telecom, products and
services of Ethio-telecom highly demanded on the markets. Customers are quality, prices and
accessibility sensitive. Even though, the products and services of Ethio -telecom has poor quality
and high price, customers have no bargaining power. In additions to quality and price of products
and services, the geographical accessibility is key instruments for market coverage to supply
products and services for end users. Transportation coverage is also important to easily
distribute products and services of Ethio-telecom. If different geographical areas of the country
are accessible to transportation infrastructures, it reduces distribution costs, minimize risks, and
easily distributed to the customers. Availability of intermediaries such as distributors, sub-
distributors, retailers helps to facilitate the speedup of services, accessibility of products and risk
sharing in order to distribute Ethio-Telecom products. Intermediaries are more important for
indirect distribution than direct distribution channels in order to easily distribution of products,
providing services, easily contact with customers and more flexible bureaucracy. In general, the
market size, geographical accessibility, products and services demand, transportation coverage,
availabilities of intermediaries and numbers of distribution channels outlet are key instruments
that measures the market coverage with positive impacts of distribution channels on the sales
performance.
According to the above two tables indicated that the market coverage, the numbers of outlets,
geographic accessibility and the market size of indirect distribution channels significantly
greater than in the direct distribution channels .Intermediaries are more important for indirect
distribution than direct distribution channels in order to easily distribution of products, providing
product and service distributions.
62
4.7. Comparative Analysis of Direct and Indirect Distribution Channels for
Sales Performance
Table 24: Comparative analysis of direct and indirect distribution channels
No. Factors Affecting Direct Distribution Indirect Distribution channels
1. Management Commitment Managers are more
engaged and support but
insignificant to improve
sales performance
Managers are less engaged and
supported the IDC but
significantly improve sales
performance
2. Motivation factors Managers are highly
motivated.
Managers are motivating the
IDC but not enough.
3. Sales support Less support Less support
4. Sales person performance Sellers are more skilled
and competent
Sellers are moderately skilled
and competent
5. Distribution flexibility Rigid distribution channels More flexible distribution
6. Creating awareness Moderate awareness Moderate awareness
7. Products/service availability More available Less available
8. Customers satisfaction Less Customers
satisfaction
More customers satisfaction
9. Market coverage Less market coverage Highest market coverage
Source: survey questionnaires, 2018
63
4.8. Opportunities of Direct and Indirect Distributions Channels
Table 25: Opportunities of Direct and Indirect Distribution Channel
Descriptive Statistics
No. Opportunities of direct and indirect distribution channels N Minimum Maxim
um
Mean Std.
Deviation
A. Ethio-telecom monopolized Products and Services on the market 256 1 5 4.05 .800
B. Ethio-telecom Support the direct and indirect distribution
Channels 256 1 5 3.57 1.046
C. Availability of Infrastructures 256 1 5 3.83 .835
D. Availability of Network Service Providers 256 2 5 4.02 .749
E. High Demand of Products and Services 256 1 5 3.94 .749
F. Ethio-telecom Support Monetary and Non-Monetary Benefit 256 1 5 3.83 .953
Valid N (listwise) 256
Compiled from survey questionnaires, 2018
As the above descriptive results shows Ethio-Telecom is the only company that provides
Telecom products and services. There are no others aggressive competitors that can provide
telecom services and share customers. Ethio-telecom delivers their products and services through
direct and indirect distribution channels. However, dominating the market with some times
quality problem, delay services, high cost and limited market coverage resulted in public doubt
and customers dissatisfactions. The mandatory requirements infrastructures for Ethio-Telecom
Products and services are available in different stations in the country. These infrastructures are
Optical Fibber Network, 3G data connections, availability of different stations and sub-stations,
access of road services, availability of banks and data centre.
Availability of Network Service Providers (NSPs) is very important to provide Ethio-Telecom
fast services delivery, high quality products/Services, minimum errors and less duplication of
human efforts. This is also the golden opportunity to facilitate direct and indirect distribution
channels of Ethio-Telecom products and services to end users. Unsatisfied demand of customers
of Ethio-Telecom products and services also encourage Ethio-Telecom to highly work on the
direct and indirect distribution channels of the products/services. With the current situation, like
demand for foods or others basic needs, societies are highly eager to get Ethio-Telecom Products
and services. However, Ethio-Telecom is pure monopoly of such products/services, encouraged
to work on improvement of direct and indirect distribution channels is the only measure. For
Direct distribution channels, Ethio-Telecom provides monetary benefits such as attractive salary
64
for workers, cash rewards and bonus. Non-monetary benefits such as mobile phone, laptops, 3G
data dongle and EVDO services. For indirect distribution channels, monthly commission
payments and cash rewards will be given for intermediaries like distributors, sub-distributors and
retailers as the monetary benefits based on sales performance. Non-monetary benefits for indirect
distributors are smart phone, Lap tops and free 3G data services.
4.9. Challenges of direct and indirect distribution channels
Table 26: Factors Affect Indirect and Direct Distribution Channels
Descriptive Statistics
No. Factors hinders distribution channels N Minimum Maximum Mean Std. Deviation
A. Poor Management commitment 256 1.00 5.00 3.55 0.954
B. Inadequate infrastructures 256 1.00 5.00 3.55 0.936
C. Poor performance of the Sales person performance 256 1.00 5.00 3.89 0.799
D. Absence of aggressive competitors 256 1.00 5.00 3.69 0.971
E. inadequate awareness creation 256 1.00 5.00 3.69 0.846
F. Weak Sales support in distribution channels 256 1.00 5.00 2.96 0.962
G. Rigid distribution channels systems 256 1.00 5.00 3.58 0.981
Valid N (listwise) 256
Compiled from survey questionnaires, 2018
As the above descriptive results shows poor performance of sales-person, absence of aggressive
competitors, inadequate awareness creation on the IDC, rigid direct distribution channels system,
inadequate infrastructures, poor commitment of management on the distribution channels and
are the main challenges that hinders the direct and indirect distribution channels of Ethio-
Telecom products and services. Sometimes, people are unaware concerning the products and
service of Ethio-telecom. Mostly, Ethio-telecom does not provide diversified and good qualities
of products and services to the customers. Poor sales support for indirect distribution channel is
also another constraint that affects distribution channels of Ethio-telecom products and services.
65
CHAPTER FIVE
5. Summary of Findings, Conclusions and Recommendations
5.1. Summary of findings
5.1.1. Factors affects sales performance
The determinants factors that affect the sales performance of Ethio-telecom products and
services are management commitment, motivation factors, sale person performance, promotional
strategy, distribution flexibility, products and services availability, customer‟s satisfaction and
market coverage. Market coverage of distribution channels is the critical factor to increase the
sales performance of Ethio-telecom products /services. This market coverage can be measured
by the variables such as market size, geographical accessibility, products and services demand,
transportation coverage, availabilities of intermediaries and numbers of distribution channels
outlet. Customer‟s satisfaction is also important factor that helps to improve the sales
performance of the company. If the customers satisfied on the products/service distribution, there
will be a continuity to be loyal customers in the future. The key elements that will be considered
for customers satisfactions to improve sales performances of the organizations are fast service
delivery, price reduction, services/products quality, sales promotion, guarantee and warranty and
low transportation costs.
5.1.2. Impacts of Distribution Channels on the Sales Performance
Both indirect and direct distribution channels have positive impacts on the sales performance of
the Ethio-Telecom distribution channels. Comparatively, indirect distribution channels
significantly increase and improve sales performance than direct distribution channels of Ethio-
telecom products/services but managers not on the position to encourage and support the IDC.
5.1.3. Opportunities of Direct and Indirect Distributions Channels
As the findings of the study reveal, Ethio-Telecom has many opportunities such as lack of
aggressive competitors to the market and control market share, availability of Network Service
Providers (NSP), intermediaries, availability of Ethio-telecom infrastructures, unsatisfied
customers demand of products/services distribution. Therefore, by using those opportunities,
Ethio-telecom can increase the direct and indirect distribution channels sales performance.
Especially indirect distribution channel have more opportunities due to the descriptive analysis
66
and the company document indicated more numbers of intermediaries and market coverage than
direct distribution channels of Ethio-Telecom.
5.1.4. Product and Service Promotion for sales performance
Currently, the Ethio Telecom uses TV Ads, Radio Ads, SMS, Print Ads and Exhibition seminars
for advertising their products and services. However, the promotion strategies such as Short
Message Services (SMS), Audio visual advertisements, good public relations (PRs) and printed
materials are important for Ethio-Telecom. SMS and Audio visual mostly practiced for both
direct and indirect distribution channels equally, but for long term strategy, the direct and
indirect distribution channels increases the Public Relation, sponsorship and print Ads to
improve sales performance of the distribution channels.
5.1.5. Challenges that hinders the distribution channels
The factors such as poor performance of sales-person, lack of flexibility of distribution channels,
poor awareness concerning products and services of Ethio-Telecom, less availability of Ethio-
Telecom products and services, poor commitment of management and less motivation way of
distribution channels are the main challenges that hinder the direct and indirect distribution
channels of Ethio-Telecom products and services.
5.2. Conclusion
Ethio-telecom is pure monopoly company in Ethiopia that dominates the markets and market
share in supply of different electronics, service provision and others telecom services. Customers
are price, quality, time and access sensitive but have no option to get bargaining power. Since,
Ethio telecom has full bargaining power of supplier over customers; they will get services
/products at any cost, poor quality, less advanced technology, delay and limited access. Ethio-
telecom uses both direct and indirect distribution channels to provide services/products. The
combination of direct and indirect distribution channels improves the sales performance of the
company. Comparatively, indirect distribution channels significantly improve the sales
performance than direct distribution channels. However, Ethio-telecom is not on the position to
improve and more engaged on indirect distribution channels due to losing sense of ownership,
un-granted system privilege and discounted price.
67
The factors that significantly affect the sales performance of Ethio-telecom are management
commitment, motivation factor, sale person performance, distribution flexibility, products and
services availability, promotional strategy, customer‟s satisfaction and market coverage.
Management commitment and distribution flexibility of indirect distribution channels negatively
and significantly affects the sales performance. This indicates management is not on the
performance to improve the sales performance. The distribution channel is also follows rigid and
inflexible distribution channel strategy.
Market coverage of Ethio-telecom products /services helps to improve the distribution channels
for sales performance of Ethio telecom products and services. Improve in sales performance
(increases in sales, profits and market share) is depends on the market coverage. If Ethio-telecom
expands its market coverage to local and national markets, distribute their products/service
through indirect distribution channels, sales performance will increase that resulted in
profitability. Customer satisfactions help to improve the sales performance of the organization
and facilitate the distribution channels. If customers are satisfied on the services/products of
distributions of Ethio-telecom, distribution channels are more engaged and sales performance of
the company will increase. To satisfy the need of customers, the company should have to work
on quality improvements, reduce price, access, timely delivery and customers-based supply of
products /services.
Direct distributions get more support from the management of the organization. The quality of
the Service for direct distribution is better than indirect distribution channels but the numbers of
outlets in the direct distribution channel are very small compared to indirect distribution
channels. As a result, indirect distribution channels with distributors, sub-distributors, and
retailers have more market coverage and accessibility for customers. However, the motivation
ways and distribution channel support are less due to the numbers of indirect distribution
channels staffs very small to address their support and to solve their problems continuously.
Even Ethio-telecom cannot able to support and follow up the distributors, sub-distributors and
retailers with in the long run. They believe sense of ownership in the case of direct distribution
channels but concerned key stakeholders sees indirect distribution channels in eyes of suspects
and not interested to give the privileges from the company.
68
5.3. Recommendations
Based on the findings of the study, the following were suggested;
The policy makers /governments should have design participatory and integrative policy to
allow for aggressive competitors, privatize full/some of its services, forms public private
partnerships (joint ventures, franchisee, Alliance and service contracts), creates transparency
and accountability, free entry and exit, and free from politics for the sake of better public
purpose and improve the direct and indirect distribution channels capacity to increase sales
performance of the company.
Ethio-telecom should have to minimize the rigid ways of its distribution channels. Managers
should be committed to improve the performance of indirect distribution channels through
forward and backward integrations, deliver products/services timely, increases an improves
supports and follow up of its distribution channels and increase its market coverage.
Ethio-telecom should have to highly work on the improvement of indirect distribution
channels through improving capacity of distributors, sub distributors and retailers. The
company should have to increase the numbers of distributors, sub distributors and retailers in
order to improve the market coverage. Increase the numbers of POS- coordinator in order to
make effective integration and support for distribution channels members.
Ethio-Telecom is currently using SMS and Audio-visual promotional strategy for both direct
and indirect distribution channels. Moreover, in the long run personal selling promotion,
public relation, and social network promotional strategy used to increase the sales
performance of the company more.
Ethio- telecom should have to use innovative way of indirect distribution channels such as
„‟E-top-up‟‟ for voucher cards distributions and E-CAF for SIM card distribution. The
traditional way of distribution channel that resulted in customers profile errors, duplications
of hard copies, inconsistent information and incurs additional costs should be reduced.
Ethio-telecom should give critical attention to the contribution of the direct and indirect
distribution channels. The company should have to work hard to improve the performance of
the indirect distribution that resulted in improvement of profits and sells of the organization.
Ethio -telecom should have to use proper promotional strategies. Sufficient awareness
creation should be made. The market coverage should be improved to easily distribute the
products and services of Ethio-telecom products and services.
69
A model that includes more factors, more predicts Sales Performance. The company should
have to deploy the software for the prediction of sales forecasting.
Ethio-telecom should to have update the pricing, improve SERVIQUAL and products/
service, providing guarantee for customers, improve the way of complaint handling, work on
need assessment of the customers to improve sales performance for better public purpose.
Ethio-telecom should have to properly utilizing existing un-exploited opportunities such as
network service providers; improve customers handling mechanism, infrastructures and
resources.
5.4. Suggestions for Further Research This research only focused on comparative study on the factors affecting direct and indirect
distribution channels sales performance with the mediating variables customer satisfaction and
market coverage in the six Addis Ababa zones not including the eight regional areas, whereas,
others researchers will including those regional boundaries of the direct and indirect distribution
channels sales performance and hence the factors affecting both distribution channels sales
performance can be seen in a deeper ways. This specific study used structured close ended
questionnaires and semi-structured interview with the top managements of direct and indirect
channels of distribution. Even if this in-depth interview provided relevant information, if the
place and time management fulfilled, other researcher will be better to be arranged as the focus
group discussion with the top management. Since Ethio-Telecom is the only SIM and voucher-
card providers for distribution channel members. Other researchers might be study on the
industry products and services distributions in the competitive businesses in the different
companies of the country. Finally, another highly interesting research area would be to
investigate new technology distribution of products and services such as SIM –card distribution
by E-CAF, E-business voucher distribution channels like E-top-up (electronic commerce)
technologies by using telecommunication networks, Impact of Intermediary and how to improve
their performance of the currently distribution channels by using technology innovation must be
underlined.
70
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Appendixes
Appendix A:
Questionnaire (English Version)
DEBREBERHAN UNIVERSITY
MBA PROGRAM
This questionnaire is designed to compare the sales performances of direct and indirect
distribution channels sales in the cases of Ethio-Telecom‟s in six zones of Addis Ababa. The
research output is mainly to fulfill the partial requirement of Masters of Business
Administration. The information gathered will be used fully and with due attention for
academic purpose only. I, therefore, would like to assure you that the data collected will not be
misused in anyway. Therefore, you‟re genuine, honest, and politely response is a valuable input
for the quality and successful completion of the paper.
General Instructions
There is no need of writing your name.
In all cases where answer options are available please tick (√) in the appropriate box.
For questions that demands your opinion, please try to honestly describe as per the
questions on the space provided.
If you have any questions raised with this questionnaire you have contact with my e-mail
and mobile address below
Emaile:[email protected], Mobile: 0911528562
Mohammed Ahmed
ii
Thank you in advance to your timely response for answering the questionnaire
Part I. General Information
3. Highest formal education attended
Technical school
College Diploma
Bachelor‟s Degree
Master‟s degree
PhD ………………..
4. Your current position -----------
Sales person
Supervisor
sales coordinator
POS- Coordinator
sales administrator
manager
Other please specify ____________________
5. In which distribution channel currently works you
Direct distribution channels
Indirect distribution channels
iii
Part II: Questions related to Distribution channels for Ethio-Telecom staffs
Rate each statement on the scale of 1-5 where
S/N Statements about distribution channel 1 2 3 4 5
I Management commitment
1 Managers who are working in the distribution channels are committed to
distribute products and services of the company in relation with various
partners to increase sales performance.
2 Managers have a high level of outcome for the company in order to
achieving great sales performance on the distributions of products and
services
3 The company management willingly makes adjustments to help us out when
we are faced with special problems or circumstances about distributions of
products and services
4 My manager provides clear and timely feedback on distribution of products
and services to encourage the company sales performance
II Motivational ways of distribution channel 1 2 3 4 5
5 The company gives salary increment and bonus payment per year for
sales staff while meeting the sales quota is satisfactory.
6 When we achieved highest sales quota in the distribution of products and
services the company gives promotion
7 When we perform better the company‟s recognition and incentives is
satisfactory
8 The company rewards the best distribution chain sales performer by
evaluating their total sales of products and services according to the sales
targets.
9 I am satisfied with the recognition programs for my distribution of
products and services when I meet or exceed the sales targets
1 Strongly disagree
2 Disagree
3 Neutral
4 Agree
5 Strongly agree
iv
III Sales person Performance in the distribution channels
10 I have enough knowledge about products and service distribution strategy
to increase sales performance
11 My skill to distribute products and services by using any system
privilege is satisfactory
12 My overall activities in the distribution channel affects sales
performance of the company
13 Interpersonal relationship between I and other channel members is
necessary to increases the sales performance of distribution channel.
14 I have good responsibility to create more sales performance on the
distribution of products and services delivery for end users
IV Distribution channel flexibility 1 2 3 4 5
15 I frequently balance inventory of the key product and services while
working.
16 The relationship between us and other distribution channel members is able
to respond quickly to requests product and services
17 The company makes adjustments when we are faced with continuous
problems in the procedures or in the flow of distribution of products and
services.
V Creating Awareness of customer needs 1 2 3 4 5
18 The company often informs adequate information early enough for end
users about the distributions of products and services.
19 The residential sales division delivers product and services sales promotion
for customers timely to achieve prescribed sales performance.
20 The company evaluates customer needs to address awareness
Timely about products and services.
21 The company gives counseling practices for distribution channels
members which helps to improve sales performance
VI Sales Support on the distribution channel 1 2 3 4 5
22 The company has provided us support on training
For all sales staff about distribution of products and services
v
23 The company has sent sales professionals to assist and share experience
for business of distribution products and services.
24 Whenever we need help or suggestions, the company responds
promptly for our distribution of products and services.
25 There is an attempt to detect, resolve and suggest solution on training gaps
from the distribution divisions on the sales of products and services.
VII Product and service availability in the distribution channel 1 2 3 4 5
26 The company products and service availability are satisfactory
27 The company sometimes lose sales in case of non-availability of
products and services
28 Sometimes there is shortage of products and services in the distribution
channels of the company
29 Sometimes there is unavailability of products and services due to
transportation problems to reach the distribution channel members
Customer satisfaction on the distribution channel 1 2 3 4 5
30 I am very satisfied with distributions of products and services of Ethio -
Telecom
32 I am very satisfied with the selling price of distribution of ethio-telecom
products and services
33 I have not faced any problems in finding SIM card- when I goes to
Ethio-telecon distribution channels
34 I have expressed the adequacy of the information for SIM-card
distribution with great satisfaction
35 I have satisfied with the sales process of ethio-telecom SIM-card
distribution channels.
Market coverage of Distribution channel 1 2 3 4 5
I have arrived long distance to get SIM and voucher -card from our
village to ethio –telecom distribution channel.
36 The company‟s SIM –card and voucher-card accessibility for
customers are very good
37 In our surrounding the SIM and voucher- card distribution channel
availability are very good
38 There is found excess SIM and voucher -card distribution in our
surroundings shops successfully when we want
39 I have used additional transport cost to get SIM-card and voucher –
card from the distributions channels of ethio-telecom
40 There is excess SIM-card distribution in our surroundings shops
successfully when we want
vi
Part III. Dependent Variable (Sales Performance)
How do you rate the following statements by considering the last two year sales performance?
1= Strongly Disagree; 2=Disagree; 3=Neutral; 4=Agree; 5=Strongly Agree.
No Statements 1 2 3 4 5
1 In the year 2016/17 your distribution of SIM card and VC has achieved
high sales revenue.
2 In the year 2016/17 your distribution of SIM card and VC has generated high
Sales per potential demanded.
3 In the year 2016/17 your distributions of SIM card and VC is being
experiencing high amount of sales to new customers.
4 In the year 2016/17 the number of order of SIM card and VC has
significantly increased.
5 In the year 2016/17 sales quota achievement of SIM card and VC
distribution has been very satisfactory.
6 In the year 2016/17 the distribution network expansion of SIM card and VC
has been improved
7 In the year 2016/17 sales performance distribution of SIM card and VC is
expected to be higher
Interview Questions for Managers
This interview questions were answered by purposively selected respondents
(Zonal Managers)
1. What do you think the current ethio-telecom direct and indirect distribution channel
problem?
2. What are the factors affecting the direct and indirect distribution channel of ethio-telecom?
3. Did you face any difficulty in the distributions of products and services from the company
distribution procedures? Yes/No
If your answer is yes specify those challenges of distribution channels ________________________
vii
4. What are the challenges of direct and indirect distribution channel in order to increase sales
performance? Which challenges more impact on the sales performance in the distribution to
achieve highest sales performance initiator?
5. What is your suggestion to solve common problems of direct and indirect distribution channels of
ET?
6. Do the company have transportation cost to distribute the products and services that affects the
sales performance of each distribution channels?
7. What are the opportunities of direct and indirect distribution channels of Ethio-Telkom?
8. What are the commonly promotional ways of Ethio-Telecom distribution channels used to
increases the level of sales performance?
9. What do you recommend to improve distribution channel sales performance and to create
smoothen long-term relationship between the distribution channel members and the company?
10. If you have further comments about direct and indirect distribution channels of Ethio-telecom please
write in the spaceprovidedbelow____________________________________________________
Thank you for your cooperation .
viii
Appendix C: Questionnaire (Amharic Version)
DEBREBERHAN UNIVERSITY
ይህ መጠይቅ የተዘጋጀው ቀጥተኛ ያሌሆነ የሽያጭ አውታር (Indirect Channel) አጠቃሊይ የሽያጭ ሊይ ያሇውን
የአፈጻጸም ጉዳዮችን በስድስቱ የአድስ አበባ ዞኖች ያለትን እና፤ ንዑስ እና ችርቻሮ አከፋፋዮች ዙሪያ መዳሰስ ነው፡፡ የዚህ
ጥናት ውጤት በዋናነት የሚሆነው በቢዝነስ አድሚንስትሬሽን በሁሇተኛ ድግሪ ማሟያ የጥናት ጽሑፍ ነው፡፡ ይህ
የሚሰበሰበው መረጃ ሙሇ በሙሇ የሚውሇው ሇአካዳሚክ ወይም ሇትምህርት አገላግሌት ብቻ ነው፡፡
ስሇሆነም መረጃው በማንኛውም መንገድ ሇላሊ ሇምንም ዓይነት አገሌግልት እንዯማይውሌ ሊረጋግጥ እወዳሇሁ፡፡
የሚሰጡኝ ትክክሇኛ፣ ታማኝ እና ጊዜውን የጠበቀ ፈጣን ምሊሽ ጥናቱን በጥራት እና በስኬት ሇማጠናቀቅ ከፍተኛ
አስተዋጽኦ ይኖረዋሌ፡፡
አጠቃሊይ መመሪያዎች፤
ስም መፃፍ አያስፈሌግዎትም፡፡
አማራጭ ምሊሾች ሇቀረቡሊቸሁ ጥያቄዎች ሇእርስዎ ተስማሚ በሆነው የምሊሽ ቁጥር እና ቦታ ሊይ ምሌክት
ያድርጉበት፡፡
የእርስዎን አስተያየት የሚሹ ጥያቄዎች ምሊሽዎን በጥያቄው መሠረት በተሰጠው ክፍት ቦታ ሊይ ይግሇጹ፡፡
ጥያቄ ወይም ግሌፅ ያሌሆነ ነገር ካሇዎት ከዚህ በታች ባሇው ኢ-ሜሌ ወይም ስሌክ ቁጥር ይሊኩሌኝ (ይዯዉለሌኝ)
ሇትብብርዎ በጣም አመሰግናሇሁ፡፡
Mohammed Ahmed
Emaile:[email protected]
Mobile: 0911528562
ክፍሌ 1፡ አጠቃሊይ መረጃዎች
1. የትምህርት ዯረጃ
የሁሇተኛ ዯረጃ ትምህርት እና ከዚያ በታች
የቴክኒክ እና ሙያ ስሌጠና ፤
የኮላጅ ድፕልማ፤
ix
የመጀመሪያ ድግሪ፤
የሁሇተኛ ድግሪ
2. የድርጅቱ የአከፋፋይነት ዯረጃ
ዋና አከፋፋይ
ንዑስ አከፋፋይ
ችርቻሮ አከፋፋይ.
ክፍሌ 2፡ በሚቀጥሇው ሠንጠረዥ ውስጥ በአጠቃሊይ የሽያጭ አፈጻጸም ሊይ ተፅዕኖ ሉያሳድሩ የሚችለ ነጥቦች
ተቀምጠዋሌ፡፡ ከእነዚህ ነጥቦች በአጠቃሊይ ሽያጭ ሊይ የሚያሳድሩትን የተፅዕኖ መጠን የመረጡትን ቁጥር በማክበብ
እንድያሳዩ እጠይቃዎታሇሁ፡፡
1= በጣም ካሌተስማሙ
2= ካሌተስማሙ
3= ስሇ ሃሳቡ ካሊወቁ ወይም ግሌጽ ካሌሆነ
4= ከተስማሙ
5= በጣም ከተስማሙ በመምረጥ ምሌክት ያድርጉ
የሽያጭ ክፍሌ አመራር ዝግጁነት
ተ.ቁ. ዝርዝር ነጥቦች
1 2 3 4 5
1 በኢትዮ-ቴላኮም ውስጥ የሚሰሩ አመራሮች ምርቶችንና አገሌግልቶችን ሇማሰራጨት ከፍተኛ የሆነ ዝግጁነት እንዳሊቸው ይሰማናሌ፡፡
2 በሚሰራጨው ሲም ካርድ እና ሞባይሌ ካርድ አገሌገልት በኢትዮ-ቴላኮም ውስጥ የሚሰሩ አመራሮች ከፍተኛ የሆነ ቁርጠኝነት አሊቸው
3 ከኢትዮ-ቴላኮም ጋር ምርትና አገሌግልት ሇማሰራጨት የአመራሮች ብቃት ሇሽያጫችን ከፍተኛ ፍሊጎት እንድኖረን ተነሳሽነት ፈጥሮሌናሌ ፡፡
4 የኢትዮ-ቴላኮም አመራሮች ሽያጫችን ከፍተኛ እንድሆን ያሊሰሇሰ ድጋፍ ባሇሙያ ሰራተኞች በመሊክ •እገዛ ያዯርጉሌናሌ
ሇአከፋፋይ ድርጅቶች የሚሰጥ ማነቃቂያ
5 የተሠጠው የሽያጭ ወሰን ሊይ ሲዯርሰ ድርጅቱ ኢትዮ-ቴላኮም የሚከፍሇው የኮሚሽን ክፍያ በቂ የሚባሌ ነው
6 የምርት እና የአገላግሌቶች ሽያጭ አፈጻጸም ውጤት ከፍተኛ ሲሆን ድርጅቱ አመርቂ ሽሌማት ይሰጣሌ ፡፡
7 እኛ ጥሩ የሺያጭ አፈጻጸም ሲኖረን ኢትዮ-ቴኮም በቂ እውቅና እና ማበረታቻ ድጋፍ ይሰጠናሌ፡፡
8 እኛ አከፋፋዮች፡ንኡስ-አከፋፋዮች እና ቸርቻሪዎች የሺያጭ ኮሚሺናችን ድርጅቱ ወቅቱን ጠብቆ ስሇሚከፍሇን ሇስራችን ተነሳሺነት ፈጥሮሌናሌ
9 እኛ አከፋፋዮች፡ንኡስ-አከፋፋዮች እና ቸርቻሪዎች የሺያጭ ኮሚሺናችን እንድሻሸሌ በጠየቅን ግዜ አፋጣኝምሊሽ ይሰጠናሌ
ምርትና አገሌግልትን በግሌ የማሰራጨት ብቃት
10 እኛ በአከፈፋይ፡ በንኡስ- አከፋፋዮች እና ቸርታሪዎች በግሌ ስራ ሊይ የተሰማራን ሰራተኞች የድርጅቱን ምርትና አገሌግልት ሇማሰራጨት በቂ እውቀት አሇን ብሇን እናስባሇን
x
11 እኛ በአከፈፋይ፡ በንኡስ- አከፋፋዮች እና ቸርታሪዎች በግሌ ስራ ሊይ የተሰማራን ሰራተኞች ምርትና አገሌግልት ሇማሰራጨት የድርጅቱን ቴክኖልጅ የመጠቀም ጥበብ አመርቂ ነው ብሇን እናስባሇን
12 እኛ በአከፈፋይ፡ በንኡስ- አከፋፋዮች እና ቸርታሪዎች ስራ ሊይ የተሰማራን የሺያጭ ሰራተኞች ምርትና አገሌግልት ሇማሰራጨት የምናዯርገው የየግሊችን እንቅስቃሴ በድርጅቱ የሽያጭ አፈፃፀም ሊይ ተፅኖ ይኖረዋሌ
13 በአከፈፋይ፡ በንኡስ- አከፋፋዮች እና ቸርታሪዎች መካከሌ ያሇው የእርስ በእርስ መተባበር እና አንድነት የሽያጭ አፈፃፀም ከፍ እንድሌ ያዯርጋሌ ብሇን እናስባሇን
14 እና አከፈፋይ፡ ንኡስ- አከፋፋዮች እና ቸርታሪዎች ብዙ ሺያጭ የመፍጠር ችልታ የሽያጭ አፈፃፀም ከፍ እንድሌ ያዯርጋሌ ብሇን በማሰብ እንሰራሇን
የአከፋፋይ ድርጅቶች የማከፋፈሌ ሥርዓት ተሇዋዋጭነት (ግትርነት የላሇበትመሆኑ)
15 ድርጅታችን የምርት እና አገላግሌቶችን ክምችት ቶል ቶል ሇመሸጥ እንዯ አስፈሊጊንቱ የማከፋፈሌ ስርአት በማመቻቸት ጥሩ አፈፃፀም እነድኖር ይሰራሌ፡፡
16
በእኛ እና በላልች የማከፋፈያ ስንሰሇት አካሊት መካከሌ ያሇው ትስስር ሇጥያቄዎች አፋጣኝ ምሊሽ ሇመስጠት ያስችሊሌ፡፡
17 እኛ አከፋፋዮች፡ንኡስ-አከፋፋዮች እና ቸርቻሪዎች የተሇያዩ ችግር እና ሁናቴዎች ሲያጋጥሙን እኛን ሇመርዳት ኢትዮ-ቴሊኮም በራሱ ተነሳሽነት ማስተካከያዎችን ያዯርጋሌናሌ፡፡
ሇዯንበኞች አስፈሊጊውን መረጃ የማስተሊሇፍ ብቃት
18 ኢትዮ-ቴሊኮም በራሱ ተነሳሽነት ሽያጫችን እንድጨምር ስሇ ምርትና አገሌግልት ስርጭት አስፈሊጊውን መረጃ በወቅቱ ያስተሌሌፋሌ
19 የኢትዮ-ቴሊኮም የሽያጭ ክፍሌ ስሇ ምርትና አገሌግልት ስርጭት ጥሩ አፈፃፀም እንድኖረው የማስተዋወቅ ስራ ወቅቱን ጠብቆ ስሇሚያዯርስ ሇስራችን ተነሳሽነት ፈጥሮሌናሌ
20 ድርጅቱ የዯንበኞችን ፍሊጎት በመገምገም ስሇ ምርትና አገሌግልት ስርጭት መረጃ እንድዯርስ በማድረጉ ውጤታማ ሆነናሌ
21 ድርጅቱ ሇአከፈፋይ፡ ሇንኡስ- አከፋፋዮች እና ሇቸርታሪዎች በሽያጭ ዙሪያ የማማከር ስራ ስሇሚያግዘን ሽያጫችን ከፍ እንድሌ ያዯርጋሌ
ሇማከፋፈያ ሰንሰሇት የሚዯረግ ድጋፍ
22 የስሌጠና ድጋፍ በኢትዮ-ቴላኮም በኩሌ ስሇሚሰጠን በሽያጫችን አፈፃፀም ውጤታማ ሆነናሌ ፡፡
23 የሽያጭ ስራዎቻችንን ሇማገዝ ኢትዮ-ቴላኮም ባሇሙያዎቸን በየግዜው ስሇሚሌክሌን ሽያጫችን ከፍ እንድሌ ያዯርጋሌ፡፡
24 እኛ አከፋፋዮች ፤ንኡስ -አከፋፋዮ፤ ቸርቻሪዎች ድጋፍ እና ውሳኔ የሚሹ ጥያቄዎችን ስናቀርብ በአፋጣኝ ምሊሽ ከድርጅቱ ስሇምናገኝ የሽያጭ አፈፃፀማችን ከፍ እንድሌ አድርጉሌ
25 ኢትዮ-ቴላኮም ስሇ ሽያጫችን እንቅስቃሴ የማማከር አገሌግልት ስሇሚያዯርግሌን የሽያጭ አፈፃጸማችን ከፍ እንድሌ አድርጎሌናሌ
የምርትና አገሌግልት ተዯራሽነት
26 እኛ አከፋፋይ፤ንኡስ አከፋፋይ እና ቸርቻሪዎች በቂ የሆነ ሲም እና የሞባይሌ ካርድ ከድርጅቱ ይቀርብሊቸዋሌ
27 ሁለም አከፋፋይ፤ንኡስ አከፋፋይ እና ቸርቻሪዎች በቂ የሆነ ሲም እና የሞባይሌ ካርድ ከድርጅቱ ባሇመቅረቡ ያመጣብን ተጥጽኖ የሇም
28 ሁለም አከፋፋይ፤ንኡስ አከፋፋይ እና ቸርቻሪዎች ከኢትዮ-ቴላኮም ሲም ካርድ እና የሞባይሌ ካርድ ገዝቶ ሇማቅረብ የይናንስ ችግር ቢገጥመን ብድር ያመቻችሌናሌ
29 ሁለም አከፋፋይ፤ንኡስ አከፋፋይ እና ቸርቻሪዎች ፍትሃዊ የሆነ ምርትና አገሌግልት ከኢትዮ-ቴላኮም ያሇምንም እጥረት ያገኛለ
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ክፍሌ 3፡ ከአከፋፋይ ድርጅቶች የሽያጭ አፈጻጸም ጋር የተያያዙ ጥያቄዎች
ተ.ቁ.
ዝርዝር ነጥቦች
1 2 3 4 5
1 የአከፋፋይ ፤ንኡስ -አከፋፋይ እና የችርቻሮ ድርጅታችን በ2008/9 ዓ.ም. ከፍተኛ የሽያጭ ገቢ
አግኝቷሌ፡፡
2 የአከፋፋይ ፤ ንኡስ -አከፋፋይ እና የችርቻሮ ድርጅታችን በ2008/9 ዓ.ም. ከአጠቃሉይ ፍሊጎት አንፃር
ከፍተኛ ሽያጭ አስገኝቷሌ፡፡
3 የአከፋፋይ ፤ ንኡስ -አከፋፋይ እና የችርቻሮ ድርጅታችን በ2008/9 ዓ.ም. ከፍተኛ ሽያጭ ሇአዳድስ
ዯንበኞች ሸጧሌ
4 የአከፋፋይ ፤ ንኡስ -አከፋፋይ እና የችርቻሮ ድርጅታችን በ2008/9ዓ.ም. የምርት እና የአገሌግልት
አቅርቦት ጥያቄ ከፍተኛ በሆነ ሁኔታ አስገኝቷሌ፡
5 የአከፋፋይ ፤ ንኡስ -አከፋፋይ እና የችርቻሮ ድርጅታችን በ2008/9 ዓ.ም. የሽያጭ ወሰንን (ኮታ)
ከማሟሉት አንጻር የሚያረካ ውጤት አግኝቷሌ፡፡
6 አከፋፋይ ድርጅታችን በ2008/9 ዓ.ም. ጀምሮ የማከፋፈያ ሰንሰሇቱ እያሰፋ ይገኛሌ፡፡
7 በያዝነው 2010 ዓ.ም የሽያጭ አፈጻጸማችን ከፍተኛ ይሆናሌ ብሇን እንገምታሇን ፡፡
የስራ ሰአትዎን በመተው ሊዯረጉሌኝ ትብብር በጣም አመሰግናሇሁ
Retailor certifications criteria
1. Valid contact with distributors
2. High SIM and Voucher card distribution performance
3. Better brand usage
4. Availability of products and services most of the time
5. Flexibility to launch Location based promotions
6. High performance of customer profile submission and approvals
7. Working only one distributor
8. Retailors who respect not to sell more than 5 SIM per single subscriber
9. Document with highly confidential not to be disclosed
10. Respect with contract agreement
Source :IDC sales division January, 2018
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