ABSTRACT
The research focuses on evaluating consumers Patronage of Consumer
Cooperative Stores. A cross- sectional survey of two hundred (200) members of
Consumer Cooperative was conducted to determine factors that influence
consumers Patronage and also examine the level of patronage of consumer
cooperative stores in Enugu State. A uniform set of structured questionnaire and
interview were employed to collect data for the study.
The results show that sex, income level, education and availability are factors that
influence patronage of consumer cooperative stores. More so, the result reveals
that members of the consumer cooperative often patronize the consumer store.
Consequently upon the findings, the researcher recommends that emphasis should
be laid on cooperative education to equip members with the knowledge and skill
about cooperative principles, management and business. More so, it will help to
instill in members cooperative values, scale up their understanding and
participation in cooperative business by organizing seminar, workshop, discussion
group and meeting. Also staff-owned consumer cooperative stores should be
established outside the working premises to attract none members to patronize the
consumer store. More so enable them to compete with other retail outlets.
Consumer cooperative should endeavour to employ staff for the consumer store
instead of rotating it among themselves to avoid distraction. There is need for
qualified manager and account officer for efficient management of the consumer
cooperative store and record keeping. The cooperative should adopt the principle
of patronage refund. Such policy promotes members loyalty thus increase the
patronage of the consumer store.
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TABLE OF CONTENTS
Title Page – – – – – – – – –
Declaration – – – – – – – – –
Certification – – – – – – – – –
Approval Page – – – – – – – –
Dedication – – – – – – – – –
Acknowledgement – – – – – – –
Abstract – – – – – – – – –
Table of contents – – – – – – – –
List of Table – – – – – – – –
CHAPTER ONE: INTRODUCTION
1.1 Background of the study – – – – – –
1.2 Statement of the problems – – – – –
1.3 Objective of the study – – – – – –
1.4 Research Question – – – – – – –
1.5 State of the Research Hypothesis – – – –
1.6 Significance of the study – – – – – –
1.7 Limitation of the study – – – – – –
1.8 Definition of Terms – – – – – –
1.9 Scope of the study – – – – – – –
ix
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Background of Consumer Cooperative Society – – –
2.2 Consumer Cooperative in Nigeria – – – – –
2.3 Need for Consumer Cooperative – – – – –
2.4 Review of Consumer Market – – – – – –
2.5 Economic Activities and Organizational pattern for Consumer Cooperative
– – – – – – –
2.6 Favorable Conditions for the Establishment of Consumer Cooperative in
Development Countries – – – –
2.7 Functions of Consumer Cooperative – – – – –
2.8 Benefits to Members – – – – – – –
2.9 Problems of Consumer Cooperative Society – – – –
2.10 Factors that Influence Consumers Patronage – – – –
CHAPTER THREE: METHODOLOGY
3.1 Introduction – – – – – – – – –
3.2 Research Design – – – – – – – –
3.3 Study Area – – – – – – – – –
3.4 Sources of Data – – – – – – – –
3.5 Population – – – – – – – – –
3.6 Sample Size – – – – – – – – –
3.7 Sample procedure – – – – – – – –
3.8 Research Instrument – – – – – – –
3.9 Data Analytical Techniques – – – – – –
x
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Descriptive Statistics and Analysis – – – – – –
4.1 Introduction – – – – – – – –
4.2 Socio-Economic Profile of Members – – – – –
4.3 Economic Activities – – – – – – –
4.4 Nature of Goods Sold – – – – – – –
4.5 Patronage – – – – – – – – –
4.6 Members Perception – – – – – – –
4.7 Marketing Factors – – – – – – – –
4.8 Constraints of Consumer Cooperative – – – – –
4.9 Regression Result – – – – – – – –
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATION
5.1 Summary of Finding – – – – – – –
5.2 Conclusion – – – – – – – – –
5.3 Recommendation – – – – – – – –
Bibliography – – – – – – – –
Appendix 1 – – – – – – – – –
Appendix11 – – – – – – – – –
Questionnaire – – – – – – – –
xi
LIST OF TABLES
I. DISTRIBUTION OF RESPONDENTS BY SEX [% in parenthesis]
II. DISTRIBUTION OF RESPONDENTS BY AGE [% in parenthesis]
III. DISTRIBUTION OF RESPONDENTS BY EDUCATIONAL
QUALIFICATION [% in parenthesis]
IV. DISTRIBUTION OF RESPONDENTS BASED ON MARITAL STATUS
[% in parenthesis]
V. DISTRIBUTION OF RESPONDENTS BASED ON INCOME LEVEL
[%by parenthesis]
VI. DISTRIBUTION OF RESPONDENTS BASED ON YEARS OF
MEMBERSHIP
VII. DISTRIBUTION OF RESPONDENTS BASED ON WEEKLY
PURCHASES
VIII. DISTRIBUTION OF RESPONDENTS BASED ON ECONOMIC
ACTIVITIES.
IX. DISTRIBUTION OF RESPONDENTS BASED ON NATURE OF GOODS
SOLD.
X. DISTRIBUTION OF RESPONDENTS BY LEVEL OF PATRONAGE
XI. DISTRIBUTION OF RESPONDENTS BASED ON MEMBERS
ATTITUDE
XII. PRICE DISTRIBUTION [% in parenthesis]
XIII. DISTRIBUTION BY QUALITY [% in parenthesis]
XIV. DISTRIBUTION OF RESPONDENTS BASED ON SERVICES
RENDERED
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Cooperative is a form of economic organization based on certain human
values. The International Cooperative Alliance has defined cooperative as ‘an
autonomous association of persons united voluntarily to meet their common
economic, social and cultural needs and aspirations through a jointly owned and
democratically controlled enterprise’.
According to Kattookaran (2002) cooperatives are service-oriented
institution based on the principles of each for all and all for each. It is an
organization of the people, by the people and for the people. The basic objective
of the cooperative movement is to achieve the welfare of the members
concerned and to protect them from exploitation. In developing countries,
cooperatives have been assigned some important role as instrument of
economic and social transformation. Cooperative aims to remedy the economic
inequality and the evils of concentration of the weaker section by the strong.
2
Cooperative came as an aftermath of industrial revolution which took
place in Britain as a reaction to the capitalist exploitation such as hike in price,
profiteering, adulteration of goods, offering to the market goods with incorrect
weight and measures. The first workable cooperative society was founded in
England by the Rochdale pioneers group of weavers. The policy and
organization they adopted later became the principle of cooperation. The
principles of cooperation formulated by Rochdale pioneer were: democratic
control, open membership, limited interest on capital, patronage divided, cash
trading, sale of pure and unadulterated goods, education of members and
political and religious neutrality. The London Congress (1934) and Vienna
Congress (1966) of the International Cooperative Alliances have revised the
principles of cooperative formulated by Rochdale pioneers. The ICA general
assembly met in the occasion of ICA’s centennial congress in Manchester in
September 1995 and approved the ICA 1995 principles which include;
voluntary and open membership, democratic management and control, member
economic participation, autonomy and independence, education, training and
information, cooperation among cooperatives, concern for community,
Uchendu (1998) noted.
3
The cooperatives have enlarged its activities in all spheres of human life
namely production, distribution, housing, education and so on.
1.1.1 CONSUMER COOPERATIVE SOCIETIES
Since time immemorial, middlemen have been exploiting the consumers.
It is the consumers who ultimately bear all the burden of the various middlemen
who engaged in the distributive channel of trade. These middlemen also indulge
in the variety malpractices such as underweight, adulteration, black marketing,
hoarding and profiteering. As long as these nefarious activities of the
middlemen are not checked, price line cannot be brought under control,
Himachalam (1991). Under this situation, consumer cooperative was the only
answer to protect the interest of the consumers as a whole.
Consumer cooperative is a business enterprise run by consumers who are
members as well as owners of the business. According to Guelp (1993),
Consumer cooperative is a cooperative business owned by its customers for
their mutual benefit. The consumers of the goods and services which the
business provides are often the individuals who provide the capital required for
establishing the enterprises.
4
In the words of Igwe (1999), consumer cooperative provides unlimited
opportunities for helping to solve consumers’ problems and improving the
quality of their lives. Consumer cooperative is organization, which intends to
support the economy of member household through the acquisition of
merchandise from wholesalers for sales to members at a fair price, Igwe (2006)
noted. In carrying out their commercial activities, they are consciously guided
ethically by values such as honesty in business, sales of high quality goods and
services, fair prices and advice to consumers so as to get the best possible
decision for the satisfaction of their needs.
A consumer cooperative store is a voluntary organization of consumers,
organized to obtain their requirements of consumer goods and services on the
terms of greatest advantages to them Mathur (1991). Consumer cooperative
stores also sell to non-members and the cost savings that result from their largescale
operation are onto members. According to Kattookaran (2002),
consumer cooperatives are supposed to serve as the best custodian of the
consumers by supplying quality products and services at reasonable price and in
correct weight.
5
Consumer cooperative society is one of the types of retail outlets.
According to Agbonifoh et al (1998), consumer cooperative societies are
economic associations of consumers for the purposes of purchasing goods from
manufacturers or wholesalers to a retailer to members of the cooperative who,
by definition, are final consumers. Retailing is the process of selling goods
directly to the ultimate consumers. A retailer is a specialized marketing
functionary linking the wholesaler or the producer with the final consumer. As a
specialist in selling to the final consumers, he buys the assortment of goods
demanded by the consumers and makes them available to the consumers at
convenient points from numerous sources. He convinces the consumer to buy,
employs all the marketing variables at his disposal, Agbonifoh et al (1998).
According to , Agbonifoh et al (1998), retailing has evolved over the
years as is evident in the different types of retailers and the different functions
performed by them over time. Three theories have been advanced to explain the
evolution of retail institutions. The theory of natural selection maintains that
retail institution that adapts best to its environment will survive and grow.
Another theory asserts that retailing institutions that pass through a life cycle
begins with low margin, low price and minimum services. The next stage in the
6
life cycle sees the retailer upgrading his facilities and offerings and adding more
services in a bid to increase the volume of sales and hopefully profit.
According to Uchendu (1998), consumer cooperative store is a retail
store that is put up by group of people who come together as a sociological
group to pursue common objectives of:
1. Buying in large quantities to reduce unit cost.
2. Buying directly from producers to reduce the incidence of buying
adulterated goods.
3. Enjoy other economies of scale associated with bulk purchases.
Consumer cooperative came as an aftermath of industrial revolution
which took place in Britain as a reaction to the capitalist exploitation such as
hike in price, profiteering, adulteration of goods, offering to the market goods
with incorrect weight and measures. The first successful consumer cooperative
was the Rochdale Equitable Pioneers.
In Nigeria, the establishment of consumer cooperative was prompted by
the scarcity of consumer goods after the Second World War. It started as a
village store with meager resources. People pull their resources and stocked
consumer shop so that they can buy from the manufactures or importers at same
price as their counterparts, the competitors.
7
Members derive a lot of benefits by joining a consumer cooperative
society which urges them to patronize the consumer cooperative store. Some of
the benefits according to Igwe (2006) are that the membership affords one the
opportunity of buying goods at a very cheaper price. The cheapness of the
goods helps the members to save money thereby contributing to improvement
of the socio-economic status of members. The goods bought are free from
adulteration, shortage of weights and measure and other bad practices in
inherent in capitalist trade. The consumers are sure of getting what they
bargained for at consumer store without fear. There is also regular payment of
dividend to members in form of patronage to the consumer store, Chukwu
(1990). Consumer cooperative protects members from being exploited by
middlemen. The idea of cooperative is in the forefront of upholding this stand
in the interest of the consumers.
More so, consumer cooperative makes goods available to consumers at
all times which implies that consumers are sure of getting what they want at all
times. The interests of consumers are highly protected.
8
1.2 STATEMENT OF THE PROBLEM
The need for consumer cooperative in Nigeria cannot be overemphasized.
Consumer cooperative stores are much needed in a country where majority of
the citizens are workers, civil servants, and so do not produce what they
consume.
It has been observed that little attention has been given to this aspect of
cooperative unlike agricultural cooperative. Over the times, there have been a
lot of attentions on agricultural produce with little or no emphasis on
consumers. There is need to study how these finished goods reach the final
consumers and consumers’ satisfaction of the consumer goods which is the
finished products of the agricultural goods.
According to Uchendu (1998), in a situation of rural areas, there might be
less need for consumers’ cooperative stores. Most of the people produce
substantial fraction of what they consume. They depend less on the open market
for their basic food items. Consumer cooperatives are best needed in the urban
areas where majority of the people make purchases for their basic needs and
that of their families.
9
According to Adebayo (2005), when an economic situation is termed to
be normal and goods are available at the open market, prices are very moderate
without much interference from the middlemen in the chain of distribution. But
in a situation where the conditions are the other way round then all hands must
be on deck to evolve a system by which the consumers will get these goods at
reasonable price, with the required quantity and possible reduction in the
activities of the market intermediaries.
In the words of Okonkwo (2001), today in our country, a lot of people
cannot afford three square meals a day. This is because of the sky-rocketing
inflation which bedeviled this country. Consumer goods are so scare and
starvation widespread. This problem is made worse by the traders and
middlemen who buy up the available foodstuffs and stock them to be sold at
very high prices during the period of scarcity. Also in anticipation of hike in
price of food items, they hoard the foodstuff apparently; make huge gain in time
of scarcity. They create artificial scarcity as a result of their personal interest.
People spend all their incomes in purchase of foodstuff and less or none for
other basic needs.
10
Furthermore, the need for consumer cooperative also arose among the
salary earners. The need arose out of the fact that salaries are not paid when
due. For this reason, salary earners sometimes run out of cash and therefore
cannot purchase from the open market or from the producers or the major
distributors. These irregularities of salaries brought forth the need for
establishing cooperative stores where members can purchase not only on credit
but also at a fair price, unadulterated goods, goods of high quality and correct
measure. Cooperative stores operate in such a way that members pool their
resources together to purchase goods in bulk and directly from producers or
importers. This way, the goods are offered to members at a moderate price than
is obtainable at open market and pay patronage dividend to members.
Although the aim of cooperative stores is to make goods available to
members at a cheaper rate, there is also the need to make surplus from the
venture; therefore, it becomes pertinent that a study to evaluate consumers’
patronage is carried out. The study proposed here, intends to evaluate these
salient reasons that may influence consumers to purchase from cooperative
stores or on contrary dissuade them from doing so.
11
The life of any business depends on its ability to make surplus and
plough it back into the business. This also applies to consumer cooperative
stores. For this reasons, level of patronage becomes a very important aspect of
their existence. This study will also examine level of patronage in order to
evaluate consumer patronage and how it affects the life of cooperative stores.
1.3 OBJECTIVE OF THE STUDY
The overall purpose of this study is to evaluate consumers’ patronage of
consumers’ cooperative stores in Enugu State.
The specific objectives are to:
1. examine the socio-economic profiles of the members of consumers
cooperative;
2. determine the socio-economic functions/activities of consumer
cooperative stores;
3. determine the nature and varieties of goods sold in consumer
cooperative stores;
4. examine the level of patronage of consumer cooperative stores
and the perception of the members regarding patronage of
consumer stores;
5. determine socio-economic and market factors affecting patronage of
the consumer cooperative stores;
12
6. examine the problems that the consumer cooperative stores face;
7. and make appropriate recommendations based on the findings.
1.4 RESEARCH QUESTIONS
1. What are the socio-economic profiles of the members of consumer
stores?
2. What type of socio-economic activities do cooperative stores engage
in?
3. What types of goods are sold in cooperatives stores?
4. What are the factors that affect the patronage of the consumers?
5. What are the perceptions of the members of consumer stores toward
patronage of consumer stores?
6. Are there any problems encountered by the consumer stores?
7. What can be done to improve the patronage of the consumers?
1.5 STATEMENT OF RESEARCH HYPOTHESES
The following hypotheses have been formulated to guide the study.
Ho – Socio-economic profile of consumers including age, sex, marital
status, income levels and education have no influence on the
patronage of consumer cooperative stores.
H1 – Socio-economic profiles of consumers including age, sex, marital
status, income levels and education have influence on the
patronage of consumer cooperative stores.
13
Ho – Market variables such as price, quality, accessibility, availability of
goods, services rendered and level of awareness has no influence on
the patronage of consumer cooperative stores.
H1 – Market variables such as price, quality, accessibility, availability of
goods, services rendered and level of awareness has influence on
patronage of consumer cooperative stores.
1.6 SIGNIFICANCE OF THE STUDY
The Ministry of Commerce and Cooperative, consumer cooperative
societies, owners/members of consumer cooperative societies and scholars of
cooperative department or college will find the study relevant. Information on
consumers’ patronage of consumer cooperative stores can guide in the
management and operations of consumers cooperative.
The study will help to assess how consumer cooperative societies have
helped in promoting the socio-economic well being of the members as well as
the owners. As a cooperative society and also as a retail outlet, there is need to
evaluate and assess the level of patronage of consumer cooperative stores to
know the level of patronage which is the live wire of the cooperative
sustainability and continuity.
14
The findings of the study will also help to promote the economic
activities of the consumer stores and enable them to survive the competitive
market environment.
Such findings will also benefit the owners of consumer cooperatives in
terms of enhancing the operations and management of the consumer
cooperative stores. More so, the result will enable them to promote consumer
cooperatives more than other retail outlets.
The study will help in laying a groundwork/foundation for more models
which seek to describe and explain consumer patronage (buying behavior) as a
major perspective in market analysis.
As a step forward, all those interested in the study will have a stand to
identify other relevant issues not covered and add to existing knowledge on this
topic.
Finally, this study will add to the literature on this topic and related topics
for further studies.
1.7 LIMITATIONS OF THE STUDY
The problems encountered in the course of this project are:
15
First, there was problem of identifying functional Consumer Cooperative Stores
due to the fact that majority of such Cooperative Societies have wound up.
Secondly, there was problem of inadequate information with regard to the topic
of study. Thirdly, the researcher encountered financial difficulty in travelling to
these areas to source information and administer questionnaire. Lastly, there
was the problem of time constraint.
DEFINITION OF TERMS
Cooperative – The International Cooperative Alliance has defined
cooperative as ‘an autonomous association of persons
united voluntarily to meet their common economic,
social and cultural needs and aspirations through a
jointly owned and democratically controlled
enterprise’.
Consumer Cooperative – A consumer cooperative store is a voluntary
store Organization of consumers organized to obtain their
requirements of consumer goods and services on the
terms of greatest advantages to them
Consumer Market – A consumer market is a market that
consists of individuals and households
16
who buy for the purpose of personal domestic
consumption
Patronage refund – This is also called patronage rebate. This is
dividend works out from substantial sum of
money, depending on the amount of
purchases made by the member.
1.8 SCOPE OF THE STUDY
The scope of this study covers three selected Consumer Cooperative
Societies in three Local Government Areas of Enugu State namely, Enugu
North, Oji River and Nsukka.
The Consumer Cooperative Societies selected are Project Development
Institute Consumer Cooperative Society Enugu, Federal Cooperative College
Consumer Cooperative Society Oji, University of Nigeria Nsukka Staff
Consumer Cooperative and Nigeria Union of Teachers Staff Consumer
Cooperative Society
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