Distribution Channel of Pepsico

A STUDY ON DISTRIBUTION CHANNEL OF PEPSICO
TABLE OF CONTENT
EXECUTIVE SUMMARY 02-03
1 CHAPTER 1
INTRODUCTION 04-07
2 CHAPTER 2 08-34
INDUSTRY PROFILE
COMPANY PROFILE
 HISTORY
 MARKETING STRATEGY
 MARKETING OVERVIEW
 SALES AND DISTRIBUTION
3 CHAPTER 3 35-37
REVIEW OF LITERATURE
4 CHAPTER 4 38-44
RESEARCH METHODOLOGY
 TITLE OF THE STUDY
 STATEMENT OF THE PROBLEM
 OBJECTIVES OF THE STUDY
 SCOPE OF THE STUDY
 RESEARCH METHODOLOGY
 LIMITATIONS OF THE STUDY
5 CHAPTER 5 45-73
ANALYSIS AND INTERPRETATION
6. CHAPTER 6 74-76
FINDINGS AND RECOMMENDATIONS
7. CHAPTER 7 77-78
CONCLUSION
8 CHAPTER 8 79-82
BIBLIOGRAPHY
QUESTIONNAIRE
EXECUTIVE SUMMARY
1
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.
2
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 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.
3
INTRODUCTION
4
INTRODUCTION
Distribution Channel is the chain of businesses or intermediaries
through which a good or service passes until it reaches the end consumer.
A distribution channel can include wholesalers, retailers, distributors and
even the internet. Channels are broken into direct and indirect forms,
with a "direct" channel allowing the consumer to buy the good from the
manufacturer and an "indirect" channel allowing the consumer to buy the
good from a wholesaler. Direct channels are considered "shorter" than
"indirect" ones.
The Distribution Channel
Distribution is also a very important component of Logistics & Supply
chain management. Distribution in supply chain management refers to the
distribution of a good from one business to another. It can be factory to
supplier, supplier to retailer, or retailer to end customer. It is defined as a
chain of intermediaries; each passing the product down the chain to the
next organization, before it finally reaches the consumer or end-user. This
process is known as the 'distribution chain' or the 'channel.' Each of the
elements in these chains will have their own specific needs, which the
producer must take into account, along with those of the all-important
end-user.
Channels
A number of alternate 'channels' of distribution may be available:
 Distributor, who sells to retailers,
 Retailer (also called dealer or reseller), who sells to end customers
5
 Advertisement typically used for consumption goods
Distribution channels may not be restricted to physical products alice from
producer to consumer in certain sectors, since both direct and indirect
channels may be used. Hotels, for example, may sell their services
(typically rooms) directly or through travel agents, tour operators, airlines,
tourist boards, centralized reservation systems, etc. process of transfer
the products or services from Producer to Customer or end user.
There have also been some innovations in the distribution of services. For
example, there has been an increase in franchising and in rental services -
the latter offering anything from televisions through tools. There has also
been some evidence of service integration, with services linking together,
particularly in the travel and tourism sectors. For example, links now exist
between airlines, hotels and car rental services. In addition, there has
been a significant increase in retail outlets for the service sector. Outlets
such as estate agencies and building society offices are crowding
out traditional grocers from major shopping areas.
Market factors
An important market factor is "buyer behavior"; how do buyer's want to
purchase the product? Do they prefer to buy from retailers, locally, via
mail order or perhaps over the Internet? Another important factor
is buyer needs for product information, installation and servicing. Which
channels are best served to provide the customer with the information
they need before buying? Does the product need specific technical
assistance either to install or service a product? Intermediaries are often
6
best placed to provide servicing rather than the original producer - for
example in the case of motor cars.
The willingness of channel intermediaries to market product is also a
factor. Retailers in particular invest heavily in properties, shop fitting etc.
They may decide not to support a particular product if it requires too
much investment (e.g. training, display equipment, warehousing).
Another important factor is intermediary cost. Intermediaries typically
charge a"mark-up" or "commission" for participating in the channel.
This might be deemed unacceptably high for the ultimate producer
business.
Producer factors
A key question is whether the producer have the resources to perform the
functions of the channel? For example a producer may not have the
resources to recruit, train and equip a sales team. If so, the only option
may be to use agents and/or other distributors.
Another factor is the extent to which producers want to maintain control
over how, to whom and at what price a product is sold. If a manufacturer
sells via a retailer, they effective lose control over the final consumer
price, since the retailer sets the price and any relevant discounts or
promotional offers. Similarly, there is no guarantee for a producer that
their product/(s) are actually been stocked by the retailer. Direct
distribution gives a producer much more control over these issues.
7
INDUSTRY
&
COMPANY PROFILE
8
INDUSTRY PROFILE
Barbara Murray (2006c) explained the soft drink industry by stating, “For
years the story in the nonalcoholic sector centered on the power struggle
between…Coke and Pepsi. But as the pop fight has topped out, the
industry's giants have begun relying on new product flavors…and looking
to noncarbonated beverages for growth.” In order to fully understand the
soft drink industry, the following should be considered: the dominant
economic factors, five competitive sources, industry trends, and the
industry’s key factors. Based on the analyses of the industry, specific
recommendations for competitors can then be created.
Soft Drink Industry, the production, marketing, and distribution
of nonalcoholic, and generally carbonated, flavored, and sweetened,
water-based beverages. The history of soft drinks in the United States
illustrates important business innovations, such as product development,
franchising, and mass marketing, as well as the evolution of consumer
tastes and cultural trends.
Many Europeans long believed natural mineral waters held medicinal
qualities and favored them as alternatives to often-polluted common
drinking water. By 1772, British chemist Joseph Priestley invented a means
to synthetically carbonate water, and the commercial manufacturing of
artificial mineral waters began with Jacob Schweppes’s businesses in
Geneva in the 1780s and London in the 1790s. The first known U.S.
manufacturer of soda water, as it was then known, was Yale University
chemist Benjamin Silliman in 1807, though Joseph Hawkins of Baltimore
secured the first U.S. patent for the equipment to produce the drink two
9
years later. By the 1820s, pharmacies nationwide provided the beverage
as a remedy for various ailments, especially digestive.
Though the drinks would continue to be sold in part for their therapeutic
value, customers increasingly consumed them for refreshment, especially
after the 1830s, when sugar and flavorings were first added. Soda
fountains emerged as regular features of drugstores by the 1860s and
served beverages flavored with ginger, vanilla, fruits, roots, and herbs. In
1874 a Philadelphia store combined two popular products to make the first
known ice-cream soda. The first cola drink appeared in 1881.
In the late 1800s, several brands emerged that were still popular a
century later. Pharmacists experimenting at local soda fountains invented
Hires Root Beer in Philadelphia in 1876, Dr. Pepper in Waco, Texas, in
1885, Coca-Cola in Atlanta, Georgia, in 1886, and Pepsi-Cola in New Bern,
North Carolina, in 1893, among others. Reflecting two of the middle-class
mores of the period—temperance and feeling overwhelmed by the pace
and burdens of modern life—early marketing touted these drinks as
alternatives to alcohol and/or as stimulants. Coca-Cola inventor John S.
Pemberton's first print advertisement for his creation read "Delicious!
Refreshing! Exhilarating! Invigorating!," while Asa Candler, the eventual
founder of the Coca-Cola Company, promoted his product in the years
leading up to Prohibition as "The Great National Temperance Beverage."
The history of Coca-Cola reveals how national markets in soft-drink brands
developed. To limit the cost of transportation, manufacturers
of syrup concentrates licensed bottlers to mix the product, package, and
distribute it within a specific territory. Candler underestimated the
10
importance of the bottling side of the business and in 1899 sold the
national rights to bottle Coke for a fairly small sum to Benjamin F. Thomas
and Joseph B. Whitehead, who then started a national network of bottlers,
creating the basic franchising format by which the industry is still run.
Candler and his successor after 1923, Robert Woodruff, were aggressive
and innovative in marketing Coke as a leading consumer product and
cultural icon. Coupons for free samples and giveaways of items bearing
the drink's name and logo publicized the beverage, and pioneering efforts
in market research helped define how best to take advantage of
advertising and promotions. During World War II, Woodruff opened bottling
operations overseas to supply U.S. military personnel, and after the war,
Coke was poised to enter these international markets, not only as a
consumer product, but also as a symbol of "the American Century."
After World War II, the soft-drink industry became a leader in television
advertising, the use of celebrity endorsements, catchy slogans, tie-ins
with Hollywood movies, and other forms of mass marketing, particularly
focusing on young consumers and emphasizing youth-oriented themes. As
health and fitness consciousness and environmental awareness became
popular, the industry responded with sugar-free and low-calorie diet
sodas, beginning in the 1960s, and later, caffeine-free colas and
recyclable containers.
The most famous rivalry within the industry has been between Coke
and Pepsi, which waged two rounds of "cola wars" in the twentieth
century. In the 1930s and 1940s, Pepsi challenged the industry leader by
offering a twelve-ounce bottle for the same five-cent price as Coke's
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standard six ounces. In the 1970s and 1980s, "Pepsi challenge" taste-tests
led Coke to change its formula in 1985, a campaign that failed because it
underestimated the attachment Coke drinkers had to the tradition and
symbolism of the brand.
In 2001, the soft-drink industry included approximately five hundred U.S.
bottlers with more than 183,000 employees, and it achieved retail sales of
more than $61 billion. Americans that year consumed an average of
55 gallons of soft drinks per person, up from 48 in 1990 and 34 in 1980.
The nine leading companies accounted for 96.5 percent of industry sales,
led by Coca-Cola with more than 43 percent of the soft drink market and
Pepsi with 31 percent. Seven individual brands accounted for almost two-
thirds of all sales: Coca-Cola Classic (itself with nearly 20 percent of the
market), Pepsi-Cola, Diet Coke, Mountain Dew (a Pepsi product), Sprite (a
Coca-Cola product), Dr. Pepper, and Diet Pepsi. Domestic sales growth
slowed in the late 1990s because of increased competition from coffee
drinks, iced teas, juices, sports drinks, and bottled waters. The industry
continues, however, to tap lucrative international markets; Coke and Pepsi
each have bottling operations in more than 120 countries.
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COMPANY PROFILE
Type : Public (NYSE: PEP)
Founded : Chicago, Illinois, U.S. (1965)
Headquarters : Purchase, New York, U.S.
Area served : Worldwide
Key people : Indra Krishnamurthy Nooyi(Chairwoman, President
& CEO )
Industry : Food Non-alcoholic beverage
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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".
14
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.
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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
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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, Thumps 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
17
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 Coca- Cola 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.
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MARKETING STRATEGY
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
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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 criticized
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. Pop tub 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.
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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 sponsorship deals in international cricket teams. The
Pakistan cricket team are just one of the teams that the brand sponsors.
The team wears the Pepsi logo on the front of their test and ODI test
match clothing.
COMPETITION
The Coca-Cola Company has historically been considered PepsiCo’s
primary competitor in the beverage market, and in December 2005,
PepsiCo surpassed The Coca-Cola Company in market value for the first
time in 112 years since both companies began to compete. In 2009, the
Coca-Cola Company held a higher market share in carbonated soft
drink sales within the U.S. In the same year, PepsiCo maintained a higher
share of the U.S. refreshment beverage market, however, reflecting the
differences in product lines between the two companies. As a result of
mergers, acquisitions and partnerships pursued by PepsiCo in the 1990s
and 2000s, its business has shifted to include a broader product base,
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including foods, snacks and beverages. The majority of PepsiCo's
revenues no longer come from the production and sale of carbonated soft
drinks. Beverages accounted for less than 50 percent of its total revenue
in 2009. In the same year, slightly more than 60 percent of PepsiCo's
beverage sales came from its primary non-carbonated brands,
namely Gatorade and Tropicana.
PepsiCo's Frito-Lay and Quaker Oats brands hold a significant share of the
U.S. snack food market, accounting for approximately 39 percent of U.S.
snack food sales in 2009. One of PepsiCo's primary competitors in the
snack food market overall is Kraft Foods, which in the same year held 11
percent of the U.S. snack market share.
PRODUCTS AND BRAND
PepsiCo’s product mix as of 2009 (based on worldwide net revenue)
consists of 63 percent foods, and 37 percent beverages. On a worldwide
basis, the company’s current products lines include several
hundred brands that in 2009 were estimated to have generated
approximately $108 billion in cumulative annual retail sales.
The primary identifier of companies' main brands within the food and
beverage industry are those which generate annual sales exceeding $1
billion, and 19 of PepsiCo's brands met this description as of 2009: Pepsi-
Cola, Mountain Dew, Lay's, Gatorade, Tropicana, 7Up, Doritos, Lipton Teas,
Quaker Foods, Cheetos, Mirinda, Ruffles, Aquafina, Pepsi Max, Tostitos,
Sierra Mist, Fritos, and Walker's.
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PACKAGING AND RECYCLING
Environmental advocates have raised concern over the environmental
impacts surrounding the disposal of PepsiCo’s bottled beverage products
in particular, as bottle recycling rates for the company’s products in 2009
averaged 34 percent within the U.S. The company has employed efforts to
minimize these environmental impacts via packaging developments
combined with recycling initiatives. In 2010, PepsiCo announced a goal to
create partnerships that prompt an increase the beverage container
recycling rate in the U.S. to 50 percent by 2018.
One strategy enacted to reach this goal has been the placement of
interactive recycling kiosks called “Dream Machines”
in supermarkets, convenience stores and gas stations, with the intent of
increasing access to recycling receptacles. [85][86] The use of resin to
manufacture its plastic bottles has resulted in reduced packaging weight,
which in turn reduces the volume of fossil fuels required to transport
certain PepsiCo products. The weight of Aquafina bottles was reduced
nearly 40 percent, to 15 grams, with a packaging redesign in 2009. Also in
that year, PepsiCo brand Naked Juice began production and distribution of
the first 100 percent post-consumer recycled plastic bottle.
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Our Mission
"To be the world's premier consumer Products Company focused on
convenience food 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."
Our Vision
"To build India’s leading total beverage company, delighting consumers by
best meeting their everyday beverage needs, and stakeholders, by
delivering performance with purpose, through our talented people."
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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
25
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:
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The value delivery process consists of the value creation and delivery
sequence. This is done in three phases. The first phase, choosing the
value, represents the homework done by the marketing department
before the product exists. Marketing is required to segment the market,
select the appropriate the target market, and develop the offering’s value
proposition. This is known as Segmentation, Targeting and Positioning and
is the essence of strategic marketing.
Once the business unit has chosen the value, the second phase is
providing the value. Marketers need to determine specific product
features, prices and distribution.
The task in the third phase is communicating the value by utilizing the
sales force, sales promotion, advertising, and other communication tools
to announce and promote the product. Each of these value phases has
different cost implications.
SALES AND DISTRIBUTION NETWORK OF PEPSICO INDIA.
COMPANY
FOBO
COBO
WAREHOUSE
27
C & F Agents
DISTRIBUTERS
SALESMAN SALESMAN
WHOLESALER
RETAILER
SLUMS
RETAILER
CUSTOMER
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.
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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.
29
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
30
TDM MDM
ADC MDC
CE ME
SALES PERSON MARKETING

ASSISTANT
MUM – Marketing Unit Manager:
In charge of specific zones (e.g. north, south, east, west) and report to the
corporate office.
UM - Unit Manager:
In charge of day to day operations and supervision of all the functions
within the organizations including operations, logistics, sales and
distribution, marketing. The Unit Manager reports to the MUM.
TDM - Territory Development Manager:
TDM is the in charge of the sales and distribution network of a particular
territory within a zone. Responsible for the daily, monthly and annual
sales within the territory decides the daily schemes for products and
incentives for salespersons. He is also responsible for cost effectiveness,
profit generation and profit maximization within the territory.
31
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.
32
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 V.C. coolers. 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 V.C coolers.
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
33
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 liberalization 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
34
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.
35
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.
36
REVIEW OF LITERATURE
1. REVIEW OF LITERATURE
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
37
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.
38
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.
39
RESEARCH METHODOLOGY
40
REARCH METHODOLOGY
MEANING OF RESEARCH:
Research in a parlance refers to a search for knowledge. One can also
define research as a systematic search for pertinent information on
specific topic. In fact research is an art of scientific investigation.
DEFINITION:
According to Clifford woody “Research comprises defining and redefining
problem, formulating hypothesis or suggested solutions, collecting,
organizing and evaluating data, making deduction and reaching
conclusion to determine whether they fit the formulating hypothesis”. A
research design is a logical and systematic plan preparing for directing a
research study. It specified the objective of the study the methodology
and techniques to be adopted for achieving the objective. It constitutes
the blue print for the collection, measurement and analysis of the data.
Methodology is defined as “A particular procedure or set of procedures,
the analysis of the principle or procedure of enquiry in particular fields.”
This chapter gives a clear picture of how the study has been carried on. It
summarizes the procedure in this study. It describes the objective of the
study, the basic for the final analysis the methods of data collection, for
selecting samples and limitation of the study. The value of any scientific
and systematic study lies in its methodology.
41
TITLE OF THE STUDY:
“A STUDY ON DISTRIBUTION CHANNEL AT PEPSICO”
NEED OF THE STUDY:
The study was mainly conducted to identify distribution channel Strategy
of PepsiCo.
STATEMENT OF THE PROBLEM:
The study was conducted to know the problems faced by the retailers and
distributors and their perception towards the company and the customer’s
perception towards the PepsiCo.
42
PURPOSE AND OBJECTIVE OF THE STUDY:
The objective of the study was:
 TO know distribution channel Strategy of PepsiCo.

 To know the importance of Distribution channel strategy in
Positioning of the product.

 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.
STUDY DESIGN:
“A study design is the arrangement of the condition for the collection and
analysis of data in a manner which helps the purpose of the study.” As the
study was made on the distribution channel of PepsiCo and such
documents being considered confidential, the questionnaire method of
surveying the distributer was adopted and separate questionnaire was
prepared for the customers and retailers. Each question has 2-4 options,
giving sufficient options to the respondents. On the bases of the answers
to these questions, the findings are analyzed.
43
RESEARCH METHODOLOGY:
Method of research- Description research was used.
Tools used for data collection: A questionnaire was structured
together the primary
Information.
SOURCES OF DATA COLLECTION:
The data has been collected from both primary and secondary methods
have been used.
Primary data- It was collected by surveying the distributers of PepsiCo
and Retailers and randomly to the customers going to retailers.
Secondary data- it was collected from,
• General library research source like marketing book.
• Advertising journals like magazines and newspaper.
• Internet: PepsiCo website, wiki
Structured questionnaire: Structured questionnaire is a printed
list of questions to be filled by the respondents. The structured questions
are being made as short as possible and simple to understand. The
44
questionnaire is designed such that it helps to elicit the accurate
information.
TOOLS AND TECHNIQUES:
The first hand information was collected by interviewing the Distributor
regarding the
Strategies followed by the company for distribution channel. A
questionnaire was formulated and circulated to the retailers and
customers. Hence the survey method is the tool used here for data
collection.
SAMPLING DESIGN:
• Sample unit: Distributers of PepsiCo, Retailers and customers
• Sample size: 100 respondents
• Sampling technique: Random sampling
• Sampling method: Probability sampling
• Place of study: Kankarbhagh, Boring road
PLAN OF ANALYSIS:
The questionnaires were tabulated using tally method. The tabulated data
was analyzed and inferences were drawn. The tabulated data has been
depicted in the form of a graph. The promoters of different brands working
there were not taken for sample size.
45
LIMITATION OF THE STUDY:
• Biased- The study was purely based on the information provided by
the respondents and they may be biased.
• Time constraint- The study was conducted in a short period of time
and a detailed
study was not possible.
• Cost constraint- This being a academic study suffers from cost
constraint.
• Area constraint- The area of study is limited to only Bangalore city.
• Sample constraint- The sample size was not large enough as
planned, as the time factor was the key limitation in the study.
• Confidential constraint- Due to confidential constraint certain
information, not all details could be obtained.
46
47
TABLE 1.
Q.1. PepsiCo have good distributions channel?
TABLE SHOWING WHAT RESPONDENT THINKS ABOUT PEPSICO
DISTRIBUTION CHANNEL.
Sl No. Particulars No of Respondent Percentage

1 Strong Agree 32 32
2 Agree 43 43
3 Can’t Say 05 05
4 Disagree 20 20
Total 100 100
ANALYSIS:
From above table it can be observed that it can be observed that 43% of
the respondent believe that PepsiCo has good distribution channel and 32
% of the retailer and distributer strongly agree that company has best
distribution channel while 20% disagree that PepsiCo don’t have good
distribution channel and 5% of them can’t say.
GRAPH: 1
SHOWING WHAT RESPONDENT THINKS ABOUT PEPSICO
DISTRIBUTION CHANNEL
48
INTERPRETATION: The data shows that company have good distribution
channel but should focus more on their distribution channel and try to
convert customer in strongly agree respondent by providing them better
services and schemes.
TABLE 2.
Q.2. Distribution channel has an important role in positioning of the
product?
49
TABLE SHOWING DOES DISTRIBUTION CHANNEL IMPORTANT FOR
POSITIONING THE PRODUCT

2 Agree 45 45
3 Can’t Say 05 5
4 Disagree 08 20
Total 100 100
ANALYSIS:
From above table it can be observed that 45% of the respondent agree
that Distribution channel plays an important role in building the
positioning of the company and 30% strongly support that While 20%
doesn’t agree with the statement while 5% chooses can’t say.
GRAPH: 2
SHOWING DOES DISTRIBUTION CHANNEL IMPORTANT FOR
POSITIONING THE PRODUCT
50
INTERPRETATION: 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. Most of the retailer and distributer
support the statement that means if distribution channel is improved more
it will help in the positioning of the company.
TABLE 3.
Q.3. you being provided the V.C coolers by the company?
TABLE SHOWING THAT RETAILERS ARE PROVIDED THE V.C COOLERS OR NOT.
51

1 Yes 70 70
2 No 30 30
Total 100 100
ANALYSIS:
From above table it can be observed that 70% are saying that they are
getting V.C. coolers from the company side to keep their product but 30 %
are saying that they are not getting any V.C coolers from the company.
GRAPH 3:
SHOWING THAT RETAILERS ARE PROVIDED THE V.C COOLERS OR
NOT.
52
INTERPRETATION:
It means company is not focusing on all retailers that major concerns for
the organization. Most of the retailers having the V.C coolers which is
given by the company but some of them don’t have because they are
smaller retails where sales are very less, also some of the retailers puts
different brands into the same V.C coolers by which also they loss their V.C
coolers.
53
TABLE: 4
Q.4. PepsiCo has good relationship with the distributors/retailers?
TABLE SHOWING THE RELATIONSHIP OF THE COMPANY WITH THE
DISTRIBUTORS AND RETAILORS

2 Agree 43 43
3 Can’t Say 05 5
4 Disagree 20 20
Total 100 100
ANALYSIS: From above table it can be observed that 43% of the retailer
and distributor Agrees that PepsiCo has a good relation with them and
32% strongly support the statement while 20% of the retailer and
distribution was against the statement means they said PepsiCo doesn’t
having good relation with them.
GRAPH 4:
SHOWING THE RELATIONSHIP OF THE COMPANY WITH THE
RESPONDENT
54
INTERPRETATION: It shows that company should thing that how can
they maintain better relationship with every retailers and distributors.
TABLE 5:
Q.5. Perception of retailers/distributors towards the PepsiCo’s Distribution
Channel?
TABLE SHOWS THE PERCEPTION OF RETAILERS / DISTRIBUTORS TOWARDS
THE PEPSICO’S DISTRIBUTION CHANNEL
55

1 Excellent 27 27
2 Good 55 55
3 Bad 13 13
4 Worst 05 05
Total 100 100
ANALYSIS: From above table it can be observed out of 100 % respondent
only 27% are saying that PepsiCo have excellent distribution channel and
5% are saying that PepsiCo have worst distribution and 13% of them says
it has bad distribution channel but 55 % are saying that PepsiCo have
good distribution channel.
GRAPH 5:
SHOWS THE PERCEPTION OF RETAILERS / DISTRIBUTORS
TOWARDS THE PEPSICO’S DISTRIBUTION CHANNEL
56
INTERPRETATION: 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.
TABLE 6:
Q.6. How much time, Company takes to make reach the product at retailer
shop?
57
TABLE SHOWS IN HOW MUCH TIME RETAILER SHOP GET THEIR PRODUCTS

1 One day 46 46
2 Three Day 37 37
3 One Week 17 17
4 One Month 00 00
Total 100 100
ANALYSIS: From above table it can be observed out of 100 % respondent
only 46% of retailers get their stock in one day and 37% of the respondent
gets their stock in 3 days while only 17% of the respondent gets their
stock in 01 week.
GRAPH 6:
SHOWS IN HOW MUCH TIME RETAILER SHOP GET THEIR PRODUCTS
58
INTERPRETATION: Here area of concern that how company can make
happy those respondent who don’t receive their stock in time. They
should provide all the retailers on time stock which help to make good
distribution channel and well as build the positioning of the company.
TABLE 7:
Q.7. If better scheme is given then replace with coke"
59
TABLE SHOWS THAT IF BEETER SCHEME IS PROVIDED BY COKE TO
THE DISTRIBUTER OF PEPSICO CAN THEY SWITCH

2 Agree 40 40
3 Can’t Say 20 20
4 Disagree 10 10
Total 100 100
ANALYSIS: From above table it can be observed that 40% of the
respondent (distributors) Agrees that they can switch over coke if better
scheme is provide to them and 30% are strongly agree to switch over coke
while 20% can’t able to decide but 10% of distributer are loyal to their
company they don’t want to switch over the Company.
GRAPH 7:
THAT IF BEETER SCHEME IS PROVIDED BY COKE TO THE
DISTRIBUTER OF PEPSICO CAN THEY SWITCH
60
INTERPRETATION: It shows that if company has to maintain good
relationship with retailers and distributors then company will be focus on
better services and schemes otherwise they are ready to switch over the
company.
TABLE 8:
Q.8. You are having logistics facility of company or own?
61
TABLE SHOWS THE STATUS OF THE LOGISTIC FACILITY

1 Own 70 70
2 Company 30 30
Total 100 100
ANALYSIS:
From above table it can be observed that 70% of the respondent
(distributer) having their own logistics so that they can keep some stock
with them while 30% of the respondent don’t have their own logistic they
depends on company logistics.
GRAPH 8:
SHOWS THE STATUS OF THE LOGISTIC FACILITY
62
INTERPRETATION:
Most of the respondents having their own logistics which is good for both
the company and retailers or customers because retailer can easily got
the stock by their distributers and can fulfill the customers wants but if
distributers don’t have their own logistics then it takes time to reach the
products to the retailer.
TABLE 9:
63
Q.9. Does Logistic Facility affects the Distribution Channel?
TABLE SHOWS THERE IS AN AFFECT OF LOGISTIC FACILITY ON DISTRIBUTION
CHANNEL

2 Agree 60 60
3 Can’t Say 10 10
4 Disagree 00 00
Total 100 100
ANALYSIS: From above table it can be observed that 60% of the
respondent (distributor) Agrees that logistic facility affects the distribution
channel and 30% strongly supports the statement while 10% of the
respondent is against the statement means they said PepsiCo doesn’t
having good relation with them while there is no respondent disagree that
logistic facility affects distribution channel.
GRAPH 9:
TABLE SHOWS THERE IS AN AFFECT OF LOGISTIC FACILITY ON
DISTRIBUTION CHANNEL
64
INTERPRETATION: It shows that Company and the distributor must have
best logistic facility to deliver the stock and maintain a good relationship
with retailers.
TABLE 10:
65
Q.10. Perception of respondent towards the PepsiCo Distribution channel if
V.C coolers provided by the company.
TABLE SHOWS THE PERCEPTION OF RESPONDENT TOWARDS
PEPSICO IF V.C COOLERS IS PROVIDED BY THE COMPANY

1 Excellent 37 37
2 Good 58 58
3 Bad 05 05
4 Worst 00 00
Total 100 100
ANALYSIS: From the above table it can be observed that 58% of the
respondent (retailer and distributor) says that it is good if company
provides them the V.C Coolers and 37% of them says it’s excellent if they
got the V.C coolers by the company while 5% of the respondent says its
bad but says it worst.
GRAPH 10:
SHOWS THE PERCEPTION OF RESPONDENT TOWARDS PEPSICO IF
V.C COOLERS IS PROVIDED BY THE COMPANY
66
INTERPRETATION: PepsiCo have good distribution channel because they
are giving V.C coolers to the retailers, they should provide the V.C Coolers
to the entire retailer so that it help to attract the customers as well
building the brand positioning.
TABLE 11:
Q.11. How many times you go for soft drink in a week?
TABLE SHOWS THE NUMBER OF TIMES CUSTOMER VISITING RETAILER FOR
SOFT DRINK IN A WEEK

1 One 10 10
2 Two - Three 25 25
3 Three - Five 53 53
67
4 More than Five 12 12

Total 100 100
ANALYSIS: If we see the table then we find that out of 100%respondent,
only 53% respondent are going 3-5 times for soft drink in a week and 25%
respondent are saying that they are going 2-3 times in a week while 10%
of them goes only once in a week and more there are 12 % of customers
who goes more than 5 times in a week.
GRAPH 11:
SHOWS THE NUMBER OF TIMES CUSTOMER VISITING RETAILER
FOR SOFT DRINK IN A WEEK
68
INTERPRETATION: Here we find that walk-in of the customer is more to
the retailers shop means large number of soft drinks is selling in the
market.
TABLE 12:
Q.12. Which brand’s soft drink you usually drink?
TABLE SHOWS THAT WHICH BRAND IS PREFERRED MORE

1 PepsiCo 42 42
2 Coke 33 33
4 Others 25 25
Total 100 100
ANALYSIS:
If we see the chart then we find that out of 100%respondent, 42%
respondent prefers PepsiCo while 33% respondent prefers Coke and rest
25% respondent prefer others.
69
GRAPH 12:
SHOWS THAT WHICH BRAND IS PREFERRED MORE
INTERPRETATION:
70
In this we find that after having different products in PepsiCo, it can’t able
to capture the market in larger market. Their competitors are giving tuff
competition to their Company.
TABLE 13:
Q.13. Do you get easily your demanded brand in the market?
TABLE SHOWS DO THE CUSTOMER EASILY GETS THEIR PREFERRED BRAND IN
THE MARKET

1 Yes 87 87
2 No 13 13
Total 100 100
ANALYSIS:
From the above table we find that out of 100%respondent, only 87%
respondent are agree to say whatever brand they demanded they are
easily get that but 13% 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.
71
GRAPH 13:
TABLE SHOWS DO THE CUSTOMER EASILY GETS THEIR PREFERRED
BRAND IN THE MARKET
INTERPRETATION:
It proves that PepsiCo is having a good distribution Channel because
customers are find to find out their desired product in the retailer shop.
72
TABLE 14:
Q.14. Why you prefer this brand?
TABLE SHOWS THE FACTOR FOR CHOOSING BRAND

1 Availability 18 18
2 Advertisement 38 38
3 Taste 42 42
4 Others 02 02
Total 100 100
ANALYSIS:
From the above table we can find that 42% respondent prefer the brand
because its taste while 38% of the respondent prefers this brand because
of its Advertisements while 18% prefers because of Availability while 2%
go for others things.
73
GRAPH 14:
SHOWS THE FACTOR FOR CHOOSING BRAND
INTERPRETATION: This proves what a customer prefers to choose the
brand, advertisement also plays a major role in attracting the customer
and the taste. Most of the respondent like the of its carbonated fizz so
PepsiCo should make their product more fizzy.
74
FINDINGS
&
RECOMMENDATION
75
FINDINGS AND RECOMMENDATION

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.

 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.
76
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.

 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.
77
CONCLUSION
78
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.
79
BIBLIOGRAPHY
80
BILBLIOGRAPHY
BOOKS:
I. Philip Kilter, Marketing management, Pearson education, New
Delhi, seventh Indian print 2005.
WEB/INTERNET RESOURCES:
 PEPSICO INTERNATIONAL OFFICIAL WEBSITE,
 PEPSICO INDIA WEBSITE.
 PEPSICO INTERNATIONAL INTERNAL REPORT.
 http://en.wikipedia.org/wiki/PepsiCo
 www.pepsicoindia.com.
 http://www.pepsico.com/
QUESTIONNAIRE:
Dear Sir
81
On behalf of PepsiCo India Ltd. Please help me in doing my project by

taking a couple of minutes to tell me about the service that you have
received so far. This will be used only for academic purpose only
Name _______________________
01. PepsiCo have good distributions channel?

a. Strongly agree b. Agree c. Can’t say d. strongly disagree e. Disagree
02. Distribution channel has an important role in positioning of

the product?
a. Strongly agree b. Agree c. Can’t say d. disagree
03. Are you being provided the V.C.coolors by the company?

a. yes b. no
04. PepsiCo has good relationship with the distributors/retailers?

05. Perception of retailers/distributors towards the PepsiCo’s

Distribution Channel?
a. Excellent b. good c. bad d. worst
06. 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.
07. If better scheme is given then replace with coke"

a. Strongly agree b. Agree c. Can’t say d. strongly disagree e. Disagree
08. You are having logistics facility of company or own?

a. own b. Company
82
09. Does Logistic Facility affects the Distribution Channel?

10. Perception of retailers/distributors towards the PepsiCo Distribution channel if V.C

coolers provided by the company.
A. Excellent
B. Good
C. Bad
D. Worst
11. 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
12. Which brand’s soft drink you usually drink?

a. PepsiCo b. Coke c. others.
13. Do you get easily your demanded brand in the market?

a. yes b. No
14. Why you prefer this brand?

a. Availability b. Advertisement c. Taste d. Others………..
83

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What is the purpose of the study?

What is the purpose of the study?

What are the factors responsible for PepsiCo losing market leadership to Coca Cola in India?

What are the factors responsible for PepsiCo losing market leadership to Coca Cola in India?

A STUDY ON DISTRIBUTION CHANNEL OF PEPSICO

EXECUTIVE SUMMARY 02-03

snack food companies in the world. PepsiCo was founded by Caleb

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

segment PepsiCo Established its dominance in the market owing to its

expertise in sales, marketing, operations and local collaboration. PepsiCo

But, the most important are; Distribution channel is having an important

role in positioning of the product because we know that distribution

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

snatch considerable market share from PepsiCo. Acquisition of well-

the marketing initiatives and policies of PepsiCo India in detail with

particular focus on its partner relationship management.

objectives. The data collected for research is primary and secondary.

Primary data is collected by observation, interviews and questionnaires.

conclusion of the study that reveals some important findings regarding

the strategy and corporate structure and strategy of PepsiCo India.

Distribution Channel is the chain of businesses or intermediaries

A distribution channel can include wholesalers, retailers, distributors and

manufacturer and an "indirect" channel allowing the consumer to buy the

good from a wholesaler. Direct channels are considered "shorter" than

The Distribution Channel

Distribution is also a very important component of Logistics & Supply

chain management. Distribution in supply chain management refers to the

distribution of a good from one business to another. It can be factory to

supplier, supplier to retailer, or retailer to end customer. It is defined as a

next organization, before it finally reaches the consumer or end-user. This

process is known as the 'distribution chain' or the 'channel.' Each of the

A number of alternate 'channels' of distribution may be available:

 Distributor, who sells to retailers,

 Retailer (also called dealer or reseller), who sells to end customers

 Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alice from

producer to consumer in certain sectors, since both direct and indirect

(typically rooms) directly or through travel agents, tour operators, airlines,

tourist boards, centralized reservation systems, etc. process of transfer

the products or services from Producer to Customer or end user.

example, there has been an increase in franchising and in rental services -

been some evidence of service integration, with services linking together,

such as estate agencies and building society offices are crowding

out traditional grocers from major shopping areas.

An important market factor is "buyer behavior"; how do buyer's want to

mail order or perhaps over the Internet? Another important factor

is buyer needs for product information, installation and servicing. Which

assistance either to install or service a product? Intermediaries are often

example in the case of motor cars.

The willingness of channel intermediaries to market product is also a

factor. Retailers in particular invest heavily in properties, shop fitting etc.

They may decide not to support a particular product if it requires too

much investment (e.g. training, display equipment, warehousing).

Another important factor is intermediary cost. Intermediaries typically

charge a"mark-up" or "commission" for participating in the channel.