Project study reporton

Distribution strategy of PepsiCo

SESSION 2014-2016 SUBMITTED TO:SWATI KHANDEWAL SUBMITTED BY: ANAND SHARMA

IILM Academy of Higher Learning

35/95, Sector-10, Kumbha Marg, RHB Colony Pratap Nagar,

Sanganer, Jaipur - 302033

INTRODUCTION

Pepsi was first introduced as "Brad's Drink", in New Bern, North Carolina, United States, In 1893 the pharmacy of Caleb Bradham, who made it at his drugstore where the drink was sold. It was later labelled Pepsi Cola, named after the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. (Pepsistore.com) In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to 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 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a race." The advertising theme "Delicious and Healthful" was then used over the next two decades. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again.

In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy – 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. Mega gel bought the Pepsi trademark.

MISSION

“Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.”

VISION

PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.”

STRENGTHS:-

PEPSICO has an excellent brand image.

Retailer friendly schemes.

Continuous & strategic improvements in the promotional

strategies.

Strong dealer network.

PEPSI has got goodwill in the market with regard to the

brand name.

It has a very wide product mix.

Large number of celebrity endorsed.

A very good sales force.

WEAKNESSES:-

PEPSI not able to keep the retailers satisfied as they are not

providing with the coolers on time as compared to others

Interior part of the city is not looked after as the main city as

the roads are not good enough for the vehicles to reach

there.

Support material not provided to the retailers as being

provided by the competitor.

PEPSI has only cola flavor where its competitor has coca

cola has coke and Thumps up.

Its one of the Popular brands PEPSI in cola flavor is lagging

behind with its nearest competitor only due to high sugar

content and less thrilling.

More emphasis is given to larger dealers.

OPPORTUNITIES:-

Consumers are showing increased interests in PEPSI

products.

Promotional activities provide it an edge over the

competitors.

Top position in C.S.D. products in India gives it an

advantage.

Pepsi can explore its distribution network in interior area

also.

THREATS:-

Some dealers are not very satisfied with the services of

Pepsi which directly affect the sale of product.

Competitor’s products already available in the market with

similar schemes.

Tough competition from others.

Strategic pricing by competitor may affect the company’s

margins.

Pesticide controversy taking away the consumer. Many

religious Guru asking their followers not to consume soft

drinks.

4Ps:

Product:

A product (in Pepsi's case, a popular soda drink with cola flavoring) must appeal to the marketplace and deliver taste to consumers.

Price:The second element, price, is all about offering a product for an appealing price - one that still allows PepsiCo to make a tidy profit from the sale of their drinks.

Place:The third element, place, is about distribution of soda drinks. Drinks may be sold in mass chain stores, such as Wal-Mart, and in an array of other retail stores, such as drug stores, grocery stores, and corner stores or bodegas. Distribution is the key to getting the product in front of consumers, so place is a very important part of the overall sales equation.

Promotion: Promotion includes the marketing and advertising of a product. In the case of Pepsi, marketing is international and takes place in every form of mass media - including television ads, print ads, and online marketing.

PRODUCTS DETAILS

Aquafina

Bottled water goes through a state-of-the-art purification process so that you get the refreshment your body craves in its purest form.

Brisk The original iced tea with tons of attitude. The one with the bold lemon flavor that kicked iced tea off the back porch and gave it some street cred. Now that's Brisk, baby!

Cheetos CHEETOS Snacks are the playfully mischievous cheesy crunch that add a little lighten-up moment to any day. Proof positive, you simply can’t eat a Cheetos Snack without smiling. The CHEETOS brand strives to provide consumers with fun times every step of the way.

Diet Mountain Dew All the great taste and intensity of DEW without the calories.

Diet Pepsi

With its light, crisp taste, Diet Pepsi gives you all the refreshment you need - with zero sugar, zero calories and zero carbs. Light. Crisp. Refreshing. Diet Pepsi. Nothing refreshes like a Diet PepsiDoritos DORITOS brand tortilla chips deliver a powerful crunch that unlocks the bold and unique flavors you crave. The DORITOS brand is constantly creating new ways to give you immersive and memorable experiences, to put you in control of the things you love most.

Fritos

The popularity of FRITOS Corn Chips has put the snack in a class of its own. From small towns and family barbecues to parties in the big city, this classic snack is a true icon. The hearty chip even inspired the creation of another American classic, FRITOS Chili Pie.

Gatorade Available in over 80 countries, Gatorade's line of performance drinks adds over 40 years of rehydration and sports nutrition research to the PepsiCo portfolio. Born in the lab In early summer of 1965, a University of Florida assistant coach sat down with a team of university physicians and asked... Lay's

Wherever smiles happen and happiness is celebrated, you’ll find LAY'S potato chips. From backyard BBQs and birthday parties to 4th of July picnics, LAY'S chips are there to share the moment. It’s no wonder these deliciously fresh-tasting and perfectly crispy potato chips have been America’s..

Lipton

Made with natural ingredients, new 100% Natural Lipton Iced Tea unlocks the natural goodness of tea, blending it with delicious flavors to hydrate and refresh you.

Mirinda

Mirinda is here to be your carefree laugh out loud partner. The bold fruity taste and the vibrant fizz will remind everyone; don’t take life too seriously. Enjoy the sensorial fruity Mirinda experience with Orange, Citrus, Green Apple, Strawberry, Tangerine and Pomegranate flavors. Release Mirinda....

Mountain Dew

Mountain Dew exhilarates and quenches with its one of a kind great taste.

Pepsi MAX

Pepsi MAX is the only soda with zero calories and maximum Pepsi taste.

Quaker Quaker's family of brands includes household names you know and love. These consumer brands which deliver great taste, nutrition, quality and variety, have been around for as long as 130 years. Ninety-two percent of our U.S. brands hold the number-one or number-two position in their respective..

Ruffles Chip lovers have come to know that ―R R R Ruffles Have Ridges The thick ridges of RUFFLES® Potato Chips help hold more great potato chip flavors and stand up to the thickest dips.

Sierra Mist

Sierra Mist Natural is made with real sugar and nothing artificial - just natural ingredients so the crisp, clean lemon-lime flavor shines through. It's simple, delicious, and refreshing - naturally! Tostitos

TOSTITOS® tortilla chips are made for dipping. Whether it’s a couple of friends gathered to watch the game or a giant backyard barbecue, TOSTITOS are the must-have chips the ultimate salsa and dip delivery system. With their perfect shape, texture and taste, TOSTITOS chips are a reminder that the. Tropicana Tropicana, the strongest name in juices, extends the PepsiCo portfolio of brands with plenty of nutritious, high-quality flavors. Tropicana Products, Inc. is the leading producer and marketer of branded fruit juices. Its products are marketed in the U.S. under a variety of brand names, including.

DISTRIBUTION STRATEGY

Distribution strategy is sets of interdependent organization involves in the process of making a product or service available for use or consumption.”By channel distribution of Pepsi means the intermediaries or the process through which Pepsi is transferred from the producer to the ultimate users. There are a lot of

intermediaries between Pepsi producers and consumers. Some intermediaries like wholesalers and retailers buy and resale the product. They are known as merchant middle men.

Intensive Distribution:

Pepsi Co follows an intensive distribution strategy to distribute Pepsi. To support their universal feature they want to place their product in as many outlets as possible.

Distribution Model of Pepsi:

Pepsi uses two types of distribution model to distribute the product among the consumers. They are

Direct Distribution System Indirect Distribution System

Direct Distribution System:

Pepsi uses its direct distribution system to deliver suppliers. It Supplies the product directly with

PIZZA HUT KFC

According to the marketing channel Pepsi uses zero level of marketing channels. It means

We can see there are no intermediaries between manufacturer and consumer. This single type of marketing channel is maintained by Pepsi.

Manufacturer Consumer

Indirect Distribution System:

In this system, there are a lot of intermediaries such as distributors, retailers, wholesaler etc. To make the product available at the right places at the right time in the market, the sales department of PepsiCo Company pays major attention on controlling the channel of distribution. The nature of the channel is as follows

So according to the marketing channel Pepsi uses 2-level marketing channel. It means

DISTRIBUTORSPEPSI

WHOLESALER

CONSUMERSRETAILERS

ConsumerRetailersWholesalersManufacturer

Number of Intermediaries:

Pepsi Provides direct and indirect employment of 1, 50, 000 people (including suppliers and distributors).

Distributors:

Distributors frequently have a business relationship with manufactures that they represent. The distributors of Pepsi maintain exclusive buying agreements that limit the number of participants. The distributor becomes the company’s direct point of contact. Distributors don’t sell the product directly to consumers. At first PepsiCo supplies Pepsi to the distributors. Then they resale the product to wholesaler or retailer. According to there are 70 distributors of Pepsi. Some of them are:

OTC GLOBAL LTD, INDIA (Exporting and importing Pepsi in 500 ML pet Bottles )

SUNRISE FOODSTUFF JSC, VIET NAM (Exporting Famous-Brand Pepsi Soft Drinks 330ml.)

Wholesalers:

The wholesalers of Pepsi generally buy a large quantity of products directly from distributors or the company. Then they resale the product to the retailers. According to http://www.exporters.sg/there are 70 wholesalers of Pepsi. Some of them are:

FAR WAY GENERAL TRADING LLC (Exporting and importing Pepsi )

Brand Distribution Poland LTD, POLAND (Exporting Pepsi 0,33L 24 cans case)

Retailers:

Retailers consist of small and large for-profit businesses that sell products directly to consumers. The retailers buy small quantities of an item from a distributor or a wholesaler. Then resale them to consumers. According to http://www.exporters.sg/ there are 563 retailers of Pepsi. Some of the retailers are

MARKET SEGMENTATION

As we know that Pepsi is provided among a huge population which is called market. To distribute it and increasing the revenue the market should be segmented. Pepsi has segmented their market keeping four major segmentation variables in their mind which are:

Geographic

Demographic

Psychographic

Behavioral

Geographic Segmentation:

Geographic segmentation means dividing the market into different geographical units such as nations, regions, states, countries, cities or even neighborhood. Pepsi has put little emphasis to segment their market geographically. They are doing business almost in maximum places around the world.

Demographic Segmentation:

Despite the large customer base in the Soft Drink industry, 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 what marketers refer to as Generation X, which are profiled to be between the ages of 18 to 29. In addition, Pepsi shifted its focus to the growing American teenage market in the 1990s by forming exclusive contracts with American schools and developing advertising campaigns such as “The Next Generation” and the “Joy of Pepsi”, featuring Britney Spears. Pepsi believes that if they can get this market to adopt their product, they could establish a loyal customer in a long run.

Psychographic segmentation:

Psychographic segmentation divides buyers into different groups based on social class, lifestyle or personality characteristics. People from same demographic group can have very different psychographic makeups. Pepsi’s segmentation has also been

emphasized psycho graphically. Their beverages are very much focusing towards lower and upper middle class as they can afford to drink Pepsi. They have a product like “Mountain Dew” a particular drink which is focused especially who has adventurous personality. Their campaign of this drink totally focuses to adventurous young people.

Behavioral segmentation:

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. In this segment, Pepsi has been concentrating carefully. Because they offer in every special occasions, for the people who seek for benefits off their products, to their loyal customer base. Occasional cases like religious festivals; special days like mothers’ day, valentine’s day, friendship day, any individual’s birthday or marriage ceremony or anniversary in a word in every special occasions there are people to whom buying Pepsi for celebration is must.

Segmentation Variables

Data

Geographical

World region Asia

Country Bangladesh

Cities All major cities

Density Urban

Climate Tropical wet

Demographic

Age 14-30

Gender Male, Female

Family Size 1-2, 3-4, 5+

Family Life Cycle Married, Unmarried

Psychographic

Social Class Middle Class, Upper Class

Lifestyle Actualizes, Believers, Fulfilled, Achievers, Strivers, Experience makers, Strugglers

Personality Adventurous

Behavioral

Occasions Parties, Birthdays, Sports, Regular occasions

Benefits Quality, Taste

User Status First Time User

Loyalty Status Strong

Readiness Stage Aware, Interested

MARKET TARGETING:

Market Targeting can be carried out at several different levels. Companies can target very broadly through “Undifferentiated Marketing”, very narrowly through “Micromarketing” or somewhere between “Differentiated Marketing” and “Concentrated or Niche Marketing”. There are four strategies of market targeting. Pepsi follows the strategy of “Concentrated or Niche Marketing”. In niche marketing companies goes after a large share of one or a few segments or niches. Through concentrated marketing, the firm achieves a strong market position because of its greater knowledge of customer it serves in the niches it serves and the special reputation in acquires. Pepsi customers are mostly Teenagers and Young Adults between the ages of 14 to 30. It also targets at Schools, Colleges, Universities, Homes, Restaurants, Hotels, and Stores They focused on varietal differentiation since 1990 by introducing a string of niche products. To increase volume in order to counter flat Coca-Cola sales, Pepsi introduced Sierra Mist in 2002-2003 to take the place of 7-up and go head-to-head with Sprite. Pepsi has also tried to boost volume by introducing products that appeal to specific target markets that it currently is not reaching. Pepsi has introduced Code Red and Live Wire, extensions of Mountain Dew, Pepsi One, and Pepsi Blue. Finally, Pepsi is countering declining sales of carbonated drinks through the marketing and distribution of Starbucks ready to drink products, and the acquisition of SOBE and Gatorade. The success of Pepsi’s Mountain Dew Code Red launched in 2001 was the most successful soft drink innovation in 20 years and has spurred even more niche product introductions for PepsiCo as well as other competitors. In some sense Pepsi also follows the idea of “Micromarketing”. As they are they are promoting their brands to the local customer groups. They are sponsoring the signboards for

the little or big shopkeepers in town. They are also providing refrigerator logoed “Pepsi”. All these they are doing to attract their target customers.

MARKET POSITIONING:

PepsiCo plans to further create positions that will give products the greatest advantage in their target markets. Pepsi has been positioned based on the process of positioning by direct comparison and have positioned their products to benefit their target market.

Positioning Strategies of Pepsi:

To find points of differentiation, Pepsi have followed some strategies which have differentiated themselves from others. Usually marketers try to differentiate along the lines of following things

• Product Differentiation

• Channel Differentiation

• Image Differentiation

Pepsi have differentiated themselves in the field of Product Differentiation, Channel Differentiation and Image Differentiation. The unique characteristic of their product and their brand image has differentiated themselves from the other beverages in market.

Product Differentiation:

Product differentiation comes into play for sure in the case of Pepsi. When looking at Pepsi, people think of soda.

Channel Differentiation:

Coke and Pepsi distribute their drinks through independent bottlers. These firms make the ingredients for the drinks and then ship them to the local bottlers, who pretty much finalize the product. After this is done, this bottler has the right to distribute whatever brand it wants to a specific region. On the other hand, a brand such as Canady Dry does something much different. Canady Dry packages its product in several locations and then ships them to wholesale grocers who distribute them to the local grocery stores and outlets. This is a great example as to why Canady Dry is strong within local grocery stores, but why they are not present in vending machines like Pepsi is. Furthermore, I found it really interesting that since the vending machine market is dominated by Pepsi and Coke, that Canady Dry actually has to be purchased in order to get into a vending machine; something that doesn’t happen too often.

Image Differentiation:

Creating a strong and distinctive image requires creativity and hard work. Symbols, signs, logos and color are used to create strong-company or brand recognition and image differentiation.

Positioning statement for Pepsi:

As we discussed earlier that “Pepsi positions itself on points of difference as well as points of parity. Pepsi's POD is their forward thinking attitude. According to that Pepsi’s positioning statement is

“To new generation, those who want the best taste in drinks, Pepsi is a cold drink which gave the best taste, low fat in a reasonable spending.”

RECCOMONDATION

This is one of the most important and most difficult part of

study. I arrived a certain recommendation for a company

after the analysis of data, some of the recommendations are

as follows.

All brands should be making available in all outlets. The

distributor can do this with timeliness delivery. Availability

will increase visibilities, which in turn increase the sale.

Pepsi distributor can convince the more retailers for

entering into agreement for exclusive outlet with some

extra benefit.

He damage Product should be replaced as soon as possible.

The Sign board should be provided to all the Retailers.

Another brand of Cola flavor should be introduced and it

should have strong taste and more fizz so as to attract the

customers who like Thumps up more than Pepsi.

CONCLUSION

PepsiCo was found by CELEB BRADHAM in 1902 at North

Carolina in USA, its present CEO is INDIRA NOOYI and

PepsiCo. India holding chairman is Mr. RAJIV BAKSI. In India

it has 34 bottling plant of them 8 are COBO and 26 are

FOBO, in which one is in (Mathura) Varun Beverages Pvt.

Ltd. chhata(Mathura). is a franchise owned bottling plant

(FOBO), producing Pepsi range bottled soft drinks.

The conclusion of this project report is that PepsiCo

products are profitable and having good distribution

channel but should focus more on their distribution channel

and try to satisfied more by providing them better services.

Pepsi still had some distance to cover to catch up with Coke.