Study of Distribution Channel Strategy of the Pepsico

“STUDY OF DISTRIBUTION CHANNEL STRATEGY OF PEPSICO FOR THE POSITIONING OF THE PRODUCT”

A DISSERTATION REPORT SUBMITTED TOWARDS PARTIAL FULFILMENT OF POST GRADUATE OF DIPLOMA IN MANAGEMENT

ACADEMIC SESSION (2008-2010)

INSTITUTE OF TECHNOLOGY AND SCIENCE GHAZIABAD (U.P.) SUBMITTEDTO: Dr. GOVIND PRASAD Asst. professor of ITS Ghaziabad.

SUBMITTED BY:NIKHILESH Kr SINGH PGDM 4th Semester ITS Ghaziabad.

DECLARATION

I hereby declare that the project entitled “STUDY OF DISTRIBUTION CHANNEL STRATEGY OF THE PEPSICO FOR THE POSITIONING OF THE PRODUCT” was done by me under the guidance of Mr. Govind Prasad, Asst. Professor, Institute of Technology& Sciences, in partial fulfillment of the requirement for the award of the degree of Post Graduate Diploma in Management. I assure that the work is original and has not been submitted earlier to this Institute or to any other institution.

NIKHILESH Kr. SINGH PGDM STUDENT 4rth Semester ITS GHAZIABAD Date: Place:

ACKNOWLEDGEMENT There is always a sense of gratitude one expresses to others for the helpful and needy service they render during all phases of life. I have completed this Project with the help of different personalities. I wish to express my gratitude towards all of them. I would also like to thank my mentor Asst. Prof. Dr. Govind Prasad for steering my confidence and capability for giving me insight into my project by giving me exposure to the arena of competitive and real world. Lastly I would like to thank my parents and friends for their constant support during the duration of my Dissertation. I am highly indebted to Prof Parul Malik (Chairperson, ITS Ghaziabad) for providing me an opportunity to work for the dissertation on wonderful topic “STUDY OF DISTRIBUTION CHANNEL STRATEGY OF PEPSICO FOR THE POSITIONING OF THE PRODUCT” I also thank Dr. Manoj Kumar Dash (Faculty guide), ITS Ghaziabad who has supported and guided me for the data collection, compilation and interpretation, with the valuable insights into the completion of this project. Last but not the least my heartfelt love for my parents, whose constant support and blessings helped me throughout this project.

Table of Content Research Title

1

Declaration

2

Acknowledgement

3

Literature Review

1-2

Objective Summary about the company

3 4-20

Marketing overview of PepsiCo in India

21-31

Sales and Distribution network of PepsiCo

31-34

Sales and Marketing Hierarchy of PepsiCo

35-40

Five forces effecting the environment

41-43

Research Methodology

44-63

Limitation SWOT Analysis

64 65-67

Observations

68

Findings

69

Recommendations

70-71

Conclusion

72

Bibliography

73

Questionnaire

74-75

LITERATURE REVIEW

PepsiCo is one of the oldest, largest and most successful beverage and snack food companies in the world. PepsiCo was founded by Caleb Bradham in 1902 in USA. Today PepsiCo and its affiliates operate in more than 140 countries in the world and generate revenues in excess of $ 40 Billion. In its pursuit of never ending growth and expansion, PepsiCo entered India in 1989 in a joint venture with Punjab Government. However, PepsiCo India very soon started its beverage operations in collaboration with the R K Jaipuria group. Soon after entering the beverage segment PepsiCo Established its dominance in the market owing to its expertise in sales, marketing, operations and local collaboration. PepsiCo maintained its market dominance for many more years to come. However, this advantage slipped and PepsiCo had to concede the market leadership to Coca Cola India. Several actors were responsible for this development. But, the most important are; Distribution channel is having an important role in positioning of the product because we know that distribution channel is tool by which we can make reach our product to the final consumers Discontinuation of slums in the distribution network by PepsiCo. This move by PepsiCo adversely affected its position of a market leader because while PepsiCo discontinued the use of Slums in its distribution network, Coke continued it and within one year, it was able to snatch considerable market share from PepsiCo. Acquisition of well-established and favored brands like Thumps Up and Limca by Coca Cola India. These two brands still constitute a bulk of sales for Coca Cola India.

To explore the reasons behind these developments this study will analyze the marketing initiatives and policies of PepsiCo India in detail with particular focus on its partner relationship management. The above-mentioned objectives can be achieved by carrying a proper and planned research involving different types and methods. The data collected for laid the foundations for the study and gave a platform for the analysis and findings which lead to the fulfillment of the objectives. The data collected for research is primary and secondary. Primary data is collected by observation, interviews and questionnaires. The data collection and analysis paves way for the recommendation ad conclusion of the study that reveals some important findings regarding the strategy and corporate structure and strategy of PepsiCo India.

OBJECTIVE OF PROJECT

 TO know distribution channel Strategy of PepsiCo.  To know the importance of Distribution channel strategy in Positioning of the product. Sub Objective:  TO know the PepsiCo planning towards the distribution channel strategy.  How strong relationship PepsiCo has with the distributors and retailers.  Perception of consumer towards the PepsiCo product.  Perception of retailers towards the distribution channel of the PepsiCo.

Summary about the company

Type Founded Headquarters Area served Key people Industry Products

Nimbooz Revenue Operating income Net income Total assets Total equity Employees Divisions Website

: Public (NYSE: PEP) : Chicago, Illinois, U.S. (1965) : Purchase, New York, U.S. : Worldwide : Indra Krishnamurthy Nooyi (Chairwoman), (President) & (CEO) : Food Non-alcoholic beverage :Pepsi Diet Pepsi Mountain Dew Sierra Mist StarbucksFrappuccino LiptIcedTea 7up Izze Tropicana Products Copella Naked Juice Gatorade PropelFitnessWater Quaker Oats Lay's Doritos Cheetos Fritos RoldGold Ruffles Tostitos Slice : ▲ USD 43.251 Billion (2008) : ▲ USD 6.935 Billion (2008) : ▲ USD 5.142 Billion (2008) : ▲ USD 35.994 Billion (2008) : ▲ USD 12.106 Billion (2008) : 185,000 (2008) : PepsiCo Americas (PepsiCo Americas Food, PepsiCo Americas Beverages), PepsiCo International : PepsiCo.com

History of the company It was first introduced in North Carolina in 1898 by Caleb Braham who made a pharmacy which sold the drink which was known back then as "Brad's Drink", and was later named Pepsi Cola possibly due the digestive enzyme pepsin and kola nuts used in the recipe. Braham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. In 1903, Braham moved the bottling of Pepsi-Cola from his drugstore into a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. In 1929, automobile race pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads as "A bully drink...refreshing, invigorating, a fine bracer before a race". In 1931, the Pepsi-Cola Company went bankrupt during the Great Depression- in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went bankrupt again. Pepsi's assets were then purchased by Charles Guth; the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula. During the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was slashed to five cents, sales increased substantially. With a radio advertising campaign featuring the jingle "Pepsi cola hits the spot Twelve full ounces, that's a lot / Twice as much for a nickel, too Pepsi-Cola is the drink for you," arranged in such a way that the jingle never ends. Pepsi encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard of six ounces per bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at a time of economic crisis, the campaign succeeded in boosting Pepsi's status. In 1936 alone 500,000,000 bottles of Pepsi were consumed. From 1936 to 1938, Pepsi-Cola's profits doubled.

1940s advertisement specifically targeting African Americans.

Pepsi's success under Guth came while the Loft Candy business was faltering. Since he had initially used Loft's finances and facilities to establish the new Pepsi success, the near-bankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a loss for Guth.

PepsiCo in India PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab government-owned 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." In 2003, the Centre for Science and Environment (CSE), a non-governmental organization in New Delhi, said aerated waters produced by soft drinks manufacturers in India, including multinational giants PepsiCo and The Coca-Cola Company, contained toxins, including lindane, DDT, malathion and chlorpyrifos — pesticides that can contribute to cancer, a breakdown of the immune system and cause birth defects. Tested products included Coke, Pepsi, 7 Up, Mirinda, Fanta, Thums Up, Limca, and Sprite. CSE found that the Indian-produced Pepsi's soft drink products had 36 times the level of pesticide residues permitted under European Union regulations; Coca Cola's 30 times. CSE said it had tested the same products in the US and found no such residues. However, this was the European standard for water, not for other drinks. No law bans the presence of pesticides in drinks in India. The Coca-Cola Company and PepsiCo angrily denied allegations that their products manufactured in India contained toxin levels far above the norms permitted in the developed world. But an Indian parliamentary committee, in 2004, backed up CSE's findings and a government-appointed committee, is now trying to develop the world's first pesticides standards for soft drinks. Coke and PepsiCo opposed the move, arguing that lab tests aren't reliable enough to detect minute traces of pesticides in complex drinks. On December 7, 2004, India's Supreme Court ruled that both PepsiCo and competitor The Coca-Cola Company must label all cans and bottles of the respective soft drinks with a consumer warning after tests showed unacceptable levels of residual pesticides. Both companies continue to maintain that their products meet all international safety standards without yet implementing the Supreme Court ruling. As of 2005, The CocaCola Company and PepsiCo together hold 95% market share of soft-drink sales in India. PepsiCo has also been accused by the Puthussery panchayat in the Palakkad district in Kerala, India, of practicing "water piracy" due to its role in exploitation of ground water resources resulting in scarcity of drinking water for the panchayat's residents, who have been pressuring the government to close down the PepsiCo unit in the village. In 2006, the CSE again found that soda drinks, including both Pepsi and Coca-Cola, had high levels of pesticides in their drinks. Both PepsiCo and The Coca-Cola Company

maintain that their drinks are safe for consumption and have published newspaper advertisements that say pesticide levels in their products are less than those in other foods such as tea, fruit and dairy products. In the Indian state of Kerala, sale and production of Pepsi-Cola, along with other soft drinks, was banned by the state government in 2006, but this was reversed by the Kerala High Court merely a month later. Five other Indian states have announced partial bans on the drinks in schools, colleges and hospitals.

Marketing Strategy of Pepsi In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the majority of participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo took great advantage of the campaign with television commercials reporting the test results to the public. In 1976 Pepsi, RKO Bottlers in Toledo, Ohio hired the first female Pepsi salesperson, Denise Muck, to coincide with the United States bicentennial celebration.

Pepsi logo (1973-87). In 1987, the font was modified slightly to a more rounded version which was used until 1991.

In 1996, PepsiCo launched the highly successful Pepsi Stuff marketing strategy. By 2002, the strategy was cited by Promo Magazine as one of 16 "Ageless Wonders" that "helped redefine promotion marketing." In 2007, PepsiCo redesigned their cans for the fourteenth time, and for the first time, included more than thirty different backgrounds on each can, introducing a new background every three weeks. One of their background designs includes a string of repetitive numbers 73774. This is a numerical expression from a telephone keypad of the word "Pepsi."

Pepsi’s logo (2003-09. Currently using with Pepsi Wild Cherry and Pepsi ONE) In late 2008, Pepsi overhauled their entire brand, simultaneously introducing a new logo and a minimalist label design. The redesign was comparable to Coca-Cola's earlier simplification of their can and bottle designs. Due to the timing of the new logo release, some have criticised the logo change, as the new logo looked strikingly similar to the logo used for Barack Obama's successful presidential campaign, implicating a bias towards the President. Also in 4th quarter of 2008 Pepsi teamed up with Google/Youtube to produce the first daily entertainment show on Youtube. This daily show deals with pop culture, internet viral videos, and celebrity gossip. Poptub is refreshed daily from Pepsi. Since 2007, Pepsi, Lay's, and Gatorade have had a "Bring Home the Cup™," contest for Canada's biggest hockey fans. Hockey fans were asked to submit content (videos, pictures or essays) for a chance at winning a party in their hometown with The Stanley Cup and Mark Messier. In 2009, "Bring Home the Cup™," changed to "Team Up and Bring Home the Cup™." The new installment of the campaign asks for team involvement and an advocate to submit content on behalf of their team for the chance to have the Stanley Cup delivered to the team's hometown by Mark Messier. Pepsi has official sponsorship deals with three of the four major North American professional sports leagues: the National Football League, National Hockey League and Major League Baseball. Pepsi also sponsors Major League Soccer. Pepsi also has sponsership deals in international cricket teams. The Pakistan cricket team are just one of the teams that the brand sponsers. The team wears the Pepsi logo on the front of their test and ODI test match clothing.

Slogans of Pepsi • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

1939-1950: "Twice as Much for a Nickel" 1950: "More Bounce to the Ounce" 1950-1957: "Any Weather is Pepsi Weather" 1957-1958: "Say Pepsi, Please" 1958-1961: "Be Sociable, Have a Pepsi" 1961-1963: "Now It's Pepsi for Those Who Think Young" 1963-1967: "Come Alive, You're in the Pepsi Generation". 1967-1969: "(Taste that beats the others cold) Pepsi Pours It On". 1969-1975: "You've Got a Lot to Live, and Pepsi's Got a Lot to Give" 1975-1977: "Have a Pepsi Day" 1977-1980: "Join the Pepsi People (Feeling Free)" 1980-1981: "Catch That Pepsi Spirit" David Lucas composer 1981-1983: "Pepsi's got your taste for life" 1983-1984: "Pepsi Now! Take the Challenge!" 1984-1991: "Pepsi. The Choice of a New Generation" (commercial with Michael Jackson, featuring Pepsi version of Billie Jean) 1986-1987: "We've Got The Taste" (commercial with Tina Turner) 1987-1990: "Pepsi's Cool" (commercial with Michael Jackson, featuring Pepsi version of Bad) 1990-1991: "You got the right one Baby UH HUH" ( sung by Ray Charles for Diet Pepsi ) 1991-1992: "Gotta Have It"/"Chill Out" 1992-1993: "Be Young, Have Fun, Drink Pepsi" 1993-1994: "Right Now” Van song for the Crystal Pepsi advertisement. 1994-1995: "Double Dutch Bus" Pepsi song sung by Brad Bentz. 1995: "Nothing Else is a Pepsi" 1995-1996: "Drink Pepsi. Get Stuff." Pepsi Stuff campaign 1996-1997: "Pepsi: There’s nothing official about it" (During the Wills World Cup (cricket) held in India/Pakistan/Sri Lanka) 1997-1998: "Generation Next" - with the Spice Girls. 1998-1999: "It's the cola" (100th anniversary commercial) 1999-2000: "For Those Who Think Young"/"The Joy of Pepsi-Cola" (commercial with Britney Spears/commercial with Mary J. Blige) 2000-2003: "Aazadi dil ki" (Hindi - meaning "Freedom of the Heart")(India) 2003: "It's the Cola"/"Dare for More" (Pepsi Commercial) 2003-2005: "Yeh Pyas Hai Badi" (Hindi meaning "This thirst is too much") (India) 2005-2006: "An ice cold Pepsi. It's better than sex!" (Larry Sypolt) 2006-2007: "Why You Doggin' Me"/"Taste the one that's forever young" Commercial featuring Mary J. Blige 2007-2008: "More Happy"/"Taste the once that's forever young" (Michael Alexander) 2008: "Yeh hai Youngistaan Meri Jaan!" (Hindi)(Urdu - meaning "This is the Young era my dear" (India and Pakistan)

• • • • •

2008: "Pepsi Stuff" Super Bowl Commercial (Justin Timberlake) 2008: "Рepsi is #1" Тv commercial (Luke Rosin) 2008: "Pepsify karo gai!" Commercial (Urdu (Hindi - meaning "Wanna Pepsify!") (Pakistan) (Featuring. Adnan Sami and Annie) 2008-2009: "Something for Everyone." 2009-present: "Refresh Everything" and (during many commercials) "Every Generation Refreshes The World"

Pepsi Input – Processing – Output Model

Input Supply 1.

Manage supply ingredients to ensure availability to produce products.

2.

Maintain purified water supply for quality and availability to produce products.

Manufacturing 1.

Ensure best technology is available to produce products and mix ingredients.

2.

Ensure quick storage and inventory processes to maintain freshness and quality.

Sales 1.

Determine demand by past sales and future marketing.

2.

Adjust quantities produced in real time to meet appropriate demand.

Output Supply 1.

Determine inventory of ingredients to order new supplies.

2.

Maintain purified water supply so ensure continuance of production.

Manufacturing 1.

Ensure proper packaging to ensure quality and freshness in products.

2.

Maintain quick local distribution to ensure freshness and quality products.

Sales 1.

Keep positive distribution levels to all sales outlets to maintain positive sales.

2.

Meet any new demand or competition with products and consumer needs.

Pepsi’s Mission The mission of Pepsi is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors 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. Pepsi has grown faster than both the S&P 500 and their industry group over the past four years. 2003 alone was a strong year. Their overall volume grew by 5%. Division net revenue grew by 8%. Division operating profit grew by 10%. Total return to shareholders was 12%. Earnings per share grew by 22%. They have six of the fifteen largest-selling brands in U.S Supermarkets. And, around the world, sixteen of their brands sell more than one billion dollars each at retail. Pepsi is also very concerned about the environment and has a separate set of goals. Our goal is to have the least possible impact on the environment and so far we have been very successful. For example, in 1992 Pepsi-Cola replaced its can holders with plastic ring connectors. Using a break-apart concept, these rings snap when cans are removed from the connectors, greatly reducing the risk of entanglement for wildlife. In addition, photo-degradable additives break down these connectors into small particles when they are exposed to sunlight, further reducing the likelihood of any negative environmental impact. In 1995, Pepsi was one of only 20 companies honored by the U.S. Environmental Protection Agency (EPA). EPA Administrator Carol Browner called the efforts of Pepsi to reduce solid waste "a notable achievement."

A third goal of Pepsi is to achieve a diverse workforce.

Pepsi knows that

understanding different cultures is a major advantage. They view diversity as a key to their future. They see that offering a workplace where diversity is valued helps them build the top-quality workforce so crucial to their success by enabling them to attract and retain great people from a wide spectrum of backgrounds. Their CEO offers this quote, “PepsiCo has long been dedicated to instilling the broadest possible base of diversity within our own company and among the companies who serve us, and is a strong advocate of diversity within our communities.” This intense dedication to diversity has led to many awards that include being named a top 50 company for diversity by DiversityInc. minorities.

Fortune magazine ranked Pepsi number nine for best companies for

Business Views These are the three different views to explain Pepsi in terms of relevance, accuracy, timeliness, exclusiveness, and accessibility. MARKETING VIEW-: The marketing view is the backbone of business dimension in case study of Pepsi. In order to make a firm successful in the marketplace this view must penetrate all the other views together. Introducing new ways to approach the market or launching a new product needs good understanding of the target population, which is done through the marketing view. It forecasts and plans the different components in the business dimension that are going to affect the future of the company. Through the marketing view Pepsi tries to reach to its existing as well as future customers. A competent market strategy is very important in today’s competitive market; especially for a multinational company like, Pepsi. Narrowing down its different products towards different type of population, for example, Sprite among buyers for various products within the company. Advertising is a very vital part in the marketing view because it brings the consumers and Pepsi together which determines the demand.

PRODUCT VIEW-: The product view of Pepsi reflects the launch of new products every six months. As seen among these globally operating beverage companies, Pepsi and Coke, in order to stay competent in the market they invent new products to attract more customers and please the existing ones. If Pepsi does not try hard in experimenting new products they know someone else could steal the market with similar ideas. If there is no product, there is no business. Therefore, in order to dominant the market globally as well as in the U.S., Pepsi comes with different flavors or even changes

the looks of bottles. Pepsi has wide variety of beverages like soft drinks, juices, water, and energy drinks. This company started with just plain soda and since then has been trying to add more products to its existing line. If you look according to the accessibility view you can also see those vending machines everywhere for your conveniences.

LOGISTIC VIEW-: The logistic view is a very important part of the globally operating companies. For Pepsi, to have bottling plants in all the countries they sell the products is necessary. By doing this, there exists a well-established connection between the suppliers, producers, distributors and consumers. Pepsi Company’s organization is divided into four areas covering Asia, Africa, Europe and America. These four subdivisions are further narrowed among the countries in these continents. The interorganization structure of the company has different divisions. The manufacturing plant makes and bottles the product, the distributors deliver to the suppliers, and the suppliers sell it to the retailers and finally to the consumers. These supply–chains in different countries are controlled by one main headquarter.

In the Market

1.

2.

3.

Above figure shows the market share of the beverages players. First figure shows that thums up has the largest market share in top five soft drink players. And limca got the fifth rank. Pepsi is on the 3rd rank with 13.2% market share. Second figure shows the market share covered by beverage players. In the market coke is on 1st rank with the 38% of market share and Pepsi has 21.4% market share. Third figure shows the battle between the product of different brand but same flavor. In this war of soft drink in between Pepsi and thums up thums up has won this war by 15.7% of market share, Pepsi has only 13.2% of market share in cola market.

PEPSICO INDIA WITH RKJ GROUP: Vision Being the best in everything we touch and handle. Mission Continuously excel to achieve and maintain leadership position in the chosen businesses; and delight all stakeholders by making economic value additions in all corporate functions. It can be said with absolute certainty that the RKJ Group has carved out a special niche for itself. Our services touch different aspects of commercial and civilian domains like those of Bottling, Food Chain and Education. Headed by Mr. R. K. Jaipuria, the group as on today can lay claim to expertise and leadership in the fields of education, food and beverages.

The business of the company was started in 1991 with a tie-up with Pepsi Foods Limited to manufacture and market Pepsi brand of beverages in geographically pre-defined territories in which brand and technical support was provided by the Principals viz., Pepsi Foods Limited. The manufacturing facilities were restricted at Agra Plant only. Varun Beverages Ltd. is the flagship company of the group.The group also became the first franchisee for Yum Restaurants International [formerly PepsiCo Restaurants (India) Private Limited] in India. It has exclusive franchise rights for Northern & Eastern India. It has total 46 Pizza Hut Restaurants & 1 KFC Restaurant under its company.

The group added another feather to its cap when the prestigious PepsiCo “International Bottler of the Year” award was presented to Mr. R. K. Jaipuria for the year 1998 at a glittering award ceremony at PepsiCo’s centennial year celebrations at Hawaii, USA. The award was presented by Mr. Donald M. Kendall, founder of PepsiCo Inc. in the presence

of Mr. George Bush, the 41st President of USA, Mr. Roger A. Enrico, Chairman of the Board & C.E.O., PepsiCo Inc. and Mr. Craig Weatherup, President of Pepsi Cola Company.

Strategic Divisions: PepsiCo India consists of different divisions that include Beverage division, Snack food division and the Restaurant division (Yum Restaurants India Pvt. Ltd.). These divisions work as separate SBU’s and have their separate management. PepsiCo India divided its beverage division into different operating divisions. The heads of these divisions report directly to the CEO. The heads of these divisions are in charge of their respective areas and are accountable for the proper functioning of all the regions. The FOBO’s also report to the regional heads apart from the COBO’s.

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.

Choose the Value (Strategic Marketing) Customer Segmentation

Value Positioning

Market Selection / Focus

Provide the Value (Tactical Marketing) Distributi on / Servicing

Sourcing / Making

Pricing

Service Develop ment

Product Develop ment

Communicate the Value (Tactical Marketing) Sales Force

Value Creation and Delivery Sequence

Sales Promotion

Advertising

Generic Value Chain: Firm Infrastructure Suppo rt Activit ies

Inbound Logistics

Human Resource Management Technology Development Margin

Procurement

Operations

Outbound Logistics

Marketing and Sales

Service

Primary Activities

The generic value chain is a tool to identify ways to create value for the customer. This model proposes that every firm is a synthesis of activities performed to design, produce market, deliver and support its product. In order to be more precise only the primary activities in the value chain of PepsiCo India are analyzed.

Primary Activities: Inbound Logistics – This involves bringing and procuring raw materials for the business. For the carbonated drinks industry only two raw materials are required, they are water and the concentrated salt that is used to produce the final product. For this purpose water is extracted from the ground and the concentrated salt is provided by PepsiCo India to all the plants in the country.

Operations – Operations primarily includes all the bottling plants. Currently there are 32 bottling planting in India that operate for PepsiCo. Of the 32 plants, 15 are owned by PepsiCo and the rest 17 are (FOBO), owned by R K Jaipuria Group.

Outbound Logistics – The Outbound logistics of Pepsi can be divided into three stages. First the finished product from the bottling plants is sent to the depot or the territorial office, from where it is sent to the C & F centers and the Distributor Points according to their demand. From the C & F centers and Distributor Points the product is sent out for sale in the market to the retailers.

Marketing and Sales – The sales and distribution network of Pepsi is very strong and comprises of different layers and a dedicated sales force. This is one of the important factors for the success of Pepsi. To keep the company abreast with competition and to provide support to its channel partners and to increase the sales, PepsiCo puts lot of effort in its marketing activities. This includes maintaining excellent relations with its channel partners, making huge investments in Advertising, signing of Megastars as its brand ambassadors, sponsoring various events, launching promotional for any launch or re launch of a product.

Service – In this industry after sales service is generally not required. The only exception being leak or burst bottles. In that case, the shopkeeper gets replacement for plastic bottles from the salesmen instantly, while the replacement for glass bottles is provided between 25th and 30th of every month. They are required to collect all the damaged glass bottles and give to the respective salesperson who gives them the replacement within the next few days after getting it approved from the CE or ADC.

Marketing Mix / 4 P’s: Marketing Mix has been defined as the set of marketing tools that a firm uses to pursue its marketing objectives. These tools are classified into four broad groups, namely, Product, Price, Place and Promotion. Marketing mix decisions should be made to influence trade channels as well as final consumers. A firm can alter any of the four P’s accordingly, including changes in the product and distribution channel as well.

The four P’s represent the seller’s view of the marketing tools available for influencing buyers. Whereas, from a buyers point of view, each marketing tool is designed to deliver a customer specific benefits according to his or her requirements.

Marketing Mix

Target Market

Marketing Variables: The Four P Components of the Marketing Mix Product Product Prod. Variety Prod. Variety Quality Quality Design Features Design Brand Name Features Packaging Sizes Brand Name Services Packaging Warranties Returns Sizes

Services Warranties Returns

Place

Price List Price Discounts Allowances Payment period Credit Payments

Promotion

Channels Coverage Assortments Locations Inventory Transport

Sales Promotion Advertising Sales Force Pubic Relations Direct Marketing

Figure 4p’s:

Product: Pepsi offers different variety of products ranging from carbonated to Non Carbonated Soft Drinks. These include – Pepsi Cola,Mirinda ( Lemon and Orange ),7 Up,Dew,Slice ,Tropicana,Aquafina (Mineral Water)

These Products come in different size – 200 ml, 300 ml, 600 ml, 1200 ml, 2 lt. there are nearly 42 SKU’s which are monitored and regulated on daily basis.

Product Quality: This is one of the most important aspects that any Co. needs to address. Specially in the case of Pepsi this is even more important because of the controversies and claims regarding the CSE report on Pesticides in Pepsi. Therefore pepsi has to maintain stringent quality norms and standards and norms. Pepsi does that by following one quality standard worldwide and according to the official website of pepsi, the Co. maintains that : “At every level of Pepsi-Cola Company, we take great care to ensure that the highest standards are met in everything we do. In our products, packaging, marketing and advertising, we strive for excellence because our consumers expect and deserve nothing less. We promise to work toward continuous improvement in all areas of our organization”. “At every step of our manufacturing and bottling process, strict quality controls are followed to ensure that Pepsi-Cola products meet the same high standards of quality that consumers have come to expect and value from us. We also follow strict quality control procedures during the manufacturing and filling of our packages. Each bottle and can undergoes a thorough inspection and testing process. Containers are then rinsed and quickly filled through a high-speed, state-of-the-art process that helps prevent any foreign material from entering the product. Additional quality control measures help to ensure the integrity of Pepsi-Cola products throughout the distribution process, from warehouse to store shelf”.

Brand Name:

This is the most important thing any Co. in this Business needs to do if it wants to remain and succeed in the Business. Pepsi has successfully done that for so many years. Pepsi has targeted the youth and has invested heavily in advertising and building a brand image (by launching several campaigns and roping in mega stars such as Shahrukh, Sachin, ganguly, Dravid etc.) that attracts to the youth and this is one of the main reason for the success of Pepsi.

Packaging and Size : The products are available in packaging and sizes. This is done to facilitate the use according to the requirements of the Customer. Different packaging also affects the usage pattern of the product in various markets. e. g. sale of 2 lt. bottles is high in areas in which middle and high income group customers stay. But the sale of 200 and 300 ml bottles is high in areas where people in the lower income group bracket stay. The sale of 600 ml bottles is high in areas where students etc. stay. Different packaging is also provided for different products like Tetra Packs, Pet Bottles and Glass Bottles (in 200 and 300 ml).

Services, Warranties, Returns : There are no warranties and services (post sales) provided for these products but there is provision of returns in case there is any problem with the product, e.g. leak or burst bottle, half filled bottle etc. The pet or plastic bottles are returned the same day and a replacement is provided for the same but in the case of glass bottles the retailer has to collect all the burst bottles and return it to the salesman around 25th of every month to get a replacement.

Price: List Price: The Price of each product is fixed and there is no discrepancy. Salesmen are not authorized to make any change, alteration or give discounts unless authorized by the Company. Discounts: Discounts are provided to Wholesalers and Slums but there is no discount for retailers. The discounts are negotiated directly with the Company and the C&F or the Distributor point is not involved in the price negotiation.

Allowances: Allowances are given to salesmen on achieving their daily targets. This target is given to every Salesman everyday before he goes on his designated route. The Depot In charge (Sr. C E / C E) gives the target to every salesman in consultation with the TDM. Payment period and Credit terms: No credit is provided. The payment procedure is not flexible as the retailers are required to make on the spot payments. At times, they defer the payment and in that case, the Salesman either shows a shortage or pays the rest of the amount by himself. The wholesalers are also required to make in advance but at times they also defer the payment and make the payment at a later date.

Place: Channels: ‘Channels are independent organizations involved in the process of making a product or service available for use or consumption’. There are different intermediaries in channels that facilitate the availability of goods to the consumer. Coverage: Two things come under market coverage. These are Market Reach and Market Penetration. Market Reach can be termed as accessibility and Market Penetration can be termed as Frequency.

Promotion: Sales Promotion: This is the most frequently used form of promotion which is used to increase the sale of the selected product. These promotions are used from time to time depending upon the sale of the products. If the sale of any particular product declines or shows a declining trend then a suitable Sales Promotion Campaign is launched to increase the sale of that product.

Advertising: Advertising is done by PepsiCo. COBO (Company owned Bottling Operations) and FOBO (Franchisee owned Bottling Operations) have no say in the advertising campaigns and their planning. The advertising account of Pepsi is handled by JWT (J Walter Thomson) in association with the Corporate office of PepsiCo India. Sales Force: There is a dedicated sales force at every C&F and Distributor point. Every Salesman is assigned a specific route that he has to cover every day. The Salesman has to take care of all the Shops on the designated route and address and inform (to the Sr. CE / CE) about any issue any retailer has on the route. The Salesmen are also assigned the task of providing all the information to the retailers regarding the daily schemes and the details of all the promotion schemes launched from time to time. These include informing the retailer about the promotional scheme, registration for the scheme, terms and conditions of the scheme etc. The Salesman is also assigned the task of registering maximum possible outlets on his assigned route.

Public Relations: This is one important aspects related to the success of PepsiCo in India. Pepsi believes in maintaining good and healthy relations with all its Channel partners and every other person in the value chain. This has helped Pepsi in maintaining an extremely competitive position in the market in spite of the continuous onslaught from Coca Cola.

SALES AND DISTRIBUTION NETWORK OF PEPSICO INDIA.

COMPANY

COBO

FOBO

WAREHOUSE

C&F

DISTRIBUTOR

SALESMEN

WHOLESALER

RETAILER

CUSTOMER

SALESMEN

SLUMS

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

MUM – Marketing Unit Manager:

MARKETING ASSISTANTS

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.

FIVE FORCES EFFECTING THE ENVIROMENT

Bargaining Power of Suppliers 1. Supplier Concentration 2. Importance of Volume to Supplier 3. Differenciation of Inputs 4. Impact of Inputs on Cost of Differentiation 5. Switching Cost of Firms in the Industry 6. Presence of Substitute Inputs 7. Threat of Forward Integration 8.Cost Relative to Total Purchase in Industry

Threat of New Entrants 1. Cost Advantage. 2. Proprietary Products 3. Access to Inputs. 4. Government Policy. 5. Economies of Scale. 6. Capital Requirement 7. Brand Identity. 8. Switching Cost. 9. Distrbution Access. 10.Retaliation.

Existing Rivalry Among Firms

Threat of Substitutes 1. Switching Costs. 2. Buyer inclination to Substitute. 3. Price performance trade off of Substitutes.

Bargaining Power of Buyers 1. Bargaining Leverage. 2. Buyer Volume. 3. Buyer Information. 4. Brand Identity. 5. Price Sensitivity. 6. Treat of Backward Integration. 7. Product differentiation. 8. Buyer Concentration Vs Industry. 9. Substitutes Available. 10. Buyers Incentive. Degree of Rivalry 1. Exit Barriers 2. Industry Concentration 3. Fixed costs / Value added. 4. Industry Growth. 5. Overcapacity. 6. Product difference. 7. Switching Costs. 8. Brand Identity. 9. Diversity of Rivals. 10. Corporate Stakes.

Threat of new entrants: Pepsi’s product differentiation caused by their marketing strategy has limited the threat of new entrants. Also the heavy start up costs of manufacturing and packaging plants would be a deterrent. But, the biggest deterrent is brand image and reputation; a new company would be very hard pressed to take market share away from established players like Pepsi, Coke etc. More importantly, the access to distribution channels is currently one of the biggest barriers to entry, and this barrier remains because both Coke and Pepsi maintain very strong relation with their channel partners.

Bargaining power of buyers: The level of bargaining power differs among groups of buyers. The bottlers, retailers and distributors have significantly greater bargaining power than the end consumer does. Large retailer such as Reliance, Big Bazaar, Subhiksha are able to extract profits from the Company through incentives such as volume-based purchases, promotions and displays. This is particularly true for pet bottles. But, this can also be harmful for the retailers and they losing customers if they refuse to stock a particular brand. The bargaining power of the consumer is low. They are a fragmented group and no one individual’s purchase accounts for a significant portion of manufacturer’s profit. Although the presence of substitutes does serve to increase buyer power for consumers, but a high degree of brand loyalty mitigates this loyalty. In short, we can say that the end consumer has medium bargaining power.

Bargaining power of suppliers: There are very few suppliers for the entire soft drink industry. The end product is comprised of few ingredients, which are largely commodities. In addition, it is safe to assume that Pepsi accounts for a large percentage of the suppliers total revenues. Thus, it

is important for the suppliers to contain whatever bargaining power they have. The overall bargaining power of the suppliers is considered low.

Threat of Substitutes: There are many substitutes to sweetened carbonated beverages. Specially in India there are several substitutes that pose a threat to PepsiCo. They are bottled water, juices, energy drinks, tea, coffee, energy drinks and CSD from its main competitor Coca Cola India. The challenge lies in increasing brand loyalty within these substitute markets, because the substitute products are, for the most part, contained with each manufacturer’s product portfolio. In India the local beverages like tea and nimbu paani pose a threat to some extent to the established players. Therefore the threat of substitutes is very high specially because of negligible switching costs.

Existing Rivalry among firms: There is intense rivalry between Coke and Pepsi. This rivalry leads to a downward pressure on prices and significant investment in advertising in an attempt to build and maintain brand loyalty. In a maturing market such as domestic carbonated drinks, the only way to gain market share is to steal from one’s rival. Thus, Coke and Pepsi fight heatedly over prices, suppliers, spokespeople, retail space and ore importantly, the taste buds of consumers.

To do a complete analysis of the overall environment is not possible due to the huge sample size of the population therefore before presenting my findings I would like to remind the reader the limitations or constraints under which the survey was done. This survey may not be fruitful for the entire population of internal partners of PepsiCo butit will surely be useful for the particular regions mainly Trans-Yamuna and EastDelhi.

RESEARCH METHODOLOGY . Research Type

: Exploratory Research

Sample  Technique

: Convenient Sampling

 Size

: 400 Respondent (I meet 400 respondents out of which 50 were

the distributors, 250 retailers and rest of were the normal consumers.)  Description

: Distributors, retailers and consumers were the different part of the

Ghaziabad, Noida and Delhi. 

Instrument

: Questionnaire & observations of the respondent

DATA COLLECTION METHOD The data collection mode used to get the desired information from primary sources & Unstructured Direct Interviews &the instruments used in the Questionnaire. In this research data was collected through two different modes, namelyPrimary data collection: •

Gather information through Questionnaire.

•

Direct interview with Grocery outlet, Convenience store, Eating and

drinking and consumer. SECONDARY SOURCES:

1. Internet Sites -

www.google.com, www.pepsicoindia.com, www.wikipedia.com. .

2. Magazines - Business World Management & Economic times.

DATA ANALYSIS FROM RETAILERS &DISTRIBUTORS PERSPECTIVE:

Frequencies

PepsiCo having good distrbution channel

Strongly agree Agree Can't Say Strongly Disagree Dis Agree

6.67% 3.67%

18.67%

7.0%

64.0%

If we see the chart then we find that out of 100% respondent 64% are agree that PepsiCo have good distribution channel and only 18.67% are strongly agree, the data shows that company should focus on their distribution channel and try to convert customer in strongly agree respondent by providing them better services and schemes.

Distribution channel is importent in positioning of product

Strongly agree Agree Can't Say Strongly Disagree 1.0%

Dis Agree

18.0%

41.33%

38.33%

If we see the chart then we find that out of 100% respondent 41.33% respondent are strongly agree that distribution channel have an important role in positioning of the product and 38.33% are agree and rest are disagree, it shows that our objective is fulfilled by this research and we can say that if we have to promote our product then we should have strong distribution channel.

V.C. coolors provided by the company

yes No

29.67%

70.33%

If we see the chart then we find that out of 100% respondent, 70.33% are saying that they are getting V.C. coolers but 29.67 % are saying that they are not getting, it means company is not focusing on all retailers that major concerns for the organization.

PepsiCo relationship with the retailers/distributors

Strongly agree Agree Can't Say Strongly Disagree 4.67%

Dis Agree

10.0% 27.33%

3.67%

54.33%

If we see the chart then we find that out of 100% respondent 27.33% respondent are strongly agree that PepsiCo has maintaining good relationship with them and 10% are strongly disagree and 54.33 % are agree, it shows that company should thing that how can they maintain better relationship with every retailers and distributors.

Perception of retailers/distributors towards the pepsiCo Distribution channel Excellent Good Bad Worst 10.67% 5.33%

35.33%

48.67%

If we see the chart then we find that out of 100 % respondent only 35.33% are saying that PepsiCo have excellent distribution channel and 10.67% are saying that PepsiCo have worst distribution and 48.67 % are saying that PepsiCo have good distribution channel, here area of concern that how company can make happy those respondent who are thinking that PepsiCo have worst/bad Distribution channel and how can company develop good distribution channel and change the perception of retailers and distributors.

"If better scheme is given then replace with coke"

yes No

48.67%

51.33%

If we see the chart then we find that out of 100% respondent, 51.33% respondent are saying that if they will get better services and scheme then they will switch over to another brand like coke and only 48.67% are saying that they will not switchover, it show that company should focus that how can be provided better schemes and services to the retailers and distributors in result they will not switchover to another brand.

Cross tabulation: PepsiCo having good distribution channel * PepsiCo relationship with the retailers/distributors Symmetric Measures

Interval by Interval Ordinal by Ordinal

Pearson's R Spearman Correlation

Value .593

Asymp. Std. Error(a) .042

Approx. T(b) 12.706

Approx. Sig. .000(c)

.532

.048

10.851

.000(c)

N of Valid Cases

300 a Not assuming the null hypothesis. b Using the asymptotic standard error assuming the null hypothesis. c Based on normal approximation.

Bar Chart PepsiCo relationship with the retailers/distributors

140

Strongly agree

120

Agree Can't Say Strongly Disagree

100

Dis Agree

t n u o C

80

42.33%

60

40 18.33%

20 8.33%

5.67% 1.33%

0 Strongly agree

Agree

1.0%

Can't Say

0.67%

Strongly Disagree

0.67%

0.33%

Dis Agree

PepsiCohavinggooddistrbutionchannel

If we see the table then we find that the relationship with the retailers and distributors having an important role in maintaining the good distribution channel because 42.33% respondent are agree to say that we have good relation with the PepsiCo and that shows that PepsiCo having good distribution channel.

PepsiCo relationship with the retailers/distributors * Time taken by the company to make reach the product at retailers shop Symmetric Measures



Value .710


.664

.036

Approx. T(b) 17.383


15.334

.000(c)

N of Valid Cases 300 a Not assuming the null hypothesis. b Using the asymptotic standard error assuming the null hypothesis. c Based on normal approximation.

Bar Chart Time taken by the company to make reach the product at retailers shop

100

One Day

80

3 Day One Week One Month

t n u o C

60

29.33%

40

24.67% 22.0%

20 8.67% 5.33% 0.33%

0 Strongly agree

Agree

1.67%

Can't Say

1.33%

Strongly Disagree

2.0%

Dis Agree


If we see the table then we find that out of 100% respondent 29.33% respondent are saying that we have good relation with the PepsiCo because they are providing products at right time .

PepsiCo relationship with the retailers/distributors * V.C. coolers provided by the company Symmetric Measures



Value .592


Approx. T(b) 12.674


.535

.047

10.927

.000(c)


Bar Chart

140

V.C. coolors provided by the company

120

yes No

100

t n u o C

80 44.33%

60

40

24.67%

20

0

10.0% 2.67%

Strongly agree

10.0% 1.0%

0.33%

Agree

Can't Say

Strongly Disagree

Dis Agree


If we see the table then we find that out of 100% respondent 44.33% respondent are agree to say that they have good relationship with PepsiCo because of they are getting visi coolers by the company, it means visi coolers have an important role in maintaining the good relationship with the retailers. PepsiCo relationship with the retailers/distributors * “If better scheme is given then replace with coke" Symmetric Measures



Value -.429


Approx. T(b) -8.203


-.479

.045

-9.427

.000(c)

N of Valid Cases


Bar Chart "If better schemeis giventhenreplace withcoke"

120

yes

100

No

t n u o C

80

60 34.67%

40

24.33% 19.67%

20 8.67% 4.33%

3.0%

0.67%

0 Strongly agree

Agree

Can't Say

PepsiCo relationshipwiththe

1.33%

Strongly Disagree

0.33%

DisAgree

If we see the table then we find that 24.33% reta ilers/d istrib utors are strongly aree that they will not switchover to another brand because of better scheme but 34.67% respondent are strongly agree that if they will get better services and schemes then they will switch over to another company’s brand, it shows that if company have to ,maintain good relationship with retailers and distributors then company will be focus on better services and schemes.

PepsiCo having good distribution channel * logistics facility of the company Symmetric Measures



Value .216


Approx. T(b) 3.815


.230

.047

4.075

.000(c)

N of Valid Cases

300

a Not assuming the null hypothesis. b Using the asymptotic standard error assuming the null hypothesis. c Based on normal approximation.

Bar Chart logistics facility of the company

150

own company

100

C t n u o

53.0%

50

13.33%

11.0% 7.0%

5.33%

0 Strongly agree

Agree

Can't Say

3.67%

Strongly Disagree

6.67%

Dis Agree

PepsiCo having good distrbution channel

If we see the table then we find that out of 100% respondent 53% respondent are agree to say that better facility of logistics have an important role in having good distribution channel .

Visi coolers provided by the company * PepsiCo having good distribution channel Symmetric Measures



N of Valid Cases

Value .487


Approx. T(b) 9.632


.443

.052

8.530

.000(c)

300

a Not assuming the null hypothesis. b Using the asymptotic standard error assuming the null hypothesis. c Based on normal approximation.

Bar Chart PepsiCo having good distrbution channel

150

Strongly agree Agree Can't Say Strongly Disagree Dis Agree

t n u o C

100

50.67%

50

16.33%

0

13.33%

2.0%

0.67%

2.33%

yes

5.0%

3.0%

6.0%

No

V.C. coolors providedby the company

If we see the table then we find that out of 100 % respondent, 50.67% are saying that they are agree to say that PepsiCo have good distribution channel because they are getting visi coolers from the company, it shows that visi coolers have an important role in having a good distribution channel.

Visi coolers provided by the company * Perception of retailers/distributors towards the PepsiCo Distribution channel Symmetric Measures



Value .544


Approx. T(b) 11.184


.442

.056

8.509

.000(c)


Bar Chart Perception of retailers/distributors towards the pepsiCo Distribution channel

125

100

Excellent Good Bad Worst

t n u o C

75

40.33%

50 29.33%

25

6.0%

10.67%

8.33% 4.67%

0.67%

0 yes

No

V.C.then coolo rs p rovid edbout y the mpany If we see the table we find that ofco 100% respondent, 40.33% respondent are saying that PepsiCo have good distribution channel because they are getting visi coolers from the company, it shows that visi coolers are very important for having good distribution channel.

Time taken by the company to make reach the product at retailers shop * PepsiCo having good distribution channel Symmetric Measures



Value .735


Approx. T(b) 18.714


.713

.030

17.575

.000(c)

N of Valid Cases


Bar Chart PepsiCo having good distrbution channel

120

Strongly agree

100

Agree Can't Say Strongly Disagree

t n u o C

80

Dis Agree

60 35.33%

40

27.33%

18.67%

20 6.0%

0

0.67%

One Day

0.67%

1.33%

3 Day

One Week

5.0%

1.0%

0.33%

1.0%

One Month

Time taken by the company to make reach the product at retailers shop

If we see the table then we find that 18.67 % respondent are strongly agree that PepsiCo good distribution channel because they are getting product within one day and 35.33% respondent are agree to say that PepsiCo have good distribution channel if they are getting product within 3 days,it shows that company’s distribution is depends on time that how quick company is providing product at door of the retailers/distributors.

PepsiCo having good distribution channel * Services provided by the distribution/PepsiCo

Symmetric Measures



Value .640


Approx. T(b) 14.361


.562

.043

11.727

.000(c)

N of Valid Cases


Bar Chart Services provided by the distribution/PepsiCo

200

yes No

t n u o C

150

100 59.0%

50 18.67% 5.0%

0 Strongly agree

Agree

3.33%

Can't Say

0.67%

Strongly Disagree

1.0%

Dis Agree

PepsiCohavinggooddistrbutionchannel

If we see the table then we find that 59.0% respondent are agree to say that PepsiCo have good distribution channel because they are getting good services and only 18.67% are strongly agree, it shows that better services and schemes have an important role in maintain good distribution channel.

Distribution channel is important in positioning of product * “How accurately they fill the order" Symmetric Measures



Value .097


Approx. T(b) 1.675


.191

.044

3.365

.001(c)

N of Valid Cases


Bar Chart "Howaccurately they fill the order"

125

100% 50-80% 100

75

t n u o C

41.0%

50

21.0% 17.33%

25

0

18.0%

1.0%

0.33%

Strongly agree

Agree

Can't Say

Strongly Disagree

1.33%

Dis Agree

Distributionchannel is importent in positioningof product

If we see the table then we find that 41.0% respondent are strongly agree to say that distribution channel have an important role in positioning of the product because of only by good distribution channel they are getting fill their order by 100%.

DATA ANALYSIS FROM CONSUMERS PERSPECTIVE:

Frequencies:

Demanded brand Available in the Market

yes No

45.0% 55.0%

If we see the chart then we find that out of 100%respondent, only 55% respondent are agree to say whatever brand they demanded they are easily get that but 45% respondent are saying that they are not getting the demanded brand, it is major concern that why these respondent are not able to get their demanded brand.

Cross Tabulation: Age of the respondent * Soft drink consumed by the respondent in a week Symmetric Measures



Value .332


Approx. T(b) 3.489


.322

.103

3.363

.001(c)

N of Valid Cases


Bar Chart Soft drink consumed by the respondent in a week

30

25

one two to three three to five more than five

t n u o C

20

15

30.0%

10

5

10.0%

9.0%

8.0% 6.0%

5.0% 3.0%

2.0%

1.0%

0 10-20

21-25

1.0%

1.0%

26-35

Above

age of the respondent

If we see the graph then we find that age group 21-25 is more potential customer and company should focus on them and provide them better taste, quality according their preferences.

Brand preferred by the respondent * demanded brand Available in the Market Symmetric Measures

Value

Asymp. Std. Error(a)

Approx. T(b)

Approx. Sig.



-.241

.093

-2.455

.016(c)

-.241

.095

-2.455

.016(c)

N of Valid Cases


Bar Chart Demandedbrand Availableinthe Market

30

yes 25

No

t n u o C

20

15

29.0% 23.0%

22.0%

10

13.0%

5

10.0%

3.0%

0 PepsiCo

Coke

Others

Brandpreferedbytherespondent

If we see the graph then we find that coke brand is more easily available than Pepsi it means there is some fault in distribution channel and company should find that and make available their brand at every retailers shop.

Limitations

•

The limitations faced during the dissertation my research as lack of availability of first hand data. As the data included is secondary in nature, authentication of the

data is major concern. The next difficulty was the facts and figures had change due to change in financial year, thus it could affect the recommendation and conclusion part. •

There can also be the limitation as the sample size; on the basis of 400 respondents we can not get the truthful result about the distribution channel of any organization that major limitation of my dissertation.

•

It may happen that what question we ask from the retailers/distributors, they may not give tact full answer.

•

Retailers and distributors had less time to give answer of our questionnaire and may be that answer is not fact full.

•

The area of concern was limited due to that research may not give fact full result.

•

Respondent was not giving the answer of our questions.

•

We were not able to give our full time in research work because of college time and study as well as busy in interview for campus placement.

•

The area of survey was Delhi/NCR, Utter Pradesh etc. and it was concentrated on urban area only.

•

The psychological condition varies from place to place because in many places outlet owner was not supportive.

SWOT ANALYSIS In order to get clear understanding of the position of Diet Pepsi in the various markets we did a SWOT analysis from the data obtained from the survey and the various retailer interviews

STRENGTHS: PACKAGING AND PRICING – Pepsi has the advantage of having provided the same kind of health based carbonated drink the Slim Diet Pepsi Can which in comparison to the Diet coke is a much more attractive offering because it is slim sleek equally healthy and way cheaper. DISTRIBUTION – As already mentioned Pepsi India has one strongest and most efficient sales and distribution networks not only in India but also throughout the globe. Also in the particular market where the survey was done the sales people have developed a network which is powerful enough to make or break sales for Pepsi in any given quarter P R – One of the most important factors of success of PepsiCo in India is the relationship the company and its constituents have with the channel partners. The Company officials and even the employees of FOBO have very good rapport and relations with the Channel partners. Also the recently introduced retailer benefit schemes such as the gold card membership and other free gifts and offerings not only motivate the retailers but also helped us create visibility for the Slim Diet Can range in a profound. The experience of working with people who welcome us with a smile rather than a frown will always be remembered. NON-CARBONATED – This is one those strengths of Pepsi that often goes unnoticed but plays a very important role in success of Pepsi in India and even around the globe. The non-carbonated segment is dominated by Pepsi, Tropicana is the market leader in fruit juices. In the mineral water segment, Aquafina clearly outsells Kinley without ay fuss. Bottling – Pepsi has the advantage of being in partnership with the largest bottler in India, the R K Jaipuria Group. RKJ Group controls almost 65% of the bottling operations of PepsiCo in India. At times this is also seen as a weakness of Pepsi in India attributing to the fact that the Jaipuria group is so strong that in certain circumstances it can even defy the parent Company.

WEAKNESS:

SECOND MOVER DISADVANTAGE - Diet Pepsi Cola does have the first mover advantage which Diet Coke has and this may prove to be a major shortcoming also in the Agra Market no Extensive efforts have been made to popularize it. Brand – On a comparative scale Diet Coke proves to have a better brand image in customers mind than. This compels to incur extra expenditure in Advertising, Promotions and Sponsorship. MCDONALDS – This is one of the most important reason why Diet Coke outsells Pepsi worldwide and specially in the United States. Similarly, in India Diet Pepsi may suffers in sales because of institutional sales. Now Pepsi is trying very to bridge this gap in the near future. EXPENDITURE – Right from the very beginning Pepsi has hired the biggest and the most expensive stars in the country as its brand ambassadors and has spend heavily on advertising which has affected its balance sheet. Vizicoolers – At presently this is one the biggest problems faced by Pepsi. Pepsi is not able to get refrigerators in India so they have to import it other namely Sri Lanka, Mauritius etc. Because of this, retailers are facing lot of problems in vigicoolers. They are not able to get new refrigerators, replacements for old ones, even the repair work takes lot of time because at times even the spares are not available on time.

OPPORTUNITIES: Lowest Per Capita Consumption – Even after almost decades of presence in the market, there are growth opportunities for Diet Pepsi in India as here the per capita consumption of carbonated beverages is one of the lowest in the world.

Health Based: apart from its Juice Based drinks portfolio Pepsi can Use the Slim Diet can to the maximum by promoting it as a health drink at Cheaper prices.

THREATS: NGO’s – NGO’s like CSE can seriously hamper the sales and prospects of companies operating in this industry. This happened during the pesticide controversy involving both coke and Pepsi. HEALTH – Growing health awareness among people and some of ill effects of carbonated beverages have pursued many people to switch over to non-carbonated beverages that can seriously hamper the long-term prospects of the entire Industry and not Pepsi. ENVIRONMENT – Environmental concerns are often raised because of the massive amount of water extracted by the bottling plants resulting in the drop in groundwater level which affects the local population adversely. In India PepsiCo adopted the strategy of growth through intensification. In the intensification strategy, it used market penetration by developing one of the strongest sales and distribution network in the world and utilizing it to the fullest. .

OBSERVATION

•

To collect order each and every outlet.

•

To cheque visi-cooler with 100% purity.

•

To see a soft drink in Brand Order.

•

To see every outlet is this soft drink present in display rack.

•

To see every outlet visi- cooler will present in prime location.

•

To visit every outlet in regular basis.

•

To go every outlet and listen any problems in visi- cooler and soft drink to be noted in complaint diary.

•

To see each and every outlet worked in better condition.

•

To see as a Market developer (M.D) every outlet full fills in terms and conditions with visi-Cooler.

•

To see as a Market developer (M.D.) if any outlet will not selling your product than you asked why you are not selling in my product. Then you give advice to outlet.

FINDINGS

 Some retailers are unable to get the services which are provided by the company  There are some retailers are not happy with services provided by the distributors and the company  There is a gap between the retailers and the company  Distributers are not satisfied with the services like margins, product availability, credit facility  Customers prefer the taste of Thumbs Up more than the PepsiCo’s product.  Most of the time desired products are not available or not chilled due to unavailability of visi coolers.  In most of the mix outlet company has not provided its Visi Cooler, so it is becoming the major cause for not getting fulfill of the demand. Because retailers are promoting that brand to the consumer which company is satisfying them more in terms of Visi Cooler, Schemes, Relationship etc  Retailers are not happy with the MDC (Marketing Development Coordinator) of PepsiCo. Retailers are saying that what they promise, do not fulfill that.  Marinating good relationship with the retailers as well distributors

is very

important for having a strong distribution channel  Visi cooler have an important role in enhancing the distribution channel and policy.  Time concern is very important in good distribution channel, it means providing product at retailers door within a time.  Company should provide better facility of logistics because without logistics any company cannot maintain good distribution strategies.

RECOMMENDATION

This is one of the most important and most difficult part of the study. I arrived at certain recommendations for PepsiCo India after the analysis of the data. Some of the important recommendations are as follows •

There should be and correct feedback from the retailers on the performance of salesmen. This will help improve their efficiency and accountability. Moreover, this will also help in reducing the confusing that the retailers have at times because the salesman does not explain the schemes properly.

•

As already mentioned V.C. coolers are a major reason of dissatisfaction among retailers. The periodical maintenance check of V.C. coolers is done at three months. This should be done at an interval of 45 days or 60 days instead of the current practice of 90 days

•

Company should adopt aggressive marketing strategy that it could reach each and every place.

•

Company should have better logistics facility for making reach the product at retailer’s door at a right time.

•

Marketing Development Coordinators/ Marketing Executives/ Sales Executives of the company must focus more for making better relationship with retailers.

•

Company should provide visi cooler to every retailer. Because who is having visi cooler of which company they are promoting the same brand to the consumer.

•

Company should more focus on youth of the country because youths more prefer the soft drinks.

•

Company should focus on the consumers taste and preferences and launch new product according to the consumer taste and need.

•

Company should focus on the better services and schemes are providing to the retailers /distributors or not if not then why.

•

Company should maintaining good relationship with the distributors as well as retailers.

In order to respond effectively to changing market trends and challenges, soft drink companies must support their improvement efforts with industry-specific solutions. Company should focus on their distribution channel because it is blood of the company because if product will not reach the market then there is no need of their production as well as company should focus on better services /schemes which can be provide to the retailers as well as distributors.

CONCLUSION

After analyzing all the aspects of the data available and giving some important recommendations a suitable conclusion which should be derived for this study. However, before starting the conclusion part, the objective of the research must be kept in mind so that we can arrive at a befitting conclusion for the research problem. The primary objective of this research was to know distribution channel Strategy of PepsiCo and to know the importance of Distribution channel strategy in Positioning of the product. The data collected provided a sound base for understanding the overall organizational set up of PepsiCo in India. By analyzing the data and the literature review, following conclusion was inferred: •

The Sales and Distribution Network of Pepsi is very strong and almost flawless.

•

PepsiCo India had the first mover advantage when it entered the market and it capitalized on that advantage to grab the market.

•

Franchisee based operations combined with the Company’s operations add strength to the overall presence of the Company in the market.

•

Franchisee takes care of its operations and PepsiCo does not interfere in its operations. The Franchisees are required to report to the Company at specific time intervals.

•

The Advertising Campaigns are conceived, implemented by the PepsiCo and Franchisee has no say in that.

•

It is very important to develop good relationship with the retailers by providing them better services and schemes.

•

Maintaining the good relationship with the distributors are very important for the company because they are the main part of the distribution channel.

BIBLIOGRAPHY

•

PEPSICO INTERNATIONAL OFFICIAL WEBSITE,

•

PEPSICO INDIA WEBSITE.

•

PEPSICO INTERNATIONAL INTERNAL REPORT.

•

www.google.com.

•

www.pepsicoindia.com.

•

www.wikipedia.com.

•

Magazines - Business World Management & Economic times.

Questionnaire:

Dear Sir On behalf of PepsiCo India Ltd., We want to thank you for giving us the opportunity to serve you. Please help us serve you better by taking a couple of minutes to tell us about the service that you have received so far. We appreciate your business and want to make sure we meet your expectations. This will be used only for academic purpose only Name of Retailer/Distributors _______________________

Address

__________________________________

Phone no

___________________________________

1. PepsiCo have good distributions channel? a. Strongly agree b. Agree c. Can’t say d. strongly disagree e. Disagree 2. Distribution channel has an important role in positioning of the product? a. Strongly agree b. Agree c. Can’t say d. strongly disagree e. Disagree 3.

How much time, Company takes to make reach the product at retailer shop? a. One day

b. 3 day c. One week

4. One month.

4. You are having logistics facility of company or own? a. own

b. Company

5. Are you being provided the v.c.coolors by the company? a. yes b. no 6. PepsiCo has good relationship with the distributors/retailers? a. Strongly agree b. Agree c. Can’t say d. strongly disagree e. Disagree 7. Perception of retailers/distributors towards the PepsiCo’s Distribution Channel? a. Excellent b. good c. bad

d. worst

8. Are you happy with services provided by the distributors/PepsiCo? a. yes b. no

9. Is there any govt. interference? a. yes b. no 10. Are you satisfied with distribution policy of the PepsiCo? If chance given to you replace with coke a. Yes b. no 11. Ever missed your order? If yes then what may be main reason? a. Wrong order

b.sudden change in weather

c. change in schemes

12. How frequently Executive comes to take orders? a. Daily

b. After 1-2 days

13. Accuracy of order fills? a.100% b. 100- 80%

c.50-80%

c. once in a week

d. below 50%

Consumers: Name: Gender: Age:

a. Male b. Female a. 10 to 20 b. 21 to 25 c. 26 to 35 d. 35 above

1. How many times you go for soft drink in a week? a. One b. Two to three c. three to five d. more than five 2. Which brand’s soft drink you usually drink? a. PepsiCo b. Coke c. others. 3. Do you get easily your demanded brand in the market? a. yes b. No 4. Why you prefer this brand? a. Availability b. Advertisement

c. Taste

d. Others………..

Study of Distribution Channel Strategy of the Pepsico

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