Summer Internship Report - Pepsi

A Report Submitted towards the partial fulfillment of the requirement of the one month field project

MEGHA SHREE

BBA L1S2

ACKNOWLEDGEMENT

INSTITUTE OF MARKETING & MANAGEMENT

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For For the the su succ cces ess s of this this proj projec ectt my prof profou ound nd thanks and deep sense of gratitude is due, to Mr.Soumitro Patna tnaik (ADC) for constan tantly guiding me and tackling variety of hurdles with impl implic icit it pati patien ence ce thro throug ugho hout ut my su surv rvey ey and and analysis. His deep involvement and interest in the project infused in me great inspiration and confidence in taking up this stud tudy in right direction and without whose overall guidance and help the project may not have been completed. The project report could not have been completed without the guidance of Mr. Sharad Vatts (MDM) & Mr. H. Kundu (Dy. General Manager) of Pepsi, Varun Beverages Ltd. Last but not the least my project work is a result of guidance and co-operation of many respectable persons of PEPSI and many of my friends to whom I cannot express their help in words. In spite of all my efforts there can be some short comings in my project work. Please point out those mistakes and oblige.


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UNDERTAKING

I Megha shree to the best of my knowledge declare that the project on ‘EDS (Every Dealer Survey) & Supply Chain of Pepsi’ was undertaken by me during FEBURY as my field project The project was undertaken under the superv supervisi ision on of Soum Soumitr itro o Patnai Patnaik k (ADC) (ADC) Varun Varun Beverages Ltd. I declare that the project done for Pepsi, Varun Beverages Ltd. is original.


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TABLE OF CONTENTS 1. Title Page 2. Acknowledgement 3. Undertaking 4. Executive Summary----------------------------------------------------------------2 5. Objective of the Study-------------------------------------------------------------4 6. Methodology 6.1 The Research Frame---------------------------------------------------------5 6.2 Methodology for analysing supply chain--------------chain---------------------------------------------------6 6 7. Main Report 7.1 History of Pepsi---------------------------------------------------------------8 7.2 Pepsi Co Overview---------------------------------------------------------20 7.3 Pepsi Co India---------------------------------------------------------------22 7.4 About RKJ Group-----------------------------------------------------------24 7.5 Carbonated Soft Drink Industry---------------Industry------------------------------------------------------------------29 7.6 Marketing Mix---------------------------------------------------------------33 7.7 Operational Structure------------------------------------------------------36 7.8 Activities of the Sales Man----------------Man---------------------------------------------------------------------------37 ---37 7.9 Introduction to SCM--------------------------------------------------------40 7.10 Supply Chain of Pepsi Co------------------------------------------------43


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7.11 Research Design-----------------------------------------------------------49 7.12 The Sampling Design Process-------------------------------------------51 7.13 SWOT Analysis------------------------------------------------------------71 8. Findings---------------------------------------------------------------------------72 9. Conclusion & Recommendations 9.1 Conclusion-------------------------------------------------------------------73 9.2 Recommendation------------------------------------------------------------74 10. Limitations-----------------------------------------------------------------------75 11. Bibliography/Reference--------------------------------------------------------76 12. Appendices (EDS Sheet)

4. EXECUTIVE SUMMARY The project report mainly focuses on the work culture of Pepsi Varun Beverages which is a FOBO (franchise owned business operations) type of organization, competitive market of soft drinks industry shows the competitiveness of its sales promotional strategies so as to retain its market share and to play a major role in the market. Varun beverages as a franchise bottling unit of Pepsi earns a major share of India’s market distributed all over country. As according to the supply chain is concerned there are various modes of supply of products to the market so that the product reaches to the consumer at the right place, at the right time and at a right price. The importance of maintaining a good supply chain is to satisfy market demand with adequate supply i.e. to satisfy customer wants. Sales activities are boosted by providing various sales promotional activities, which include sales promotional schemes that attract the potential customers who are eager to make Pepsi as their brand of choice. The effectiveness of the supply chain activities in the Noida region has been given the attention so that the customer especially the retailers who are the key players of the market get the product as and when needed. Thus to increase market share and to increase market competitiveness against its INSTITUTE OF MARKETING & MANAGEMENT

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competitor attractive schemes are launched to increase demand for goods and also to increase consumers for its products. Since in FMCG sector demand for goods keeps on changing depending on market conditions and fast changing consumer taste and preferences, one has to maintain a good knowledge about changing market conditions and accordingly make strategies to maintain its market position. Therefore a good supply chain strategy has to be maintained so as to cater to market demand and also to reach out to new potential customers. Strategies have to keep on changing according to market condition and therefore various schemes are being used to maintain demand for the product. It has to prepare strategy so as to increase demand for its products and also to see that the demand and supply position is maintained. So in order to be competitive, one to has keep on analysing its market position and competitor, make strategies to hold on to its current market position and also to look out for new market opportunities.

Thus this project report mainly focuses on the study of supply chain activities of Pepsi, its market reach and how they balance the supply activities with varying market demand. The study tries to understand the major activities that involve in a FMCG sector regarding supply of products to the market and hence finding out the major flaws and accordingly suggesting solutions to the problems. The report also focuses on the market competition faced by Pepsi in Noida and analysing the market position of Pepsi as against its competitor. It tries to analyze the feasibility of sales strategy used by Pepsi as compared to its competitor.


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5. OBJECTIVE OF THE STUDY 1) PRIMARY OBJECTIVE The primary objective of the study is to analyze the effectiveness of supply chain procedure of Pepsi and to compare the market competitiveness of Pepsi against its competitor.

2) SECONDARY OBJECTIVE    

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Study of the supply chain activities of Pepsi. To give recommendations for improving the supply chain activities. Analysing the proper functioning of schemes To check out the functioning of product display of Pepsi. Study of market share of Pepsi in Noida. To study and analyze consumer behavior in soft drinks industry.


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6. METHODOLOGY 6.1 THE RESEARCH FRAME:

1. Channel through which the customers are getting the product:  

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Grocery Eatery Convenience Institutional

2. Status of Cola in shops:   

Pepsi Coca Cola Mix

3. Chilling equipment found in the shop: 

VISI Cooler INSTITUTE OF MARKETING & MANAGEMENT

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  

OYC Own Cooler Ice Box

4. Display status of Pepsi or Coke in shop:      

Glow Sign Board DPS Wall Painting Counter Rack In The Shop

5. Average daily peak sales (in crates):  

Pepsi Coke

6.2 METHODOLOGY FOR ANALYSING SUPPLY CHAIN: Marketing research specifies the information required to address issues, designs the method for collecting information, manages and implements the data collection process, analysing the results, and communicate the findings and their implementation. In this research process the data is collected through different sources and interpreting it in desired way, once the objective is clear, different techniques and methods are adopted to achieve them. The methodology used for this project work is very simple. The main aim of supply chain activities of the company is to fulfill the demand for their products at every corner of their operations. They have to fulfill the demand for supply of entire Noida region. To gather information regarding the supply chain activities a general questionnaire was drafted. In case of any additional information required, direct questions were asked to the retailers and distributors and the answers were taken on a plan sheet. Distributors are the people who gave some relevant information about the marketing plan and other operations which are related to supply chain. They gave information regarding the quality of INSTITUTE OF MARKETING & MANAGEMENT

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supply chain activities of the company and the areas where they are facing problems. Questions were asked regarding the quality of sales service provided by the company sales personnel i.e. were they getting the products on time, in right quantity and in all flavour. Questions were asked regarding awareness of schemes provided by the company and the availability of those schemes. Since distributors are generally located in remote areas who then supply their products to small retailers in the interior parts. So information was gathered regarding the mode of transport of supplying their products to those areas and the basic problems faced by them in this process.

Information regarding the retailers was also collected through questionnaire and direct questions put forward to them. In order to analyze the supply chain activities to retail business, data’s were collected from 800 retailers and average information were collected. Retailers were mainly asked about the availability of adequate supply during peak seasons. Problems faced by them in getting the damaged products replaced from the company and the quality of service provided by the company sales man. It has been tried to find out what is the main reason behind the retailers keeping more of stock of a particular brand than the other. The important reason that has been considered is retailer’s good relation with route agent, availability of heavy discounts or higher schemes or distribution of assets by the company to boost up sales. All this factors directly or indirectly affect the demand for company’s product hence they play an important role in demand supply position of a particular region. The steps involved in research methodology are research question, hypothesis formulation, research design, and data collection method, sampling plan, fieldwork, data analysis and interpretation. The data’s collected through this process were analyzed and an inference was drawn in terms of the problems faced in the supply chain. In order to make this study


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more reliable I had to make use of some of the analytical tools and then in the end inferences were drawn on the basis of matter collected from the distributors and retailers. To know about the market share and market competency strategy followed by Pepsi, data’s were collected from different retailers through out the entire Noida region. The data’s were collected through a prescribed questionnaire and information regarding the current market scenario was known.

7. MAIN REPORT 7.1 HISTORY OF PEPSI: PepsiCo, Inc. was founded by Donald M. Kendall, President and Chief Executive Officer of Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay, through the merger of the two companies. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded by Herman W.Lay, also in 1932. Herman Lay is chairman of the Board of Directors of the new company; Donald M. Kendall is president and chief executive officer. The company reported sales of $510 million and had 19,000 employees. Major products of the companies are:  Pepsi-Cola Company - Pepsi-Cola (formulated in 1898), Diet Pepsi (1964) and Mountain Dew (introduced by Tip Corporation in 1948).


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Frito-Lay, Inc. - Fritos brand corn chips (created by Elmer Doolin in 1932), Lay's brand potato chips (created by Herman W. Lay in 1938), Cheeotos brand cheese flavored snacks (1948), Ruffles brand potato chips (1958) and Rold Gold brand pretzels (acquired 1961). Mountain Dew launches its first campaign "Yahoo Mountain Dew ... it'll tickle your innards."

Major Milestones of Pepsi in subsequent years: 1966 Milestones:  Doritos brand tortilla chips are introduced. They are destined to become the most popular snack chip in the U.S.  Pepsi enters Japan and Eastern Europe. 1967 Milestones:  Pepsi Generation advertising, "Come Alive! You're in the Pepsi Generation" campaign that named and claimed a whole generation (1963-67), introduces a new theme: "Taste that beats the others cold. Pepsi pours it on!" 1968 Milestones:  North American Van Lines (NAVL), a premier transportation company, joins PepsiCo. NAVL remains a strong contributor to PepsiCo until it is divested in 1984. 1969 Milestones:  Bold, modern Pepsi-Cola packaging using red, white and blue is introduced. "You've got a lot to live, Pepsi's got a lot to give," becomes the advertising theme.  Frito-Lay introduces Funyuns brand onion flavored snacks.  Mountain Dew changes its slogan to "Get That Barefoot Feelin' Drinkin' Mountain Dew." 1970 Milestones:  PepsiCo sales pass the $1 billion mark. The company has 36,000 employees.  PepsiCo moves from New York City to new world headquarters in Purchase, N.Y. The new corporate headquarters feature a building by


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one of America's foremost architects, Edward Durrell Stone (19021978), set on a campus of 144 acres amid an outdoor sculpture garden. W.C. Fritos is introduced as Frito-Lay's new advertising mascot. Wilson Sporting Goods, a top name in sports equipment, joins PepsiCo. It is divested in 1985. Pepsi introduces the industry's first two-liter bottle. Pepsi is the first company to respond to consumer preference with lightweight, recyclable, plastic bottles.

1971 Milestones:  PepsiCo Chief Executive Officer Donald M. Kendall assumes the position of chairman of the Board of Directors on the retirement of Herman W. Lay. Lay maintains an active role in the corporation until his death December 6, 1982.  Andrall E. Pearson is appointed president of PepsiCo, a position he holds until his retirement in 1984.

1972 Milestones:  Mountain Dew, acquired by Pepsi-Cola in 1964, switches its advertising and package graphics from hillbillies to action-oriented scenes. Sales climb and Mountain Dew will become one of the 10 best-selling soft drinks in the United States.  Don Kendall announces agreement making Pepsi-Cola the first foreign product sold in the then U.S.S.R. PepsiCo is given exclusive rights to import Stolichnaya Russian vodka in the U.S. 1973 Milestones:  Foods International, later called PepsiCo Foods International (PFI) and subsequently named Frito-Lay International, is established to market snack foods around the world.  The third Mountain Dew slogan appears "Put A Little Yahoo in Your Life." 1974 Milestones:


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PepsiCo sales pass the $2 billion mark. Pepsi-Cola becomes the first American consumer product to be produced, marketed and sold in the former Soviet Union.

1975 Milestones:  PepsiCo has 49,000 employees.  Pepsi Light, with a distinctive lemon taste, is introduced as an alternative to traditional diet colas. 1976 Milestones:  The Pepsi Challenge, introduced in Dallas, Tex. in 1975, becomes a national campaign. Around the nation, consumers select Pepsi-Cola as the best tasting cola.  PepsiCo adopts Code of Worldwide Business Conduct.  Pepsi-Cola becomes the single largest selling soft drink brand sold in U.S. supermarkets. Advertising campaign is "Have a Pepsi day!" "Puppies," becomes one of America's best-loved ads.

1977 Milestones:  PepsiCo acquires Pizza Hut; Inc. Pizza Hut was founded in 1958 by Dan and Frank Carney. It is spun off along with Taco Bell and KFC businesses as Tricon Global Restaurants, Inc. in 1997.  PepsiCo passes the $3 billion mark in sales. 1978 Milestones:  Taco Bell is acquired. Taco Bell was established in the mid 1960s by Glen Bell. It is spun off along with Pizza Hut and KFC businesses as Tricon Global Restaurants, Inc. in 1997. Later becomes YUM. 1979 Milestones:  Opening of PepsiCo Research and Technical Center in Valhalla, N.Y.  PepsiCo reaches $5 billion in sales. 1980 Milestones:


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PepsiCo Food Service International (PFSI) is formed to focus on overseas development of restaurants. PepsiCo now has 111,000 employees. First presentation of the international Donald M. Kendall Bottler-ofthe-Year Award. Pepsi is #1 in sales in take-home market.

1981 Milestones:  PepsiCo passes $7 billion in sales.  PepsiCo and China reach agreement to manufacture soft drinks, with production beginning in 1982.  PepsiCo launches PepsiCo Food Systems (PFS), its restaurant supply company. PFS is sold to AmeriServe in 1997. 1982 Milestones:  Pepsi Free and Diet Pepsi Free, the first major brand caffeine-free colas, are introduced.  Inauguration of the first Pepsi-Cola operation in China.

1983 Milestones:  The Bottler Hall of Fame is established to recognize the achievement and dedication of international bottlers. 1984 Milestones:  PepsiCo is restructured to focus on its three core businesses: soft drinks, snack foods and restaurants. Transportation and sporting goods businesses are sold.  Wayne Calloway becomes president of PepsiCo.  Diet Pepsi is reformulated with 100% NutraSweet.  Slice and Diet Slice, the first major soft drinks with fruit juice, are introduced.  Pepsi-Cola makes advertising history as Michael Jackson and his brothers usher in a new generation of Pepsi-Cola advertising in two of


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the most eagerly-awaited television commercials featuring music marketing. Pepsi becomes "The Choice of a New Generation." Herman W. Lay Award of Excellence established at Frito-Lay to recognize world-class selling excellence.

1985 Milestones:  PepsiCo is now the largest company in the beverage industry. The company has revenues of more than $7.5 billion, more than 137,000 employees.  Pepsi-Cola products are available in nearly 150 countries and territories around the world. Snack food operations are in 10 international markets.  The cola war takes "one giant sip for mankind," when a Pepsi "space can" is successfully tested aboard the space shuttle.  Pepsi distributes products in China.

1986 Milestones:  Wayne Calloway becomes chairman of the Board of Directors and chief executive officer in May when Donald M. Kendall retires.  PepsiCo purchases Kentucky Fried Chicken, the leader in the quick service chicken market. KFC was founded by Colonel Harland Sanders. Colonel Sanders began franchising the company in 1952. KFC is spun off along with Pizza Hut and Taco Bell businesses as Tricon Global Restaurants, Inc. in 1997.  PepsiCo purchases Seven-Up International, the third largest franchise soft drink operation outside the United States.  PepsiCo passes $10 billion in sales.  PepsiCo is listed on the Tokyo stock exchange.  Diet Pepsi gets a new logo.


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1987 Milestones:  “Mustang," a Diet Pepsi commercial, becomes the first ad ever to appear in a home video cassette. The cassette, "Top Gun," becomes the largest-selling video ever.  Pepsi sponsors tours of major music stars, including Miami Sound Machine, David Bowie and Tina Turner. 1988 Milestones:  Pepsi-Cola International enters a landmark joint venture agreement in India.  Hostess Frito-Lay, a major new partnership in Canada, is formed with Hostess Foods in Canada.  "Chase," a four-part Pepsi ad featuring Michael Jackson in his firstever episodic commercial, airs during the Grammy awards and becomes the most-watched commercial in advertising history.  Worldwide retails sales of Doritos brand tortilla chips hit $1 billion. It is the world's largest selling snack chips brand. 1989 Milestones:  PepsiCo acquires Walkers Crisps and Smith Crisps, two of the United Kingdom's leading snack food companies.  PepsiCo enters top 25 of Fortune 500 ranking with sales of $15.4 billion, it is number 23. The company has more than 300,000 employees. 1990 Milestones:  PepsiCo signs the largest commercial trade agreement in history with the Soviet Union.  PepsiCo profits exceed $1 billion for the first time. 1991 Milestones:  PepsiCo acquires an equity interest in Wedel SA, the leading manufacturer of chocolate and confectionery in Poland Snacks now include operations in 23 countries.  Pepsi-Cola introduces a new logo, its eighth in 93 years. Advertising features rap singer MC Hammer.


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Pepsi-Cola forms joint venture with Thomas J. Lipton Co. to develop and market tea-based drinks.

1992 Milestones:  PepsiCo purchases an equity interest in California Pizza Kitchen. It is sold in 1997.  Frito-Lay and General Mills agree to merge snack food businesses in Europe.  Pepsi-Cola begins distribution of Lipton's line of ready-to-drink teas nationwide. 1993 Milestones:  Both PepsiCo beverages and snack food operating profits pass the $1 billion mark.  Pepsi introduces "The Cube," an innovative 24-can multipack that satisfies growing consumer demand for convenient large size soft drink packaging.  Pepsi-Cola International introduces Pepsi Max, a soft drink with unique blend of sweeteners that delivers maximum cola taste in a nosugar product.  Pepsi-Cola introduces Aquafina bottled water into test market.

1994 Milestones:  Pepsi-Cola International acquires Indian company, its first big bottling plant in Bombay.  PepsiCo and Starbucks form the North American Coffee Partnership to jointly develop ready-to-drink coffee beverages.  Pepsi-Cola licenses the Citrus Hill trademark from The Procter & Gamble Co. to launch a line of fountain juices and drinks.  Wake Forest University names its School of Business and Accountancy in honor of Wayne Calloway.


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PepsiCo sales reach $30.4 billion. There are 470,000 employees worldwide, making PepsiCo the third largest employer.

1995 Milestones:  Pepsi-Cola introduces "Nothing else is a Pepsi" theme line.  7Up International launches 7UP Ice Cola, a new clear cola.  PepsiCo will introduce Lay's brand potato chips in 20 markets throughout the world.  PepsiCo is on-line at http://www.pepsico.com 1996 Milestones:  Pepsi-Cola launches Pepsi World at http://www.pepsi.com  Pepsi-Cola domestic and international operations combined into Pepsi-Cola Company. International and domestic snack food operations combined into one business unit called Frito-Lay Company.  PepsiCo announces plans to spin off its restaurant businesses as an independent publicly-traded company sell its food distribution company and focus on its core beverage and snack food businesses. The spin-off is completed October 6, 1997. Shareholders receive one share in the new restaurant company, Tricon Global Restaurants, Inc., for every 10 shares they hold in PepsiCo, Inc.  PepsiCo is now a $20 billion company with approximately 140,000 employees worldwide.  Roger Enrico succeeds Wayne Calloway as chief executive officer and chairman of the Board of Directors.

1997 Milestones:  Pepsi-Cola North American bottling operations become a separate unit called The Pepsi-Cola Bottling Co.  Frito-Lay announces plans to buy the 104-year-old snack, Cracker Jack, a candy-coated mix of popcorn and peanuts from Borden Foods Corp.


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Pepsi-Cola kicks off the celebration of its 1998 100th Anniversary with first worldwide bottler’s conference, held in Hawaii. The event is held during the same time as first bottler's conference.

1998 Milestones:  PepsiCo Chairman and CEO Roger A. Enrico donate his salary to provide scholarships for children of PepsiCo employees.  Former Chairman and CEO Wayne Calloway die on July 9th. He joined PepsiCo in 1967 becoming its Chairman and CEO in 1986.  PepsiCo acquires Tropicana Products from Seagram Company Ltd., the biggest acquisition ever undertaken by PepsiCo. Tropicana was founded in 1947 by Anthony Rossi. Its major brand is Tropicana Pure Premium Juices. 1999 Milestones:  In March, The Pepsi Bottling Group, the world's largest Pepsi bottler, begins trading on the New York Stock Exchange. It is listed under the symbol PBG. The $2.3 billion public offering is among the biggest initial public offerings in stock market history.  Steve Reinemund named president of PepsiCo.  Tropicana juices are entering the huge India market for the first time. Spearheaded by Tropicana Asia Pacific, orange juice will appear in the New Delhi and Bangalore markets.  Frito-Lay introduces a new corporate logo.

2000 Milestones:  Pepsi-Cola teams up with Yahoo Inc., the biggest web navigation company, in a multimedia marketing campaign aimed at teens and young adults.  Aquafina brand bottled water becomes the best-selling brand of single-serve bottled water in US retail channels. INSTITUTE OF MARKETING & MANAGEMENT

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Pepsi-Cola launches "Sierra Mist" a caffeine-free, lemon/lime soda. PepsiCo, Inc. and The Quaker Oats Company reached an agreement to merge. PepsiCo sales are $20 billion and the company has 125,000 employees at year end. PepsiCo launches Diversity@work, http://www.pepsico.com/diversity website.

2001 Milestones:  Pepsi-Cola launches the bold new Mountain Dew Code Red nationwide. It is Mountain Dew's first line extension since the introduction of Diet Mountain Dew in 1988.  May 2 -The Board of Directors of PepsiCo, Inc. elected Steven S Reinemund chairman of the board and chief executive officer, succeeding Roger Enrico who will become vice chairman. The board also elected Indra K. Nooyi as a director and gave her the additional title of president of PepsiCo in addition to CFO.  SLAM, the orange brand Mirinda, is launched in Italy. 2002 Milestones:  Gatorade introduces new Gatorade ICE in three flavors- Orange, Lime and Strawberry.  Gatorade turns 35. It was created in 1960s to help performance of Florida Gators football team and now is the leading sport drink.  PepsiCo reorganizes to unite all North American beverage operations, including Pepsi-Cola, Tropicana and Gatorade, into one new division -- PepsiCo Beverages and Foods North America.  PepsiCo announces $5 billion share repurchase program.  Brand Pepsi has a new look.

2003 Milestones:  Pepsi-Cola signs an exclusive four-year sponsorship deal with the Canadian Hockey Association, making Pepsi the official soft drink.  Pepsi announces four-year sponsorship agreement with the UK Football Association.


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PepsiCo creates PepsiCo International, the business that will unite all international snack, beverage and food units in an effort to drive faster growth and improved profitability around the world. Pepsi–Cola trademark turns 100 years old.

2004 Milestones:  Frito-Lay’s 24-count Multi-Sack variety pack won the Institute of Packaging Professional's (IoPP) Integrity Award, one of the industry’s top awards, at this year’s AmeriStar Packaging Awards.  Pepsi-Cola to launch Pepsi Edge, the first full-flavored cola with 50% less sugar, carbohydrates and calories than regular cola.  PepsiCo publishes first Corporate Citizenship report in its 2003 Annual Report. 2005 Milestones:  PepsiCo Celebrates 40th Anniversary  PepsiCo International announced the appointment of Pioneer Foods, a leading South African food and beverage company, as its franchisee in the Republic of South Africa.  PepsiCo Donates $2 Million to Pakistan Earthquake Victims  Pepsi Partners with Harvey's, Swiss Chalet and Milestone's Restaurants 2006 Milestones:  PepsiCo India re-launches Mirinda.  In selected cities cross the United States, Pepsi distributes more than three million free cans of newly reformulated Diet Mountain Dew, marking the largest single-day sampling effort in company history  Starbucks and PepsiCo sign a distribution agreement for Ethos Water  Indra Nooyi named Chief Executive Officer of PepsiCo as of October 1, 2006

2007 Milestones:  PepsiCo signs Maria Sharapova for International endorsement of Gatorade and Tropicana


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Tropicana launches Tropicana Healthy Heart with Omega-3s, the first national orange juice to include omega-3s Ruffles unveils new packaging to reflect its switch to 100% pure sunflower oil Aquafina launches Aquafina Alive—a low calorie, vitamin-enhanced water beverage Quaker Oats debuts new Quaker Life Chocolate Oat Crunch Cereal Flat Earth Fruit and Vegetable Crisps hit stores nationally Fritos Corn Chips celebrates 75th Anniversary with retro packaging Near East celebrates its 45th Anniversary with a recipe contest Tropicana launches Tropicana Fruit Squeeze, a 20-calorie drink with real Tropicana fruit juice Lay’s launches ‘Share the Joy’ program to help the Make a Wish Foundation raise funds Pepsi-Cola North America launches Diet Pepsi MAX New Quaker Mini Delights launches offering great taste and portion control in a satisfying serving of mini snack cakes Diet Pepsi Jazz introduces new Caramel Cream flavor Grandma’s Cookies offering limited-edition flavors for spring: Iced Lemon and Sugar flavors Walkers is the first major food brand in the world to display a carbon footprint reduction logo on its packs PepsiCo Announces 25% Dividend Increase and Raises Share Repurchase Target; Nooyi Assumes Chairman Title EPA Names PepsiCo 2007 ENERGY STAR(R) Partner of the Year PepsiCo Makes Largest Corporate Purchase of Renewable Energy Certificates Pepsi launches “Design Our Pepsi Can” National Promotion Tropicana unveils New Organic Line – Tropicana Organic QTG facility earns an Energy and Environmental Design (LEED) “Gold” certification from the U.S. Green Building Council PCNA and Frito-Lay launch “Shrek the Third” National Summer Promotion Indra Nooyi receives the Outstanding American by Choice Award.

7.2 PEPSI CO OVERVIEW: INSTITUTE OF MARKETING & MANAGEMENT

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The company consists of Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America. PepsiCo brands are available in nearly 200 countries and territories and generate sales at the retail level of about $92 billion. Some of PepsiCo's brand names are more than 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001. PepsiCo offers product choices to meet a broad variety of needs and preference -- from fun-for-you items to product choices that contribute to healthier lifestyles. PepsiCo’s mission is “To be the world's premier consumer Products Company focused on convenient foods and beverages. It seeks to produce healthy financial rewards to investors as they provide opportunities for growth and enrichment to their employees, their business partners and the communities in which they operate. And in everything they do, it strives for honesty, fairness and integrity.” SHAREHOLDERS:

PepsiCo (symbol: PEP) shares are traded principally on the New York Stock Exchange in the United States. The company is also listed on the Amsterdam, Chicago and Swiss stock exchanges. PepsiCo has consistently paid cash dividends since the corporation was founded.

CORPORATE CITIZENSHIP:


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At PepsiCo, it believes that as a corporate citizen, it has a responsibility to contribute to the quality of life in its communities. This philosophy is expressed in its sustainability vision which states: “PepsiCo’s responsibility is to continually improve all aspects of the world in which they operate – environment, social, economic -- creating a better tomorrow than today.” Its vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

PEPSI CO HEADQUARTERS:

PepsiCo World Headquarters is located in Purchase, New York, approximately 45 minutes from New York City. The seven-building headquarters complex was designed by Edward Durrell Stone, one of America's foremost architects. The building occupies 10 acres of a 144-acre complex that includes the Donald M. Kendall Sculpture Gardens, a worldacclaimed sculpture collection in a garden setting. The collection of works is focused on major twentieth century art, and features works by masters such as Auguste Rodin, Henri Laurens, Henry Moore, Alexander Calder, Alberto Giacometti, Arnaldo Pomodoro and Claes Oldenberg. The gardens originally were designed by the world famous garden planner, Russell Page, and have been extended by François Goffinet. The grounds are open to the public, and a visitor's booth is in operation during the spring and summer.

7.3 PEPSI CO. INDIA:


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PepsiCo entered India in 1989 and in the span of a little more than a decade, has grown to become the country’s largest selling 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. The group has built an expansive beverage, snack food and exports business and to support the operations are the group’s 37 bottling plants in India, of which 16 are company owned and 21 are franchisee owned. In addition to this, PepsiCo’s Frito Lay snack division has 3 state of the art plants. PepsiCo’s business is based on its sustainability vision of making tomorrow better than today.

PEPSI CO. INDIA PRODUCTS:


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PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7UP, Mirinda and Mountain Dew, in addition to low calorie options– Diet Pepsi and 7UP Light, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks Gatorade, and 100% natural fruit juices and juice based drinks – Tropicana and Slice. Other local brands – Lehar Everess Soda, Dukes Lemonade and Mangola complete their diverse spectrum of brands.

PepsiCo’s snack food company, Frito-Lay, is the leader in the branded potato chip market and was amongst the first companies to eliminate the use of trans fats and ‘msg’ in its products. It manufactures Lay’s Potato Chips; Cheetos extruded snacks, Uncle Chips and traditional namkeen snacks under the Kurkure and Lehar brands. Quaker Oats, Lehar Lites, low fat and roasted snack options enhance the choices available to the growing health and wellness needs of consumers.

7.4 ABOUT RKJ GROUP: INSTITUTE OF MARKETING & MANAGEMENT

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It can be said with absolute certainty that the RKJ Group has carved out a special niche for itself. The 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: 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. It diversified into education by opening their first school in Gurgaon under management of Delhi Public School Society. The schools of the group are run under a Registered Trust namely Champa Devi Jaipuria Charitable Trust. Companies are medium sized, professionally managed, unlisted and closely held between Indian Promoters and foreign collaborators.


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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.

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.”

BUSINESS SEGMENTS OF RKJ GROUP: The RKJ Group is divided into three business segments- Beverage, Food and Education. It has a leading market position in each of its three business segments. A balanced portfolio produced a solid business performance. Products and services which look to the future ensure that they will be well placed in growth markets.


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BEVERAGES:

Indian Beverages industry’s size is Rs. 8000 Crores and it is dominated by two players viz Pepsi & Coke only. This high profile industry has lot of potential for growth as per capita consumption in India is 8 bottles a year as compared to 20 bottles in Sri Lanka, 14 in Pakistan, while 12 bottles a person in Nepal. The RKJ group is India's leading supplier of retailer brand carbonated and Non-Carbonated soft drinks, with beverage manufacturing facilities in India and Nepal. Its experience in the beverage industry dates back to the sixties when it had the first franchise at Agra.

The group manufactures and markets Carbonated and Non-Carbonated Soft Drinks and Mineral Water under Pepsi brand. The various flavours and sub-brands are Pepsi, Mirinda Orange, Mirinda Lemon, Mountain Dew, 7UP, Slice Mango, Slice Orange, Evervess Soda and Aqauafina.

It has the license to supply beverages in the territories of Western U.P., part of M.P., half of Haryana, whole of Rajasthan, Goa, 3 districts of Maharashtra, 9 districts of Karnataka and whole of Nepal. The group has in total 18 bottling plants in India & Nepal and is responsible for producing and marketing 44% of Pepsi requirement in India.


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FOOD:

The last decade has been a period of dynamic growth for non-alcoholic drinks and has witnessed completely new segment of the food market in India taking shape. To capitalize on the RKJ group’s significantly important relationship with Pepsi Foods, it decided to venture into Foods sector, which is second largest business for Pepsi all over the world. Fast food is the most happening things across the world.

The group 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. Out of 56 operational Pizza Hut restaurants in the country 27 restaurants are owned and run by its company. These restaurants are located at Defence Colony, Alaknanda, Vikas Puri, Green Park, Karol Bagh, New Friends Colony, Connaught Place, Basant Lok, Greater Kailash, Jaipur (2), Agra, Noida (2), Faridabad (2), Chandigarh (2), Ludhiana, Jallandhar, Amritsar, Gurgaon (3), Kushambi(Ghaziabd) and Kolkatta (2). All these restaurants are making good profits & are dominating the market. The name of business entity is Devyani International Private Limited. Ice Creams under “Candia” brand: The group has its presence in the Ice Cream segment since 1991, when it started manufacturing and marketing Ice Cream under the brand name of “Gaylord” in the state of U.P. During 1996 it sold its brand to Brooke Bond and started supplying Ice Cream to Hindustan Lever as their Ice Cream sourcing plant. After working for 10 years in this field, during 2003 it has launched its own brand in technical and marketing collaboration with Candia of France.


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EDUCATION:

The R K J Group has been associated with excellence in education. It strongly believes that investment in quality care and education for young minds is essential for the future growth and development of our country. The group’s foray into the school education is intended to provide exceptional opportunities for the development of the academic abilities of the students. The schools run by the group encourage students to become creative, innovative and imaginative. They have a wide range of co-curricular activities, which are as important as the academic disciplines. School life merges with a plethora of activities to suit every schedule, talent and interest in the areas like indoor and outdoor games, swimming, art and culture, music and drama, Yoga and martial arts, community service, etc. The school's approach to education has been designed to ensure that the students realize their true potential and grow up to become complete individuals and responsible citizens. The group’s foray into pre-school education is in line with educational projects of the group. “We see no competition because pre-school education is a niche market. There is no specialized way of teaching pre-schoolers here”, says Jaipuria. The year 2001 witnessed the further spread of the group’s portfolio with the opening of its first school at Gurgaon under the management agreement with Delhi Public School Society. To expand in the field of education it opened its second school at Jaipur under the management of same society. The Group has entered into a join venture partnership with Modern Montessori International (MMI) Singapore, to open pre-school educational institutions across the country. Forming a new entity, Modern Montessori International (MMI) India in which the Group will have 51 per cent equity stake, the company invests Rs 200-crore investment in the Indian operations in the next five years. MMI India plans to open four schools by April 2004 and as many as 14 schools by 2005. The company will be opening its first school in Gurgaon. The long-term agenda includes starting 20 schools each year with an investment of Rs 5 crore in each school.


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RATIONALE:

To hold the market share is major concern of any company while in the case of Soft Drinks Company the market is between FOBO and COBO that is Pepsi and Coca-Cola. To grab the market share, these companies are flooding the market with different type of sales promotion schemes on daily, weekly, monthly and annually basis. In this project the main reason of the study is to find out the effectiveness of the schemes and the retention and expansion of the market through sales promotion schemes.

7.5 CARBONATED SOFT DRINK INDUSTRY: INDUSTRY STRUCTURE:

The three main teams in the in the production and the distribution of the carbonated soft drinks are the concentrate producers, the bottlers and the retailers who are actually responsible for the sales of the product. The concentrate producers produce the concentrate and them sell it to the bottlers, who adds a sweetener to the carbonated water and then pack it in the bottles and cans. These bottlers can be either the Pepsi itself or the franchisees who work on the behalf of Pepsi. One half of the sale of the Pepsi is through the company owned bottlers (COBO) and other half of the sale is through the franchisees bottlers (FOBO). FOBO’s had the right to the product and then sells it in the defined territory and is not allowed to market the competitive brand. Then through the distribution channel the product reaches to the retailer who finally sells the product to the consumers. The principle retail outlets for the CSD are the supermarkets, convenience stores, fountain services and thousands of small outlets.


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PURCHASE AND CONSUMPTION PATTERN:

Industry research suggests that the purchase of the soft drink is unplanned, i.e. sometimes it is more and sometimes it is less depending on the demand in the market, the schemes that are provided to the retailers, the displays provided, and the incentives given and on the relationship of the salesman and the retailers. The sale of soft drinks is a seasonal affair. The sale increase tremendously during the summer season and falls down during the winter season.


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MANUFACTURING PROCESS:

Water: The water is available through the municipal supplies or through the borings. This water is then treated by reverse osmosis process to obtain germ free water. The water is also treated with some chemicals so that the water that is obtained is pure and ready for consumption. The water is also passed through the sand in order to filter it. This water thus obtained is soft and can be used for manufacturing process of the carbonated soft drinks. The same water is also used for washing of the used bottles.

Sugar Syrup Preparation : The next step is the preparation of the sugar syrup, which is further used to prepare the final concentrated syrup. In this the sugar is added to the germ free water and heated to about 85 degrees of temperature in a steam jacketed stainless steels tank of adequate capacity with an agitator, so that the sugar gets well dissolved in the water. The solution is boiled for about 20 minutes so that the syrup gets bit thick. This also kills the germs present in the water. The syrup is then filtered through the filter press at a high speed so that further impurities can be removed from the syrup. Then this syrup is cooled to a definite temperature with the help of a S.S Plant Heat Exchanger.

Finished Syrup: In the preparation of the finished syrup, additional water is added to the raw syrup in the correct quantity along with some essence. The solution is mixed thoroughly with an agitator provided in the S.S tank and allowed to mature according to the specified time limit. This time differs for each flavor.


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Beverage Preparation: In this step the ready syrup is passed through the intermix unit where more water is added to the syrup to prepare the final product. Now this beverage is chilled to a very low temperature and is pumped into the saturator carbonator. Carbonator is the stainless steel vessel consisting of a number of S.S film plates. This vessel is a pressure vessel where high pressure is maintained, so that the CO2gets well mixed with the cold water. The S.S plates forms a very thin film of the beverage on the plates. After this the beverage is filled in the glass bottles under high pressure, so that no air remains inside the bottles because this can spoil the soft drink.

Filling: Filling of the beverage in the bottles is done through the automatic counter pressure filters, which fills the bottles at a high speed, and the bottles are crowned with the caps automatically.

Washing of the bottles: Washer, which consists of the soaking compartments. These compartments contain caustic soda and a number of jets where soft water and hot The bottles, which come back from the markets, are washed with the help of bottle caustic soda solutions are used to clean the bottles. These cleaned bottles are then inspected before they go for refilling. They are passed through the bottle conveyer. Then they are passed through the LimLight inspection machine and then through the Mit-Mirror machine for finding out the cracks. After all these inspection the bottles are sent for refilling. The bottles are again checked and then packed in the groups of 24.

Quality control: The success of any industry depends on the quality of the product it provides. Therefore quality measurements are done on each step in order to ensure that the product that finally reaches the consumer is fit for consuming. The packed bottles are checked for the gas content, sugar content, organic and for the microbiological quality. Here the quality invariable remains the constant because of the continuous on –line checking.


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7.6 MARKETING MIX: PRODUCTS:

Pepsi makes Carbonated Soft Drinks i.e. cola and non-cola flavor.

Core Brands:        

PEPSI MIRINDA LEMON MIRINDA ORANGE SLICE MOUNTAIN DEW 7 UP AQUAFINA SODA

PACKAGES:    

Two types: single serve and multi serve 67 packages sizes and types Materials: glass, plastics & cans Packages may be returnable or non returnable.


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PRICING: QUANTITY 1.

PRICE

PEPSI 200 ml 300 ml 330 ml (CAN) 600 ml 2 lit

Rs.7 Rs.10 Rs.20 Rs.20 Rs.48

200 ml 300 ml 330 ml (CAN) 600 ml 2 lit

Rs.7 Rs.10 Rs.20 Rs.20 Rs.48

2. MIRINDA LEMON

3. MIRINDA ORANGE

200 ml 300 ml 330 ml (CAN) 600 ml 2 lit

Rs.7 Rs.10 Rs.20 Rs.20 Rs.48

200 ml 300 ml 330 ml (CAN) 600 ml 2 lit

Rs.7 Rs.10 Rs.20 Rs.20 Rs.48

4. MOUNTAIN DEW


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QUANTITY

PRICE

200 ml (TETRA) 250 ml 500 ml 1.2 lit

Rs.10 Rs.10 Rs.22 Rs.45

500 ml 750 ml 1 lit 2 lit

Rs.8 Rs.20 Rs.12 Rs.20

300 ml 600 ml

Rs.6 Rs.10

600 ml

Rs.23.5

600 ml

Rs.23.5

5. SLICE

6. AQUAFINA

7. SODA

8. PEPSI GOLD

9. MIRINDA SORBET

10. PEPSI DIET 33O ml (CAN) 600 ml

Rs.25 Rs.20

200 ml 300 ml 330 ml (CAN) 600 ml 2 lit

Rs.7 Rs.10 Rs.20 Rs.20 Rs.48

11. 7 UP


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7.7 OPERATIONAL STRUCTURE OF MARKETING DEPARTMENT: CHAIRMAN

UNIT MANAGER

TDM (Territory Development Manager)

ADC (Account Development Coordinator)

MDM (Marketing Development Manager)

CE (Customer Executive)

MDC (Marketing Development Coordinator)

SALESMAN

MDE (Marketing Development Executive)

ROUTE AGENT


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7.8 ROUTINE ACTIVITIES OF THE SALES MAN: Start

Check in

Meet the C.E.

Drive to gate

Checking of load by C&F worker

Order the Load

Collect gate pass and attend the gate meeting. Ask for the daily scheme

Rechecking of load

Ask for the order

Deliver the order

Merchandise the outlet

Fill the route book

Plans next visit

End

Check empties

Prepare the cash memo

Thanks the customer

Fill the complaint register and place the order. Deposit the cash to cashier

Pre plan strategy

Collect Route Book/ Forms

Check out

Visit First outlet

Present the scheme

Fill Visi cooler

Collect money

Complete the route

Check in


Greet retailer

Create stack

Ask for any problem

Back to

Count the empties and match it with gate pass load

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PEPSI 10 STEP CALL: 

Greet the customer by name.



Collect and sort all empties from the storeroom.



Communicate marketing programmes and scheme to the customer.



Leverage the route book and refill the empties.



Arrange warm product displays (in the shop).



Charge cooler, ensure 100% purity.



Arrange crate display outside the outlet.



Put up POS at eye level.



Prepare cash memo, collect cash and fill up the route book.



Thanks the customer.


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7.9 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT: Supply Chain Management refers to the analysis of and effort to improve a company’s process for product and service design, purchasing, invoicing, inventory management, distribution, customer satisfaction and other elements of the supply chain. Supply Chain Management usually refers to an effort to redesign supply processes in order to achieve to streamlining. Supply Chain Management is a coordinated set of techniques to plan and execute all steps in the global network used to acquire raw materials from vendors, transform them into finished goods, and deliver both goods and services to customers. It includes chain-wide information sharing, planning, resource synchronization and global performance measurements. Supply chain management (SCM) is the oversight of materials, information and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed). As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers who promise to provide part or all of the SCM service for companies who rent their service. Supply chain management flows can be divided into three main flows: 

The product flow



The information flow



The finances flow

The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting orders and updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements.


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There are two main types of SCM software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties. Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise (this is called the enterprise, and includes key suppliers, manufacturers, and end customers of a specific company). This shared data may reside in diverse database systems, or data warehouses at several different sites and companies.

FIVE BASIC COMPONENTS FOR SUPPLY CHAIN MANAGEMENT:

1. Plan-This is the strategic portion of supply chain management. One needs a strategy for managing all the resources that go towards meeting customer demand for one’s product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and high quality and value to customers. 2. Source-Choose the suppliers that will deliver the goods and services one needs to create one’s product or service. Develop a set of pricing, delivery and payment process with suppliers and create metrics for monitoring and improving the relationships. And put together process for managing the inventory of goods and services one receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments. 3. Make-This is the manufacturing step. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity.


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4. Deliver-This is the part that many insiders refer to as “logistics”. Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. 5. Return-The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who problems with delivered products.


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7.10 INTRODUCTION TO SUPPLY CHAIN OF PEPSI CO.: Pepsi is a well established brand and has to take care of heavy demand for their product in the market. Since there is heavy demand for their product in the market they have to take care of their distribution channel very seriously. They have maintained a very good balance between the responsiveness and the efficiency of the distribution channel. Supply chain of Pepsi is very simple; there are two type of supply route from where the goods are transported. The 1 st care is when the bottle comes from Greater Noida bottling plant and then it is moved to the distributor and from there it moves to the retailer. Retailer counter that means supply chain has 4 stages: 1. Manufacturer 2. Distributor 3. Retailer 4. Customer


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EXISTING SUPPLY CHAIN OF PEPSI CO:

Pepsi passes through 3 stages to reach the final customer. The product comes from the plant situated at Greater Noida from there with the help of company’s transporters it reaches to the distributor warehouse. The distributor for Noda area is situated in sec-66 of Noida under the name of Varun Beverages ltd. Generally the distributor places order to the company and get the requested order within two days, but there are some norms which are lead by the company, which are as follows: 1. The payment should be paid in advance. 2. 15% of transportation cost is managed by distributor as well as transit insurance is managed by the distributor. So well the goods are manufactured and kept as inventory in the warehouse of the company at Greater Noida from there it is allocated on trucks and reach to the distributor’s warehouse within 2 days, but the order is displaced in the consent with the requirement of distributor. There is a limit on minimum number of crates which has to be ordered by the distributor i.e. 500 crates and then with the help of work force the distributor has to move these goods to the retail counter. It is the responsibility of the distributor to see that there is a ready availability of the product in the market through its work force ‘sales persons’, which is to be occasionally checked by the company people. There are four distributors in the Noida region which are situated in different locations to every corner of the city. Modus operand of the distributor to make the availability of the product in the market is quite tough. The sales person under the distributor has to visit each and every retailer in their area daily so that there should be no shortage of the product in the market.


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The distributor has to supply its goods from its depot to various retailers in the market with the help of its work force. The distributor performs this task with the help of local transportation which is either owned or hired by the distributor for this purpose. The distributor has to look upon several other things which are important in day to day functions. Its job starts from when the goods reach the depot, firstly it has to check that the number of crates are in order which are being unloaded from the trucks, sorting of the goods received and removing the damaged goods. After the goods are been unloaded they are stored in an appropriate order in the depot. Goods one stored are then distributed with the help of several sales people. Every sales person is given a particular route in which he has to supply the goods. The sales persons are provided with trucks or other smaller vehicles like tempos to carry the goods from the depot to the market. The goods are loaded into every vehicle depending on the type of sales man’s route; the goods when loaded are counted on the depot gate and a gate pass is given to the sales person mentioning the amount of goods carried out on that particular day. The sales person along with a helper then goes out in the market to deliver the goods to the retailers. The main job of the sales man is to deliver the goods to the retailers, arrange the products in the retailers VISI cooler, informing the retailer about the schemes available & about the new products, give the receipt of the product to the retailer and take payment in cash with the counter part of the receipt duly signed by the retailer. The sales man has also to bring back the empties back to the depot and the damaged products as and when returned by the retailer. After the empty bottles are brought back to the depot, the empties are then sorted out and then sent back to the bottling plant. The distributor has also to manage the proper stock keeping of the empties; the simple rule that is followed by the distributor in this case is, for every bottle of soft drink sold on a particular day the sales person should bring the exact number of empties back to the depot.


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Once the goods have reached to the retailer store the last stage of the supply chain starts, where goods are transferred from retailer to the ultimate customer. It is the consumer who finally consumes the product and therefore the retailer has to know the taste and preference of the customer. A retailer needs to provide a customer ample number of product choices to choose from. Therefore a retailer likes to keep large variety of products so that he can cater to the demand of large number of customer. Therefore a distributor has to make sure that retailer is provided with sufficient amount of its products. In case of distribution channel of Pepsi the distributor has to maintain ready and continuous supply of goods to the retail outlets because in FMCG sector the consumer quickly moves to its substitutes goods due to non availability of the product. The demand for goods is this market is very volatile and keeps on changing according to consumer changing taste and preference. So in order to avoid loosing market the distributor has to keep an eye on the market conditions and to maintain a perfect balance on the demand and supply position in the market. The distributor also has to carry out occasional market surveys to find out their market position and to look out for further potential markets.


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PICTORIAL REPRESENTATION OF SUPPLY CHAIN:


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PRODUCED

PRODUCT

BOTTLING PLANT

DISTRIBUTOR

RETAILER

END CONSUMER

FLOWS IN PEPSI CO SUPPLY CHAIN: INSTITUTE OF MARKETING & MANAGEMENT

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1. PHYSICAL FLOW: Suppliers

Transporters, Warehouses

Manufacturer

Transporters, Warehouses

Dealers

Transporter, Warehouses

Retailers

2. TITLE FLOW: Suppliers

Manufacturers

Dealers

Retailers Retailers

3. PAYMENT FLOW: Suppliers

Banks

Manufacturers

Banks

Dealers

Retailers

4. INFORMATION FLOW:

Suppliers

Transporters, Warehouses, Banks

Manufacturer

Transporters, Warehouses, Banks

Dealers

Retailer

Customers

5. PROMOTION FLOW:

Suppliers

Advertising Agency

Manufacturer

Advertising Agency

Dealers

Advertisement Agency

Retailers

7.11 RESEARCH DESIGN:


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A research design is a framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the information needed to structure or solve marketing research problems. Although a broad approach to the problem has already been developed, the resear research ch design design specif specifies ies the detail detailss of implem implement enting ing that that approa approach. ch. A research design will ensure that the marketing research project is conducted effectively and efficiently. The research design used in this analysis is of casual nature. Casual Research is used to obtain evidence of cause-and-effect relationships. It is used to understand which variables are the cause and which variables is the effect of a phenomenon.

METHODS OF DATA COLLECTION: There are different methods of collecting data. The basic sources of collecting data are primary sources and secondary sources. Apart from these data’s been also collected through EDS (Every Dealer Survey). PRIMARY DATA:

The primary data are the information which is collected for a specific pur purpo pose se of addr addres essi sing ng the the prob proble lem m at hand hand.. Th Thee prim primar ary y data data’s ’s were were collected from retailers and the dealers surveyed with the help of EDS (Ev (Every ery Deal Dealer er Surve urvey y). Infor nforma mattion ion was also lso coll collec ecte ted d thro throu ugh questionnaire, direct questioning to the retailers and from salesman of Pepsi. SECONDARY DATA:

The secondary data are the data that have already been collected for purposes other than the problem at hand. These data can be easily located and and inex nexpen pensiv sively ely. Th Thee sou source rces of sec secon onda darry data data were were jour journ nals als, newspapers, magazines, internet etc.

EDS (Every Dealer Survey):


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EDS sheet is the one through which information is collected from the market market regar regardin ding g the market market regard regarding ing the marke markett share share of Pepsi Pepsi with with respect to its competitors. It also helps in finding out various other vital information regarding the condition of the inputs provided by the company and and the the impa impact ct of the the vari variou ouss sale saless prom promot otio ion n tool toolss prov provid ided ed by the the company to increase sales. It helps to find out the present market situation and gives an insight into the current market position. There are different terms that are used in an EDS sheet, some of these terms are explained below. I. CATEG CATEG (Categ (Category ory of shops) shops):: G- Grocery C- Convenience E- Eatery II. STATUS STATUS (Statu (Statuss of of shop shops): s): P- Pepsi (shops which sold soft drinks of Pepsi only) C- Coca Cola (shops which sold soft drinks of Coke only) M- Mix (shops which sold soft drinks of both Pepsi & Coke) III. III. CHIL CHILLI LING NG EQU EQUIP IPME MENT NT:: VISI- these are the coolers which are owned by the company and are provided by the company to the retailers for sales promotion. OYC- these are the coolers which are purchased by the retailers from the company on payment and are privately owned. OWN- these are the normal consumer coolers used by the shopkeepers for commercial purpose. IB- Ice Boxes provided by the company to the retailers.

IV. SIGNAGE:


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G.S- Glow Sign board provided by the company. W.P- Wall painting done by the company for advertisements. COUNTER- Counter of the shop where company logo paintings are found. RACK- Racks provided by the company for display of products. IN THE SHOP- The various posters and Pam plates found inside the shop premise.

7.12 THE SAMPLING DESIGN PROCESS: I. DEFINI DEFINING NG THE THE TARGET TARGET POP POPULA ULATIO TION: N: Sampling design begins by specifying the target population. The target population is the collection of elements or objects that possess the information sought by the researcher and about which inferences are to be made. The target population for the research project is defined as follows: Elements- Shopkeepers mainly retailers who keep stock of soft drinks of Pepsi or other brand. Sampling units- Retail shops Extent- Noida Time- May 2007 II. DETERM DETERMINI INING NG THE THE SAMPLI SAMPLING NG FRA FRAME: ME: A sampling frame is a representation of the elements of the target population. The sampling frame used in this research is taken from the EDS. EDS. Data Data’s ’s were were take taken n from from each each and and ever every y reta retail iler erss of Noid Noidaa regarding the sales pattern of Pepsi and amount of soft drinks sold in a day.

III. SELECTION OF A SAMPLING TECHNIQUE:


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The sampling technique used here is of Stratified Sampling. Stratified sampling is a two step process in which the population is portioned into sub-populations, or strata. Retailers are samples in this project and the sample were collected from Noida region. IV.DETERMINING THE SAMPLE SIZE: Sample size refers to the number of elements to be included in the study. Important qualitative factors that were considered in determining the sample size include: (1) the importance of the decision, (2) the nature of the research, (3) the number of variables, (4) the nature of the analysis, (5) completion rates, and (6) resource constraints. The sample size taken in this project is 793 retail shops, collected from 16 routes of Noida region.

V. ANALYSIS OF DATA:


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1. STATUS OF SHOPS: PEPSI- 325 COCA COLA- 44 MIX- 424

PEPSI 41%

MIX 53% COKE 6%

PEPSI

COKE

MIX

The status of shops in Noida according to data’s collected through EDS was that Pepsi came out as the market leader with 41% market share, shops which were selling only Pepsi and Coca Cola came next with 6% of its share in market. Whereas majority of the shops were found to be selling both Pepsi & Coca Cola which came out to be 53%.

2. CATEGORY OF OUTLETS:


57

EATRY- 200 GROCERY- 293 CONVENIENCE- 288 INSTITUTE- 12

CONVENIEN E 36%

INSTITUT 2%

EATR 25%

GROCER 37%

EATRY GROCERY CONVENIENCE INSTITUTE

The category of outlets that was found out according to the EDS done was that out of 793 shops, majority were grocery shops which came at 37% next was convenience shops which came at 36% then came eatery at 25% and rest were institutes at 2%.

3. VOLUME (IN CRATES):


58

PEPSI- 515510 COCA COLA- 392360

600000 PEPSI, 5155 1 500000 COKE, 39236

400000

300000

200000

100000

0 PEPSI

CO KE P EP SI

COKE

The volume was calculated in terms of number of crates of soft drinks sold per day. The entire volume of the Noida region was found out to be 907870 crates, out of which Pepsi’s volume came out to be 515510 with 57% share in total volume of the market and that of Coca Cola came at 392360 with 43% share in total volume.

4. VOLUME IN TERMS OF CATEGORIES:


59

1) EATERY PEPSI- 165855 COCA COLA- 120229

PEPSI, 165 8 180000 160000 COKE, 1202

140000 120000 100000 80000 60000 40000 20000 0 PEPSI

C O KE P E PS I C O K E

The total volume of Pepsi in eatery came out to be 286084, out of which Pepsi’s share came out to be 165855 i.e. 58% & that of Coca Cola came at 120229 i.e. 42% of total volume sold in eatery.

2) GROCERY:


60


250000

PEPSI, 204 28

200000 COKE, 13836 150000

100000

50000

0 PEPSI

C O KE P EP SI C O K E

The total volume of Pepsi in grocery came out to be 342644, out of which Pepsi’s share came out to be 204284 i.e. 60% & that of Coca Cola came at 138360 i.e. 40% of total volume sold in grocery.

3) CONVENIENCE:


61


COKE, 1329 135000

130000

125000 PEPSI, 1193 120000

115000

110000 P EP SI

CO KE PEPSI COKE

The total volume of Pepsi in convenience came out to be 252303, out of which Pepsi’s share came out to be 119332 i.e. 47% & that of Coca Cola came at 132971 i.e. 53% of total volume sold in convenience.

4) INSTITUTE:


62

PEPSI: 26039 COCA COLA: 800

30000

PEPSI, 26 0

25000

20000

15000 10000

5000

COKE, 80

0 PEPSI

C O KE P E PS I C O K E

The total volume of Pepsi in institute came out to be 26839, out of which Pepsi’s share came out to be 26039 i.e. 97% & that of Coca Cola came at 800 i.e. 3% of total volume sold in institutes.

5. CHILLING EQUIPMENT:


63

VISI: 382 OYC: 47 OWN: 359 I.B: 248

I. B 24

V IS 36

OY

OW

5%

35%

V IS I O Y C O W N I.B

The Pie chart shows the percentage of chilling equipments found in 793 retail shops of Noida, in which VISI coolers share in total was 36% to that of OWN coolers is 35% while of I.B (ice boxes) was 24% and the rest were OYC which came at 5%.

1) NUMBER OF VISI COOLER:


64


COKE 44% PEPSI 56%

P E PS I

C OK E

The number of VISI coolers that was found out of 793 shops were 382, out of which Pepsi has 215, 56% of the total VISI coolers in shops and Coca Cola has 167, 44% of the total VISI coolers found in shops.

2) OYC COOLERS:


65


COKE 21%

PEPSI 79%

P E P SI C OK E

The number of OYC coolers that was found out of 793 shops were 47, out of which Pepsi has 37, 79% of the total OYC coolers in shops and Coca Cola has 10, 21% of the total OYC coolers found in shops.

3) ICE BOX:


66


COKE 21%

PEPSI 79%

P E P SI

CO K E

The number of ICE BOXES that was found in 793 shops were 248, out of which Pepsi has 196, 79% of the total ICE BOXES in shops and Coca Cola has 52, 21% of the total ICE BOXES found in shops.

6. SIGNAGE:


67

GS: 48 DPS: 78 W.P: 38 COUNTER: 44 RACK: 87 IN THE SHOP: 58

GS

IN TH E S H

14

16%

DP 22 RAC 25% CO UN T 12%

W P 11

G S D P S W P C O U N T E RR A C K I N T H E S H

The Pie chart shows the percentage of signage found in 793 retail shops of Noida, in which GS (glow signs) share in total was 14% to that of DPS is 22% while of W.P (wall painting) was 11%, COUNTER came at 12%, RACK came at 25% and signage inside the shop were 16%.

1) G.S (GLOW SIGN):


68


COKE 10%

PEPSI 90%

P EP SI

COK E

The number of G.S that was found in 793 shops were 48, out of which Pepsi has 43, 90% of the total G.S in shops and Coca Cola has 5, 10% of the total G.S found in shops.

2) DPS:


69


COKE 14%

PEPSI 86%

P E PS I

CO KE

The number of DPS that was found in 793 shops was 78, out of which Pepsi has 67, 86% of the total DPS in shops and Coca Cola has 11, 14% of the total DPS found in shops.

3) W.P (WALL PAINTING):


70


COKE 5%

PEPSI 95%

P E PS I C OK E

The number of wall painting that was found in 793 shops was 38, out of which Pepsi has 36, 95% of the total wall paintings in shops and Coca Cola has 2, 5% of the total wall paintings found in shops.

4) COUNTER:


71


COKE 7%

PEPSI 93%

P E PS I

C OK E

The number of counters that was found in 793 shops was 44, out of which Pepsi has 41, 93% of the total counters in shops and Coca Cola has 3, 7% of the total counters found in shops.

5) RACK:


72


COKE 25%

PEPSI 75%

P E PS I

CO K E

The number of racks that was found in 793 shops was 87, out of which Pepsi has 65, 75% of the total racks in shops and Coca Cola has 22, 25% of the total racks found in shops.

6) SIGNAGE INSIDE THE SHOP:


73


COKE 10%

PEPSI 90%

P E PS I

CO KE

The number of signage inside the shop out of 793 shops was 58, out of which Pepsi has 52, 90% of the total signage inside shops and Coca Cola has 6, 10% of the total signage found inside the shops.

7.13 SWOT ANALYSIS:


74

STRENGTS 

    

A MULTI NATIONAL COMPANY GOOD BRAND RECOGNITION STRONG MARKETING STRATEGY STRONG ADVERTISING CAMPAIGN GOOD REACH TO MARKET ABILITY TO PROVIDE GOOD SALES PROMOTION SCHEMES

WEAKNESS

NON AVAILABILITY OF ALL PRODUCTS  POOR AFTER SALES SERVICE  INEFFICIENT ROUTE SALES AGENT  POOR DISTRIBUTION OF SCHEMES  PROMISES ARE NOT FULFILLED  LACK OF REFRIGERATING ASSETS DURING SUMMER SEASON 

OPPORTUNITIES   

SCOPE FOR GROWTH IN THE MARKET PEPSI SHARE IN TOTAL VOLUME OF MARKET IS 57% THERE IS STILL A LARGE MARKET FOR IT TO CAPTURE THERE IS A HUGE RURAL MARKET TO BE EXPLORED BY PEPSI

THREATS    

COCA COLA COMING INTO THE MARKET WITH AGGRESSIVE MARKETING STRATEGY. PEPSI LOOSING OUT TO COCA COLA ESPECIALLY IN THE URBAN MARKET. AVAILABILITY OF SWADESHI SUBSTITUTES IN THE MARKET. PEOPLE CHANGING ON TO FRUIT DRINKS BECAUSE OF FEAR OF PESTICIDES IN CARBONATED SOFT DRINKS.

8. FINDINGS: INSTITUTE OF MARKETING & MANAGEMENT

75

DEFICIENCIES IN SUPPLY CHAIN OF PEPSI: 1. PROBLEM FACED BY THE DISTRIBUTOR:

There is a great chance of damage in the product because of two reasons (a) the goods are transferred from a long distance. (b) the plastic bottles are more prone to damages during the summer season because of the heat conditions.  Damaged materials are not easily returned by the company people and it takes almost three months to get the damaged goods returned with the settlement of bill. Therefore a large amount of capital gets blocked and it creates disturbance in the distribution channel.  Less motivated work force of distribution channel, the sales person are not motivated enough to bring maximum sales during the day.  Most of the retailers were found keeping other products in the company owned coolers like Ice creams, milk, chocolates etc. this results in less storage in coolers and non availability of sufficiently chilled soft drinks for the consumers.  The retailers are not conscious enough to get the service & repairment of their cooling equipments done regularly, which resulted in frequent complains of cooling equipments getting out of order. 

2. PROBLEM FACED BY THE RETAILERS: 

Negligence made by the distributor: if the workforce of the distributor makes any kind of mistake in order taking and fulfillment of the order, the consequences are faced by the retailer.  The sales person of the distributor are not honest while distributing schemes to the retailers, therefore often the retailer gets part of the scheme or remains unaware of the schemes.  The sales people are less efficient in supplying goods to the retailers and are also negligent in keeping the cooling equipment especially the VISI coolers pure. Therefore the cooling equipments are often found to be stocked with rival brands which lower the sale of company products.  The company is less efficient in replacing the old and damaged coolers with new ones, which causes problem for the retailers.

9. CONCLUSION AND RECOMMENDATIONS: INSTITUTE OF MARKETING & MANAGEMENT

76

9.1 CONCLUSION: During my stay in the organisation as Summer Trainee I discovered a few discrepancies in the market, which have been mentioned earlier. Some of the conclusions drawn from my study during my stay are mentioned as follows: 

Lack of proper schemes has been a major reason behind the unfavorable response at some of the outlets. On the other hand Coca Cola had been quite active in this regard and gave attractive schemes in this season. Although the schemes provided by Pepsi were found better than that Coca Cola but the major reason for Pepsi lacking behind was inefficient distribution of the schemes to the retail outlets.



It has been found that quite often then not the schemes provided by the distributor do not reach the intended customers. Most often the outlet owners do not give these schemes (gifts) to the customers. This calls for strict vigilance by the higher authority to make sure that the schemes reach to the customer.



The route agent seems to be indifferent to his route sales and also towards the retailer problems. Most of them were in the habit of taking leaves frequently which resulted in loss of route sales and were not motivated enough to increase his route sales and seems to be harried a lot.



Most of the vehicles were not in proper working condition and also most of the sales people are not provided with basic utility tools for unloading and supply of stock.



It has been seen that most of the shop keepers were not satisfied with the service provided by Pepsi sales man also there was large amount of dissatisfaction among the shop keepers regarding the cooling equipments provided by the company. Coca Cola was found to be functioning well especially in the urban markets with their aggressive sales promotion schemes and most shopkeepers were satisfied with their products.

9.2 RECOMMENDATION:


77

Following are some of the recommendations put forwarded which may be of use for the organisation:  The supply chain should be checked regularly by the higher employees so that the deficiencies can be known and proper actions should be taken to remove the same. 

Care should be taken by the distributor that the schemes provided for the retailers are available to them without any distortion and that the problems faced by them are sorted out quickly by the sales executive.



The distributor should try to solve the problems faced by the retailers with respect to the chilling equipment provided by the company, especially during the peak summer season which causes a huge problem for the retailers to keeps the soft drinks chilled.



The distributor should keep a routine check on the distribution of sales generating assets to the retailers and look for proper display of its products in the shops.



Attractive incentive schemes for the route agents to increase the route sales should be taken into consideration. This will help reduce absenteeism among the route agents and will also help increasing sales of the depot.



It has been seen that most of the gifts which come out of lucky draw or schemes doesn’t reach the customers in time. Care should be taken that these gifts reach in proper condition and in time to the customers who will help create goodwill of the company.



Rural area and villages should be targeted properly and it should be seen that all the products and schemes that are provided by the depot are reaching to the ultimate consumers.



There has always been a complain from the retailers that all the flavors and the products does not reach them as and when wanted by them, in this regard the sales person should be efficient in catering to the market needs and help satisfying the demand of the retailers.

10. LIMITATIONS: INSTITUTE OF MARKETING & MANAGEMENT

78



The research findings are based on the 793 retail shops visited, which belongs to Noida region only.



The time taken to complete the research work was two months from the month of May to June, when the sales are at peak and hence the data’s can fluctuate.



Some of the data’s provided by the retailers may not be authentic as they had low level of interest on company’s research work.



Some of the retailers were providing wrong data by over quoting their sales as they wanted to create good impression in front of the distributor.



The research work is the outcome of the help from other persons also working in the organisation which are subjected to human error.

11. BIBLIOGRAPHY/REFERENCE: INSTITUTE OF MARKETING & MANAGEMENT

79

Summer Internship Report - Pepsi

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