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SUMMER TRAINING REPORTON
DISTRIBUTION SYSTEM & MARKET SHARE OF PEPSICO NOIDA
Submitted for partial fulfillment of award ofPOST GRADUATE DIPLOMA IN MANAGEMENT
ByACHAL SHARMA
PGDM 3rd session
Under the supervision ofMR. MANISH
(Manager - Marketing)
ACCURATE BUSINESS SCHOOL GR. NOIDA
1
CERTIFICATE
Certified that ACHAL SHARMA has carried out the Project work presented in this
report entitled Distribution Network & Market Share of Pepsi in NOIDA for the
award of the POST GRADUATE DIPLOMA IN MANAGEMENT from
ACCURATE BUSINESS SCHOOL GR.NOIDA under my supervision. The report
embodies result of original work and studies carried out by student himself and
the contents of the report do not form the basis for the award of any other degree
to the candidate or to anybody else.
Dr.Devendra pathak Director ABS Greater Noida
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ACKNOWLEDGEMENT
I would like to express my heartfelt gratitude to my Faculty Guide
Mrs. Neeti Arora, Accurate Business School, Greater Noida. without
whom the completion of this project would not have been possible.
I also thank my friends who helped me a lot while doing the research
work.
Last but not the least, I would like to thank persons for putting in their time
and effort in completion of project who helped me in various ways, directly
or indirectly.
ACHAL SHARMA
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DECLARATION
I hereby declare that report in titled “Distribution Network Market Share of Pepsi in
NOIDA” submitted by me in partial fulfillment of the award for PGDM, is my original
work and that is not previously formed the basis for the award of any other degree,
diploma, fellowship or other similar title.
And this project is completed and submitted under the guidance of Mr. Manish. The
imperial finding in this project is based on data collected by me.
Place:- GR. NOIDA ACHAL SHARMA
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TABLE OF CONTENTS
S. NO.
1. Certificate of company
2. Certificate of Supervisor
3. Acknowledgement
3. Declaration
4. Preface
5. Executive Summary
6. Company Profile
7. Product Positioning Of Pepsi
8. Strength and Weaknesses of Pepsi Co.
9. Pepsi-The Indian Experience
10. Pepsi - Brands And Pack Profile
11. The RKJ Group
12. Locations Of Bottling Plants Of Pepsi In India
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13. The Indian Beverage Industry
14. Hierarchy of Executives in Pepsi, Lucknow Unit
15. Objective Of The Project
16. The Market Research Process
17. Presentation of data
18. Findings And Observations
19. Recommendation
20. Conclusion
21. Questionnaire
22. Bibliography
23. Annexure
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PREFACE
Summer project is necessary part for fulfillment of PGDM course. The emphasis in
the project is providing the study and an insight into Indian FMCG Business
Scenario.
The Summer Project is designed to provide participation of PGDM program as on
the job experience. This has given a chance to try and apply the academic
knowledge and gain insight into corporate culture. This helps in developing
decision-making abilities and emphasizes on active participation by the student.
I undertook my Project in Varun Beverages, a leading Bottler and Marketing
partner of the Pepsi Foods. During the training, I had worked on the project
“Distribution System & Market Share of Pepsi in.NOIDA ”
I gained valuable experience & knowledge during the survey. The Project consists
of my findings after tabulation of collected data, then analyzed conclusions were
drawn and finally suggestions were put forward.
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EXECUTIVE SUMMARY
The distribution network of PEPSI is well known for its efficiency but company
constantly strives for the betterment of their distribution network system.
Emphasis of our study was to focus on the customer of company i.e., the retailers.
The Retail Mapping of NOIDA is an integral step for the assessment,
development and betterment of this system. The distribution system not only
comprises the movement of the products but also incorporates the merchandising
of the product, which is very broad in its purview.
The project incorporates the analysis of the performance of PEPSI and probing
into opportunities of increasing the market share in NOIDA . The entire process
had to be in an organized manner in order to deliver meaningful results for the
purpose of decision-making. The project was that of market research with surveys
and observations as its major phases with the objective of gathering of all
important information material for strengthening the position of PEPSI in
NOIDA.
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PEPSI boasts of having the maximum market share in the beverage segment in
NOIDA and is in constant process for the betterment of its product
performance and customer as well retailer’s satisfaction.
9
THE COMPANY PROFILE: PEPSI CO.
Caleb Bradham a New Bern N.C druggist who formulated Pepsi Cola founded
Pepsi Cola Beverage business at turn of the century. Pepsi Cola Company now
produces and markets nearly 200 refreshment beverages to retail, restaurants and
food service customers in more then 190 countries and territories around the
world and generates revenue of over 18 billion dollars PepsiCo World
Headquarters is located in Purchase, New York.
Pepsi Co. is the world leader in the food chain business. It consists of many
companies amongst which the prominent ones are Pepsi Cola, Frito-lay, Pepsi
food international, Pizza-hut, KFC and Taco bell. The group is presently into
three most profitable businesses namely, Beverages Snacks foods and
Restaurants.
The beverages segment primarily market it Pepsi diet, Pepsi Mountain Dew and
other brands worldwide and 7UP outside the U.S.market. They are positioned in
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close competition with Coca Cola inc. of USA.
The Snacks food divisions manufacture and distribute and markets others snacks
worldwide.
The restaurant segment primarily consists of the operations of the worldwide Pizza-Hut,
Taco bell and KFC chains PFS, PepsiCo’s restaurant distribution operation, supplies to
Company owned and Franchise restaurants in the U.S.
When Coca Cola changed its formula in 1985, Pepsi Stepped up its competition
with its long time archrival claiming victory in the Cola-wars. Coke and Pepsi
expended their rivalry to tea in 1991 when Pepsi formed a venture with No.1
Lipton in response to Coke’s announced venture with Nestle (Nestea).
“Pepsi Co is going blue”. This was the new color adopted by the company to
strengthen its brand globally. Also the company is changed colors from
Generation X to GENERATION NEXT.
Although Pepsi holdings over the years have become diverse in such fields as the
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Snacks industry and Restaurants industry, this portfolio will discuss its core
business and its highly successful business of Beverages. The soft drink industry
customer base is probably the widest and deepest base in a world that is flooded
with some many categories. According to Beverage Digest the customer base for
soft drinks is a whopping 95% of regular users in the United States. This
represents a large field of potential customers for Pepsi Cola.
Pepsi prefers to segment itself as the beverage choice of the “New
Generation”, “Generation Next”, or just as the “Pepsi Generation”. These
terms adopted in Pepsi’s advertising campaigns are referring to the markets that
marketers refer to as Generation X. The Generation X consumer is profiled to be
between the ages of 18 to 29. They have high expectations in life and are very
mobile and active. They adopt a lifestyle of living for today and not worrying
about long-term goals. Those Pepsi’s main emphasis on this segment they also
have a focus on the 12 to 18 year old market. Pepsi believes if they can get this
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market to adopt their product then they could establish a loyal customer for life.
Pepsi Cola throughout its 100 years of existence has developed much strength.
One of the strengths that has developed Pepsi into such a large corporation is a
strong franchise system. The strong franchise system was the backbone of success
along with a great entrepreneur spirit. Pepsi’s franchise system and distributors is
credited to bring Pepsi from a 7,968 gallons of soda sold in 1903 to nearly 5
billion gallons in the year of 1997.
Pepsi also has the luxury to spend 225 million dollars in advertising a year. This
enormous ad budget allows Pepsi to reinforce their products with reminder
advertising and promotions. This large budget also allows Pepsi to introduce new
products and very quickly make the consumer become aware of their new
products.
Pepsi also has had the good fortune of making very wise investments. Some of the
best investments have been in their acquiring several large fast food restaurants.
They have also made wise investments in snack food companies like Frito Lay,
which at present time is the largest snack company in the world. Probably high on
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the list of strengths is Pepsi’s beverage line up.
Pepsi has four soft drinks in the top ten beverages in the world. These brands
are Pepsi, Mountain Dew, Diet Pepsi, and Caffeine Free Diet Pepsi. Some
other strong brands are All Sport, Slice, Tropicana, Starbucks, Aquafina and a
license agreement with Ocean Spray Juices.
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PRODUCT POSITIONING OF PEPSI CO.
Pepsi prefers to position itself as the beverage choice of the “New Generation”,
“Generation Next”, or just as the “Pepsi Generation”.
These terms adopted in Pepsi’s advertising campaigns are referring to the markets
that marketers refer to as Generation X. The Generation X consumer is profiled
to be between the ages of 18 to 29. They have high expectations in life and are
very mobile and active. They adopt a lifestyle of living for today and not
worrying about long-term goals. Though Pepsi’s main emphasis is on this
segment but they also have a focus on the 12 to 18 year old market.
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The rich deep blue coloring represents eternal youthfulness and openness.
Marketing plans like “Yeh Dil Maange More”, “Got Another Pepsi”, “Ye Pyass
Hai Badi” has made Pepsi one of the coolest brands recognized among teens in
the top five and the only beverage product in this category.
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STRENGTH AND WEAKNESSES OF PEPSI CO.
Pepsi Cola throughout its 100 years of existence has developed much strength.
One of the strengths that have developed Pepsi into such a large corporation is a
strong franchise system. The strong franchise system was the backbone of success
along with a great entrepreneur spirit. Pepsi’s franchise system and distributors is
credited to bring Pepsi from a 7,968 gallons of soda sold in 1903 to nearly 5
billion gallons in the year of 1997.
Pepsi also has the luxury to spend 225 million dollars in advertising a year. This
enormous ad budget allows Pepsi to reinforce their products with reminder
advertising and promotions. This large budget also allows Pepsi to introduce new
products and very quickly make the consumer become aware of their new
products.
17
Pepsi-Cola provides advertising, marketing, sales and promotional support to
Pepsi-Cola bottlers and food service customers. This includes some of the world's
best-loved and most-recognized advertising. New advertising and exciting
promotions keep Pepsi-Cola brands young. The company manufactures and sells
soft drink concentrate to Pepsi-Cola bottlers. The company also provides fountain
beverage products.
Pepsi also has had the good fortune of making very wise investments. Some of the
best investments have been in their acquiring several large fast food restaurants.
They have also made wise investments in snack food companies like Frito Lay,
which at present time is the largest snacks company in the world.
Probably high on the list of strengths is Pepsi’s beverage line up. Pepsi has four
soft drinks in the top ten beverages in the world. These brands are Pepsi,
Mountain Dew, Diet Pepsi, and Caffeine Free Diet Pepsi. Pepsi also has the
No.1 tea in the United States, Lipton Tea. Some other strong brands are All Sport,
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Slice, Tropicana, Starbucks, Aquafina and a license agreement with Ocean Spray
Juices.
Pepsi Cola like any company has weaknesses. Ironically, the one strength that has
been credited for most of its success in the past has now become a weakness for
Pepsi.
This former strength is the franchise system. The franchise system in Pepsi
Corporate view has become a liability. Pepsi in today’s market must be able to act
as one instead of several separate units.
The franchise system has become a hurdle to Pepsi because many of these
franchises have become very strong and will not be dictated by PepsiCo on how
to handle their operations. Some of these franchises are unwilling to support
certain Pepsi products and at times produce their own private label products that
are in direct competition with Pepsi products.
Secondly the franchisees are not willing to make capital expenditures to keep up
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with Coca-Cola who is a firm believer in reinvesting into their infrastructure
(Coca Cola at present time does not operate a franchise bottling system).
As mentioned earlier Pepsi has tried to elevate this problem by spinning off their
interest in fast food restaurants but at present time are still guilty by association to
many of the large fountain accounts. The franchise system has also affected
fountain sales due to the fact franchisees are not willing to buy expensive fountain
equipment to place in accounts mainly because the profit margin is so low and
could take years to recoup their investment. Pepsi also has a weakness in the
international beverage market.
Unfortunately for Pepsi they were a “Johnny Come Lately” into this arena. Pepsi
has tried to enter this market by trying to do in three years what took Coke 50
years to do. This area will take years for Pepsi to mature simply due to Coke’s
dominance in the international market and the strong ties that Coke has developed
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with these markets and their governments.
Pepsi customers buy nearly five billion gallons of soft drinks per year. Pepsi
customers buy their products because of taste, price, packaging and promotional
factors and of a wide variety of brands. Pepsi customers also buy their products
due to the high accessibility of Pepsi brands.
Pepsi products are distributed to many outlets. For example, supermarkets where
Pepsi buys large shelf area and display areas so the customer can find them easier,
Viz, Convenience stores, Restaurants, Movie theaters and almost and other
conceivable spots.
Pepsi has a competitive advantage over Coke because of the image it portrays.
Pepsi promotes itself as the choice of the “New Generation”. Pepsi gets this
advantage by implementing such large marketing projects like “Project Globe”.
This marketing plan, which Pepsi spent 637 million dollars over five years, is to
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introduce the new rich deep blue coloring of its packaging. The rich deep blue
coloring represents eternal youthfulness and openness. Marketing plans like this
made Pepsi one of the coolest brands recognized among teens in the top five and
the only beverage product in this category.
Another competitive advantage that Pepsi has is in their product Mountain Dew.
Mountain Dew has grown a staggering 74.1% over the last five years. Mountain
Dew has a 6.3% market share and has recently become the No.4 soft drink in
America. At this current pace Mountain Dew will be come the first non-cola to
reach the 1billion gallon mark in one year.
Pepsi also has an advantage as an innovator in their field. They are the first soft
drink makers to introduce a new one-calorie soda called Pepsi-One with, just
approved by the FDA, Ace-K.
This new sweetener is slated to be a break through for diet soda in which it limits
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the after taste associated with diet soda and brings a more cola taste to the
product. Pepsi has always been a strong No.2 against Coke and have become one
of the world’s largest Companies. As far as market share is concerned Pepsi
stands strong.
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Here are just a few vitals of the International Market :
OVERALL MARKET SHARE 1. COCA-COLA 43.9%
2. PEPSI COLA 30.9%
3. CADBURY SCHWEPPES 14.5%
BREAKDOWN OF MARKET SHARE
1. COCA-COLA CLASSIC 20.6%
2. PEPSI COLA 14.5%
3. DIET COKE 8.5%
4. MOUNTAIN DEW 6.3%
5. SPRITE 6.2%
6. DIET PEPSI 5.9%
7. 7-UP 2.3%
8. CAFFIENE FREE DIET COKE 1.8%
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9. CAFFIENE FREE DIET PEPSI 1.0%
10. DR. PEPPER 0.6%
FOUNTAIN SALES
(FOUNTAIN SALES ARE CREDITED FOR 27% OF
SODA SALES)
1. COCA-COLA 65%
2. PEPSI COLA 23%
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PEPSI-THE INDIAN EXPERIENCE
• Pepsi is one of the most well known brands in the world today available in over
160 countries. The company has an extremely positive outlook for India.
"Outside North America two of our largest and fastest growing businesses
are in India and China, which include more than a third of the world’s
population." (PepsiCo’s annual report, 1999)
• This reflects that India holds a central position in Pepsi’s corporate strategy.
India is a key market for PepsiCo, and at the same time the company has added
value to Indian agriculture and industry. PepsiCo entered India in 1989 and is
concentrating in three focus areas – Soft drink concentrate, Snack foods and
Vegetable and Food processing.
• Faced with the existing policy framework at the time, the company entered the I
ndian market through a joint venture with Voltas and Punjab Agro Industries.
With the introduction of the liberalization policies since 1991, Pepsi took
26
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 19 company owned factories while their Indian bottling partners
own 21.
The two advertisements tags: ‘yehi hai right choice baby’ and ‘nothing official about it’
immediately ring a bell- it’s got to be Pepsi.
The advertisement tag ‘yehi hai right choice baby’ was the first ‘Hinglish’ slogan ever
used in the in the Indian market. This slogan proved to be the best suited one for Pepsi
and it was a mega hit and at that moment of time. Pepsi in a short span of its operations in India has found a place in the hearts and minds
of the Indian consumers. The success has primarily been due to the innovative and
27
passionate Indian team, which has been built over the years. Pepsi is a trendsetter
managed and run by Indians, where important decisions are taken locally.
Pepsi started its operations in India in 1989 and since then PepsiCo has set up a fully
integrated operation in India viz. Manufacturing, Research & Development, Marketing,
Distribution and Franchising- covering fruit/vegetable processing, Exports, Snack Foods
& Beverages. In the mean time Pizza Hut and Frito Lay’s are the examples in this regard
only.
Pepsi has 40 bottling plants in India, out of which 16 are company owned and 24 are
owned by Indian franchisees. One of the major player in franchisee is RKJ Group.
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.
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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.
This group has brought name and fame to the Pepsi as in all this regions Pepsi is at the
commanding position and in the mean this group has diversified itself into ice cream,
suiting and shirtings, restaurants, beer plant in Mauritius & edible oil plant in Sri Lanka.
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PEPSI – BRANDS AND PACK PROFILE
BRAND PACKS:
The products are generally available in three kinds of packaging:
GLASS BOTTLES
DISPOSABLE CANS
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PET JARS
FLAVOUR PACKS:
COLA (Carbonated Soft Drink):
PEPSI
ORANGE:
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MIRANDA ORANGE
LEMON:
MOUNTAIN DEW
7UP
MANGO:
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SLICE MANGO
DRINKING SODA :
EVERVESS SODA
MINERAL WATER:
AQUAFINA
Carbonated Soft Drinks (CSD) or Soft Drinks as they are popularly known is one of the
largest FMCG market in the whole world with the total annual sales of around $40
billion.
MARKET SHARE & BRAND AMBASODARS IN INDIA
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One of the most visible battle fronts in India's cola wars is celebrity endorsements, and
Pepsi and Coke have rolled out the biggest categories of celebrities in the country, film
stars and cricketers, signed up as brand ambassadors at humongous cost. Their well-
known faces are splashed on billboards and newspaper
pages, even as television spots roll out by the dozens featuring the stars. The Coke-Pepsi
rivalry is so intense that there is a fight to win ad space at every shop, bus-stop stall and
roadside eatery. Each transnational company marks out its territory in either bright red or
blue, the colors associated with the two brands. The prize they strive for is large, and
growing: India's soft-drink market is estimated to be worth more than US$6 billion.
Top film stars Kareena Kapoor, Shahrukh Khan, Aishwarya Rai, Amitabh Bachchan,
Rani Mukherjee, Priyanka Chopra, Akshya Kumar, Aamir Khan and cricketers Rahul
Dravid, Sachin Tendulkar, Virender Sehwag, Irfan Pathan and many more have been
offered contracts that are sometimes worth more than their earnings from films or cricket.
According to reports, Aamir Khan's contract for Coca-Cola is worth more than $4 million
over three years. For that money, Aamir sets aside a few days every year for the
commercials. Shahrukh Khah, who rivals Aamir in the movies, charges a similar amount
for Pepsi, while among the ladies, Aishwarya Rai leads with more than $2 million.
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Coca-Cola is reported to have roped in the maximum number of 15 celebrities, followed
by eight for Pepsi. Other brands such as Thums Up (Coca-Cola's local brand) have three,
while 7Up (a Pepsi brand) has Yana Gupta and, this year, the hot Mallika Sherawat.
The health-drinks business is also witnessing plenty of churn, with the segment growing
at a robust 20-25% in the past few years, compared with less than 8% for carbonated
drinks in the past couple of years. The non-carbonated beverage market is estimated to be
worth more than $250 million (in urban areas). According to a recent ACNielsen study,
among fruit juices, Dabur's Real is the market leader with 60% share, followed by Pepsi's
Tropicana (33%). In the fruit-based drinks category, Coca-Cola's Maaza is the leader,
followed by Parle's Frooti and PepsiCo's Slice. According to reports, Coca-Cola may
soon test-market its global fruit-juice brand Minute Maid, as the diet versions of the fizzy
drinks have not taken off.
Surprisingly, perhaps, one of the biggest beneficiaries of this growth is the Indian farmer,
because of the integration of backward linkages by cola companies to purchase processed
fruit. While Coca-Cola is working with farmers in Andhra Pradesh and Maharashtra,
PepsiCo has tied up with Punjab Agri Export Corp, a state-owned enterprise, to cultivate
citrus fruits, particularly oranges, for its Tropicana brand.
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The expansion potential for this business is immense, given that India is the second-
largest producer of fruit in the world, but only 4% is processed because of storage and
yield problems. In Brazil and the United States, 70% of produce is processed, while 50%
is in Israel and 83% in Malaysia. Structural changes in agriculture are imperative, as
more than 60% of India's billion-plus population depend on farm produce for their
livelihoods, while the contribution of the sector to gross domestic product is less than
25%.
As far as marketing is concerned, however, the real action is undoubtedly among the
carbonated drinks. Commercials costing more than $250,000 are shot overnight to
convey the right message. For example, the lemon-lime soft drink Sprite, a Coca-Cola
product, released a spoof of a Pepsi campaign within an hour, while Pepsi hit back within
a week with its takeoff on Coke's "Thande ka Tadka" commercials featuring Aamir.
According to some reports, the fizzy drinks have splurged more than $10 million on
advertising campaigns in one month, though the companies deny such expenditures. It is
usual for cola companies to spend $2 million to $3 million for a new campaign. Three
years back, a fierce price battle ensued when Coca-Cola India launched small 200-
36
milliliter cans priced at Rs5 (11 cents). Pepsi responded by lowering the price of its
300ml can from Rs8 to Rs6.
The cola companies have reason to feel that the Indian market remains largely untapped.
India's per capita consumption of cola is quite low at 10 servings per year, while
Pakistanis and Sri Lankans drink 25 and 30, respectively.
The advertising strategies have changed over the years, moving on from print ads to TV
commercials to promotions at restaurants, events, the Internet, contests, and tie-ups with
shops and movie theaters. India's total advertising market (print plus TV) is more than
$2.5 billion, with print ads accounting for 45% of the total.
According to the Adex India Report, in terms of TV advertising the carbonated-soft-
drinks category grew by 50% in 2005 over 2004, with the major share going to Pepsi.
However, print advertising in 2005 dipped by 23% from 2004. Pepsi continued to be the
highest spender, followed by Thums Up, Coca-Cola, Diet Pepsi and Mirinda Lemon (a
PepsiCo brand). On television as well, Pepsi is the highest spender, followed by Coca-
Cola, Mountain Dew, Thums Up, 7Up, Mirinda Orange, Sprite, Diet Pepsi, Limca (Coca-
Cola brand) and Mirinda Batman Blast. Thums Up was the largest spender in restaurants.
37
While Pepsi has shown a preference for promotional commercials linked to sponsored
programs, Coca-Cola has stuck more to pure ads. Online campaigns are picking up, too.
For Pepsi's Oye Bubbly promotion, Yahoo charged $25,000 for two days of online
advertising.
The cola brands have soldiered on despite charges by a prominent environmental
organization, the Center of Science and Environment, that Pepsi and Coca-Cola sold in
India contain pesticide residues in amounts 40-50 times the prescribed European Union
norms, and assorted other controversies such as allegations of excessive levels of
cadmium in waste from a Coke factory. Any anti-cola story has a bandwagon effect, as it
is politically correct in India to be anti-multinational-corporation and anti-American.
In fact, the problem of pesticide contamination of foodstuffs is hardly limited to Pepsi
and Coke: virtually everything that Indians eat and drink, from vegetables to eggs to
milk, carries undesirable chemicals at equal or greater concentrations, because of
uncontrolled use of fertilizer and pesticide by farmers.
This problem will take decades to solve, but with India's most beloved film stars
endorsing carbonated drinks, keeping Indians off them may well be impossible.
38
Coke still outsells Pepsi in almost all areas of the world. Saudi Arabia and the Canadian
provinces of Prince Edward Island, Newfoundland and Labrador, Ontario and Quebec are
some of the few exceptions.
By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India
after a new government ordered the company to turn over its secret formula for Coca-
Cola and dilute its stake in its Indian unit as required by the Foreign Exchange
Regulation Act (FERA). In 1988, Pepsi gained entry to India 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; Pepsi bought out its partners and ended the joint
venture in 1994. In 1993, Coca-Cola returned in pursuance of India's Liberalization
policy. In 2005, Coca-Cola and Pepsi together held 95% market share of soft-drink sales
in India. Coca-Cola India's market share was 60.9%. Others claim that due to rumors of
the use of cocaine, Coke was banned for a long time in India and recently the ban was
lifted, however, Pepsi had maintained a commanding market share.
39
According to Consumer Reports, in the 1970's, the rivalry continued to heat up the
market. Research proved that Pepsi is preferred over Coke. The way that they proved this
was by blind taste tests that were conducted in stores. These tests were called "Challenge
Booths." The sales of Pepsi started to climb, and Pepsi kicked off the "Challenge" across
the nation.
More importantly, Pepsi outsells its rival in grocery and convenience stores in the U.S.
(regarded as an indicator of consumer preference), with Coca-Cola's dominance in
exclusive restaurant, movie theater, amusement park, college, and stadium deals giving
Coke the overall sales advantage. In the U.S., Pepsi's total market share was about 31.7
percent in 2004, while Coke's was about 43.1 percent.
In Russia, Pepsi once had a larger market share than Coca-Cola. However, Pepsi's
dominance in Russia was undercut as the Cold War ended. Pepsi had made a deal with
the Soviet Union for scale production of Pepsi in 1974. When the Soviet Union fell apart,
Pepsi, was associated with the old Soviet system, and Coca Cola, just newly introduced
to the Russian market in 1992, was associated with the new system. Thus, Coke rapidly
captured a significant market share away from Pepsi that might otherwise have needed
40
years to build up. By July 2005, Coca-Cola enjoyed a market share of 19.4 percent,
followed by Pepsi with 13 percent.
According to Consumer Reports, the overall advertising of the two companies still
involve TV commercials that endorse the image of youth, beauty, family togetherness,
fun, pleasure, celebrity and patriotism. These components are expected to bring positives
to the company so that the rivalry will continue on.
41
PEPSI LOGOS
(From 1906-1939) (From 1991-1998.)
(From 1998-2006). (Pepsi Stuff represented a major assault in the Cola Wars)
42
9- PepsiCo's History Timeline
43
44
Pepsi in India
By most accounts, Pepsi 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; Pepsi bought out its partners and ended the joint venture in
1994. Others claim that firstly Pepsi was banned from import in India, in 1970, for
having refused to release the list of its ingredients and in 1993, the ban was lifted, with
Pepsi arriving on the market shortly afterwards. These controversies are a reminder of
"India's sometimes acrimonious relationship with huge multinational companies." Indeed,
some argue that Coke and Pepsi 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 Coca-Cola, 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, Seven Up, Mirinda, Fanta, Thumbs Up, Limca, 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.
Coca Cola 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
45
Indian parliamentary committee, in 2004, backed up CSE's findings and a government-
appointed committee is now trying to develop the world's first pesticide standards for soft
drinks. Coke and PepsiCo opposed the move, arguing that lab tests aren't reliable enough
to detect minute traces of pesticides in complex drinks. On December 7, 2004, India's
Supreme Court ruled that both Pepsi and competitor Coca-Cola 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, Coke and Pepsi together hold 95% market share of soft-drink sales in India.
Pepsi has also been alleged to practice "water piracy" due to its role in exploitation of
ground water resources resulting in scarcity of drinking water for the natives of
Pudussery panchayat in the Palakkad districts in Kerala, India. Local residents have been
pressuring the government to close down the Pepsi unit in the village.
Coca-Cola controlled the Indian market until 1977, when the Janata Party beat the
Congress Party of then Prime Minister Indira Gandhi. To punish Coca-Cola's principal
bottler, a Congress Party stalwart and longtime Gandhi supporter, the Janata government
demanded that Coca-Cola transfer its syrup formula to an Indian subsidiary (Chakravarty,
43). Coca-Cola backed and withdrew from the country. India, now left without both
Coca-Cola and Pepsi, became a protected market. In the meantime, India's two largest
soft-drink producers have gotten rich and lazy while controlling 80% of the Indian
market. These domestic producers have little incentive to expand their plants or develop
the country's potentially enormous market . Some analysts reason that the Indian market
may be more lucrative than the Chinese market. India has 850 million potential
customers, 150 million of whom comprise the middle class, with disposable income to
spend on cars, VCRs, and computers. The Indian middle class is growing at 10% per 46
year. To obtain the license for India, Pepsi had to export $5 of locally-made products for
every $1 of materials it imported, and it had to agree to help the Indian government to
initiate a second agricultural revolution. Pepsi has also had to take on Indian partners. In
the end, all parties involved seem to come out ahead: Pepsi gains access to a potentially
enormous market; Indian bottlers will get to serve a market that is expanding rapidly
because of competition; and the Indian consumer benefits from the competition from
abroad and will pay lower prices. Even before the first bottle of Pepsi hit the shelves,
local soft drink manufacturers increased the size of their bottles by 25% without raising
costs.
From Joint Venture to Fully-Owned Subsidiary :Pepsi is no longer a joint venture company with its Indian partners. Taking full advantage
of liberalised policies, it has taken full control of Pepsi Foods. In 1994, Pepsi made a
offer to both Voltas and PAIC to buy their equity at 'attractive' terms. Voltas sold all its
shares to Pepsi while PAIC, being a public enterprise, was forced to pull out and now it
holds less than 1 percent of the total equity in Pepsi Foods Ltd. Instead of taking strict
action against Pepsi for not following its commitments, the Indian government has given
more concessions to it in the post-liberalisation period. For instance, it has allowed Pepsi
to increase its turnover of beverages component to beyond 25 percent, and Pepsi is also
no longer restricted by its commitment to export 50 percent of its turnover. Recently the
government also allowed PepsiCo to set up a new company in India called PepsiCo India
Holdings Pvt.Ltd, a wholly owned subsidiary of PepsiCo International. Surprisingly, the
new company is also engaged in beverage manufacturing, bottling and exports activities
as Pepsi Foods Ltd. All the new investments by the PepsiCo International have been
channelised through this new venture. It now handles 28 bottling plants with a sales
turnover of Rs 500 crores which is higher than Pepsi Foods's turnover of Rs.375 crore in
1996. (The Financial Express, April 21, 1997). Although the financial performance of 47
both these companies in India has not been creditable so far, with total accumulated
losses close to Rs.350 crore (except small surplus in 1996), yet it has been successful in
achieving significant market share and brand royalty in India. The company in recent
years has not only bought over bottlers in different parts of India but also bought Dukes,
a popular soft-drink brand in western India to consolidate its market share. It has also
shrewdly consolidated its position through aggressive marketing and advertising in India.
According to surveys conducted by many market research agencies, Pepsi now holds
over 40 percent share in Indian soft drink market. In 1995 alone, the company's beverage
business grew 50 percent, well ahead of the market which expanded by 20 percent.
Another important recent shift in Pepsi's marketing strategy has been its focus on Cola
over other non-Cola brands. "We have single- mindedly focused on brand Pepsi" admits
Rishi, Vice-President, Marketing, and Pepsi. (Business India, January 15-28, 1996). At
the international level, PepsiCo International has been focusing more on India where the
consumption of soft drinks is expected to increase many-fold which is only three ounces
per person now as compared to 200 ounces in Europe and over 300 ounces in North
America. But, at the same time it is not realized that there is a vast difference between the
purchasing power of an average Indian and North American as it takes an Indian 1.5
hours of work to be able to buy a bottle of Pepsi whereas for a North American, it takes
less than 5 minutes. This experience of eight years clearly shows that Pepsi, totally
preoccupied with selling soft drinks in India, has broken promises. The responsibility of
implementation of commitments cannot be left to Pepsi alone. One should expect the
state machinery to intervene and enforce these commitments on Pepsi. Surprisingly, there
is a total silence on the part of state machinery.
48
THE RKJ GROUP
It can be said with absolute certainty that the RKJ Group has carved out a special
niche for itself. Their 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.
Devyani Beverages Ltd. and Varun Beverages Ltd. are the flagship companies of the
group.
49
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 27 Pizza Hut Restaurants
under its company.
They have diversified into education by opening their first school in Lucknow under
the management of Delhi Public School Society.
Companies are medium sized, professionally managed, unlisted and closely held
between Indian Promoters and foreign collaborators.
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.
50
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.
51
MAJOR CREDENTIALS
VARUN BEVERAGES LIMITED RECEIVED “GOLD STANDARD
AWARD” FOR PRODUCTION & QUALITY CONTROL FOR THE YEAR
1996-1997.
JAIPURIA GROUP WAS ADJUDGED “BEST BOTTLER” OUT OF MORE
THAN 2000 BOTTLERS ALL OVER THE WORLD FOR THE YEAR
1996-97.
52
LOCATIONS OF BOTTLING PLANTS OF PEPSI IN INDIA
53
THE INDIAN BEVERAGE INDUSTRY
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. I
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 flavors and sub-brands
are Pepsi, Mirinda Orange, Mirinda Lemon, Mountain Dew, 7UP, Slice
Mango, Evervess Soda and Aquafina.
It has the license to supply beverages in the territories of Western U.P., part of
54
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.
55
OBJECTIVES OF THE PROJECT
The Project “Distribution Network & Market Share of PEPSI in Lucknow ”
was designed on the lines of basic investment decisions to be taken by the senior
officials of PEPSI for the purpose of amendments in the pre-existing distribution
network in order to review and strengthen the routes. The findings of the project
are very crucial for the increment of the market share of PEPSI in the NOIDA Beverage Market.
Though the process is an ongoing one but the decisions have to be taken on a
strong base, supported by facts and figures and that too on papers. This support
can only be provided with the help of an extensive and through analysis of the
market and the data collected thereof.
The objectives of the project were delivered to us express sly by the Marketing
Development Coordinator who was the lead or the project head and we had to
56
submit the day report to him along with the draft report. He was the in charge of
the project and gave guidelines and directions to approach the project.
57
The objectives of the project are:
To analyze, interpret and study the entire beverage market of NOIDA .
Comparative study of the various brands, packs and flavors available in the
market.
Analysis of the strong and weak point of the competitors products and compare it
with PEPSI.
To assess the reach and feasibility of the product and give the output for further
investment for enhancing the distribution network along with assessing the
efficiency of the current distribution system.
Assess the promotional measures in the context to the sales of PEPSI and
focusing our study on the customer of company i.e., the retailers.
As obvious that any company is concern with the increase in sales of its products,
our project was in line with the companies’ objectives and all steps incorporate in
58
the project were directed to give an overview so as to attain its objectives.
The market research conducted by us was in accordance to the company’s rules
and policies which were quite material for the efficient and effective results and
inferences to be drawn from the entire process.
The market research was conducted in compliance of the given guidelines
delivered to us expressly to achieve the given objectives, which were as under:
1. Profitability
2. Sales
3. Market Share
4. Improvement
5. To satisfy the customers
59
THE MARKET RESEARCH PROCESS
The entire project was divided into five phases and each phase had its individual
significance and supplemented each other. The process had to be started from the
grass root level and it was very important to understand the market for this FMCG
product, which is very fast in production, distribution and consumption.
The five phases into which the project was divided were:
A. Route Riding
B. Retail Tracking
C. Corporate Tracking
D. Analysis of finding and observations
E. Segregating NOIDA for WAP and SAP
F. Preparation of Draft Report
60
The entire process was more of a Descriptive Research type and incorporated a
formal study of the specific problems faced by most FMCG companies an
exploring the opportunities in the untapped market. The survey was conducted on
the basis of PEPSI product preference and evaluation of sales forecast in the new
and underdeveloped market including the evaluation of the advertising and
promotional measures. The data collected had to be systematically arranged,
analyzed and reported in a form congenial to take on the spot decisions.
The observation approach was adopted in the process by gathering the data
essential and material for the decision-making and with clear objective of
increasing the market share of PEPSI in the NOIDA market. Customer
preferences and satisfaction was also important in assessing the market share but
that was very clear that customers generally do not have loyalty towards the
product in the Beverage industry rather what matters the most is the product
availability which will be discussed later.
61
All the phases mentioned above have been discussed along with the observations,
problems, and other dimensions which have been encountered and experience in
detail in the following pages.
62
A. ROUTE RIDING :
The Beverage Industry or to be more specific, the Soft Drinks Industry has one of
the most active network in term of its production, supply, distribution, marketing,
consumption and also personal relations at the very second level of its distribution
network. That is the reason why it is sometimes said to be “Very Fast Moving
Consumer Goods”.
Due to the above stated reason it becomes very essential to study and analyze the
market of these products from the grass root level. So in the Soft Drinks Company
as PEPSI, route riding becomes the first and foremost step in any of the activities
to be undertaken be it any official so we were no exceptions.
During the very initial days we were required to exercise Route Riding, the
objective of which was:
To understand and analyze the market in its raw and basic form.
63
To gain an in depth knowledge of the merchandising and processing activities of
the Route Agents and understand the Beverage market.
To undertake the comparative study of the various brands and flavour packs of all
existing beverages or soft drinks
market and the market share and growth potential of each brand individually.
To develop innovative ideas to enhance the distribution system.
Route Riding is basically accompanying Pepsi Vans along with the route agents
and understanding the way they conduct merchandising activities right from the
charged vans leave the depot to the entry of empty vans back to the depot. The
Route Riding phase was for the initial ten days in which we had covered ten
different routes.
The Route Riding is a crucial phase because the actual dealing with the retailers and
their dealing with the customers can be very efficiently understood through this
process which is important at all levels of decision making in the industry.
64
The Routes i.e., the Pepsi Vans were charged and left the depot by 7:30 in the
morning, accompanied by the Route Agent (R.A.’s). The RA’s were given the
route planners and the particulars of the products, flavors, and quantities along
with the billing materials. The vans had to cover the entire route and the RA had
to do the merchandising and sales against cash, which was a significant feature of
this industry. The targets were given twice or thrice in a week that was a
challenge for them and after achieving these targets the RA’s was awarded with
some special incentives. As there exists a player like Coca Cola. So it had a lot to
do with schemes, discounts and other incentives.
The routes were allocated on the basis of individual areas and the demand of the
product in that particular area. The RA’s been responsible for the accomplishment
of their sales target on their routes and was given incentives on achieving the
targets. Not only this, the RA’s also had the responsibility of moving the flavors
65
and packs in proportion along with the proper display of the products for proper
visibility and arrangement of products in brand order along with “VISI purity”.
The RA’s had the responsibility of setting up Monopoly PEPSI Sales Counters
where no products except that of PEPSI would be available amongst the soft
drinks and especially of Coca Cola. These monopoly sales counters enjoyed
special benefits in terms of discounts, schemes, VISI’s (fridges), display boards,
glow signboards, wall paintings, banners, posters and other incentives.
The RA’s had to achieve their sales target and surrender the daily sales proceeds
with the concerned Customer Executives along with the route planner and billing
materials and gate pass along with the details of sales on their route.
The entire activities of the RA’s was controlled by the Customer Executives, who
also assisted the RA’s in achieving their targets and were in charge of the sales
performance in their assigned areas. A Customer Executive had five to six RA’s
under him and was responsible for their performances as well. He was also
66
concerned with the promotional activities on his routes and handling of policy
matters in the corporate regarding supply to industrial canteens and cafeterias.
We as summer trainees were required to study and analyze the activities of the
RA’s and be familiar with the market. We had been provided Market Analysis
Sheets by the MDC in which we were required to record the observations of the
retail outlets on a particular route.
The observations, which were required to be recorded in, were:
The quantity of the cold and warm stocks of all brands and flavors available at
the outlet along with the outlet details.
Inquiring about the satisfaction of the retailers in terms of sales of PEPSI
products, schemes, discounts, combo offers, and the benefits of promotional
activities.
67
Inquiring about the satisfaction by the current distribution network in context to
product availability of all flavors packs or individual flavors according to demand
of customers, rates billings.
Inquiring about the behavior and merchandising of RA’s in accordance with the
companies’ regulations and record complaints against RA’s, company or
products, if any.
Inquire about the performance of various brands and flavors packs and
customer’s response to those brands or flavors and also to educate the retailers about
various schemes and incentives to increase sales volume.
Last but not the least, assessment of the effectiveness of, assessment of the
effectiveness of promotional materials and activities like, display boards, glow
signs, signage, wall paintings, posters, banners, racks, shelves, counters, VISI’s,
and also impact of nation wide advertising on brand loyalty by the customers.
68
The information so collected was required to be filled in the Market Analysis
Sheet (specimen on the next page) and reported to the MDC along with other
information in order of their seriousness.
69
B. RETAIL MAPPING OF NOIDA
The Retail Mapping is the integral part of the project and the most crucial is
taking significant decisions regarding the enhancement of the distribution network
involving heavy investment on account of increasing the routes and starting new
routes and promotional measures on those routes to increase its market share in
NOIDA . The new routes, exploring new markets required the decision to be supported
with facts and figures which had to be provided by the summer trainees on the basis of
the survey conducted in the market and processed data thereof.
The retail mapping had to be conducted on the basis of the Retail Tracking Sheet
(RTS), which had been developed by the Marketing Development Coordinator and
Customer Executives of the NOIDA. unit which incorporated the retail outlets, their
addresses, proprietor, respondent etc and served as a vital database for all market since
then for PEPSI in NOIDA and had to be incorporated in the project in accordance to
the companies policies.
70
Objectives of Retail Mapping:
Segregating entire NOIDA for Strong Area Programme and Weak Area
Programme i.e., SAP and WAP.
Assessment of retailer’s performance.
Assessment of the level of promotional measures required for increasing market
share of PEPSI.
Collection of required information for making investment decisions for the
enhancement of existing routes and opportunities for new routes in existing market
as well as exploring new market.
Classification of all retail outlets in NOIDA into five broad categories viz, On
Route, Non Existence, Non Potential, Reachable and Non Reachable under the
head, Potential Retail Outlets.
The Retail Tracking Sheet comprised of a total list of 1800 outlets. A team of six
summer trainees were assigned for the project and approximately 300 outlets had
to be covered by each trainee. The duration for the completion of the Retail
71
mapping took duration of 20 days. The entire survey was guided and directed by
the Customer Executive and Daily report had to be presented to him after
assessment and analysis along with other findings and observations. The Data had
to be classified in a systematic manner and presented in a predefined format,
which was further reviewed by the Marketing Development Coordinator.
The Retail Mapping process incorporated of including of new outlets, which have
been omitted or newly opened, and the product availability on all these outlets.
The major thrust was on segregating the market for Strong Area Programme and
Weak Area Programme.
The Strong Area refers to the routes on which the sales targets are met without
much effort and have continuous demand for the products. These areas are
performing to the standards and are contented with the level of promotion
schemes and other sales boosting measures. The marketing efforts are nominal in 72
these areas because of the surplus demand and the area of concern is only to
ensure the proper and efficient supply of the products to meet the demand. In the
NOIDA market approximately 32% of the market can be said to be strong areas
and these areas include the well-developed markets as shopping malls, movie
theatres, convenios, hotels, restaurants and bars etc. For these Strong areas, SAP
only aims at maintaining the performance of the product and enhancing the sales
volume. It is not the area of serious concern for the company.
On the contrary the Weak Area refers to those areas or routes, which are critically
low in sales and the targets, are tough to achieve and require aggressive marketing
support. The demand in these areas is fluctuating or rather feeble. The routes are
the area of concern for the company as the demand is very low due to many
reasons and the major one is the existence of the player like Coca Cola in the
market. Other reasons could be poor distribution network, inadequate availability
of the products on the outlet, inadequate promotional measures and marketing 73
support, undeveloped market as that of the interiors etc.
These weak areas had to be identified and the cause of their inferior performance
had to be traced through the Retail Mapping and the company had to be provided
with the facts and figures to take legitimate measure on the basis of the findings
of the deficient performance of the product in these areas. This involved the
aggressive marketing strategy and heavy investment decisions to strengthen these
markets. For this purpose the classification of the outlets into five categories was
very crucial along with the other findings and observations discussed later. These
five heads of classification have been discussed as under.
ON ROUTE :
It refers to the retail outlets, which are covered by the Route Agents and visited
daily for sales and merchandising. The outlet is visited daily and actively involved
in the sales of all brands and flavor packs of PEPSI.
NON EXISTENCE : 74
It refers to the outlets which were merchandising the product are no more in
existence, i.e., they have diversified their business activity or have closed.
NON POTENTIAL :
It refers to those outlets, which are in existence but have very low potential in
terms of sales or are not keenly interested in merchandising the products of soft
drink.
A careful assessment had to be done in case of Non Potential outlets, as they
would turn to be potential in near future. It was also the area of operation of
project to motivate these Non Potential outlets to undertake the merchandising of
PEPSI.
POTENTIAL OUTLETS :
75
It refers to those outlets, which have the potential for the merchandising of PEPSI
and have the required investment capabilities and can be the profitable Point Of
Purchase of PEPSI by the customers. There were cases in case of these potential
outlets, which were already merchandising PEPSI, and those, which did not, dealt
with beverage products. The possibilities of setting monopoly counter were very fair
at these outlets and were given special attention. The Potential outlets had to be
further classified in two heads as below:
o REACHABLE POTENTIAL OUTLETS :
It refers to those Potential outlet which are reachable i.e., the products can be made
available with the PEPSI vans. The reachability decision had to be taken in context
to the accessibility of the vans at these outlets.
o NON REACHABLE POTENTIAL OUTLETS :
76
It refers to those Potential outlets which are not accessible by the PEPSI
vans. These outlets had to be considered because the sales volume can be
increased at these outlets and so alternative method of distribution and
promotional activities have to be evaluated and worked upon.
C. CORPORATE MAPPING :
77
NOIDA being an entirely industrial city had huge potential for the sales of
PEPSI in corporate as these concerns had factories, offices and canteens and the
officials and workers base was very strong. The process of Retail Mapping was
followed by the Corporate Mapping, which incorporated of tracing of the
organizations and assessing the market for PEPSI in these areas. Apart from these
the database had to be updated to turn the non-potential market in the corporate
into profitable liaisons for the increment of sales volume.
The objectives of Corporate Mapping were:
Trace the organizations with and without canteens and cafeterias and
estimate the market for PEPSI.
Estimate the brand preference of PEPSI and COKE in the corporates and the
reasons thereof.
To review the product performance and satisfaction along with the
78
expectations of the customers in corporates including PEPSI Dispenser
Equipments.
To assess the product availability and demand of the product (Traffic) in these
organizations as well as when the product has the optimum consumption e.g.
daily, delegations, meetings, parties, or other occasions and the customers i.e.,
whether the officials or workers or both.
To ensure efficient supply and record any complaints or grievances thereof.
To assess the promotional measures being adopted by Coca Cola for tapping
these markets and locate the weak points in corporates having Coca Cola
counters to convert them into profitable opportunities.
The Corporate Mapping was the supplementary programme in the project to boost
the sales performance of PEPSI in NOIDA and capture the market share of its
nearest competitor. The analysis and findings were recorded on the format
provide by the company accompanied by the list of findings and observations in
79
order or their preference and seriousness along with all the relevant details about
the organization. The matters were discussed and analyzed carefully by the MDC.
The corporate matters had to be given a special care as these had huge potential
for the product. The specimen copy of the Corporate Mapping format is attached
for reference. The findings and observations have been discussed in the coming
pages.
D. ANALYSIS OF FINDINGS AND OBSERVATIONS :
80
The main objective of the company is to increase the brand preference and market
share so any information material form this point of view had to be take into account
along with the formats provided by the company for predefined information recording
and analysis of those recordings and present the information in an organize and
systematic manner in a condensed form reflecting the actual position of the market.
The information had to be recorded in the format along with the relevant
information as per the objectives of the research and an analysis of that information had
to be made and present them in an understandable format so that immediate inferences
can be drawn. Generally those information had to be presented in percentages and the
other findings and observations had to be evaluated and a list of findings had to be
arranged in order of their seriousness and areas of serious concern along with the outlet
details.
81
After the analysis sheets and formats have been surrendered to the C.E’s after
analysis by the trainees it was further analyzed and evaluate by him and a brief analysis
was made each day of the daily report. The CE’s further forwarded these reports after
retaining the reference copy, to MDC for further review and reference.
82
E. SEGREGATION OF NOIDA FORSAP AND WAP :
As discussed earlier that the major objective of the Retail Mapping of NOIDA
was to segregate the market for PEPSI for the Strong Area Programme and the Weak
Area Programme. These Programmes have been discussed under the Retail Mapping
Head. The Data and fact collected by the survey had to be analyzed and presented in a
systematic form in order to draw meaningful inferences.
The finding of the Route Riding and the Survey conducted during the Retail
Mapping and the Corporate Mapping were combined together and analyzed together to
reach a final report ie, the RETAIL MAPPING SUMMARY or THE CONDENSED
DRAFT REPORT, which gave the entire picture of the actual position if PEPSI in
NOIDA . The report so prepared was on the basis of the Retail Tracking Sheet and the
other supplementary finding and observations were considered to reach a consensus of
declaring the route as a weak area or a strong area.
83
The reports were analyzed thoroughly by the MDC and the Customer Executives
and a meeting was held for the assessment of the routes and the reasons of unfavorable
performance in the weak areas and how to improve the sales on those routes. The
discussion comprised of the further investments for the enhancement and extension of the
routes and the level of promotional measures required in these areas. The performance of
Coca Cola was also reviewed simultaneously and a comparative study was made to
assess the performance and growth in the industry. These data and figures were compared
with that of the last year and a growth percentage was reached which also served as a
basis of declaring an area as a Weak Area.
As already mentioned PEPSI is a VFMCG so the marketing strategies are going to be
very dynamic in nature. The Customer Executives had to formulae day to day strategies
and these were communicated to RA’s in the morning when they were going to leave the
depot and this interaction among R.A.and C.E. was to be known as Gate Meeting.
84
The programmes were to be based on the seriousness of the problems and
accordingly a mild or aggressive marketing, promotional and investment programme was
to be formulated.
85
F. PREPARATION OF DRAFT REPORT
The survey in its broad purview comprised of clearly classifying the entire retail outlets
into five different categories and exploring the new outlets. These figures of the Retail
Tracking Sheet and independent observations were systematically tabulated and
presented in a form to draw immediate inferences.
The final and complete RETAIL MAPPING SUMMARY or THE CONDENSED
DRAFT REPORT (CDR) of the 1800, which had been covered by the team of six
summer trainees, has been attached to the project on the next page. This Draft Report was
surrendered to the MDC for developing the plan of action and the formulation of Weak
and Strong Area programmes.
The CDR gives the clear picture of the factual position of the retail outlets
according to the routes. The CDR had been prepared by the combined efforts of the team
and incorporates the findings of each member of the team.
86
The figures in the CDR were complete in themselves for the purpose of taking the
instant decisions for increasing, diversifying or ending the route. The most important
head in the CDR was the Actual outlet. The CDR was supplemented by the list of
findings and observations, which were the curriculum of survey of each route and
presented the information in order of their seriousness on a particular. Both these CDR
and the list of findings served as the
most efficient base to take decisions in direction to strengthen the position of PEPSI in
NOIDA. .
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Explanation of the RETAIL MAPPING SUMMARY or the CDR:
RTS:
It comprises the shops in the Retail Tracking Sheet,
ACTUALS:
It refers to those outlets, which were actually in existence, and it is not concerned
with the RTS list. It comprises of the shops in operation and whether they have or
not been included in the RTS list.
SAME ACCOUNT:
It refers to those outlets which were common to the RTS list and the Actual
outlets surveyed. Simply it comprises the intersection of the RTS and the actual
outlets. It was required to assess and verify the reliability and up gradation of the
company’s most valuable database i.e., the Retail Tracking List.
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Rests of the heads have been discussed in detail under the head, Retail Mapping
Process discussed previously.
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Presentation Of Data
Through Questionnaire, I got large amount of data, now I am describing that data with
the help of suitable diagrams in summarized way.
I have taken sample of 200 peoples/outlets in NOIDA area and conduct a survey
for them, to find out the accurate figures of market share of PEPSI and distribution
service in NOIDA . After this study we can easily analyze that what the present
position of Pepsi in NOIDA market and what are the strengths and weakness .
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PREFERENCE AMONG PEPSI AND COKE
COKE45%
PEPSI55%
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FINDINGS AND OBSERVATION
The reports of each phase of the project had to be supplemented by the
information, data, facts and figures and significant findings and observation to support
the feasibility of decisions to be taken on the basis of the Retail mapping Summary or the
CDR. The information so recorded in each phases of the project had to be listed in order
of their relevance and seriousness and presented in a form to facilitate immediate
inference.
Some of the important observations have been listed below:
Soft drink business’s behavior is not governed by brand loyalty so the availability of
the right brand, at the right place, at the right time is the key for winning consumer in
soft drink business.
The most important and satisfying observation was that, PEPSI had approximately
64% market share in the soft drinks market in NOIDA and some of its brands like
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Mirinda Orange and Mountain Dew were performing above standards apart from
PEPSI Cola in spite of the Coca Cola with two cola flavor packs i.e., Coke and
Thumps up.
The present distribution system of PEPSI is the best in the entire FMCG industry in
Lucknow and the major strength of PEPSI. The enhancement in the distribution
network would definitely increase the market share of PEPSI.
The retailers played a very critical role in the increment in the sales volume of the
product and the had to be kept satisfied in order to increase the market share by
offering better schemes, discounts, display materials such as VISI’s, racks, counter,
signage, wall paintings and better amount for purchase of shelf space for display.
The existence of sub-dealers and super stockiest are also the major area of problem,
as they do not move the schemes and other display materials and incentives
information to the retailers, which is one of the reasons for the dissatisfaction of
retailers.
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The cut throat competition between PEPSI and COKE had lead to the never ending
cola war and price war which has brought down the profit margins which is one of the
major grievances apart from the common complains pertaining to schemes, incentives
and display materials.
The other major issue was the supply of PEPSI from the bottling plants in Delhi and
Punjab against the company policies. These plants supplied the products at
discounted rates and violated merchandising principles of PEPSI.
Another critical issue was the presence of duplicate products of PEPSI in the market.
The details of these outlets have been surrendered to the company for action against
these outlets.
The position of PEPSI in the corporates was not up to the mark and Coca Cola had a
better scene in this context. One of the reasons can be assigned to the product
positioning of PEPSI and Coca Cola.
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RECOMMENDATIONS
The Project Retail Mapping was concerned only with providing the organization
with all the necessary information required to strengthen the position of PEPSI in
NOIDA in the form of reports incorporating all information in an analyzed and
summarized form. But some critical and major issues, which have been identified on
account of extensive analysis, required suggestions to be put forward on the basis of the
current market scenario. Few suggestions, which were put forward to the MDC, have
been listed below.
There should be uniformity in prices, schemes, and discounts, which are offered to
retailers and should be based on a specific parameter such as sales volume, to avoid
dissatisfaction and biasness among the retailers.
Activities of sub dealers and super stockiest should be controlled and checked in
order to ensure fair prices and distribution of schemes and incentives to small retailers
to avoid discontent among smallholdings and outlets.
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Every possible step should be taken for the satisfaction of the retailers, as they are the
most important supplement to the sales promotion measures and nationwide
advertising campaigns of the company in context of boosting the sales and
enhancement of the brand image of PEPSI.
Strict actions should be taken against the organization producing duplicate PEPSI and
sued. Measures should be taken to educate the customer about the existence of
duplicate Pepsi.
The operations of the bottling plants of the surrounding territories should be
controlled in order to ensure that they do not supply the product in other territories not
under their area of operation.
The company should modify its advertising strategy and educate the customers about
its age-old existence and enhance its brand image. This will appeal to the target
customers of middle and older age groups apart from the younger generation in
which PEPSI has a good hold.
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CONCLUSION
The business of Soft Drink industry is significantly based upon the impulse
buying, so it is very necessary to Merchandise products of PEPSI efficiently and
present them in such a manner so that it can motivate the consumer and generate a
thirst in consumer to consummate it.
Though, PEPSI has a strong position in Lucknow with the support of its
efficient distribution network, aggressive marketing efforts and advertisements
along with
attractive schemes but there still exists potential market in NOIDA to be
exploited and a suitable Weak Area Programme or the Strong Area Programme
has to be formulated to improve its market share depending upon the area under
consideration.
Soft drink business’s behavior is not governed by brand loyalty so the emphasis is
not only on creating the market but also on retaining it. The availability of the
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right brand and flavor pack, at the right place, at the right time is a key for
winning the customer in soft drink business. Keeping these facts in mind it
becomes very important to treat the retailers with concern and satisfy them by
various measures and so that they are loyal towards PEPSI. Public relation is also
critically important in this industry.
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BIBLIOGROPHY
1. Research Methodology……….. C.R.Kothary
2. Marketing Management………. Philip Kotler
3. Statistical methods……………. S.P.Gupta
4. www.pepsi.com
5. www.pepsiworld.com
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