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There is always a sense of gratitude one expresses to others for the helpful
and needy service they render during all phases of life. I have completed this
training with the help of different personalities. I wish to express my
gratitude towards all of them.

It gives me immense pleasure to express my deep regards and

sincere sense of gratitude to Mr. Manmohan R Paul Vice-president
(marketing)for his guidance throughout the training. Thank you sir for your
able and worthy guidance. I would also like to thank Mr. Rana, Mr. Prashant
Sharma and Mr. Hitesh for their support which helped me throughout my

I would also like to thank my teacher Prof. K Shanti Saroop for

steering my confidence and capability for giving me insight into training by
giving me exposure to the arena of competitive and real world.

Lastly I would like to thank my parents and friends for their

constant support during the duration of my training.

Thank You One and All


ROLL NO. 077508

Research Methodology........................................................................................15
Report and Analysis of Data Collection …………………………………………….26
CSD Industry Overview……………………………………………………….27
CSD Industry analysis…………………………………………………………31
Market Analysis and Industry Challenges………………………………......37
Industry process Improvement Opportunities………………………………46
PepsiCo International…………………………………………………………………61
PepsiCo – The parent Company…………………………………………….64
Overview PepsiCo International…………………….……………………….66
How PepsiCo overcame Competition……………………………………….68
PepsiCo India…………………………………………………………………………..74
Overview Of PepsiCo India…………………………………………………...76
PepsiCo with RKJ Group……………………………………………………..78
Strategic Divisions…………………………………………………………….80
Marketing Overview of PepsiCo India………………………………………………81
Marketing environment……………………………………………………….81
Value Delivery…………………………………………………………………83
Value Chain……………………………………………………………………85

4 P’s…………………………………………………………………………….88
Strategic Marketing………………………………………………………………….100
Factors Influencing Marketing Strategy……………………………………100
Key Success Factors………………………………………………………...112
Communicating with Customer…………………………………………….115

Porters Five Forces………………………………………………………….135

SWOT Analysis………………………………………………………………138
Porters Grand Strategies……………………………………………………143
BCG Matrix……………………………………………………………………145


This study titled as above aims at exploring the strategies followed by PepsiCo India to
manage its various partners both internal as well as external since it started its operations
in India. This study will also explore what changes PepsiCo India is bringing in order to
increase its visibility and market presence to tackle the ever increasing hold of Coca Cola
on the Indian beverage market.

This study aims to explore the overall functioning and position of PepsiCo India in the
marketplace. It also aims to know customer perception regarding PepsiCo India. To know
about these facts this report will primarily focus on the partner relationship management
of PepsiCo India’s main carrying and forwarding agency Varun beverages limited.

To know the overall functioning of PepsiCo India is important in order to get an

understanding of the topic. It is also important because is will explore the sales and
distribution system of Pepsi India which is considered to be one of the strongest not only
in the country but also worldwide. This project also covers a detailed observation and
study of the VISI-PURITY campaign and the various retail initiatives specially related to
the Slim Diet Cans and their acceptance in the Trans-Yamuna and Agra markets both of
which are upmarket towns

The various observations and studies were done through route rides, direct marketing,
market visits and from the sales team of PepsiCo India. The aim of the overall training
was to have a complete and thorough understanding of the process of the various stages
of product movement from the bottling stage to the final consumer and the various
agencies which influence and help move these products. Also the study entails the various
push and pull strategies actually used by us suffuse the trans Yamuna Market with slim
diet cans and also studies the acceptance of the newly introduced Slim Diet Can range.
Although this study will explore the overall functioning of PepsiCo India, but in order to
be precise it will primarily concentrate on the beverage segment of PepsiCo India.

PepsiCo is one of the oldest, largest and most successful beverage and snack food
companies in the world. PepsiCo was founded by Caleb Bradham in 1902 in USA. Today
PepsiCo and its affiliates operate in more than 140 countries in the world and generate
revenues in excess of $ 40 Billion. In its pursuit of never ending growth and expansion,
PepsiCo entered India in 1989 in a joint venture with Punjab Government. However,
PepsiCo India very soon started its beverage operations in collaboration with the R K
Jaipuria group.

Soon after entering the beverage segment PepsiCo Established its dominance in the
market owing to its expertise in sales, marketing, operations and local collaboration.
PepsiCo maintained its market dominance for many more years to come. However, this
advantage slipped and PepsiCo had to concede the market leadership to Coca Cola India.
Several actors were responsible for this development. But, the most important are;
• Ad campaigns targeting regional markets.
• Discontinuation of Slums in the distribution network by PepsiCo. This move by
PepsiCo adversely affected its position of a market leader because while PepsiCo
discontinued the use of Slums in its distribution network, Coke continued it and
within one year, it was able to snatch considerable market share from PepsiCo.
• Acquisition of well-established and favored brands like Thums Up and Limca by
Coca Cola India. These two brands still constitute a bulk of sales for Coca Cola

To explore the reasons behind these developments this study will analyze the marketing
initiatives and policies of PepsiCo India in detail with particular focus on its partner
relationship management.
The above-mentioned objectives can be achieved by carrying a proper and planned
research involving different types and methods. The data collected fo laid the foundations
for the study and gave a platform for the analysis and findings which lead to the
fulfillment of the objectives.

The data collected for research is primary and secondary. Primary data is collected by
observation, interviews and questionnaires. While secondary data is collected from the
internet through different case studies and reports on the CSD industry. Observation
method was carried in East-Delhi to know the market position and market share of
PepsiCo products. Interviews of people from the sales department were conducted to
know the sales and distribution network and marketing policies of PepsiCo India, while
questionnaire method was used to know about the customer perception of the slim diet
can portfolio. Secondary data is used to know about the CSD industry and the Company
i.e. PepsiCo.
The data collection and analysis paves way for the recommendation ad conclusion of the
study that reveals some important findings regarding the strategy and corporate structure
and strategy of PepsiCo India.


The soda drink and bottled water industry includes more than 3,000 companies that
manufacture and distribute beverages. Only in the USA combined annual revenue is more
than $70 billion. Coca-Cola and PepsiCo hold more than 50 percent of the market,
following strong consolidation in the past decade. Only a few other companies have
annual revenue above $500 million. Most are local or regional manufacturing and
bottling operations with annual revenue under $100 million.

Competitive Landscape:

Demand for non-alcoholic beverages is driven by consumer tastes and demographics. The
profitability of individual companies depends on effective marketing. Large
manufacturers have economies of scale in production and distribution, with average
annual revenue per production worker close to $1 million. Small companies can compete
by producing new products, catering to local tastes, or selling at lower prices.

Products, Operations & Technology:

Nonalcoholic beverages include sodas (carbonated soft drinks, or CSD), bottled waters,
juices, and a large variety of mixtures. Sodas account for about 60 percent of the market.
The manufacture and distribution of most national soda brands, including Coke and
Pepsi, is a two-tiered process. The primary manufacturer produces a flavored syrup called
concentrate that is sold to local bottlers who manufacture and distribute the finished
product. In a typical bottling operation, the flavored syrup, corn syrup (sugar), and
filtered water are mixed in appropriate proportions, carbon dioxide gas is injected, and
the finished soda product is poured into bottles or cans, which are capped, labeled, and

The two-tiered structure is most efficient for national companies with large volume,
because the manufacturing process is simple and because water, the main ingredient of
sodas, is expensive to ship and is available locally. Smaller companies combine the syrup
production and bottling operations in one plant. For soft drink bottlers, the major raw
materials, aside from the flavored syrup, are corn syrup and containers -- glass bottles,
aluminum cans, or plastic bottles made from polyethylene terephthalate (PET).

Bottlers frequently operate sizable distribution systems, including warehouses and fleets
of specialized delivery trucks. Production and distribution volume is usually measured in
cases of 192 ounces, although actual cases of 12-ounce cans now contain 288 ounces.
Coca-Cola produces more than 4 billion cases of soft drinks per year; PepsiCo, over 3
billion. In addition to producing canned and bottled soft drinks, large manufacturers sell
sweetened syrups to restaurants and other retailers that produce the finished product at
the point of sale by mixing the syrup with carbonated water to produce fountain products.
About 35 percent of Coca-Cola's US product is in the form of fountain sales and 60
percent in bottled sales.

The manufacturing process for most non-soda beverages is usually more complicated
than the mix-carbonate-and-bottle soda process and therefore isn't usually handled by
local bottlers. In most cases, non-soda products are bottled by the manufacturer and
distributed through the same types of channels--wholesalers, distributors, brokers--used
by food manufacturers, although bottlers may also participate. Bottled waters, a rapidly
growing category of beverage, are either bottled at specific springs or made locally from
filtered tap water.

Manufacturers and bottlers typically operate under contracts, called Bottler Agreements,
that specify the territory within which the bottler has an exclusive right to make, sell, and
distribute the manufacturer's brand in bottles or cans. Fountain products are often sold
separately through wholesalers, under Distributor Agreements. Bottle and fountain
territories may overlap and bottlers may also be fountain distributors. Coca-Cola sells
products through about 80 local bottlers and 500 fountain wholesalers.

Bottler Agreements usually require that container and packaging materials be bought
from suppliers that are approved by the manufacturer, and that the bottlers not handle
competing products. Agreements also specify the price that the bottler must pay for
concentrate. The manufacturer has no control over the prices the bottler charges
customers, and usually isn't obligated to spend money for marketing or promotions in the
bottler's territory. Often, however, the manufacturer will provide marketing and
promotion support. In one year, for example, Coca-Cola provided about $600 million in
marketing support to Coca-Cola Enterprises, its largest bottler. Many Coke and Pepsi
bottlers hold perpetual contracts that can be terminated only for breach of contract.

The industry depends on technology for developing new products in the labs
and packaging product at the plants. Most bottling plants are highly automated with a
combination of mechanical automation and computerized robotics.

Sales & Marketing:

Beverage manufacturers, bottlers, and wholesalers sell products through a variety of

channels, such as food and convenience stores, restaurants, vending machines, mass
merchandisers, and institutions, including schools and colleges. Soda bottlers typically
own local vending machines. The marketing approach to each of these channels is quite
different and often includes promotional spending. Large manufacturers may also sell
directly to national accounts and usually advertise on national or regional TV and in print.

Manufacturers typically produce a line of brands and often test and introduce new
products into the market through their existing distribution channels.

Target Segment – Youth:

The child/youth market is of crucial importance to drinks manufacturers as under-19s

constitute 20-30% of the population in western countries, making them a substantial and
lucrative consumer base. With many life-long consumption habits formed during youth,
gaining high penetration in the children's and teenagers' market is of key importance to
manufacturers with long-term ambitions and growth targets.

Targeting Soft Drinks to Youths enables companies to:

• Assess the size of the soft drinks opportunity by age group

• Understand children's values and motivations and their impact on the soft drinks
• Develop incumbent market position through enhanced targeting and promotion
• Assess trends in new product development in the children's market over the
course of the past 2 years
• Combine business to business executive opinion and local field research

Analysis and Industry Challenges:

In order to survive in this environment, companies must consider the market trends that
will likely shape the industry over the next few years. This will help soft drink companies
to understand the challenges they will encounter and to turn them into opportunities for
process improvement, enhanced flexibility and, ultimately, greater profitability.

Market trends for the soft drink industry can be summarized by six fundamental themes:
• Changing consumer beverage preferences, featuring a shift toward health-oriented
wellness drinks
• Growing friction between bottlers and manufacturers in the distribution system

• Continually increasing retailer strength
• Fierce competition
• Complex distribution system composed of multiple sales channels
• Beverage safety concerns and more-stringent regulations
• Consumers turn to wellness and healthy drinks

In much of the developed world, a significant portion of the population is overweight or

obese. This includes two-thirds of Americans and an increasing number of Europeans.
Consequently, many people have started to actively manage their weight and change their
lifestyles, a shift that is reflected in their choices in the beverage aisles:
• Demand has increased for beverages that are perceived to be healthy
• Energy drink consumption has also climbed, due to the increasingly active
lifestyles of teenagers

This trend towards healthier drinks has created a number of new categories, and changed
the consumption trends of the beverage industry as a whole. While previously dominated
by carbonated soft drinks, the industry is now more evenly balanced between carbonates,
and product categories with a healthier image, such as bottled water, energy drinks and

While carbonates are still the largest soft drink segment, bottled water is catching up fast,
with an average of 58 liters consumed annually per capita. Among individual countries,
Italy ranks number one in bottled water consumption, with the average Italian drinking
177 liters per year. Overall, bottled water represents the fastest growing soft drink
segment, expanding at 9 percent annually. This growth is being partially driven by
increasing awareness of the health benefits of proper hydration.

The industry has responded to consumers’ desire for healthier beverages by creating new
categories, such as energy drinks, and by diversifying within existing ones. For example,
the leading carbonated soft drink companies have recently introduced products with 50%
less sugar that fall mid-way between regular and diet classifications. Similarly, a South
African juice company has recently released a fruit-based drink that contains a full
complement of vitamins and nutrients.

Beverage companies and bottlers are conflicting:

In the soft drink markets of Europe and the US, beverage companies use bottlers to
package and distribute products. This structure often causes conflicts of interest between
manufacturers and bottlers. Nevertheless, the supply chain must consistently deliver
value to the market in order for the segment to prosper. Despite any dissonance, the
concept of “one face to the customer” must be maintained.

Many factors are contributing to the friction between bottlers and beverage companies:
• Beverage companies often profit from increased concentrate sales at the expense
of bottlers’ margins
• Beverage companies have historically had higher returns and lower capital
• Bottlers have historically had lower returns and higher capital requirements for
building and maintaining production and distribution networks

• Bottlers continue to consolidate in an attempt to offset margin pressure through
cost reduction. Specifically, size helps them to:
• Spread fixed costs over greater volume
• Make larger investments in automated production lines
• Contain the costs of acquiring new customers
• Increase customer loyalty
• Declining prices have further reduced bottlers’ margins

Soft drink manufacturers continue to develop new products and packaging, which
increases operational complexity and, therefore, expenses for bottlers.
More new soft drinks have been introduced in the last two years by the top beverage
companies than were introduced in the entire decade of the 1990s. Examples include:
Coke with Lemon, Vanilla Coke, Dr. Pepper Red Fusion, Pepsi Blue, DnL, Fanta Berry,
SoBe Mr.Green, Sierra Mist, and Mountain Dew Code Red.
While manufacturers view these new products as a way to build a portfolio of options to
hedge against product successes or failures, bottlers see them as a burden since they often
require additional capital expenditures.

Retailers’ power continuously increases:

With Big Bazaar , Vishal and other discount stores leading the charge, India’s dominant
retailers are demanding better service and shorter order-to-delivery cycles from soft drink
companies. This is dramatically reshaping the industry, forcing soft drink companies to
become more efficient, while taking pricing power out of their hands. The dual need for
improved supply chain agility and cost efficiency is challenging suppliers to reevaluate
the ways in which they plan and manage their supply chains, as they constantly search for
approaches that will help them achieve the rock-bottom prices and operational excellence
now expected in the industry.

Furthermore, the growth of private-label products is encouraging manufacturers to take a

number of steps to compete more effectively. Increasingly, they are turning to innovation

and new product introduction as a means to achieve real differentiation as well as growth.
Branded manufacturers are also looking to get closer to the consumer, with many of the
larger ones piloting direct-to-consumer marketing approaches. They are also trying to
better understand the in-store consumer experience by monitoring the execution of in-
store activities.

Nevertheless, many suppliers are losing brand equity. In recent years, a couple of factors
have been fueling the growing competition between manufacturers and
Retailers are using their power to set higher standards for marketing and operational
excellence, including escalating demands for improved service quality and shorter order-
to-delivery cycles from manufacturers and distributors.
Because of their direct relationships with consumers, retailers have a deeper knowledge
of consumer behavior.
Competition is becoming more and more difficult:

In the beverage manufacturing industry, competition is

growing due to the following factors:
Constant demand for new niche products related to consumer preferences for healthier
and more diversified offerings
Industry consolidation, which has significantly raised the bar for the “scale needed to
The growth of private-label products.

These competitive pressures have led to:

• SKU proliferation - number of SKUs in a typical beverage company has doubled
from 1991 to 2001
• A plethora of new product failures:
• Only 20% are effective
• Only 10% generate significant revenue

• Most fail within the first two years
• Further consolidation and rationalization to capture cost savings by improving
operations and eliminating redundancy:
• Industry leaders are acquiring small, high growth companies
• Mid-market players are vertically integrating
• Declining soft drink prices:
• Profitability can only be improved through greater efficiency in the supply chain
or through more-effective trade promotions, which usually require considerable
• Sales channels are very complex
• The macro environment in which soft drink manufacturers operate has several
unique characteristics:
• Market to consumers/sell to retailers through wholesalers
• Must have the ability to communicate directly with retailers
• Multiple distribution channels
• Seasonal demands


The beverage industry is a multi-channel industry.

Therefore, soft drink companies have several types of customers with diverse

Modern Trade/Large Chain Retailers
Greater power in negotiating purchases of concentrations and merges
Direct access to the consumer and a tendency to protect this relationship from
manufacturer intrusion
Request contributions and discounts from brand companies

Small Individual Retailers

Huge number of small point sales
Sometimes buy products directly through cash and carry or modern trade

Indirect Channel (wholesalers)

Medium-sized organizations as a consequence of aggregation through consortia and
Playing a fundamental role in beverage distribution
Possess critical information regarding individual points of sale in terms of volume,
assortment, presence of competitor’s beverages, etc.

Due to the complexity of the marketplace, the entire logistical chain must be able to
sustain brands, products and services coherently within the various channels, taking into
account differing points of sale and diverse customer needs. Additionally, each beverage
manufacturer must provide customers with an extensive set of packaging options,

• Tracking product in various package sizes

• Special labeling requirements for customers
• International/domestic packaging
• Tracing / recall capabilities.
• Statutory regulation is increasing.

Governments around the world are concerned about food safety and quality. Periodically,
safety failures make big news in the global press. Amid this growing concern, regulators
are cracking down on sanitation and a variety of other food-safety requirements.
Each soft drink company must take these industry challenges into consideration, as well
as its own strengths and market position, when looking for ways to drive innovation,
accelerate growth and increase margins.

Industry Process Improvement Opportunities

Improve customer relationships with Direct Store Delivery:
Branded beverage manufacturers are attempting to get closer to the consumer, with many
larger manufacturers piloting direct-to-consumer marketing approaches. These include
active monitoring of in-store activity and, in some markets, a significant move back to
direct store delivery (DSD).

Direct Store Delivery is a business process used in the beverage industry to sell and
distribute goods directly to the customer’s point-of-sale. With DSD, the soft drink
company gets in direct contact with retailers, restaurants and pubs and other outlets where
consumers can obtain the product.
Manufacturers can use DSD to:

• Make beverage goods available to stores and customers quickly

• Optimize process settlement in sales and distribution through complete coverage
of the supply chain
• Improve customer retention and build customer relationships through personal
• Realize additional sales opportunities
• Obtain first-hand information about the market
• Better position brands against competitors

• Ensure product quality up to the point of sale

Best in class DSD companies couple the process of direct delivery with a cultural change
in how they view their employees and how their delivery personnel operate:
They are not just drivers but they have sales skills, communication skills and a global
view of the company’s offerings, commercial priorities, and initiatives. Direct Store
Delivery is characterized by variable orders and deliveries. Consequently, the process
should involve more than just bringing goods to the point of sale. It should eventually
encompass taking additional orders, picking up empties, collecting money, and more.
Best in class DSD operations typically include many value added activities, such as:

Merchandising activities - Enables the company to leverage frequent delivery visits

to the point of sale. These activities include tracking merchandising of other entities
(suppliers, wholesalers, etc.); reporting on in-store merchandising activities; carrying out
competitive intelligence (competitive products, product mixes, prices, displays, etc.); and
monitoring store/account execution. May also include some preventive maintenance.

Additional sales opportunities - Allows a company to sell goods “off the truck”
without any preceding order. The mix of products on the truck is dependent on what is
most likely to be sold on a certain trip. Support provided by handheld devices enables
drivers to skip back-end paperwork and to close the process through printed invoices.

Enhance relationship with indirect partners - Indirect sales are the process of
selling to an end customer through a third party and tracking that sale as such. Due to the
complexity of the beverage supply chain, conflicts of interest frequently arise between
beverage manufacturers and beverage distributors:

• Soft drink manufacturers profit from increased sales at the expense of distributors’
• Soft drink distributors profit from positive local pricing environments, which, if
exploited, reduce volume sales
• Soft drink distributors continue to consolidate in an attempt to offset margin
pressure through cost reduction

Despite these conflicting interests, it is crucial that beverage manufacturers and beverage
distributors maintain “one face to the customer.” These companies jointly market and sell
the product in the marketplace, and close co-operation yields benefits for both parties.
The indirect relationship is a partnership that must be nurtured by both the supplier and
the distributor. The stakes are high for everyone. For the manufacturer, a poor
relationship with a distributor may cause it to give a competitor “greater share of mind”
in the local marketplace. For the distributor, a negative relationship with a supplier means
constant threats of contract termination and reduced marketing dollars spent in the local

A strong manufacturer/distributor relationship is also important because consumers are

becoming more difficult to capture and classify. It is not only about sales; it is also about
information. But how can strategic information flow freely between partners? Although

sharing is implied in the word partnership, the reality is that companies are still
uncomfortable about exchanging strategic information. Nevertheless, it is critical for
companies to share information regarding sales volume and market intelligence on both
the microscopic and macroscopic levels.

The importance of the distributor’s role in the indirect channel for beverage distribution
suggests that it would be beneficial to establish a common understanding between
distributors and manufacturers regarding:
• Coding (products, channels, customers)
• Technology
• Data interpretation
• Marketing and sales actions.

In some cases, distributors are small- to medium-sized companies that only dedicate a
few people full-time to operational activities. As a result of this structure, they are rarely
open to implementing a truly “collaborative” environment. Recently, however, mergers
between distributing companies, and acquisitions of distributing companies by
manufacturers, have significantly modified many operating and ownership structures.

Consequently, a few well-structured and managed distributors have emerged that possess
a better understanding of the value of collaboration. These distributors have been at the
forefront of facilitating partnership initiatives.

Increase sales force effectiveness through incentives management

In the beverage industry, the critical path to a company’s success is the effectiveness of
its sales force. No matter how efficiently the company runs its manufacturing processes,
or how well it markets its products, a beverage company cannot succeed without an
effective sales force that ensures product placement on the store shelves.

A beverage manufacturer’s sales force typically comprises 17%-25% of the company’s

cost basis. Beverage distributors have an even higher percentage of their tot al costs

allocated to their sales forces. Yet, how can beverage companies get the most out of their
investments and ensure that their sales forces are operating optimally?

Properly managed commission programs allow beverage companies to effectively

motivate their sales forces to increase or maintain volume by brand or package. A
commission could be a rebate, discount, or other payment to a third party or in-house
employee. In order to actively manage sales behavior, it should be paid when the internal
or external sales representative meets a pre-established benchmark for a tracked metric.
The commission could take the form of either a cash payment or an item.

While commissions are usually paid based on sales volume, best-in-class companies take
a more holistic view of commission metrics. Some other important measures include:
• Account revenue growth
• Profit results
• Number of new accounts
• Customer service metrics
• Account retention.

Manage safety requirements through tracking and traceability

As recent history has shown, the ability to track inventory accurately – and to perform a
timely and cost-effective product recall – is critical in the beverage industry. Inventory
items need to be tracked, monitored, and controlled in different ways and at very detailed
levels. In each individual plant or warehouse, each resource requires a different level of

Food safety legislation, such as EU Directive 178, impacts the whole process flow.
Traceability is a goal that must be achieved over the entire value chain, requiring a batch
control system that is able to track and document all related characteristics.

At the batch level, it is now possible to assign different product attributes when searching
for the product including:
• Manufacturing Expiration Dates
• Shelf Life Dates

Classifying production lots into batches allows companies to identify specific inventory
and automatically record its history, including the history of the raw materials (and their
associated batch numbers) used in its production. In other words, it allows full recall of
the materials that have been involved in the overall manufacturing process. These
improvements reduce the company’s exposure to litigation and regulatory fines.

In addition, track and trace improvements help companies to maintain high quality
standards, which is often a selling point that differentiates one brand from another and
that can command a price premium with the consumer. Recording and tracking that
quality is critical. In the final analysis, soft drink companies must strive for the highest
quality standards they can achieve – ones that are superior to those of their competitors.

Optimize the extended supply chain
In a business environment characterized by strong competition, changing consumer
preferences, a complex distribution channel, and conflicting relationships between soft
drink manufacturers and distributors, the beverage supply chain is under significant
pressure. Moreover, the world’s dominant grocery retailers (with Wal-Mart paving the
way) continue to demand increasingly better service quality and shorter order to delivery
cycles from manufacturers. This confluence of factors is forcing manufacturers to
become more efficient, while taking pricing power out of their hands. The need for both
improved supply chain agility and cost-efficiency is challenging suppliers to re-assess
how they plan and manage their supply chains.

The logistic chain must be able to sustain brands, products and services cohesively, while
taking into account different channels, customers, points of sale and customer needs.
Accordingly, companies should consider taking the following steps to improve their
supply chains:

• Ensure product availability on-shelf – On-shelf availability is becoming a

critical issue for both manufacturers and retailers. A system that avoids out-of-
stocks improves consumer value, builds brand and store loyalty, increases sales
and – most importantly – boosts category profitability. The traditional practice of
filling out-of-stocks with other products is no longer sufficient – particularly from
the manufacturer’s point of view. If consumers cannot find the brand they want,
their loyalty to that brand suffers. A 2002 GMA study found that out-of-stocks
jeopardize $6 billion in retail sales every year. Less conservative estimates put
this figure as high as $20 billion.
• Flexible ordering; flexible delivering – Most retailers are demanding
increased flexibility in order lead-times and delivery methods, putting additional
pressures on the supply chains of manufacturers and distributors. To withstand
these pressures, companies need to streamline product movement through
programs such as store-specific shipments. They must also meet the strategies of
progressive retailers, which require flow-through distribution and cross-docking.

• Accurately forecast demand – Properly forecasted demand drives two of
the primary metrics used to measure the efficiency of a beverage company’s
supply chain: customer service and inventory. Accurate forecasts are essential to
achieving improved customer service and lower inventory levels. Even with
recent success in developing and maintaining efficient supply chain processes,
forecasting inaccuracy remains a significant industry problem. According to the
2003 GMA Logistics Study, more than one-third of all forecasts are inaccurate at
the national level. This figure jumps to almost one out of every two at the regional
(distribution-center) level. Meanwhile, at the store level, differences in store
formats and sizes hamper the forecasting process, and few have the tools to
accurately manage the sheer volume of data generated by forecasting.
Furthermore, many manufacturers do not have the technology to properly support
their planning and forecasting efforts. Many manufacturers are still forecasting
sales in months, although their plants run on weekly plans. That means they have
to squeeze weekly totals out of monthly boxes.
• Implement a fully integrated empties management process –
Empties management is the process of managing returnable containers, including
kegs, CO2 tanks, bottles and crates(an essential part of direct store delivery). A
successful empties management system gives the manufacturer a detailed picture
of the entire empties lifecycle, including the location and status of a company’s
assets. This process:
• Lowers costs by controlling high-value empties assets
• Increases control by managing empties at customer locations
• Decreases manufacturing issues by tracking empties.
• Reduce time-to-market for new products

An efficient new product development system is essential in the beverage industry. New
products need to be brought to market quickly in order to capitalize on changing
consumer preferences and competitive threats. However, new products must be
developed tactically, and the product’s potential must be understood and analyzed before

it hits the market. Currently, success rates for new products are astonishingly low –
dropping from 75% to 25% in the last decade according to AMR – and most fail within
the first two years after introduction.

The companies that are best able to execute the whole product development cycle will
clearly have an advantage. This requires reducing time-to-market as well as making
effective use of scarce internal resources and improving collaboration with partners. In
addition, great attention must be paid to aligning the related marketing initiatives (e.g.
advertising, sales promotions, etc.) with the new product introductions.

Innovation is one of the primary growth drivers for beverage companies, and it can
involve changes to the product itself or to the product’s packaging:
• Product innovation – Focuses on providing new tastes and flavors to
demanding consumers.
• Packaging innovation -– Emphasizes developing differentiated packaging
according to the consumption situation. Often, beverage manufacturers use
packaging innovation to increase product shelf life.

To ensure new product success, beverage companies must oversee the integration,
consolidation and reuse of knowledge from all involved parties (including beverage
manufacturers and bottlers), from R & D through production, and down to sales,
marketing, and financials.
By emphasizing greater collaboration and implementing Web-based workflow, beverage
companies can reduce lead-time from concept to shelf by 25 - 40% and, at the same time,
better integrate safety controls into the development process.

Increase customer retention through effective trade promotions:

In an environment characterized by strong retailers and discriminating consumers,
beverage companies must utilize processes and tools to protect their market shares. To do
this, they must make a favorable impact at the point of sale through promotional activity.

Trade promotions have become a necessary and expensive cost of doing business. With a
sizable percentage of volume being driven through a smaller base of retailers, the
competition for shelf space has never been higher. If a beverage company fails to execute
a trade promotion at Wal-Mart, a competitor will. Furthermore, as trade promotions have
proliferated over the past few years, they have also become more targeted. In response,
beverage companies must create promotions for specific demographics, channels, and
retailers, which make the sales process more costly and complex.

Trade promotions vary widely in terms of method, approach, and structure. Many local
promotions are run ad-hoc with marginal capital investments by field sales associates,
while others require significant investment and involve pre-scheduling in co-operation
with national chains.

Two of the most commonly used trade promotions in the beverage industry are coupons
and rebates. Coupon and rebate management are critical to enhancing relationships
between the beverage manufacturer and wholesalers, customers and, in the case of
coupons, consumers.

Coupon programs, which are in essence trade promotions addressed to the final
consumer, are mainly executed via discounts at large retailers. The coupon, a certificate
with a stated value, can be applied immediately or reserved for the next purchase. A
properly executed coupon program enables beverage companies to pass savings directly
to the end consumer.

On the other hand, rebate programs are trade promotions addressed to the retailer.
Therefore, contractual terms and conditions between the manufacturer and the retailer
must be monitored and executed. Rebates are often part of special trade promotions, and
management of the rebates typically follows one of the following flows:

Figure - Rebate management in direct sales

Figure- Rebate management in Indirect Sales

Improve margins by optimizing the telesales channel
For a large number of companies in the beverage industry, telephone sales is the primary
method of order taking and customer interaction. An effective telesales process can
increase revenues and complement other sales processes, such as DSD and field assets
management. This is accomplished by integrating the phone sales function with the
company’s other operations.

When correctly executed, inbound and outbound telesales functionality enables

companies to manage effectively and efficiently all contacts related to sales and customer
services. In addition, it helps build client relationships, sell new business, and expand and
retain the current customer base.

Well-implemented telesales functionality also enables business processes to be integrated

and standardized. This effectively “closes the loop,” creating a consistent experience for
customers within a multi-channel environment.

Some of the key benefits that a company can gain through telesales include:

Revenue Enhancement
• Improved sales effectiveness by consolidating the customer relationship
• Better up-selling
• Improved cross-selling
• Increased customer retention
• Expanded customer base
• Enhanced competitiveness via services that match or surpass those of competitors

Margin Improvement
• Reduced costs for order processing

• Accelerated sales process
• Lower sales costs in comparison to field sales
• Increased flexibility and speed to market
• Differentiated service levels according to customer relevance and need.

Implementing closed-loop processes between the telesales operations and other

departments can provide agents with a comprehensive view of all customer interactions
across the enterprise – in real time. In order to optimize the telesales channel, agents must
have tools to manage the entire sales process, from generating leads, planning calls, and
prioritizing sales opportunities and activities, to managing contacts and placing orders
Business performance improvement priorities – the path to value

Against the backdrop of these market challenges, how can soft drink companies drive
profitable growth and create value for their owners or shareholders?

In practical terms, there are four areas on which companies in the soft drink business
need to focus:
• Revenue protection and enhancement – for example, as driven by product and
packaging innovation, differentiated quality, improved product availability, and
better management of customer relationships
• Cost reduction/margin improvement – for example, through improved operational
efficiency, lower labor costs, reduced waste and the capture of operational
synergies from acquisitions
• Improved asset utilization – for example, through reduced inventory levels of soft
drinks held in cold storage and faster turnaround of re-usable transit packaging in
the supply chain
• Regulatory/assurance – for example, through demonstrating quality by
participating in retailer assurance schemes and assisting trade customers in
achieving full compliance with new traceability legislatiON


1893--Caleb Bradham, a young pharmacist from New Bern, North Carolina, begins
experimenting with many different soft drink concoctions; patrons and friends sample
them at his drugstore soda fountain.

1898--One of Caleb's formulations, known as "Brad's Drink," a combination of

carbonated water, sugar, vanilla, rare oils and cola nuts, is renamed "Pepsi-Cola" on
August 28, 1898. Pepsi-Cola receives its frist logo.

1902-- Bradham applies for a trademark with the U.S. Patent Office, Washington D.C.,
and forms the first Pepsi-Cola Company.

1905--Pepsi-Cola's first bottling franchises are established in Charlotte and Durham,

North Carolina. Pepsi receives its new logo, its first change since 1898.

1934--A landmark year for Pepsi-Cola. The drink is a hit and to attract even more sales,
the company begins selling its 12-ounce drink for five cents (the same cost as six ounces
of competitive colas).
Caleb Bradham, the founder of Pepsi-Cola and "Brad's Drink," dies at 66 (May 27th,
1867-February 19th, 1934).

1941--The New York Stock Exchange trades Pepsi's stock for the first time.
In support of the war effort, Pepsi's bottle crown colors change to red, white, and blue.

1960--Young adults become the target consumers and Pepsi's advertising keeps pace
with "Now it's Pepsi, for those who think young."

1963-- Pepsi-Cola continues to lead the soft drink industry in packaging innovations,
when the 12-ounce bottle gives way to the 16-ounce size.

Twelve-ounce Pepsi cans are first introduced to the military to transport soft drinks all
over the world.

1965--Expansion outside the soft drink industry begins. Frito-Lay of Dallas, Texas, and
Pepsi-Cola merge, forming PepsiCo, Inc.

Military 12-ounce cans are such a success that full-scale commercial distribution begins.

1970--Pepsi introduces the industry's first two-liter bottles. Pepsi is also the first
company to respond to consumer preference with light-weigh, recyclable, plastic bottles.

1984--Pepsi advertising takes a dramatic turn as Pepsi becomes "the choice of a New

1985--After responding to years of decline, Coke loses to Pepsi in preference tests by
reformulating. However, the new formula is met with widespread consumer rejection,
forcing the re-introduction of the original formulation as "Coca-Cola Classic."

The cola war takes "one giant sip for mankind," when a Pepsi "space can" is successfully
tested aboard the space shuttle.

1991-- Pepsi introduces the first beverage bottles containing recycled polyethylene
terephthalate (or PET) into the marketplace. The development marks the first time
recycled plastic is used in direct contact with food in packaging.

1992-- Pepsi-Cola and Lipton Tea Partnership is formed. Pepsi will destribute single
serve Lipton Original and Lipton Brisk products.

1994-- Pepsi Foods International and Pepsi-Cola International merge, creating the
PepsiCo Foods and Beverages Company.

1997-- PepsiCo. announces that it will spin off its restaurant division to form Tricon
Global Restaurants, Inc. Including Pizza Hut, Taco Bell, & KFC, it will be the largest
restaurant company in the world in units and second-largest in sales.

1998-- Pepsi celebrates its 100th anniversary.


PepsiCo, Inc. is one of the world's largest food and beverage companies. The company's
principal businesses include:

• Frito-Lay snacks
• Pepsi-Cola beverages
• Gatorade sports drinks
• Tropicana juices
• Quaker Foods

PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay.
Tropicana was acquired in 1998. In 2001, PepsiCo merged with the Quaker Oats
Company, creating the world’s fifth-largest food and beverage company, with 15 brands –
each generating more than $1 billion in annual retail sales. PepsiCo’s success is the result
of superior products, high standards of performance, distinctive competitive strategies
and the high level of integrity of our people.

Pepsi-Cola North America, headquartered in Purchase, N.Y., is the refreshment beverage

unit of PepsiCo Beverages and Foods North America, a division of PepsiCo, Inc. PepsiCo
Beverages and Foods North America also comprises PepsiCo's Tropicana, Gatorade and
Quaker Foods businesses in the United States and Canada.

Pepsi-Cola North America's carbonated soft drinks, including: Pepsi, Diet Pepsi, Pepsi
Twist, Mountain Dew, Mountain Dew Code Red, Sierra Mist, and Mug Root Beer
account for nearly one-third of total soft drink sales in the United States.

Pepsi-Cola North America's non-carbonated beverage portfolio includes Aquafina, which

is the number one brand of bottled water in the United States, Dole single-serve juices
and SoBe, which offers a wide range of drinks with herbal ingredients. The company also

makes and markets North America's best-selling, ready-to-drink iced teas and coffees via
joint ventures with Lipton and Starbucks, respectively.


The PepsiCo challenge (to keep up with archrival The Coca-Cola Company) never ends
for the world's #2 carbonated soft-drink maker. The company's soft drinks include Pepsi,
Mountain Dew, and Slice. It owns Frito-Lay, the world's #1 maker of snacks such as corn
chips (Doritos, Fritos) and potato chips (Lay's, Ruffles). Cola is not the company's only
beverage: PepsiCo sells Tropicana orange juice brands, Gatorade sports drink, and
Aquafina water. PepsiCo also sells Dole juices (licensed) and Lipton ready-to-drink tea
(licensed from Unilever). Its Quaker Foods division offers breakfast cereals (Life), pasta
(Pasta Roni), rice (Rice-A-Roni), and side dishes (Near East). Wal-Mart is PepsiCo's
largest customer, accounts for 9% of sales.

PepsiCo may be vying for more Pepsi-drinking people but its hefty snacks and juice sales
help to quench the company's thirst for bottom-line growth. Frito-Lay's salty snacks rule
the US market; the snack division accounts for about one-third of company sales.

The company announced a major restructuring in 2007, splitting its two business units
(Pepsi-Cola North America and PepsiCo International) into three: one for US food, a
second for US drinks, and a third for food and drinks abroad. CEO Indra Nooyi said that
due to the company's healthy growth in recent years, PepsiCo is approaching a size that
can be better managed as three units rather than two.

The split looks like this: PepsiCo Americas Foods includes Frito-Lay North America,
Quaker, and the Latin American food and snack businesses; PepsiCo Americas Beverages
includes North American beverage sales, including Gatorade and Tropicana; and PepsiCo
International includes business in the UK, the rest of Europe, Asia, the Middle East, and

With a saturated soft-drink market, the company continues to try new iterations: In 2007
the company introduced its first vitamin-enhanced water, called Aquafina Alive. It signed
a licensing agreement with Ben & Jerry's in 2006 for the sale of Ben & Jerry's milkshakes
in the US, as well as a deal with Starbucks for the distribution of the coffee purveyor's
Ethos water brand. Hot on the heels of Coke's introduction of Blak, in 2006 Pepsi
launched a coffee-flavored cola, named, Pepsi Max Cino, in the UK.

Venturing further into the non-cola category, PepsiCo acquired sparkling juice companies
IZZE and Naked Juice in 2006. It also began selling Fuelosophy, a smoothie drink, at
organic grocery store chain Whole Foods, and struck a deal to develop products with
juice maker Ocean Spray Cranberries.

Bowing to the public's growing concern about childhood obesity, in 2006 Pepsi, along
with Coca-Cola, Cadbury Schweppes, and the American Beverage Association agreed to
sell only water, unsweetened juice, and low-fat milk to public elementary and middle
schools in the US. As for high schools, the agreement calls for no sugary sodas to be sold
and one-half of the offered drinks to be water, diet sodas, lemonade, or iced tea. The
agreement was facilitated by former president Bill Clinton.

CEO Steve Reinemund stepped down as CEO in 2006 in order to spend more time with
his family. His replacement was Indra Nooyi, the company's president and CFO. Indian-
born Nooyi, the 11th female CEO of a FORTUNE 500 company, has been instrumental in
strategic decisions at the company, such as the acquisition of Tropicana and merger with
Quaker Oats.

Shortly after her appointment, Nooyi restructured the top level of power at the company.
She appointed John Compton, previously head of the Quaker-Tropicana-Gatorade unit, to
the newly created position of CEO for PepsiCo North America, reporting directly to her.


How PepsiCo outgunned Coke:

Losing the cola wars was the best thing that ever happened to Pepsi while Coke was
celebrating, PEPSI took over a much larger market.

Pepsi beat Coke in December for the first time in their 108-year rivalry, surpassing its
nemesis in market capitalization. The great irony of Pepsi's rise is this: It has never sold
more soda than Coke, even today.

"Pepsi's been on fire," notes Robert van Brugge, beverage analyst with Sanford
55Bernstein. Over the past five years its stock has risen more than a third, while Coke's
has sunk 30 percent.

Even ten years ago, it was easy to write off PepsiCo (Research) as the loser in the cola
wars against Coke (Research): the proof was everywhere. The company's profits trailed
those of its rival in Atlanta by 47 percent. Its value in the stock market was less than half
of Coca-Cola's. Coke's CEO at the time, Roberto Goizueta, was so sure of his company's
dominance that he practically dismissed Pepsi, telling FORTUNE, "As they've become
less relevant, I don't need to look at them very much anymore."

PepsiCo turned its cola Waterloo into an opportunity to retrench, regroup, and ultimately
outflank its old foe. Losing the cola wars, it turns out, was the best thing that ever
happened to Pepsi. It prompted Pepsi's leaders to look outside the confines of their battle
with Coke.

A decade ago, Coke offered investors a compelling story: a recession-resistant product

inexpensive enough that consumers would buy it in good times and bad, but valued
enough that they would willingly pay an extra nickel or so above what no-name brands

What Coke investors didn't envision was that an emerging preference for other soft
beverages --water, sports drinks -- would fracture demand. Nor did they see that the
business strengths that once applied to cola would take hold across a broadened soft drink
and snack-food market -- a market that Pepsi, and not Coke, dominated.

"They were the first to recognize that the consumer was moving to noncarbonated
products, and they innovated aggressively," observes Gary Hemphill of Beverage

PepsiCo embraced bottled water and sports drinks much earlier than its rival. Pepsi's
Aquafina is the No. 1 water brand, with Coke's Dasani trailing; in sports drinks, Pepsi's
Gatorade owns 80 percent of the market while Coke's Powerade has 15 percent.

Throughout the past five years under CEO Steve Reinemund, the company has deftly
moved with every shift in consumer tastes. "He's thinking about what the products should
look like in the future," says Victor Dzau, a director of PepsiCo.

Sustainable competitive advantage

Three major sustainable competitive advantages give PepsiCo a competitive edge as it

operates in the global marketplace:

• Big muscular brands;

• Proven ability to innovate and create differentiated products; and
• Powerful go to market systems.
• Cost and Quality.
• Timing and know how.
• Strongholds.
• Deep pockets.

Strategic Competitive Advantage

Launch Counterattack
Profits from a
competitive Traditional View


Firm has already moved to advantage 2

Profits from a Counterattack
series of
actions Hypercompetition


Coke: 1886; Pepsi: 1893.

1933: Pepsi struggling to stave off bankruptcy. Dropped price of its 10c, 12 oz. bottle to
5c, making it a better value. Ad jingle “twice as much for a nickel” better known in the
US than the Star Spangled Banner.

Price / Ounce

Price / Ounce

Pepsi Coke Pepsi

Perceived Quality Perceived Quality

Pepsi keeps price advantage through 60s and 70s, when Pepsi charged its bottlers 20%
less for its concentrate.

With rising ingredient costs, Pepsi could no longer offer twice as much for the same
price. So, it raised price to Coke’s level giving it a war chest to fuel an aggressive ad
campaign. Battle shifted from Price to Quality, with Pepsi targeting the youth.

What followed was the Pepsi Challenge & “Real Thing” Coke ads

Pepsi Coke First move:

Price / Ounce

Price / Ounce Challenge
Youth & Middle
Class Segments 2nd move:
Coke’s Ad war

Perceived Quality Perceived Quality

Perceived quality caught up. Deeper pocketed and lower cost Coke initiated a price war
in selective markets where Pepsi was weak in the 70s. Pepsi responded with its discounts
and by the end of the 80s, 50% of food store sales were on discount

Other companies moved into the lower left quadrant of the market. But the two major
players forced price down to “ultimate value.”

To break price spiral, Coke launched New Coke to keep Coke loyals and induce
switching among Pepsi buyers. But this move from Coke was rejected by the market.

Attempts to move to next arena via niches in caffeine and sugar substitutes were adopted.

Coke &
Price / Ounce

Price / Ounce
Spiral NewCoke Classic Coke
Generics Actual & Pepsi
RC Cola

Perceived Quality Perceived Quality


PepsiCo entered India in 1989 and in the span of a little more than a decade it became the
country's largest selling soft drinks company. The Company has invested heavily in India
making it one of the largest multinational investors. The group has built an expansive
beverage, snack food and exports business and to support the operations are the group's
43 bottling plants in India, of which 15 are company owned and 28 are franchisee owned.

PepsiCo stays committed to providing its consumers with top quality beverages. Its
diverse portfolio of brands include the flagship cola brand - Pepsi; Diet Pepsi; 7Up;
Mirinda; Mountain Dew; Slice fruit drink; Tropicana brand 100% fruit juices in various
flavours; Aquafina packaged drinking water; Gatorade plus local brands Lehar Evervess
Soda, Dukes Lemonade and Mangola.

PepsiCo is also a dominant player in the snack food segment in India. PepsiCo's snack
food company Frito-Lay is the leader in the branded potato chip market. It manufactures
Lay's Potato Chips; Cheetos extruded snacks, Uncle Chips; traditional namkeen snacks
under the Kurkure and Lehar brands; and Quaker Oats.

PepsiCo is one of the largest MNC exporters in India and its export business consist of
three categories - agri business, commodities and Pepsi system sales. PepsiCo has made
significant investments with the Punjab Agriculture University to develop a
comprehensive agro-technology program that has helped thousands of farmers across
India improve the yield of their farms and the quality of their agricultural products.
PepsiCo has leveraged its knowledge in contract farming to develop seaweed cultivation

in Tamil Nadu and has partnered with the Government of Punjab to help farmers of the
state through the utilization of developed technology for citrus farming.

As part of its sustainable development initiatives, PepsiCo India has been a committed
leader in the promotion of rain water harvesting, water conservation recycling and the
reduction of effluent discharge. PepsiCo has also established zero waste centers and PET
recycling supply chains and assisted victims of natural disasters. PepsiCo stays dedicated
in its endeavor to develop community outreach programs by supporting rural water
supply schemes, administering medical camps in villages, providing computers to rural
schools and creating opportunities for women in rural areas through vocational training as
an alternate means of livelihood.


PepsiCo Mission
"To be the world's premier consumer products company focused on convenience foods
and beverages. We seek to produce healthy financial rewards to investors as we provide
opportunities for growth and enrichment to our employees, our business partners and the
communities in which we operate. And in everything we do, we strive for honesty,
fairness and integrity."

PepsiCo in India
PepsiCo entered India in 1989 and has grown to become one of the country’s leading
food and beverage companies. One of the largest multinational investors in the country,
PepsiCo has established a business which aims to serve the long term dynamic needs of
consumers in India.

PepsiCo India and its partners have invested more than U.S.$700 million since the
company was established in the country. PepsiCo provides direct employment to 4,000
people and indirect employment to 60,000 people including suppliers and distributors.

PepsiCo nourishes consumers with a range of products from treats to healthy eats, that
deliver joy as well as nutrition and always, good taste. PepsiCo India’s expansive
portfolio includes iconic refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew,
in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages
such as Aquafina drinking water, isotonic sports drinks - Gatorade, Tropicana100% fruit
juices, and juice based drinks – Tropicana Nectars, Tropicana Twister and Slice. Local
brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range
of brands.

PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty snack market and
all Frito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips,

Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and
Lehar brands. The company’s high fibre breakfast cereal, Quaker Oats, and low fat and
roasted snack options enhance the healthful choices available to consumers. Frito Lay’s
core products, Lay’s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil to
significantly reduce saturated fats and all of its products contain voluntary nutritional
labeling on their packets.

The group has built an expansive beverage and foods business. To support its operations,
PepsiCo has 43 bottling plants in India, of which 15 are company owned and 28 are
franchisee owned. In addition to this, PepsiCo’s Frito Lay foods division has 3 state-of-
the-art plants. PepsiCo’s business is based on its sustainability vision of making
tomorrow better than today. PepsiCo’s commitment to living by this vision every day is
visible in its contribution to the country, consumers and farmers.

Performance With Purpose

Performance with Purpose articulates PepsiCo India's belief that its businesses are
intrinsically connected to the communities and world that surrounds it. Performance with
Purpose means delivering superior financial performance at the same time as we improve
the world.

To deliver on this commitment, PepsiCo India will build on the incredibly strong
foundation of achievement and scale up its initiatives while focusing on the following 4
critical areas that have a business link and where we believe that we can have the most


Being the best in everything we touch and handle.

Continuously excel to achieve and maintain leadership position in the chosen businesses;
and delight all stakeholders by making economic value additions in all corporate

It can be said with absolute certainty that the RKJ Group has carved out a special niche
for itself. Our services touch different aspects of commercial and civilian domains like
those of Bottling, Food Chain and Education. Headed by Mr. R. K. Jaipuria, the group
as on today can lay claim to expertise and leadership in the fields of education, food and

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

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

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

Strategic Divisions:

PepsiCo India consists of different divisions that include Beverage division, Snack food
division and the Restaurant division (Yum Restaurants India Pvt. Ltd.). These divisions
work as separate SBU’s and have their separate management.

PepsiCo India divided its beverage division into different operating divisions. The heads
of these divisions report directly to the CEO. The heads of these divisions are in charge of
their respective areas and are accountable for the proper functioning of all the regions.
The FOBO’s also report to the regional heads apart from the COBO’s.


Marketing Environment:
Marketing environment is the overall environment in which a Company operates. This
consists of the Task Environment and the Broad Environment.

Task Environment
Task Environment includes the immediate players involved in producing, distributing and
promoting the offering. The main players are the company, suppliers, distributors, dealers
and the target customers. Suppliers include the material and service suppliers such as
marketing research agencies, advertising agencies, banking and insurance companies,
transportation companies, and telecommunications companies. The dealers and
distributors include agents, brokers, manufacturer representatives and others who
facilitate finding and selling to customers.

The suppliers for PepsiCo India include the bottle suppliers for the soft drinks. These
include the Pet bottles and the Glass bottles. One of the most vital products required in
the operation is Refrigerator. PepsiCo does not manufacture the refrigerators, instead they
are supplied by different vendors who get time bound contracts from the company.

The distributors and dealers are part of the sales and distribution network. This will be
explained later under the section of ‘Place’, in the 4 P’s segment.

The target customer for PepsiCo is primarily the youth. But, because of increasing
competition from Coke PepsiCo has expanded its target customer base which now
includes people who are prospects for beverages beyond the CSD category. PepsiCo has
started targeting this segment by offering products in the Non- CSD category, these
include fruit based non-carbonated drinks, juice based drinks, energy drinks, sports
drinks, snack food (from the snack food division i.e. ‘Frito Lay’).

Broad Environment:
This contains forces that can have a major impact on the players in the task environment.
This includes six components: demographic environment, economic environment,
physical environment, technological environment, political – legal environment, and
socio – cultural environment. Companies need to pay close attention to the trends and
developments in these environments and make timely adjustments to their marketing
strategies in order survive and succeed in the market. This will be explained in detail in
the strategic marketing segment.

Value Delivery Process:

The value delivery process consists of the value creation and delivery sequence. This is
done in three phases. The first phase, choosing the value, represents the homework done
by the marketing department before the product exists. Marketing is required to segment
the market, select the appropriate the target market, and develop the offering’s value
proposition. This is known as Segmentation, Targeting and Positioning and is the essence
of strategic marketing.

Once the business unit has chosen the value, the second phase is providing the value.
Marketers need to determine specific product features, prices and distribution.

The task in the third phase is communicating the value by utilizing the sales force, sales
promotion, advertising, and other communication tools to announce and promote the
product. Each of these value phases has different cost implications.

Choose the Value (Strategic Marketing)

Customer Market Value

Segmentation Selection / Positioning

Provide the Value (Tactical Marketing)

Distributi Sourcing Service Product

on / / Develop Develop
Servicing Making ment ment

Communicate the Value (Tactical Marketing)

Sales Force Advertising

Fig. 2 – Value Creation and Delivery Sequence

Generic Value Chain:

Firm Infrastructure

Human Resource Management

Technology Development
ies Procurement Margin

Inbound Outbound Marketing

Operations Service
Logistics Logistics and Sales

Primary Activities

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

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

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

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

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

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

Marketing Mix / 4 P’s:

Marketing Mix has been defined as the set of marketing tools that a firm uses to pursue
its marketing objectives. These tools are classified into four broad groups, namely,
Product, Price, Place and Promotion.

Marketing mix decisions should be made to influence trade channels as well as final
consumers. A firm can alter any of the four P’s accordingly, including changes in the
product and distribution channel as well.

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

Marketing Mix

Target Market


Marketing Variables: The Four P Components of the Marketing Mix

Prod. Variety
Brand Name
Brand Name
Sizes Price Promotion
Warranties List Price Sales Promotion
Returns Discounts Advertising
Allowances Sales Force
Payment period Pubic Relations
Credit Payments Direct Marketing

Fig. 3 – Four P’s

Product:Pepsi offers different variety of products ranging from carbonated to Non

Carbonated Soft Drinks. These include –

Pepsi Cola

Mirinda ( Lemon and Orange )

7 Up




Aquafina (Mineral Water)

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

Product Quality:

This is one of the most important aspects that any Co. needs to address. Specially in the
case of Pepsi this is even more important because of the controversies and claims
regarding the CSE report on Pesticides in Pepsi. Therefore pepsi has to maintain stringent
quality norms and standards and norms. Pepsi does that by following one quality standard
worldwide and according to the official website of pepsi, the Co. maintains that :

“At every level of Pepsi-Cola Company, we take great care to ensure that the highest
standards are met in everything we do. In our products, packaging, marketing and
advertising, we strive for excellence because our consumers expect and deserve nothing
less. We promise to work toward continuous improvement in all areas of our

“At every step of our manufacturing and bottling process, strict quality controls are
followed to ensure that Pepsi-Cola products meet the same high standards of quality that
consumers have come to expect and value from us. We also follow strict quality control
procedures during the manufacturing and filling of our packages. Each bottle and can
undergoes a thorough inspection and testing process. Containers are then rinsed and
quickly filled through a high-speed, state-of-the-art process that helps prevent any foreign
material from entering the product. Additional quality control measures help to ensure the
integrity of Pepsi-Cola products throughout the distribution process, from warehouse to
store shelf”.

Brand Name:

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

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

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


List Price: The Price of each product is fixed and there is no discrepancy. Salesmen are
not authorized to make any change, alteration or give discounts unless authorized by the

Discounts: Discounts are provided to Wholesalers and Slums but there is no discount for
retailers. The discounts are negotiated directly with the Company and the C&F or the
Distributor point is not involved in the price negotiation.

Allowances: Allowances are given to salesmen on achieving their daily targets. This
target is given to every Salesman everyday before he goes on his designated route. The
Depot In charge (Sr. C E / C E) gives the target to every salesman in consultation with the

Payment period and Credit terms: No credit is provided. The payment procedure is not
flexible as the retailers are required to make on the spot payments. At times, they defer
the payment and in that case, the Salesman either shows a shortage or pays the rest of the
amount by himself. The wholesalers are also required to make in advance but at times
they also defer the payment and make the payment at a later date.


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

Advertising: Advertising is done by PepsiCo. COBO (Company owned Bottling

Operations) and FOBO (Franchisee owned Bottling Operations) have no say in the
advertising campaigns and their planning. The advertising account of Pepsi is handled by
JWT (J Walter Thomson) in association with the Corporate office of PepsiCo India.

Sales Force: There is a dedicated sales force at every C&F and Distributor point. Every
Salesman is assigned a specific route that he has to cover every day. The Salesman has to
take care of all the Shops on the designated route and address and inform (to the Sr. CE /
CE) about any issue any retailer has on the route. The Salesmen are also assigned the task
of providing all the information to the retailers regarding the daily schemes and the
details of all the promotion schemes launched from time to time. These include informing
the retailer about the promotional scheme, registration for the scheme, terms and
conditions of the scheme etc. The Salesman is also assigned the task of registering
maximum possible outlets on his assigned route.

Public Relations:

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


Channels: ‘Channels are independent organizations involved in the process of making a

product or service available for use or consumption’. There are different intermediaries in
channels that facilitate the availability of goods to the consumer.

Coverage: Two things come under market coverage. These are Market Reach and Market

Market Reach can be termed as accessibility and Market Penetration can be termed as










Initially the focus of the Company remains on reaching all the markets and then the
Company shifts its focus on increasing the frequency of sales in the respective markets so
that the sales and profitability of the Company can be increased.

Company (PepsiCo): PepsiCo India provides the salt to all the bottling plants in the
Country that carry out the bottling operations.

COBO: These are Company owned bottling operations operating directly under the
Company. Out of 32 bottling plants, PepsiCo owns 15.

FOBO: These are Franchise owned bottling operations. R K Jaipuria group does all the
franchisee-bottling operations for PepsiCo India; currently R K J Group has 17 bottling
plants for Pepsi.

Warehouses: These are Company or franchisee owned warehouses spread over various
locations that cover the respective territories and come under the purview of their
respective Area or Territory Offices. Stocks are sent from the bottling plants to these
warehouses, from where they are sent to the C & F centers and Distributor Points.

C & F Centers: These are the biggest centers in the distribution network and receive
proper assistance from the Company (either COBO or FOBO). The C & F center is
owned by a private player and not by the Company. The vehicles (Delivery Vans) are
owned by the Company, and the Salesmen at the C & F points are on the Company

Distributors: These are small, compared to C & F centers. Everything at the

Distributor point owned and managed by the distributor, even the salespersons are on the
Distributors payroll.

Wholesalers: These are smaller than C & F centers and Distributor points and get the
stock directly from the Company or Franchisee. They get their stock directly from the
Company and thus get special rates and extra discounts from the Company.

Slums: They are generally smaller than the Wholesalers are. However, they get special
discounts from the C & F centers and Distributor points.

All the different players in the distribution channel namely C & F centers, Distributor
points, Wholesalers and Slums have different designated markets and are not supposed to
operate in the market designated to any other player.

Retailer: Retailers are the most important chain in the distribution channel of Pepsi as
they are the only point of contact with the customers. Retailers get their stock from all the
other channel members in the distribution channel.


Demographic/ Technological/
Economic Physical
Environment Environment



4 P’s
Suppliers Public

Marketin Organization
g Control &
n System


Political/ Social/
Legal Cultural
Environment Environment

Demographic / Economic Environment:
Demographic environment comprises of people of different ages and class. This helps the
Company in identifying specific target market for specific products. Similarly, economic
environment helps the Company in deciding how much to spend and accordingly price
the products. Pepsi distributes its products considering this in mind. Cans are distributed
in areas that have more youth population and two lt. bottles are distributed in areas that
have more no. of families. 200 ml bottles are primarily distributed in areas with lower
income group people.

Technical / Physical Environment:

Technical and physical environment refers to the technical capabilities and the
infrastructural capabilities and requirements of the Company. Pepsi has access to the best
technology for its products and it uses the same technology worldwide for its products.
This was instrumental in helping Pepsi handle the pesticide controversy.

Political / legal Environment:

This is one of the most important factors that a company needs to consider while starting,
establishing and expanding operations in any country. Legal Environment is important
because a company needs to confirm to the laws of the land and carry out its operations
accordingly. While political environment is important as it can play an important in
forming opinions regarding the company. This is the reason why Pepsi operates in India
in collaboration, initially it started its operations in India with Punjab Government and
then it started its operations in the carbonated and non-carbonated beverage segment n
collaboration with RKJ group.

Social / Cultural Environment:

This plays an important role in determining the acceptability of the product according to
he socio cultural norms of the market and the effect the company has on each of these.
Companies need to be very careful about this issue as people are very sensitive about
their culture and may not tolerate any infringement. This determines the ingredients (of

the products) and the type advertisement and promotions used by the Company. Because
of these factors, Pepsi primarily uses Bollywood stars and Cricket stars in India as they
are the biggest celebrities and role models and are widely accepted.

Market Intermediaries:
Market Intermediaries facilitate the availability of products to the customers. Primarily
there are three strategies for distribution through market intermediaries. They are
Exclusive distribution, Selective Distribution and Intensive Distribution.

Exclusive Distribution means severely limiting the number of intermediaries. It is used

when the producer wants to maintain control over the service level and outputs offered by
the resellers. It often involves exclusive leading arrangements.

Selective Distribution involves the use of few selective intermediaries who are willing to
carry a particular product. It is used by established companies and by new companies
seeking distributors.
Intensive Distribution consists of the manufacturer placing the goods or services in as
many outlets as possible.

Pepsi primarily uses intensive distribution for its products. This is done to increase the
market reach and market penetration of its products and to counter competition from its
largest and biggest rival Coke. The sales and Distribution network of Pepsi is already
discussed in detail.

There are no suppliers for the carbonated beverage industry including PepsiCo. The salt
used by all the bottling plants to make the beverages is supplied to them by PepsiCo
irrespective of whether they are COBO or FOBO. The concentrated salt is the only
ingredient apart from water that is required to manufacture the beverages.


For Pepsi the biggest competition comes from Coke. Even outside India Coke is Pepsi
biggest competitor. Because of the fierce competition from Coke, Pepsi has to be very
aggressive in promoting itself through advertisements and other methods like sales
promotions. This is evident in the immense expenditure Pepsi incurs on its
advertisements and endorsements of its brand ambassadors.

Marketing Information System:

Definition – “Marketing Information System” consists of people, equipment and
procedure to sort, analyze, evaluate and distribute needed timely and accurate
information to marketing decision makers. MIS is needed to counter issues like – too
much information, too little information, too late information and inaccurate information.
The type of information required by Pepsi is regarding new products launched by its
competitors primarily Coke, promotional schemes and daily schemes of Coke and new
brand endorsements etc. Information regarding new product launches is required by
PepsiCo so that they can accordingly plan their strategy, while information regarding
promotional schemes and daily are required by all the regional and territorial offices so
that they can accordingly introduce and test the schemes.

Marketing planning System:

This is required to make a marketing plan that is a central instrument for directing and
coordinating marketing effort. The marketing plan primarily operates at two levels.
Strategic Marketing plan – This lays out the target market and the value proposition to
be offered.

Tactical marketing Plan – Specifies marketing tactics, including product features,

promotion, merchandising, pricing, sales channel and service.
Decisions regarding strategic marketing plan are taken at the corporate level. While most
of the decisions regarding tactical marketing plan are taken at the regional and territorial

level. These decisions are required for the formulation of marketing planning system for
specific markets.

These systems include methods of promotion, like sales promotion. Sales promotion
primarily includes displays and incentives to retailers in the form of gifts, merchandise
and discounts on purchase of products.

Marketing Control System:

It is a system comprising of different procedures and various levels of management to
bring efficiency and to keep a check on different marketing functions within the
organization. There are primarily four types of marketing control systems. These are,
Annual Plan Control, Profitability Control, Efficiency Control and Strategic Control.

Annual plan control – These are top and middle management tasks that try to examine
whether the planned results are being achieved. This is also done at regional offices apart
from the corporate office. These regional offices comprise off the COBO and FOBO
offices. These tasks primarily comprise off Sales analysis, Market share analysis, Sales to
expense analysis, Sales to expense ratio, Financial analysis etc. In PepsiCo India, this is
beyond annual plan. It is done on monthly basis, apart from annually and bi annually. The
sales analysis is done to know the sales and sales trend of different brands individually
and with respect to their competitors. Sales analysis is the primary tool to identify the
type and scope of promotions launched by the Company.

Profitability Control – This is done to examine whether the company is making or

losing money while carrying out its business. Profitability is measured in terms of
product category, territory, segment, channels, order size etc. For PepsiCo India, the most
profitable product / brand among all the products is Pepsi Cola. Every territory is
required to monitor and increase its profitability. The territorial offices are required to
report to the head office and send a detailed report for analysis and planning.

Efficiency Control – Used to evaluate and improve the spending efficiency and impact
of marketing expenditures. Efficiency of sales force, advertising, sales promotion and
distribution is measured. Sales force efficiency is primarily measured by scheduled calls,
completed calls and strike rate. Scheduled calls are the total no. of outlets on a particular
route. Completed calls are, total no. of outlets visited, and strike rate is the no. of outlets
on which sales is successful. Salesmen are also judged on their monthly and weekly data
and asked to improve their performance if it is not up to the mark. To motivate the sales
force they are given daily targets and if they achieve their targets then they receive
incentives accordingly. The incentives are announced in advance, the daily incentives are
cash based and if any promotional incentives or monthly incentives are there, they are
generally in the form of gifts or merchandise.
Advertising efficiency is measured at the corporate level. Although it is generally
believed that its very difficult to get a precise idea of the advertising efficiency, still some
of the factors are taken into consideration to measure advertising efficiency. These can be
summed up as, advertising cost per thousand target buyers reached by the media vehicle,
percentage of audience who noted, saw, associated or read the Ad. Consumer opinions on
the Ad’s content and effectiveness. Before and after measures of attitude towards the
product. Advertising efficiency can also be improved by better product positioning, pre
testing the Ads, looking for better media buys, and doing post testing. We will analyze the
Advertising campaigns of PepsiCo India in greater detail later.

Another important factor to be taken into consideration while analyzing the efficiency is
the distribution efficiency. This is a very important aspect of the operations of PepsiCo
India because this industry primarily relies on the push strategy and if the sales and
distribution network is not strong then the company will not be able to achieve the
desired the sales of its products and will also find it extremely difficult to cope with the
competition from the largest soft drinks manufacturer in the world. The sales and
distribution network of PepsiCo is very strong and has a very specific structure. PepsiCo
makes sure that this structure is not altered and works within the specified framework and
to its full potential. The effectiveness of the distribution network is judged based on
market reach and market penetration. For this purpose, supervisors (sales executives)

accompany the salesmen regularly and make sure that they cover all the shops on the
route and also report and any issues found in the market.

Strategic Control – This is used to examine whether the Company is pursuing its best
opportunities with respect to markets, products and channels. To do a proper assessment
for strategic control different instruments including marketing audit, marketing
effectiveness, marketing excellence review and the ethical and social responsibility

Marketing audit is a comprehensive, systematic, independent and periodic examination of

a company’s or business unit’s marketing environment, objectives, strategies and
activities with a view to determine problem areas and recommending a plan of action to
improve the company’s marketing performance.








MUM – Marketing Unit Manager:
In charge of specific zones (e.g. north, south, east, west) and report to the corporate

UM - Unit Manager:
In charge of day to day operations and supervision of all the functions within the
organizations including operations, logistics, sales and distribution, marketing. The Unit
Manager reports to the MUM.

TDM - Territory Development Manager:

TDM is the in charge of the sales and distribution network of a particular territory within
a zone. Responsible for the daily, monthly and annual sales within the territory decides
the daily schemes for products and incentives for salespersons. He is also responsible for
cost effectiveness, profit generation and profit maximization within the territory.

MDM - Marketing Development Manager:

MDM is responsible for all the marketing activities and their effectiveness within a
territory. Decides the format and time frame of the marketing and promotional activities
and the incentives given to the retailers.

ADC - Area Development Coordinator:

Reports to the TDM, and is in charge of a C & F center and the distributor point in the
area. He is directly responsible for any issues in the area and is supposed to ensure the
smooth functioning of the entire sales and distribution network in the area. ADC is
responsible for timely disposal of any issue faced by the retailers. He decides and
approves the boards, displays and hoardings in the area.

MDC - Marketing Development Coordinator:
Reports to MDM, and is in charge of carrying out all the marketing activities in the area.
He is responsible for the execution and success of marketing and promotional activities.
Coordinates with the outside agencies for displays, boards, checks conducted in the
market. He is also responsible to keep a check on the expenditure of the marketing
activities in the market.

CE - Customer Executive:

Reports to the ADC and is in charge of the salespersons. He is required to visit the market
and accompany every salesperson as frequently as possible. He is the first person to get
information about the market / area and is the first contact if the salespersons or retailers
face issue. Responsible for assigning and achieving daily sales target given to the

ME - Marketing Executive:
Reports to the MDC and is responsible for the daily functioning of the marketing
activities in the including awareness of promotions in the market and the response in the

They are the most important asset for the company as they are the ones who sell the
products, are responsible for acquiring new customers, and retain the old ones. Their
work also includes informing the retailers about the promotions and any new scheme
launched. They are also required to push for the sale of any new product launched in the
market and make sure that the retailers are following the company guidelines regarding
the launch and the maintenance of Vizicoolers. They report to the CE.

Marketing Assistant:
Reports to the ME and is responsible for the distribution and usage of the displays and
boards in the area. Also has to check whether retailers are following the guidelines of the
company regarding promotional displays, other displays and displays in the Vigicoolers.
They report to the ME.

Pepsi is one of the most well known brands in the world today available in over 160
countries. The company has an extremely positive outlook for India. "Outside North
America two of our largest and fastest growing businesses are in India and China, which
include more than a third of the world’s population." (PepsiCo’s annual report, 1999)

This reflects that India holds a central position in Pepsi’s corporate strategy. India is a key
market for Pepsico, and at the same time the company has added value to Indian
agriculture and industry. PepsiCo entered India in 1989 and is concentrating in three
focus areas – Soft drink concentrate, snack foods and vegetable and food processing.

Faced with the existing policy framework at the time, the company entered the Indian
market through a joint venture with Voltas and Punjab Agro Industries. With the
introduction of the liberalisation policies since 1991, Pepsi took complete control of its
operations. The government has approved more than US$ 400 million worth of
investments of which over US$ 330 million have already flown in.

One of PepsiCo’s key strategies was to develop a completely local management team.
Pepsi has 15 company owned factories while their Indian bottling partners own 28. The
company has set up 8 greenfield sites in backward regions of different states. PepsiCo
intends to expand its operations and is planning an investment of approximately US$ 500
million in the next three years.

Sustainable Competitive Advantage:

Competitive advantage is a company’s ability to perform in one or more ways that its
competitors cannot or will not match. When a company is able to maintain that advantage
a long period of time that gives it an edge over its competitors then, this advantage is
termed as sustainable competitive advantage. Any competitive advantage must be seen by
customers as a customer advantage. Then only that competitive advantage can be
transformed into a sustainable competitive advantage.

Three major competitive advantages give PepsiCo India a competitive edge in the market
place. They are:

• Big Muscular Brands built through better market positioning and heavy
investment in advertising and promotions;
• Proven ability to innovate and create differentiated products through superior
operating base;
• Powerful go to market system built with the help of superior relationship base and
an impeccable sales and distribution network.

Making it all work are the extraordinarily talented and dedicated people who are an
integral part of PepsiCo India.

Communicating with the Customer:

Marketing Communication is the means by which firms attempt to inform, pursued and
remind consumers directly and indirectly about the products and brands they sell.
Marketing Communication is the central instrument of making brand equity. Marketing
Communication consists of six major modes of communications called the marketing
communication mix.

• Advertising.
• Sales promotion.
• Events and Experiences.
• Public Relations and Publicity.
• Direct Marketing.
• Personal Selling.

Although PepsiCo uses all the modes in some form or the other, but this study will
examine various aspects of communication with the internal customers.


Threat of New
1. Cost Advantage.
2. Proprietary
3. Access to Inputs.
4. Government Policy.
5. Economies of Scale.
6. Capital
7. Brand Identity.
8. Switching Cost.
Bargaining Power of 9. Distrbution Access. Bargaining Power of
Suppliers 10.Retaliation. Buyers
1. Supplier Concentration 1. Bargaining
2. Importance of Volume Leverage.
2. Buyer Volume.
to Supplier 3. Buyer Information.
3. Differenciation of 4. Brand Identity.
Inputs Existing 5. Price Sensitivity.
4. Impact of Inputs on Rivalry 6. Treat of Backward
Cost Among Integration.
of Differentiation Firms 7. Product
5. Switching Cost of differentiation.
Firms 8. Buyer Concentration
in the Industry Vs Industry.
6. Presence of Substitute 9. Substitutes Available.
Inputs 10. Buyers Incentive.
7. Threat of Forward
Degree of Rivalry
1. Exit Barriers
2. Industry
Threat of Substitutes
1. Switching Costs.
3. Fixed costs / Value
2. Buyer inclination to
4. Industry Growth.
3. Price performance
5. Overcapacity.
trade off of
6. Product difference.
7. Switching Costs.
8. Brand Identity.
9. Diversity of Rivals.
10. Corporate Stakes.

Threat of new entrants:

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

Bargaining power of buyers:

The level of bargaining power differs among groups of buyers. The bottlers, retailers and
distributors have significantly greater bargaining power than the end consumer does.
Large retailer such as Reliance, Big Bazaar, Subhiksha are able to extract profits from the
Company through incentives such as volume-based purchases, promotions and displays.
This is particularly true for pet bottles. But, this can also be harmful for the retailers and
they losing customers if they refuse to stock a particular brand.

The bargaining power of the consumer is low. They are a fragmented group and no one
individual’s purchase accounts for a significant portion of manufacturer’s profit.
Although the presence of substitutes does serve to increase buyer power for consumers,
but a high degree of brand loyalty mitigates this loyalty. In short, we can say that the end
consumer has medium bargaining power.

Bargaining power of suppliers:

There are very few suppliers for the entire soft drink industry. The end product is
comprised of few ingredients, which are largely commodities. In addition, it is safe to
assume that Pepsi accounts for a large percentage of the suppliers total revenues. Thus, it
is important for the suppliers to contain whatever bargaining power they have. The
overall bargaining power of the suppliers is considered low.

Threat of Substitutes:

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

Existing Rivalry among firms:

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

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


Every research methodology includes a research design which may be defined
as the arrangement of conditions for collection and analysis of data in a manner that aims
to combine relevance to the research process with economy in procedure.
The sampling method that I am being using is the stratified sampling method, the reason
behind using this method even though the time consumption when taken into
consideration is more is to divide the whole set of population I am considering for my
work into different group according to type of information gathered from each set and by
that a perfect co-relation could also be done. My data collection processes would
consist of series of procedures which would be further divided into primary and
secondary data collection. The secondary data are those studies made by others for their
own purposes. The secondary data for my research would be collected from the
companies own data, archives and their annual financial reports. Also the findings of
prior research studies on outsourcing of accounting processes would give an ample
amount of historical data or decision making patterns. Also I would use internet to get
some more information about the industry and use journals for getting guidance from the
past researches in this topic.


The data collection mode used to get the desired information from primary
sources & Unstructured Direct Interviews &the instruments used in the Questionnaire. In
this research data was collected through two different modes, namely-
• Primary data collection
• Secondary data collection
Primary data collection: Primary data was collected through Questionnaire Surveys and
direct interviews.

Secondary Data Collection: Secondary data was collected from old reports and
magazines and data provided by Varun Beverages itself.

The limitations faced during the training and while undergoing my research was lack of
availability of first hand data. As the data included is secondary in nature, authentication
of the data is major concern. The next difficulty was the facts and figures had change due
to change in financial year, thus it could affect the recommendation and conclusion part.
Also there were huge constraints when it came to time as a one month period only
allowed me a bit of primary research plus the population size being humongous my
sample pf 50 retailers does not necessarily represent the entire population rather it can be
taken as a representative group of the regions in which the survey was taken.





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


PACKAGING AND PRICING – Pepsi has the advantage of having provided the same
kind of health based carbonated drink the Slim Diet Pepsi Can which in comparison to
the Diet coke is a much more attractive offering because it is slim sleek equally healthy
and way cheaper.

DISTRIBUTION – As already mentioned Pepsi India has one strongest and most
efficient sales and distribution networks not only in India but also throughout the globe.
Also in the particular market where the survey was done the sales people have developed
a network which is powerful enough to make or break sales for Pepsi in any given quarter

P R – One of the most important factors of success of PepsiCo in India is the relationship
the company and its constituents have with the channel partners. The Company officials
and even the employees of FOBO have very good rapport and relations with the Channel
partners. Also the recently introduced retailer benefit schemes such as the gold card
membership and other free gifts and offerings not only motivate the retailers but also
helped us create visibility for the Slim Diet Can range in a profound. The experience of
working with people who welcome us with a smile rather than a frown will always be

NON-CARBONATED – This is one those strengths of Pepsi that often goes unnoticed
but plays a very important role in success of Pepsi in India and even around the globe.
The non-carbonated segment is dominated by Pepsi, Tropicana is the market leader in
fruit juices. In the mineral water segment, Aquafina clearly outsells Kinley without ay
Bottling – Pepsi has the advantage of being in partnership with the largest bottler in India,
the R K Jaipuria Group. RKJ Group controls almost 65% of the bottling operations of
PepsiCo in India. At times this is also seen as a weakness of Pepsi in India attributing to
the fact that the Jaipuria group is so strong that in certain circumstances it can even defy
the parent Company.

Pepsi – Pepsi Cola is the biggest strength of Pepsi as it is the market leader in the Cola
segment and clearly outsells both the products the Coca Cola Company namely Coke and
Thums Up. Pepsi controls almost 60% market share in the Cola segment.


SECOND MOVER DISADVANTAGE - Diet Pepsi Cola does have the first mover
advantage which Diet Coke has and this may prove to be a major shortcoming also in the
Agra Market no Extensive efforts have been made to popularize it.
Brand – On a comparative scale Diet Coke proves to have a better brand image in
customers mind than. This compels to incur extra expenditure in Advertising, Promotions
and Sponsorship.

MCDONALDS – This is one of the most important reason why Diet Coke outsells Pepsi
worldwide and specially in the United States. Similarly, in India Diet Pepsi may suffers
in sales because of institutional sales. Now Pepsi is trying very to bridge this gap in the
near future.

EXPENDITURE – Right from the very beginning Pepsi has hired the biggest and the
most expensive stars in the country as its brand ambassadors and has spend heavily on
advertising which has affected its balance sheet.

Vizicoolers – At presently this is one the biggest problems faced by Pepsi. Pepsi is not
able to get refrigerators in India so they have to import it other namely Sri Lanka,
Mauritius etc. Because of this, retailers are facing lot of problems in vigicoolers. They are
not able to get new refrigerators, replacements for old ones, even the repair work takes lot
of time because at times even the spares are not available on time.


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

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


NGO’s – NGO’s like CSE can seriously hamper the sales and prospects of companies
operating in this industry. This happened during the pesticide controversy involving both
coke and Pepsi.

HEALTH – Growing health awareness among people and some of ill effects of
carbonated beverages have pursued many people to switch over to non-carbonated
beverages that can seriously hamper the long-term prospects of the entire Industry and
not Pepsi.

ENVIRONMENT – Environmental concerns are often raised because of the massive
amount of water extracted by the bottling plants resulting in the drop in groundwater
level which affects the local population adversely.

In India PepsiCo adopted the strategy of growth through intensification. In the

intensification strategy, it used market penetration by developing one of the strongest
sales and distribution network in the world and utilizing it to the fullest.

Pepsi did market development by making the aware of the best products available at their
disposal, by using the best technology to produce the products, by properly
communicating with the customer, and making the customer realize that he is important.
Pepsi also explored new markets by venturing new segments like fruit based beverages,
sports drinks, snack food division.

Pepsi expanded and established itself in the market place by constantly developing new
products to the customers, like Tropicana, Gatorade, and Pepsi Blue. In this way, Pepsi
was also able to effectively counter the threats posed by substitutes and new entrant


This is one of the most important and most difficult part of the study. I arrived at certain
recommendations for PepsiCo India(Trans-Yamuna and Agra markets) after the analysis
of the data. Some of the important recommendations are as follows

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

• As already mentioned Vizicoolers are a major reason of dissatisfaction among

retailers. The periodical maintenance check of Vizicoolers is done at three
months. This should be done at an interval of 45 days or 60 days instead of the
current practice of 90 days

• A complete survey of the every territory should be done for standys, banners logo
racks etc. and then a proper budget and plan should be made for their availability
at the required places, instead of doing it in bits and pieces as the current practice
is this will help with promotion at every retailer level

• There should be incentives for salesmen for every display they enroll because
they are assigned this task and if they get incentives for the same then it will
greatly increase the efficiency of the promotional activities.

• Pepsi should also introduce a version of Diet Pepsi Cola as a sports drink range
this is a completely new and untapped market which will help in providing the
impetus for Diet Pepsi

• Pepsi should start more aggressive marketing of its Diet Pepsi range of products
as they have very good growth and future prospects while there is not much
growth in the carbonated beverages sector.

In order to respond effectively to changing market trends and challenges, soft drink
companies must support their improvement efforts with industry-specific solutions. These
solutions should have the following characteristics and provide the following capabilities:

Basic processes
Pre-configured processes with clearly defined implementation scope – A streamlined
implementation strategy is necessary to minimize disruptions to the business while
maximizing enterprise-wide adoption. When a world-class solution tailored to the
specific needs of the soft drink industry is coupled with a rapid implementation approach,
it can deliver immediate business value, generating a high overall return on investment
and a low total cost of ownership.

Manage financials including cost management – An effective solution must provide an

integrated finance system capable of handling cost management, meeting internal and
external reporting requirements, providing real-time data access, and drilling-down to
greater levels of detail.

Manage procurement process – Necessary capabilities for efficient procurement include

supporting vendor price comparisons and flexible pricing processes for the actual value
of the raw ingredients. It should also support quotation handling, contract management,
and batch handling.

Meet customer expectations for managing Their Orders – An effective solution should be
able to effectively manage the entire process for handling customers’ orders,
encompassing variable pricing, delivery, invoicing and payment. It should support

beverage companies in shortening order cycle times, making on-time and in-full
deliveries, and providing optimal payment methods for customers.

Optimize planning and manufacturing to suit specific business requirements –

Solutions in this arena should support a multi-step manufacturing process. This includes
the ability to perform automatic batch determination based on expiration date during
production-order processing.

Provide efficiencies in integrated inventory management – Integrated inventory

management capabilities are crucial. The system should be able to automatically update
all stock figures after material movements have been posted. These figures should be
accessible in real-time for decision support.

Manage product safety – As food safety requirements become more advanced across the
beverage industry, track and trace capabilities are a prerequisite. An effective solution
should have the functionality to find a defective batch that has already been delivered to a
Beverage-specific processes

Plan deliveries – Effective solutions feature powerful tools that businesses can use to
efficiently load, dispatch, and track any number of deliveries. An emphasis should be
placed on eliminating redundant trips and matching the appropriate vehicles and drivers
to customers for each delivery. By extending route management into the order
management system, companies could reap potential cost savings of 25% to 50%.

Monitor route business – Beverage companies must be able to account for every item
delivered, and take quick action to resolve item discrepancies. Best-in-class solutions
provide powerful check-in and check-out functions that record all deliveries and returned

They should also provide tools to monitor quickly and accurately the entire transportation
operation, or that of a transportation supplier, from loading and delivery to accounting
and settlement of returned goods. The system as a whole should ensure complete loads,
on-time deliveries, solid inventory control, and seamless invoicing.

Keep track of empties – Best-of-breed beverage industry solutions paint a detailed

picture of the entire empties situation, showing the location and status of crates, kegs, or
pallets, and helping optimize return logistics. It should also permit quick access of each
customer’s empties account as well as print delivery notes or invoices recording the
empties involved in a delivery.

Manage rebates and bonus agreements – Rebate and bonus agreements are critical to
enhancing relationships among beverage manufacturers, wholesalers and customers. Yet,
the task of managing rebate programs is becoming increasingly difficult as current rebate
arrangements often involve numerous parties, including many that are not directly
involved in the initial transactions. Effective beverage solutions provide companies with
the tools needed to manage easily and accurately large, complex partner constellations
with any number of bonus or rebate arrangements. They should also provide coupon
management. These functions apply both to direct and indirect customers.

Manage commissions – In the beverage industry, complex commission structures are

needed to motivate the sales force and to encourage them to push certain brands and to
develop specific markets. Best-in-class solutions allow companies to complete
commission based transactions, make payments both to internal and external sales forces,
and track the payment of these commissions over time.


After analyzing all the aspects of the data available and giving some important
recommendations a suitable conclusion which should be derived for this study. However,
before starting the conclusion part, the objective of the research must be kept in mind so
that we can arrive at a befitting conclusion for the research problem.

The primary objective of this research was to develop a complete understanding of the
overall functioning of PepsiCo India including the sales and distribution network and
marketing (Partner Relationship Management to be precise).
The data collected provided a sound base for understanding the overall organizational set
up of PepsiCo in India. By analyzing the data and the literature review, following
conclusion was inferred:

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

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

• Franchisee based operations combined with the Company’s operations add

strength to the overall presence of the Company in the market.

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

• The Advertising Campaigns are conceived, implemented by the PepsiCo and

Franchisee has no say in that.

• Promotional activities within every territory are under the territory office and the
officials of that office are responsible for the effectiveness and successful
implementation of these campaigns.

• Because of fierce competition PepsiCo has spend heavily on Ads in order to

increase the brand recall and successfully face the competition.

• Pepsi has good brand image and recall in the customer’s mind but the most
surprising thing is that when compared with Coke, Pepsi lags behind in terms of
brand image.

• Although the overall functioning of Pepsi is very efficient, there are certain areas
that can be improved.

• PepsiCo is finding it difficult to counter the competition from Coke in carbonated

Beverages Segment but it has distinct advantage and upper in almost all the other
segments like snack food, non carbonated beverages, sorts drink, restaurants etc.
• Diet Pepsi even though newly introduced hasn’t yet caught up with Diet Coke the
way it should.













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