1.1 INTRODUCTION TO THE COMPANY( PEPSICO) PepsiCo Inc. is an American multinational food and beverage corporation headquartered in Purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which include an acquisition of Tropicana in 1998 and a merger with Quaker Oats in 2001—which added the Gatorade brand to its portfolio. As of January 2012, 22 of PepsiCo's product lines generated retail sales of more than $1 billion each, and the company's products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food & beverage business in the world. Within North America, PepsiCo is ranked (by net revenue) as the largest food and beverage business. Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and the company employed approximately 297,000 people worldwide as of 2011. The company's beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in certain regions. PepsiCo is a SIC 2080 (beverage) company.
COMPANY PROFILE
Type
: Public (NYSE: PEP)
Founded
: Chicago, Illinois, U.S. (1965)
Headquarters
: Purchase, New York, U.S.
Area served
: Worldwide
Key people
: Indra Krishnamurthy Nooyi(Chairwoman, President & CEO )
Industry
: Food Non-alcoholic beverage
History The recipe for Pepsi (the soft drink), was first developed in the 1880s by a pharmacist and industrialist from New Bern, North Carolina, named Caleb Bradham – who called it "PepsiCola" in 1898. As the cola developed in popularity, he created the Pepsi-Cola Company in 1902 and registered a patent for his recipe in 1903.The Pepsi-Cola Company was first incorporated in the state of Delaware in 1919.The company went bankrupt in 1931 and on June 8 of that year the trademark and syrup recipe was bought by Charles Guth who owned a syrup manufacturing business in Baltimore, Maryland. Guth was also the president of Loft, Incorporated, a leading candy manufacturer and used the company's labs and chemists to reformulate the syrup. He further contracted to stock the soda in Loft's large chain of candy shops and restaurants, which were known for their soda fountains, used Loft resources to promote Pepsi, and moved the soda company to a location close by Loft's own facilities in New York City. In 1935 the shareholders of Loft sued Guth for his 91% stake of PepsiCo in the landmark Guth v. Loft Inc.. Loft won the suit and on May 29, 1941 formally absorbed Pepsi into Loft, which was then rebranded as Pepsi Cola Company that same year. (Loft restaurants and candy stores were spun off at this time.) In the early 1960s the company product line expanded with the creation of Diet Pepsi and purchase of Mountain Dew.
In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the company it is known as at present. At the time of its foundation, PepsiCo was incorporated in the state of Delaware and headquartered in Manhattan, New York. The company's headquarters were relocated to its still-current location of Purchase, New York in 1970,and in 1986 PepsiCo was reincorporated in the state of North Carolina. PepsiCo was the first company to stamp expiration dates, starting in March 1994.
Acquisitions and divestments Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of businesses outside of its core focus of packaged food and beverage brands; however it exited these non-core business lines largely in 1997, selling some, and spinning off others into a new company named Tricon Global Restaurants, which later became known as Yum! Brands, Inc.PepsiCo also previously owned several other brands that it later sold so it could focus on its primary snack
food and beverage lines, according to investment analysts reporting on the divestments in 1997. Brands formerly owned by PepsiCo include: Pizza Hut, Taco Bell,KFC,,Hot 'n Now, East Side
Mario's, D'Angelo
Sandwich
Shops,Chevys
Fresh
Mex, California
Pizza
Kitchen,Stolichnaya (via licensed agreement), Wilson Sporting Goods and North American Van Lines. The divestments concluding in 1997 were followed by multiple large-scale acquisitions, as PepsiCo began to extend its operations beyond soft drinks and snack foods into other lines of foods and beverages. PepsiCo purchased theorange juice company Tropicana Products in 1998, and merged with Quaker Oats Company in 2001, adding with it the Gatorade sports drink line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima, among others. In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of its products in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this acquisition was completed, resulting in the formation of a newwholly owned subsidiary of PepsiCo, Pepsi Beverages Company. In February 2011, the company made its largest international acquisition by purchasing a two-thirds (majority) stake in Wimm-Bill-Dann Foods, a Russian food company that produces milk, yogurt, fruit juices, and dairy products. When it acquired the remaining 23% stake of Wimm-Bill-Dann Foods in October 2011, PepsiCo became the largest food and beverage company in Russia.
Competition The Coca-Cola Company has historically been considered PepsiCo's primary competitor in the beverage market and in December 2005, PepsiCo surpassed The Coca-Cola Company in market value for the first time in 112 years since both companies began to compete. In 2009, the CocaCola Company held a higher market share in carbonated soft drink sales within the U.S. In the same year, PepsiCo maintained a higher share of the U.S. refreshment beverage market, however, reflecting the differences in product lines between the two companies. As a result of mergers, acquisitions and partnerships pursued by PepsiCo in the 1990s and 2000s, its business has shifted to include a broader product base, including foods, snacks and beverages. The majority of PepsiCo's revenues no longer come from the production and sale of carbonated soft drinks.Beverages accounted for less than 50 percent of its total revenue in 2009. In the same
year, slightly more than 60 percent of PepsiCo's beverage sales came from its primary noncarbonated brands, namely Gatorade and Tropicana. PepsiCo's Frito-Lay and Quaker Oats brands hold a significant share of the U.S. snack food market, accounting for approximately 39 percent of U.S. snack food sales in 2009. One of PepsiCo's primary competitors in the snack food market overall is Kraft Foods, which in the same year held 11 percent of the U.S. snack market share.
PRODUCTS AND BRAND PepsiCo’s product mix as of 2009 (based on worldwide net revenue) consists of 63 percent foods, and 37 percent beverages. On a worldwide basis, the company’s current products lines include several hundred brands that in 2009 were estimated to have generated approximately $108 billion in cumulative annual retail sales. The primary identifier of companies' main brands within the food and beverage industry are those which generate annual sales exceeding $1 billion, and 19 of PepsiCo's brands met this description as of 2009: Pepsi-Cola, Mountain Dew, Lay's, Gatorade, Tropicana, 7Up, Doritos, Lipton Teas, Quaker Foods, Cheetos, Mirinda, Ruffles, Aquafina, Pepsi Max, Tostitos, Sierra Mist, Fritos, and Walker's.
PACKAGING AND RECYCLING Environmental advocates have raised concern over the environmental impacts surrounding the disposal of PepsiCo’s bottled beverage products in particular, as bottle recycling rates for the company’s products in 2009 averaged 34 percent within the U.S. The company has employed efforts to minimize these environmental impacts via packaging developments combined with recycling initiatives. In 2010, PepsiCo announced a goal to create partnerships that prompt an increase the beverage container recycling rate in the U.S. to 50 percent by 2018. One strategy enacted to reach this goal has been the placement of interactive recycling kiosks called “Dream Machines” in supermarkets, convenience stores and gas stations, with the intent of increasing access to recycling receptacles. The use of resin to manufacture its plastic bottles
has resulted in reduced packaging weight, which in turn reduces the volume of fossil fuels required to transport certain PepsiCo products. The weight of Aquafina bottles was reduced nearly 40 percent, to 15 grams, with a packaging redesign in 2009. Also in that year, PepsiCo brand Naked Juice began production and distribution of the first 100 percent post-consumer recycled plastic bottle.
Headquarters The PepsiCo headquarters are located in Purchase, New York. It was one of the last architectural works by Edward Durell Stone. It consists of seven three story buildings. Each building is connected to its neighbor through a corner. The property includes the Donald M. Kendall Sculpture Gardens with 45 contemporary sculptures open to the public. Works include those ofAlexander Calder, Henry Moore, and Auguste Rodin. Westchester Magazine stated "The buildings’ square blocks rise from the ground into low, inverted ziggurats, with each of the three floors having strips of dark windows; patterned pre-cast concrete panels add texture to the exterior surfaces." In 2010 the magazine ranked the building as one of the ten most beautiful buildings in Westchester County. At one time PepsiCo had its headquarters in 500 Park Avenue in Midtown Manhattan, New York City.[ In 1956 Pepsico paid $2 million for the original building. PepsiCo built the new 500 Park Avenue in 1960 In 1966, Mayor of New York City John Lindsay started a private campaign to convince PepsiCo to remain in New York City. Six months later, the company announced that it was moving to 112 acres (45 ha) of the Blind Brook Polo Club in Westchester County. After PepsiCo left the Manhattan building, it became known as the Olivetti Building.
PEPSICO IN INDIA PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab governmentowned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994. Others claim that firstly Pepsi was banned from import in India, in 1970, for having refused to release the list of its ingredients and in 1993, the ban was lifted, with Pepsi arriving on the market shortly afterwards. These controversies are a reminder of "India's sometimes acrimonious relationship with huge multinational companies." Indeed, some argue that PepsiCo and The Coca- Cola Company have "been major targets in part because they are well-known foreign companies that draw plenty of attention." PepsiCo has grown to become one of the country’s leading food and beverage companies. One of the largest multinational investors in the country, PepsiCo has established a business which aims to serve the long term dynamic needs of consumers in India. PepsiCo India and its partners have invested more than U.S. $1 billion since the company was established in the country. PepsiCo provides direct and indirect employment to 297,000 people including suppliers and distributors. PepsiCo India Holdings Pvt. Ltd. operates through its subsidiaries including Pepsi Foods Ltd, Frito Lay India, and Tropicana Beverages Company. The company, through its subsidiaries manufactures, bottles, and exports fruit juices and carbonated beverages and packaged snacks such as Lays, Ruffles, Fritos, and Cheetos. PepsiCo India is based in Gurgaon, India. PepsiCo nourishes consumers with a range of products from treats to healthy eats that deliver joy as well as nutrition and always, good taste. PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks - Gatorade, Tropicana100% fruit juices, and juice based drinks ± Tropicana Nectars, Tropicana Twister, Slice, and the new brand Nimbooz by 7up with real lemon juice. Local brands Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range of brands.
Mission and Vision Mission Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors even as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity. Vision PepsiCo's responsibility is to continually improve all aspects of the world in which we operate – environmental, social, economic – creating a better tomorrow than today.Our vision is put into action through programmes and a focus on environmental stewardship, activities to benefit society and a commitment to build shareholder value by making PepsiCo a truly sustainable company. Performance with Purpose At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society – delivering what we call Performance with Purpose.Our approach to superior financial performance is straightforward – drive shareholder value. By addressing social and environmental issues, we also deliver on our purpose agenda, which consists of human, environmental, and talent sustainability.
1.2 INTRODUCTION TO PORJECT ( STUDY ON DISTRIBUTION CHANNEL OF PEPSICO WITH SPECIAL REFERNCE :-LAL JI & SONS) My field of study will look into upon the following aspects of distribution and selling strategy and market-research. The main purpose of trade is to supply goods to the consumers living in far off places. As goods and services move from producer to consumer they may have to pass through various individuals. The middlemen are connecting links between producers of goods and consumers. They perform several functions such as buying, selling, storage, etc. The middlemen constitute the channels of distribution of goods. Thus, a channel of distribution is the route or path along which goods move from producers to ultimate consumers. Distribution Channel is the chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. A distribution channel can include wholesalers, retailers, distributors and even the internet. Channels are broken into direct and indirect forms, with a "direct" channel allowing the consumer to buy the good from the manufacturer and an "indirect" channel allowing the consumer to buy the good from a wholesaler. Direct channels are considered "shorter" than "indirect" ones. The Distribution Channel Distribution is also a very important component of Logistics & Supply chain management. Distribution in supply chain management refers to the distribution of a good from one business to another. It can be factory to supplier, supplier to retailer, or retailer to end customer. It is defined as a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.
Channels A number of alternate 'channels' of distribution may be available: Distributor, who sells to retailers, Retailer (also called dealer or reseller), who sells to end customers Advertisement typically used for consumption goods Distribution channels may not be restricted to physical products alice from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. process of transfer the products or services from Producer to Customer or end user. There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas. The main purpose of trade is to supply goods to the consumers living in far off places. As goods and services move from producer to consumer they may have to pass through various individuals. The middlemen are connecting links between producers of goods and consumers. They perform several functions such as buying, selling, storage, etc. The middlemen constitute the channels of distribution of goods. Thus, a channel of distribution is the route or path along which goods move from producers to ultimate consumers. The route taken by goods as they move from producer to consumer is known as Channel of Distribution. From the above diagram it can be found that there is just one direct channel i.e. from producer to the consumer.
There are many indirect channels like: (1) PRODUCER
DISTRIBUTOR
(2) PRODUCER
CONSUMER
(3) PRODUCER
DISTRIBUTOR
(1) PRODUCER
DISTRIBUTOR
CONSUMER
RETAILER
CONSUMER
CONSUMER STOCKIST
RETAILER
The route normally used by FMCG companies especially by the soft drink companies is the second one i.e. (ii). In this case the wholesaler is usually called distributor. If the producer is producing goods on a large scale, it may not be possible for him to sell goods directly to consumers. As such, he sells goods through middlemen. These middlemen may be wholesalers or retailer s. A wholesaler is a person who buys goods in large quantities from producers; where as a retailer is one who buys goods from wholesalers and producers and sells to ultimate consumer s as per their requirement. The involvement of various middlemen in the process of distribution constitute the indirect channel of distribution. Let us look into some of the important indirect channels of distribution.
DISTRIBUTOR Distributors are one of the important middlemen in the channel of distribution who deals with the goods in bulk quantity. They buy goods in bulk from the producers and sell them in relatively smaller quantities to the retailers. In some cases they also sell goods directly to the consumers if the quantity to be purchased is more. They usually deal with a limited variety of items and also in a specific line of product, like iron and steel, textiles, paper, electrical appliances, etc. Let us know about the characteristics of distributors.
CHARACTERISTICS OF DISTRIBUTOR The followings are the characteristics of distributors: I.
Distributors buy goods directly from producers or manufacturers.
II.
Distributors buy goods in large quantities and sells in relatively smaller quantities.
III.
They sell different varieties of a particular line of product. For example, a distributor who deals with Lays, lehar, quaker, Tropicana and soft drinks of different variety etc.
IV.
They may employ a number of agents or workers for distribution of products.
V.
Distributors need large amount of capital to be invested in his business.
VI.
They generally provide credit facility to retailers.
VII.
He
also
provides
financial
assistance
to
the
producers
or
manufacturers.
FUNCTIONS OF DISTRIBUTORS Let us now know what the functions of distributors are. (a) Collection of goods: A distributor collects goods from manufacturers or producers in large quantities. (b) Storage of goods:
A distributor collects the goods and stores them safely in
warehouses, till they are sold out. Perishable goods like fruits, vegetables, etc. are stored in cold storage. (c) Distribution: A distributor sells goods to different retailers. In this way, he also performs the function of distribution. (d) Financing: The distributor provides financial support to producers and manufacturers by sending money in advance to them. He also sells goods to the retailer on credit. Thus, at both ends
the distributor acts as a financier. (e) Risk taking: The distributor buys finished goods from the producer and keeps them in the warehouses till they are sold. Therefore, he assumes the risks arising out of changes in demand, rise in pr ice, spoilage or destruction of goods.
MARKETING OVERVIEW OF PEPSICO INDIA Marketing Environment: Marketing environment is the overall environment in which a Company operates. This consists of the Task Environment and the Broad Environment. Task Environment Task Environment includes the immediate players involved in producing, distributing and promoting the offering. The main players are the company, suppliers, distributors, dealers and the target customers. Suppliers include the material and service suppliers such as marketing research agencies, advertising agencies, banking and insurance companies, transportation companies, and telecommunications companies. The dealers and distributors include agents, brokers, manufacturer representatives and others who facilitate finding and selling to customers. The suppliers for PepsiCo India include the bottle suppliers for the soft drinks. These include the Pet bottles and the Glass bottles. One of the most vital products required in the operation is Refrigerator. PepsiCo does not manufacture the refrigerators; instead they are supplied by different vendors who get time bound contracts from the company. The distributors and dealers are part of the sales and distribution network. This will be explained later under the section of ‘Place’, in the 4 P’s segment.The target customer for PepsiCo is primarily the youth. But, because of increasing competition from Coke PepsiCo has expanded its target customer base which now includes people who are prospects for beverages beyond the CSD category. PepsiCo has started targeting this segment by offering products in the Non- CSD category, these include fruit based non-carbonated drinks, juice based drinks, energy drinks, sports drinks, snack food (from the snack food division i.e. ‘Frito Lay’).
Broad Environment: This contains forces that can have a major impact on the players in the task environment. This includes six components: demographic environment, economic environment, physical environment, technological environment, political – legal environment, and socio – cultural environment. Companies need to pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies in order survive and succeed in the market. This will be explained in detail in the strategic marketing segment. Value Delivery Process: The value delivery process consists of the value creation and delivery sequence. This is done in three phases. The first phase, choosing the value, represents the homework done by the marketing department before the product exists. Marketing is required to segment the market, select the appropriate the target market, and develop the offering’s value proposition. This is known as Segmentation, Targeting and Positioning and is the essence of strategic marketing. Once the business unit has chosen the value, the second phase is providing the value. Marketers need to determine specific product features, prices and distribution. The task in the third phase is communicating the value by utilizing
the
sales
force,
sales
promotion,
advertising,
and
other
communication tools to announce and promote the product. Each of these value phases has different cost implications.
SALES AND DISTRIBUTION NETWORK OF PEPSICO INDIA COMPANY
COBO
FOBO
WAREHOUSE
C&F
DISTRIBUTOR
SALESMEN
SALESMEN
SLUMS
WHOLESALER
RETAILER
CUSTOMER
RETAILER
CUSTOMER
Initially the focus of the Company remains on reaching all the markets and then the Company shifts its focus on increasing the frequency of sales in the respective markets so that the sales and profitability of the Company can be increased. Company (PepsiCo): PepsiCo India provides the salt to all the bottling plants in the Country that carry out the bottling operations. COBO: These are Company owned bottling operations operating directly under the Company. Out of 32 bottling plants, PepsiCo owns 15. FOBO: These are Franchise owned bottling operations. R K Jaipuria group does all the franchisee-bottling operations for PepsiCo India; currently R K J Group has 17 bottling plants for Pepsi. Warehouses: These are Company or franchisee owned warehouses spread over various locations that cover the respective territories and come under the purview of their respective Area or Territory Offices. Stocks are sent from the bottling plants to these warehouses, from where they are sent to the C & F centers and Distributor Points. C & F Centers: These are the biggest centers in the distribution network and receive proper assistance from the Company (either COBO or FOBO). The C & F center is owned by a private player and not by the Company. The vehicles (Delivery Vans) are owned by the Company, and the Salesmen at the C & F points are on the Company Payroll. Distributors: These are small, compared to C & F centers. Everything at the Distributor point owned and managed by the distributor, even the salespersons are on the Distributors payroll. Wholesalers: These are smaller than C & F centers and Distributor points and get the stock directly from the Company or Franchisee. They get their stock directly from the Company and thus get special rates and extra discounts from the Company.
Slums: They are generally smaller than the Wholesalers are. However, they get special discounts from the C & F centers and Distributor points. All the different players in the distribution channel namely C & F centers, Distributor points, Wholesalers and Slums have different designated markets and are not supposed to operate in the market designated to any other player. Retailer: Retailers are the most important chain in the distribution channel of Pepsi as they are the only point of contact with the customers. Retailers get their stock from all the other channel members in the distribution channel.
SALES AND MARKETING HIERARCHY OF PEPSICO INDIA
MUM
UM
UM
TDM
MDM
ADC
MDC
CE
ME
SALESPERSONS
MARKETING ASSISTANTS
MUM – Marketing Unit Manager: In charge of specific zones (e.g. north, south, east, west) and report to the corporate office. UM - Unit Manager: In charge of day to day operations and supervision of all the functions within the organizations including operations, logistics, sales and distribution, marketing. The Unit Manager reports to the MUM.
TDM - Territory Development Manager:TDM is the in charge of the sales and distribution network of a particular territory within a zone. Responsible for the daily, monthly and annual
sales within the territory decides the daily schemes for products and incentives for salespersons. He is also responsible for cost effectiveness, profit generation and profit maximization within the territory.
MDM - Marketing Development Manager: MDM is responsible for all the marketing activities and their effectiveness within a territory. Decides the format and time frame of the marketing and promotional activities and the incentives given to the retailers.
ADC - Area Development Coordinator: Reports to the TDM, and is in charge of a C & F center and the distributor point in the area. He is directly responsible for any issues in the area and is supposed to ensure the smooth functioning of the entire sales and distribution network in the area. ADC is responsible for timely disposal of any issue faced by the retailers. He decides and approves the boards, displays and hoardings in the area. MDC - Marketing Development Coordinator: Reports to MDM, and is in charge of carrying out all the marketing activities in the area. He is responsible for the execution and success of marketing and promotional activities. Coordinates with the outside agencies for displays, boards, checks conducted in the market. He is also responsible to keep a check on the expenditure of the marketing activities in the market.
CE - Customer Executive: Reports to the ADC and is in charge of the salespersons. He is required to visit the market and accompany every salesperson as frequently as possible. He is the first person to get information about the market / area and is the first contact if the salespersons or retailers face issue. Responsible for assigning and achieving daily sales target given to the salespersons.
ME - Marketing Executive: Reports to the MDC and is responsible for the daily functioning of the marketing activities in the including awareness of promotions in the market and the response in the market
Salesperson: They are the most important asset for the company as they are the ones who sell the products, are responsible for acquiring new customers, and retain the old ones. Their work also includes informing the retailers about the promotions and any new scheme launched. They are also required to push for the sale of any new product launched in the market and make sure that the retailers are following the company guidelines regarding the launch and the maintenance of Vicioolers. They report to the CE.
Marketing Assistant: Reports to the ME and is responsible for the distribution and usage of the displays and boards in the area. Also has to check whether retailers are following the guidelines of the company regarding promotional displays, other displays and displays in the Vigicoolers. They report to the ME. Pepsi is one of the most well known brands in the world today available in over 160 countries. The company has an extremely positive outlook for India. "Outside North America two of our largest and fastest growing businesses are in India and China, which include more than a third of the world’s population." (PepsiCo’s annual report, 1999) This reflects that India holds a central position in Pepsi’s corporate strategy. India is a key market for Pepsico, and at the same time the company has added value to Indian agriculture and industry. PepsiCo entered India in 1989 and is concentrating in three focus areas – Soft drink concentrate, snack foods and vegetable and food processing. Faced with the existing policy framework at the time, the company entered the Indian market through a joint venture with Voltas and Punjab Agro Industries. With the introduction of the liberalisation policies since 1991, Pepsi took complete control of its operations. The government
has approved more than US$ 400 million worth of investments of which over US$ 330 million have already flown in. One of PepsiCo’s key strategies was to develop a completely local management team. Pepsi has 15 company owned factories while their Indian bottling partners own 28. The company has set up 8 greenfield sites in backward regions of different states. PepsiCo intends to expand its operations and is planning an investment of approximately US$ 500 million in the next three years.
Sustainable Competitive Advantage: Competitive advantage is a company’s ability to perform in one or more ways that its competitors cannot or will not match. When a company is able to maintain that advantage a long period of time that gives it an edge over its competitors then, this advantage is termed as sustainable competitive advantage. Any competitive advantage must be seen by customers as a customer advantage. Then only that competitive advantage can be transformed into a sustainable competitive advantage. Three major competitive advantages give PepsiCo India a competitive edge in the market place. They are:
•
Big Muscular Brands built through better market positioning and heavy investment in advertising and promotions;
•
Proven ability to innovate and create differentiated products through superior operating base;
•
Powerful go to market system built with the help of superior relationship base and an impeccable sales and distribution network.
Making it all work are the extraordinarily talented and dedicated people who are an integral part of PepsiCo India.
Communicating with the Customer: Marketing Communication is the means by which firms attempt to inform, pursued and remind consumers directly and indirectly about the products and brands they sell. Marketing Communication is the central instrument of making brand equity. Marketing Communication consists of six major modes of communications called the marketing communication mix. •
Advertising.
•
Sales promotion.
•
Events and Experiences.
•
Public Relations and Publicity.
•
Direct Marketing.
•
Personal Selling.
Although PepsiCo uses all the modes in some form or the other, but this study will examine various aspects of communication with the internal customers
DISTRIBUTION CHANNEL OF PEPSICO PRODUCTS FOR LAL JI & SONS MANUFACTURER (CHANNO VILLAGE)
DEPOT (Phaguwala)
DISTRIBUTORS (JALANDHAR,LUDHIANA, PHAGWARA)
RETAILERS
CONSUMERS
Note: “DEPOT” at Phaguwala, they directly get their stock from the PepsiCO channo plant
Strategies for Lal ji & Sons Criteria for selecting the distributors: The company looks at the prospects before permitting/Authorizing for distributor. Therefore the criteria’s are as follows, He should have a godown Vehicles
Manpower Deposit for cases/crates at the rate of 200 each Liquid value
Distributors in JALANDHAR 1.
LAL JI & SONS
2.
SHAGUN
3.
GURU KIRPA
Number of units possessed by distributors In season - 14 units In off-season – 6 units * Units refers to the vehicles possessed by the distributors for local logistics
Factors influencing the assignment of areas to distributors salesman 1. An average number of outlets the salesman effectively works on. A salesman can handle 60 outlets on an average effectively in a day 2. Depending on the frequency of a particular route. The distributors follow three types of frequencies they are: a) Daily b) Alternative days c) Once a week Note: Once in a week is only followed for the up country areas
Working of distributors The distributor first has to maintain the following •
The Brand pack separately after unloading the vehicle i.e. the brand order in the following sequence - lays - Tropicana - Juice - Water
•
5 days stock to meet the demand.
The company gives target to the distributors and these distributors with help of sales executives break the target into 1. Daily 2. Weekly 3. Brand wise 4. Sales wise Here the distributor focuses on weaker brands and tries to push maximum number of these weaker units into the mixed cases ordered by the retailers. The distributor have to maintain a four (4) day stock with them which will become the reorder level once when the order is placed at the Phaguwala depot the stock comes up the next day but an important point to note here is unless and until the empty bottles reach the depot the new stock will not reach the distributor.
Distributors route Planning : Distributors identify two routes they are: •
Potential route
•
Non Potential route
Note: For Potential the vehicle goes daily and for non potentials it goes once in a week The potential routes are those routes in which the distributor gets maximum business as the number of outlets will be more and therefore the vehicle goes daily to meet the market demand. Ex: If a distributor has 400 outlets in his area he has to plan accordingly as per his route where in he has to visit 60 outlets per route.
OPERATIONAL PLANS FOR THE YEAR Distributors have two plans a year 1. First plan from January 1st to June 15th 2. Second Plan from June 15th to December 31st FIRST PLAN: This plan is considered as yielding season where maximum business will be earned. The 70% of the target needs to be achieved during this season SECOND PLAN: Here in this plan there will be minimum business and during this season there will be lot of promotional activities undertaken.
The role of distributor in market: The distributors’ salesman is trained properly with respect to his behaviour with the retailers. As soon as the vehicle goes to the outlet it is the duty of the sales person to 1. Greet the retailer and have a look at the cooler/refrigerator and Rack. 2. He has to suggest the retailer about the stock needed. 3. Convince him for purchase. 4. Place the products in the cooler/rack as per brand order. 5. Look at the warm displays. 6. Follow up and handle complaints.
Support from the company to the distributor The company supports the distributors in terms of incentives during the off season i.e. during the second plan in order to retain the distributor. Distribution (Place) Strategies ● Product availability where and when customers want them. ● Involves all activities from raw materials to finished products Basic Channels of Distribution.
Distribution Objective
Minimize total distribution costs for a given service output Determine the target segments and the best channels for each segment Objectives may vary with product characteristics e.g. perishables, bulky products, non-standard items, products requiring installation & maintenance.
