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PROJECT REPORT OF SUMMER TRAINING ON Distribution strategy of Pepsi and Retailers satisfaction Submitted to Lovely Professional University In partial fulfillment of the
Requirements for the award of Degree of Master of Business Administration UNDER THE GUIDANCE OF: Mr. Sanjay Jindal Lect. Management SUBMITTED BY: Raju Saw
Roll No. : Q3002B49 Reg. No.:11004488
DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY JALANDHAR NEW DELHI GT ROAD PHAGWARA PUNJAB
Date:
Signature
DECLARATION
I Raju Saw, Reg No. 11004488 here by declare that the project entitled Distribution strategy of Pepsi and Retailers satisfaction at Varun Beverage has been personally done by me under the guidance of Mr.Sanjay Jindal in partial fulfillment of Post Graduation Program- during academic year-. All the data represented in this project is true & correct to the best of my knowledge & belief. This work has not been submitted for any other degree / diploma exam elsewhere.
RAJU SAW
ACKNOWLEDGEMENT
I am indebted to my project guide Mr. Pranav anand who gave me guidance, encouragement and inspiration throughout the project. I am very grateful to him for his support that enabled me to enhance my knowledge and helped to draft the report. I also express my sincere thanks to Mr. Sanjay Jindal for helping me and guiding me in completing my project. All in all, it was the pleasant learning experience for me in varun Beverages Pvt. Ltd, thanks to all seniors and staff for making it so memorable. It was their encouragement that, support and co operation, which made me, give some meaning to my project. Finally, I thank my parents for the encouragement and support given to me throughout the project work.
(Raju Saw)
TABLE OF CONTENT
Page. No.
Chapter-1 Chapter -2 Executive summary Introduction
COMPANY PROFILE IN US COMPANY PROFILE-IN INDIA BEVERAGE INDUSTRY KEY ELEMENTS OF THE TRADE PRODUCT PROFILE PRICING PRODUCT AND PROFILE
CHAPTER- 3
NETWORK DESIGN
DISTRIBUTION STRATEGIES CHAPTER 4 OBJECTIVE OF THE STUDY LITERATURE REVIEW
CATEGORY MANAGEMENT
RESEARCH METHODOLOGY CHAPTER - 5 DATA ANALYSIS MARKET FINDINGS CHAPTER 5 SWOT ANALYSIS CONCLUSION LIMITATIONS RECOMMENDATIONS/SUGGESTIONS BIBLIOGRAPHY QUESTIONNAIRE
EXECUTIVE SUMMARY
The aim behind this project is to know Distribution strategy of Pepsi and retailers satisfaction of Varun Beverage Pvt. Ltd., Mohan nagar; it was done mainly to know the satisfaction level of the Retailer and different services provided by the industry.
We are well aware of the fact that in the Indian context, the demand for soft drinks in found increasing substantially, mainly on account of the changing lifestyle, which has been influenced by the growing influence of corporate sector on the living habits or society. The growing middle close is found to the fascinated to the western style of living. This promotes frequent consumption of soft drink produced by the multinationals. The two global giants viz. Pepsi Company and coca cola have been dominating the market shares and making the business environment more volatize for each other of course, find coca cola number one in the area but the threat and challenges generated by Pepsi Co., have been found making the tasks difficult.
Thus, the project done for the Varun Beverages was carried by conducting a market survey of retailer and filling the questionnaire consisted of question dealing with the satisfaction level of the Retailer by the availability of various product and services provided by the industry.
Channels of distribution are an important aspect of marketing strategy. Channels chosen for the companys products effect every other marketing decision. On 1 JUNE I started my project under the guidance of Mr. Pranav Anand (C.E.). I have been allocated the area for survey in Mohan Nagar (Ghaziabad) region. Number of Retailers Covered: - 100 Market Area Of Mohan Nagar :1. SAHIBABAD 2. KARKAR GAON 3. JHANDAPUR 4.SAHIBABAD MANDI 5. SURYANAGAR 6. VAISALI 6
Introduction
HISTORY OF PEPSI
PepsiCo is a USA based company having its head quarters at New York with the net worth of $30-40 million. The average sales of the company are approx 90 million bottles per month. Pepsi made it first international move in Russia in 1959. During the Khrushchev era, within 32 years Pepsi emerged as the biggest competitor for Coca Cola. Pepsi is available in 155 countries.
In any soft drink, on the globe Pepsi food is one of the largest soft drink companies in the world with its headquarter in New York. It was invented by Pharmacist Culab D. Baradham in 1898 to cure the disease Dyspepsia. It is from this word that its name was related to Pepsi. Soon it entered the American market as soft drink, which at that time mostly dominated by Coca Cola, but soon Pepsi able to dominate the Cola market, and there after it never looked back. Pepsi and Coca Cola are engaged in ferocious cola war that has taken the whole world by storm.
Pepsi entered the Indian soft drink in Kanpur in 1988 and began its production in May 1990 and soon it was giving the local contenders run for their money in soft drink market. It comes out with dazzling marketing innovation that rocked the cola market, like selling the product through function Pepsi outlets. Its advertisement agency was Hindustan Thomson Association (HTA). Its advertisement budget for 1995-1996 was valued at Rs. 24 crores which is likely to be increased manifold in coming years.
Pepsi food is one of the largest and best foreign investments in India. Till today it has invested Rs. 500 crores in India to develop the local market. Pepsi has distributed exclusive franchises in India to bottle its total product. There are 28 bottling plant of Pepsi in India. Some are directly controlled by Pepsi and rest is under various franchisees.Pepsi stands 51st position among the fortune 500 companies of the world. Its total capital is approx $3000 crores and total sales annually is worth $37 crores. Its total profit in the year 1996-97 was worth Rs. 458 crores approx. The total number of employees engaged in the business is 45.25 lakhs globally.
Foods,which includes PepsiCo Beverages North America (Pepsi-Cola North America and Gatorade/Tropicana North America) and Quaker Foods North America. PepsiCo International includes the snack businesses of Frito- Lay International and beverage businesses of PepsiCo Beverages International. PepsiCo brands are available in nearly 200 countries and territories.
Many of PepsiCo's brand names are over 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001.
Pepsi-Cola Company - Pepsi-Cola (formulated in 1898), Diet Pepsi (1964) and Mountain Dew (Introduced by Tip Corporation in 1948). Frito-Lay, Inc. Fritos brand corn chips (created by Elmer Doolin in 1932), Lay's brand potato chips (created by Herman W. Lay in 1938), Cheetos brand cheese flavored snacks (1948), Ruffles brand potato chips (1958) and Rolled Gold brand pretzels (acquired 1961) Pepsi co is the world leader in the food chain business. It consists of many companies amongst which the prominent one is Pepsi cola, frito lay, Pepsi food international, pizza hut, and KFC and taco bell. The group is presently into three most profitable businesses namely, beverages, snack foods and restaurants. It has scores of big brand available in nearly 150 countries across the globe.
The beverages segment primarily market Pepsi diet, mountain dew and other brands Worldwide and 7UP outside the U.S. market. They are positioned in close competition with Coca-Cola inc. of USA. A point to be noted is that coca cola get 80% of its profit from international operation while same figure of Pepsi co. stand at 6%, the segment is also in the bottling plants and distribution facilities.
The restaurant segment primarily consists of the operations of the worldwide pizza hut, Taco
Bell and KFC. Long time no.2 player in the cola wars, Pepsi co. is widening the play field, over the last years; the company has invested more than $2billion in its worldwide operations. When Coca-Cola changed its formula in 1985, Pepsi stepped up its competition with its long time archival claiming victory in the cola wars.
Coke and Pepsi expanded their rivalry to tea in 1991 when Pepsi formed a venture with Lipton in response to cokes announced venture with nestle (Nestea) it has won over 30% of the ready to drink tea market, a part of the so called "new age beverages segment. The beverage industry has witness the phenomenal growth over the last few years necessitating capacity increase and builds up of commensurate infrastructure to meet the business growth, which is accordingly matched. PepsiCos success is the result of: superior products high standards of performance distinctive competitive strategies the high integrity of our people
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 agrotechnology 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.
The major players in the soft drinks market in India are PepsiCo and Coca-Cola Co, like elsewhere in the world. Coca-Cola acquired a number of local brands like Limca, Gold Spot and Thumps Up when it entered Indian market for the second time. Pepsi Cos soft drink portfolio also consists of Miranda and 7Up along with Pepsi. The market share of each of the company is more or less the same, though there is a conflict in the estimates quoted by different sources.
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The major ingredient in a soft drink is water. It constitutes close to 90% of the soft drink content. Added to this, the drink also contains sweeteners, Carbon dioxide, Citric Acid/Malic acid, Colors, Preservatives, Anti Oxidants and other emulsifying agents, etc.
BEVERAGE INDUSTRY
Indian Beverages industrys size is Rs. 8000 Crores and it is dominated by two players viz. Pepsi & Coke only. This high profile industry has lot of potential for growth as per capita consumption in India is 8 bottles a year as compared to 20 bottles in Sri Lanka, 14 in Pakistan, while 12 bottles a person in Nepal.
The group manufactures and markets carbonated and Non-Carbonated Soft Drinks and Mineral Water under Pepsi brand. The various flavors and sub-brands are Pepsi, Mirinda Orange, Mirinda Lemon, Mountain Dew, and 7UP, Slice Mango, Evervess Soda and Aquafina.
Pepsi-Cola products contain natural flavours, including extracts of the kola nut ND flavor oils derived from natural sources such as citrus and other fruits. Caramel (made from corn sugar) adds color and flavor to our colas. Other ingredients add a refreshing taste: phosphoric acid in colas; citric acid and sodium citrate in Mountain Dew, Slice and Diet Pepsi.
We also put a freshness date on every can and bottle. Soft drinks may lose some flavor over time so our freshness date tells consumers when the product is freshest and best tasting. Every can and bottle of Pepsi-Cola products has a Nutrition Facts panel, which shows the number of calories and other nutrients per serving. There is essentially no fat in any PepsiCola a product. The main ingredients found in Pepsi-Cola products include carbonated water, carbohydrates, sugar, sodium, potassium and caffeine. For a complete breakdown by ingredients by product, see our product information for Pepsi, Diet Pepsi, Mountain Dew, Slice and Aquafina. 11
Ascorbic Acid Another name for Ascorbic Acid is Vitamin C the Ascorbic Acid used in our carbonated soft drinks functions as an antioxidant to protect the flavors, color, and taste. In some beverages we also add it to provide the nutritive value found in Vitamin C. Aspartame Aspartame is a sugar substitute used in our diet beverages and many other food products. Aspartame is made of the same building blocks as protein, so it is considered a "nutritive Sweetener," but the very small amounts used in diet drinks contribute no calories. Blue1 Blue 1 is a FDA-approved food coloring used in a variety of products such as jellies, condiments, puddings, and beverages. Brominated Vegetable Oil (BVO) Brominated vegetable oil has been used by the soft drink industry since 1931. It is a widely used food additive that has been extensively tested and approved by the U.S. Food & Drug Administration. Brominated vegetable oil is derived from soybean oil that has been modified in order to keep the flavoring oils well blended. Caffeine Caffeine provides a characteristic flavor to soft drinks. Caffeine is naturally found in coffee, tea and chocolate. For comparison, an 8-oz. cup of brewed coffee can have from 85-120 mg of caffeine on average, while an 8-oz. serving of Pepsi contains about 25 mg of caffeine. An 8-oz. cup of coffee therefore contains three to four times as much caffeine found in a caffeinated colon. There is no caffeine in Caffeine Free Pepsi, Caffeine Free Diet Pepsi, Aquafina, Slice, Mountain Dew or Mirinda. Caramel Caramel is a flavoring that is added to some of our beverages. Citric Acid Citric Acid can be found in citrus fruits such as lemons and oranges. Citric acid is used to bring out the flavor of other ingredients and imparts a tang or tartness to beverages. Citric acid is not Vitamin C. the same fruits that have citric acid often have Vitamin C but the technical name for Vitamin C is ascorbic acid. Gum Arabic Gum Arabic is a purified natural vegetable gum obtained from the acacia tree and is used in keeping our carbonated beverages well blended.
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High Fructose Corn Syrup High Fructose Corn Syrup (HFCS) is a sugar derived from corn and provides sweetness and taste to our beverages. HFCS has the same sweetness as table sugar (sucrose) and has almot the identical composition f fructose and glucose.
Natural Flavorings Natural Flavorings are flavoring ingredients that are the essences or extracts derived from natural plant sources. Natural Flavorings are what gives a product its distinctive flavor and taste. Pepsi products are the only products with these distinct flavor blends, which are considered part of our secret formula. The term natural flavor is defined by the food and drug administration and all of our natural flavorings meet this definition.
Phosphoric Acid A small amount of phosphoric acid is added to our soft drinks. However, it is greatly diluted and is fully approved by the U.S. Food and Drug Administration for use in soft drinks. Phosphoric acid provides tartness, essential to a well-rounded flavor. Phosphorus, like calcium, is an essential mineral in bone. It is widely distributed in the food supply, including fish, milk, meat, eggs and cereal grains.
Potassium Potassium in Pepsi-Cola products may come from water or as part of certain ingredients. For example, potassium may be combined with benzoic acid, which helps prevent spoilage and flavor changes. Potassium is an electrolyte that helps meet the mineral needs of active people.
Quillaia Quillaia Extract is a purified extract derived from the bark of the Quillaia tree. It is carefully selected based on its characteristics. It is cooked, filtered and pasteurized. It is FDA approved, non-hazardous. Quillaia is found in some of our frozen drinks.
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Sodium All of our products are "low sodium" and contains less than 110 mg per eight-fluid-ounce serving. A number of beverages have less than 35-mg sodium per serving, so they are considered "very low sodium" products.
Sugar Regular soft drinks and sports drinks are sweetened with sugar. There are many types of sugar available today. In soft drinks and sports drinks, the sugar is primarily high fructose corn syrup, which comes from corn.
Total Carbohydrates Total carbohydrates include the sugars and any carbohydrate-like parts of ingredients, such as organic acids. Although diet drinks may have no sugar, they may contain more than half a gram of carbohydrate.
Yellow5 Yellow 5 is a FDA-approved food coloring. Used since 1916, it is found in a variety of products such as skim milk, yogurt and macaroni and cheese.
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2. A BOTTLE THAT IS CHILLED IS SOLD: - In the industry it is considered that a bottle is chilled or putting in cooling compartment is sold. That is the reason the policy providing triages come up because according to the contract the shopkeeper has to keep only & only Pepsis products in the visi cooler.
3. A BOTTLE LOSS TO COKE IS A GAIN TO PEPSI: - The competition is so strong between the two companies i.e. fighting is on for each bottle that is to be sold in the market. Competitive bidding goes on for each & every prestigious outlet in their region. Monopolizing entries & fat foods joints is their first priority.
4. EMPTY kA HI KHEL HAI: - [Empty plays an important role]: - As discussed earlier the distribution points keeps on putting up distribution schemes for retailers i.e. like two bottles of solution free with the purchase of every one carat of solution. Now these schemes have timed well keeping in mind the environmental conditions & schemes provided by the other company. These schemes are of twenty-four hours duration. If a scheme is launched & there is no empty in the market for refill, the whole effort goes in vain that is the reason is said ki sub empty ka khel hai.
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PRODUCT PROFILE
The product profile of VARUN BEVERAGE PVT. LTD. is:
Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 No. of Product Pepsi Cola Pepsi Cola Pepsi Cola Pepsi Cola Mirinda Orange Mirinda Orange Mirinda Orange Mirinda Orange Mirinda Lemon Mirinda Lemon Mirinda Lemon Mirinda Lemon Tropicana Tropicana 7up Lime 7up Lime 7up Lime 7up Lime Everest soda Everest soda Lemon Mountain dew Mountain dew Mountain dew Mountain dew Slice Slice Slice Quantity 200ml 300ml 600ml 2000ml 200ml 300ml 600ml 2000ml 200ml 300ml 600ml 2000ml 200ml 1000ml 200ml 300ml 600ml 2000ml 300ml 500ml 200ml 300ml 500ml 2000ml 250ml. 500ml 1200ml Colors Burnt-Sugar Burnt-Sugar Burnt-Sugar Burnt-Sugar Sunset Sunset Sunset Sunset Tetrazin Tetrazin Tetrazin Tetrazin Apple Apple None Color None Color None Color None Color None Color None Color None Color None Color None Color None Color Mango Mango Mango Flavor Cola Cola Cola Cola Orange Orange Orange Orange Lemon Lemon Lemon Lemon Mix fruit Mix fruit Lime Lime Lime Lime Lime Lime Lime Lime Lime Lime Mango Mango Mango
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PRICING
Product Pepsi Cola Quantity 200ml 250ml (cane) 300ml 600ml 2000ml Miranda Cola 200ml 300ml. 600ml. 2000ml. Miranda Lemon 200ml 300ml. 600ml. 2000ml. 7up Lime 200ml 300ml. 600ml. 2000ml. Lemon Mirnda dew 600ml 200ml. 600ml Slice 250ml. 500ml. 1200ml. Aquafina 1000 ml. Price /Pet Rs. 192 Rs.330 Rs. 262 Rs. 546 Rs. 510 Rs. 192 Rs. 262 Rs. 546 Rs. 510 Rs. 192 Rs. 262 Rs. 546 Rs. 510 Rs. 192 Rs. 262 Rs. 546 Rs. 510 Rs. 546 Rs. 192 Rs. 546 Rs. 262 Rs. 546 Rs. 630 Rs. 150 Quantity/Pet pet (24) pet (24) pet (24) pet (24) Pet (9) pet (24) pet (24) pet (24) Pet (9) pet (24) pet (24) pet (24) Pet (9) pet (24) pet (24) pet (24) Pet (9) pet (24) pet(24) pet (24) pet (24) pet (24) Pet (9) Pet (12)
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FLAVORS: Cola Orange Clear Lemon Cloudy Lemon Berry Ginger Mango Slice Out of these products the 70% of the sales of the company come from the Cola brand, which is the market leader in the most part of the country of these kinds of packaging in which the product is available to make them 80% of the sales come from these bottles. The businesses of returnable bottles are very cumbersome and make the market very complex and demanding.
FACILITIES PROVIDED BY THE COMPANY TO THE RETAILER:1. VISI COOLER 65 Liter 110 Liter 120 Liter 165 Liter 200 Liter 210 Liter 18
220 Liter 300 Liter 320 Liter 330 Liter . 400 Liter 500 Liter These coolers are allocated according to outlet nature, volume & investment of the outlet.
3. DISPLAY MATERIAL Stickers Banners Racks Counters G.S. Boards D.P.S. Boards
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DISTRIBUTION NETWORK
Total market of Mohan Nagar is divided into 1 Dipot & 8 distributors. Distributors names are:Pal Sweet House Prag dairy Firm - Mayuri Marketing - Ramavtar Enterprises - Manoj Store - Krishna Enterprises - Ashriti Enterprises - M.H Marketing
DISTRIBUTION OF PEPSI
Here there are four systems of distribution channels. - Channel 1. - ManufacturerConsumer - Channel 2. - ManufacturerRetailer..Consumer - Channel 3. - ManufacturerWholesaler.RetailerConsumer - Channel 4. - Manufacture.WholesalerJobberRetailer..Consumer
In Mohan Nagar channel 1, 2 and 3 are being Used for distribution
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DISTRIBUTION CHANNELS
COMPANY
COBO WAREHOUSE
FOBO
C&F
DISTRIBUTER
SALESMAN
SALESMAN
WHOLESELLER
SLUMS
RETAILERS
RETAILERS
CUSTOMER
CUSTOMER
COBO: These are Company owned bottling operations operating directly under the Company. Out of 32 bottling plants, PepsiCo owns 15.
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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 centres and Distributor Points.
C & F Centres: These are the biggest centres in the distribution network and receive proper assistance from the Company (either COBO or FOBO). The C & F centre is owned by a private player and not by the Company. The vehicles (Delivery Vans) are owned by the Company, and the Salesmen at the C & F points are on the Company Payroll.
Distributors: These are small, compared to C & F centres. 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 centres 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 centres and Distributor points. All the different players in the distribution channel namely C & F centres, 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
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Total market of Mohan nagar is divided into 1 C&F Agent & 8 distributors. Distributors names are:- Pal Sweet House Prag dairy Firm - Mayuri Marketing - Ramavtar Enterprises - Manoj Store - Krishna Enterprises - Ashriti Enterprises - M.H Marketing
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DISTRIBUTION STRATEGIES
A Company can choose any of the following distribution types: Exclusive Distribution Selective Distribution Intensive Distribution PEPSI HAS ADOPTED THE INTENSIVE DISTRIBUTION STRATEGY.
INTENSIVE DISTRIBUTION: A Strategy of intensive distribution is characterized by placing the goods or services in as many outlets as possible. When the consumer requires a great deal of location convenience, it is important to offer greater intensity of Distribution. This strategy is generally used for convenience items such as Tobacco, gasoline, and soap, snack foods & bubblegum. Manufactures are constantly tempted to move from exclusive or selective distribution to more intensive distribution to increase their coverage and sales and you could find Pepsi in nursing homes, confectionery shops, departmental stores; you name it & Pepsi is available there.
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DISTRIBUTION CHANNEL REDEFINED Pepsi has redefined distribution to strengthen their competitive advantage in the emerging consumer and market scenario. Their earlier focus was to drive wide availability and enable easy access to their brands for consumers. Now they seek to go well beyond this distribution paradigm. Their new approach is more holistic touching consumers in multiple ways at the point of purchase and more importantly, creating opportunities for customers to receive brand message and experience our brands. They are proactively addressing these emerging trends by approaching distribution and channels in a much broader way. They are shifting emphasis from mere reach or availability expansion to touching consumers with a 3- way convergence of product availability, brand communication and higher level of brand experience. They are thus going beyond delivering products and creating greater engagement and interaction around the purchasing experience. Pepsis reinvention of distribution is built on an understanding of emerging consumer trends, the retail environment and the growth drivers of our brands. Pepsis distribution system is a key external resource. Normally it has taken years to build and cannot be easily changed. It ranks in importance with key internal resources such as manufacturing, research, engineering and field sales personals. It represents significant corporate commitment to set policies and practices that constitute the basic fabric on which is woven an extensive set of long run relationship. Product Availability Point Of Purchase Brand Experience Brand Communication
CHANNEL FUNCTION AND FLOWS Marketing channel perform the following functions To gather the information about potential and current customers, and competitors. To list orders with manufacturers. To reach agreements on Price They provide the successive storage and movement of physical products. It can be defined as backward and forward integration i.e. starting from supplier of the raw material to the end customer. The physical flow of Pepsi from its manufacturing unit to various retailers is as follows 25
LITERATURE REVIEW
Vives (1984) and Gal-Or (1986) concluded that duopolistic competition for both quantity and price setting competitors. Their conclusion suggests that for Bertrand competitors, incentives always exist to share common demand information. The case is usually the opposite for Cournot competitors, but Mauleg and Tsutsui (1996) show that even in a Cournot model, if the demand uncertainty is about a common slope parameter rather than the overall level of demand, competitors may have incentives to share their private information. This paper extends this stream of research analyzing the incentives of competitors in demand information sharing with a distribution channel partner, i.e., vertical information sharing. Another aspect of a firms information strategy concerns with information selling (Sarvary and Parker 1997, Iyer and Soberman 2001) but we do not consider that in our model. Strategic Alliance Literature and the Distribution Channel Context: Li et al. (1987) studied at quantity setting competitors decision of acquiring information about an uncertain demand parameter through, say, market research, and conclude that more information is always good for a firm though cost consideration may prevent firms from acquiring unlimited amount of information. Several studies have looked at competing firms incentives in sharing their private information. Analyzing quantity setting competitors selling directly to consumers, many researchers including Gal-Or (1985) and Shapiro (1986) analyze competitors incentives in sharing demand and cost information.
Carpenter and Coughlan (1998) studied the problem of channel partners entering into an alliance for a bilateral monopoly channel. They focus on the importance of hold-up problems in this context even without any uncertainty in the environment. In our work, an alliance is formed only when it is beneficial for both firms, and hence we do not consider the hold-up problems. Stern et al. (1996) point out that information is sometime used to facilitate soft or quasi integration of the entire channel and our analysis also supports a similar outcome. Chu 26
and Messinger (1997) use a bilateral monopoly setup to explore the information acquisition decision of the channel partners. In this paper, our focus is on the information sharing decision. Further, Chu and Messinger allow only the two polar cases; no information vs. perfect information. Using the reliability metric that we develop for measuring the quality of a firms information, we are able to model information more generally, allowing for imperfect information as well. Thus, in this work, we analyze information sharing decisions among channel partners both in a bilateral monopoly framework and in a competitive channel.
Simon Kwok ( 2003) Concluded that there is considerable interest and debate over the
effectiveness of sales promotion. Previous studies have shown that sales promotions are more effective when they provide benefits that are congruent with those of the promoted product. This study explores and extends the congruency framework by analyzing the impact of culture at an ethnic group level. The purpose is to investigate the popular assumption that cultural differences exist at this level and to see whether these differences have an impact on sales promotion effectiveness. A quasiexperimental design is used to test a series of hypothesis based on a sample of AngloAustralians and Chinese-Australians. It is found that despite the existence of cultural differences at an ethnic level, culture does not appear to have a significant impact on consumer responses to sales promotion. It is also Found that the congruency effects between product and promotion type are weak and may be non-existent in some cases. Finally, the study also provides evidence that further validates a scale used for the measurement of culture.
Farris, Paul and Friberg, Kristina, Snapple Beverage Corporation. ,( Vol. , pp. October 21, 2008)This case described the situation facing Snapple management during the earlygrowth stages of the brand and category of flavored teas. In the early months of summer, just as peak season was approaching, Snapple was already facing out-of-stocks. The case asks students to wrestle with the options of cutting back on flavors or product lines, allocating demand to certain outlets and geographical areas, or coming up with creative solutions to deal with the problem. Strong competitors (Coke, Pepsi, Nestea, and Lipton) were also threatening to take share from Snapple in a category the company had created. The system of contract 27
production and independent distributors further complicated Snapple's ability to implement short- and long-term solutions that would balance push and pull marketing. The case includes a CD with video of Jude Hamerle, Snapple's marketing manager, describing what the company did and why, which provides an opportunity for a discussion of subsequent events, including Quaker's purchase and, later, sale of Snapple to Triarc.
Markkinointi (2008) Concluded that the interest for the case company as they had challenged the Finnish credit card markets by introducing new product features aimed at persuading customers to use credit card as a daily payment method. The initiative was reinforced by a set of sales promotion activities, which were the focus of this research. The theoretical part of the research was based on the academic literature on the subjects of sales promotion, consumer behavior and financial services. Results concerning birthday promotion did not reveal statistically significant differences between promotion and credit card transactions. The lack of marketing communications and sales frequencies, however leave the question unclear. After all, the most active customer group was customers age 18 to 37 and they were also the most influential group to sales promotion. Both promotions also showed that most of the purchases are very small that is between 0-25.That could indicate that the card was actually used in small daily purchases,
Julian Vieceli, Robin N Shaw(Dec. 2010, Vol.26)A study has investigated how Chinese retailers perceive their foreign brand apparel suppliers and explored the use of power theory for explaining these relationships. A survey of 150 apparel retailers operating in Beijing, China provided data for the study. Referent power Positively influenced retailers' attitudes toward and non-economic satisfaction with their Suppliers. Greater referent power also reduced channel conflict and enhanced economic satisfaction with business performance. The importance of this source of power seems to be linked with the concept of guanxi in China, where respectful relationships are valued. Coercive threats to withhold necessary merchandise, service, or contracts increased channel conflict. Surprisingly, greater channel conflict was associated with increased economic satisfaction with business performance. This relationship is contemplated from a cultural perspective and recommendations are made to foreign brand apparel manufacturers wishing to access China's retail market. 28
Category Management:
Interest in understanding and implementing category management is very high among executives. As Bucklin and Gupta (1999) report, category management was found to be the most important issue in their study among all issues in the distribution and retail management area. The category management movement has been fairly widespread in frequently purchased packaged goods distributed through grocery stores and similar initiatives were planned in other related businesses in recent years.1 However, there is also evidence of some disenchantment with the concept, especially among retailers. By analyzing incentives for both manufacturers and retailers, we investigate the conditions when information sharing is indeed beneficial for each member of the distribution channel. Academic research has provided models to help implement micro marketing (Montgomery 1997) and relevant metrics for evaluating profitability(Chen et al. 1999), but virtually no attempt has been made to explain the emergence of the category captain phenomenon. We model category management as an information sharing phenomenon in competitive channels and also show how information sharing may help mitigate some of the ills associated with excessive upstream competition and trade promotions.
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 29
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 India
Nickolas Dias (president of pepsi 1940) noticed that the company's strategy of using advertising for a general audience either ignored African Americans or used ethnic stereotypes in portraying blacks. He realized African Americans were an untapped niche market and that Pepsi stood to gain market share by targeting its advertising directly towards them.
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RESEARCH METHODOLOGY
Research in common refers to a search of knowledge. One can also define research as a scientific & systematic search for pertinent information of a specific topic. It is the pursuit of truth with the help of study observation, comparison & experiment. As the method, I have used percentage method to present the data.
DEVELOPING RESARCH PLAN: After deciding the objective of marketing research the next step is deciding Research plan for gathering effective information related to this research project. The research consists of following steps, which are discussed subsequently.
RESEARCH DESIGN: Descriptive Research: In my market survey descriptive research process was carried out to describe the market characteristics, consumer profiles, distribution strategies, and market potential.
Data Source: During project study I use both primary as well as secondary data source. For primary data collection I visited various retailers in Sahibabad & for secondary data I went through Books, Journals & Internet. The information collected is relevant, correct & unbiased.
Research Design: I followed survey technique for collecting the data. Here, I carried out information from retailers and carefully selected the instrument & methods of surveying like I have chosen personal contact methods because of higher response rate & meaningful responses. This has helped me to get the general feedback about Pepsi.
Reach Instrument: The research instrument used was EDS form. In which market information detail of each outlet should be filled in EDS form. For this I have visited each & every outlet & check all the brands & packs of Pepsi are available or not or which one is available in comparison with Coke & filled it in EDS forms. In my research process I have used closed ended & open 31
ended questionnaire where respondents could answer in their own manner. Through this I was able to extract information from the respondents about Pepsis products & the competitors.
Sampling Plan: In designing the sampling plan following points were considered:
Sampling Size: I have surveyed about each & every outlet of the area specified to me so size would reach upto 100 retailers.
Elementary Retailers. The geographical limit is the area of Shahibabad,region. Contact Method: In my research process, I have collected information through personal interview process. It is the most reliable & accurate method for collecting primary data. Through this, the analysis of body language & facial expressions can be made.
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DATA ANALYSIS
1. Number of different types of store out of 100 Grocery Kiosk Eatery Provision store Others
39 23 17 12 9
23 17 12 9 Series1
The graph is clearly representing that number of grocery shop is maximum in the area. It shows that the analysis which is going to be describe, these retailers have mostly participated. The overall data analysis may suffer from biosness, thats why, I have analyzed this by using percentage method and represented them in the column and bar digram.
60% 50% 40% 30% 20% 10% 0% Pepsi Coca-cola Others 13% 48% 39% Series1
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Till where the outlet share of retailer outlet is concerned, according to the graph that Pepsi share in outlet tells the whole story of PEPSI. As about the services, facilities, visiting sales person, etc. which I have represented in the particular way.
3. Pack demand
IN %AGE Grocery Kiosk Provisional Store 200 ml 250 ml 300 ml 500 ml 1000 ml 2000 ml Eatery Others
7 13 18 27 11 24
9 10 27 25 22 7
12 15 18 19 14 22
28 13 11 24 5 19
32 23 18 6 16 5
The analysis says that 500 ml pack is most popular. At the grocery stores the low quantity packs are demanded less but the fact is that these stores are not much interested in selling small quantity packs. So these stores demand company for large packs. At the same time the bottle shops which are in the category of others are selling mostly small packs.
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4. Demand of different customer group IN %age Male Female Children Pepsi 39 58 58 Coca-cola 56 34 38 Others 5 8 4
180 160 140 120 100 80 60 40 20 0 Pepsi Coca-cola 39 56 4 8 5 Others 58 58 38 34 Children Female Male
Why Pepsi is being demanded more? Yes, obviously pepsi is more demanded in the area. There may be the various of reason to guess. But the finding is different from all. Only the brand image and popularity of the brand people is more, which have made the Pepsi so demanded. But if individually we see the male part they are demanding for coca-cola as the answer I got, its more fizzzzyy.
5. Happy with Distribution channel In % age Grocery Kiosk Provisional store Eatery Others Very Happy 55 60 67 59 54 Happy 15 32 25 30 35 Partialy Happy 19 6 5 7 7 Not Happy 11 2 3 4 4
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120 100 80 60 40 55 20 0 Grocery Kiosk Provisional Store Eatery Others 60 67 59 54 2 6 32 3 5 25 4 7 30 4 7 35 Not Happy Partialy Happy Happy Very Happy
11 19 15
This analysis is able to tell the story of degree of perfectness of distribution channel so that the retailers are happy. But the means of analysis why the some of retailers are not happy? Mostly in the column of Not happy grocery stores may seen. But make all happy by an individual is not so easy task. In fact that catogary wants to sell, what they want. And company wants to them that the sell all the packs equally and simply the conflict arises.
6. Sale in carets
In % age Grocery Kiosk Provision store Eatery Others 0-50 crts 50-100crts 100-150crts 150-200crts 200-crts<
11 30 20 16 15
14 38 56 44 46
35 17 18 33 30
38 11 4 4 6
2 4 2 3 3
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60 50 40 30 30 20 20 11 10 0 0-50 crts 16 15 14 38
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50-100crts
100-150 crts
15-200 crts
200-crts<<
Only some stores are able to sell more than 200 crts in whole month and in them the number of kiosk is more. Actually the data is taken in down season. however the average sell of pepsi is seems to be good.
7 responsive to your complaints In % age Grocery Kiosk Provisional store Eatery Others 59 42 34 36 3 8 3 9 1 5 Strongly agree 55 49 52 Agree 27 23 32 Neutral 7 11 12 Disagree 4 9 2 Fully Disagree 7 8 2
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70 60 50 40 32 30 20 11 12 10 0 Strongly agree Agree Neutral Disagree Fully Disagree 7 3 8 4 9 2 3 9 7 8 2 1 5 27 23 59 55 49 52 42 34 36 Grocery Kiosk Provisional store eatry others
The stores are seems to be equaly decision taker all the types of stores has a equal thinking as concerned to the level of agreeness.This means company is able to show the proper response to the retailers that has tied up them with the company.
8. Delivery position of PepsiCo product In % age Grocery Kiosk Provisio store Eatery Others 55 53 35 38 2 3 6 5 2 1 Very good 52 59 48 Good 32 33 28 can't say 11 5 10 Bad 3 2 9 Worse 2 1 7
300 250 200 150 100 50 52 0 Very good 53 others 55 48 59 38 35 28 33 32 Good 3 2 10 5 11 Can't say 5 6 9 2 3 Bad 1 2 7 1 2 Worse Eatry Provision store Kiosk Grocery
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Its obvious that if the response is good than the delivery position will also strong and the retailer will always be satisfied.
9.Frequency of the visit of Pepsi executive In % age Daily Alternate Day 33 43 28 weekly fortnightly Monthly more than these duration 0 0 1 0
35 38 42
15 16 22
6 3 7
50 53
29 30
18 11
3 6
0 0
0 0
250
200
53
150 50
30 29
100
42
28 43 11 18 22
Kiosk Grocery
50
38
35 0 Daily
33 alternate day
16 15 Weekly
6 3 7 3 6 Fortnightly
0 1 monthly
If all together we see, the good response, wanted delivery, and proper visits gives an extra inspiration to sell the product. Retailer analyze these things. These things show that company a proper care for their product as well as the concerned people.
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10. Do you have visi-coolers? In % age (a) Pepsi (b) Coca Cola (c) Both (d) Own (e)Others
30 33 32
22 30 30
26 30 28
20 2 3
2 6 7
Eatery Others
45 51
44 38
8 9
3 2
0 0
250
200 51 150 45 100 32 50 33 30 (a) Pepsi 38 44 30 30 22 (b) Coca cola 9 8 28 30 26 Both 2 3 3 2 20 (d)Own others Eatery Provision store Kiosk Grocery 0 7 6 2 (e) Others
Visi-coolers are the cooling equipment provided by the company to the retailers because its the concept of the company A BOTTLE THAT IS CHILLED IS SOLD. Its good that company has provided visi-coolers but some of the grocery stores having their own also. That is for multipurpose uses. Company most try to replace the others by their own visi-coolers.
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11. What time suits for visiting a salesperson to Mornin g Grocery Kiosk Provisio n store Eatery Others 75 80 3 4 16 6 6 10 62 68 72 Noo n 22 14 6 Afternoo n 9 8 13 Evenin g 7 10 9
store
120 100 80 Evening 60 40 20 0 Grocery Kiosk Provision Store Eatery other Afternoon Noon Morning
The huge number is in the favour of morning visiting our. Thats gives them a proper space to talk and order the products.
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1. Every retailer wants that vehicle should come in the morning so that they will keep the bottles in the fridge as soon as possible so that they can cater to the demand of customers and replenishment is fast.
2. Company is not able to solve or not responsive to the some stores, mainly of others category, i.e. bottle shops, even then they are doing good business.
3. Cooling equipments are not well distributed. Where the grocery stores are using their own freezer at the same while provisional stores and small shops have not properly got the equipments.
4. In spite of everything better, there is dissatisfaction among some retailers. This is because of some personal behaviour of retailers.
5. Although coca-cola has very good distribution channel over there but Pepsi has maintained its market share due to its strong CRM (customer relationship management) with the retailers.
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SWOT ANALYSIS
STRENGTH Pepsi is a well-established brand, so it has a good reputation in the market. Backed by huge promotion at national & international level. Well known personalities are attached with the brand. They are able to satisfy their retailers at the great extent. Pepsi share in the market is high due to customer satisfaction.
WEAKNESS Unable to attract more male category customer, which are mostly attracted by its competitors. Incompetent salesman who do not give the schemes in the market regularly. Unavailability of various demanded flavours like Mountain Dew & Mirinda Lemon. Ignorance of others category shops.
OPPORTUNITY Many tie up or liaison with major showrooms, computer centres & restaurant. Huge publicity of Lemon Miranda /Slice has created a lot of demand. Company has brand equity in the eyes of customers, so its new products can easily penetrate in the market. Untapped market. No major competitor other than Coca-Cola.
THREAT Threat of competitors new brand entry in the market in near future. Restrictions made by Govt. agencies that soft drinks are harmful & non-nutritive. Natural juice are now available whose price are less or same as soft drinks. The coca-cola brand is the major threat to the company which is still the market leader in this segment. The grapevine by the people that it contains harmful chemicals and pesticides.
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CONCLUSIONS:1. After visiting nearly 100 outlets I found that Pepsi & its Brands are doing a good job in Shahibabad. It is clear that Pepsi (48%) is ahead of Coke (39%) in the soft drink market in Shahibabad region. If we compare it with Signage or display material then also Pepsi has an edge over coke.
2. At this time it slolely depends on the retailer which brand he offers to the consumer. Although the company has been unable to satisfy the retailers, The company must take immediate steps in order to resolve its disputes with these retailers.
3. It was also found that the schemes that are brought up in the market by Pepsi & Coke after every couple of day is not making any net effect on the sale of Cola, whereas one is cannibalizing others market only.
4. It was also seen that Pepsi brand is better sold than coke. But it is Thumps up, sprite which is making the major difference in the market.
5. The sale in age wise section, it was found that 200ml is sold in all the age groups with same frequency but 300ml is sold mostly in 16 to 45yr. of age group where as CAN is sold in younger generation only. Finally 2lit. are used only for family or party purpose.
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LIMITATIONS
Findings are based on the views expressed by the consumers. So it may suffer from biased prejudices. Some of the respondents were not co-operative & many seem to be having no interest. The study has not been intended on a very large scale, have the possibility of errors,
which cannot be ruled out. Geograhic Area was specified so the findings may differ from area to area. It is extremely time consuming exercise to persuade retailer to respond to
questionnaire. The retailer knows us as people from Pepsi there by the responses could have been
The time allowed for the project was very short (6 weeks).
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RECOMMENDATIONS:1. PEPSI, the choice of Generation next is not providing the first choice of young generation. A young generation wants something strong in cold drinks & thus prefers Thums up, sprite. Pepsi should come out with some extra strong taste to catch up maximum young generation & to become exactly Generation Next drink.
2. Company should appoint competent & sincere salesman so that they could provide schemes to the entire retailers & cover their full route.
3. It is often seen that some salesman do not intimate schemes to the retailer & few of the retailers complained about it. So there should be frequent visits of Customer Executives to their respective areas to keep the shopkeepers benefited with various schemes.
4. Delay in starting of supply vans from respective depot should be checked & a proper time register should be maintained.
5. Most of the retailers are complaining about delay & no replacement of burst bottles. Marketing Management should sort some solutions to this major problem of replacing burst bottles.
6. Company should try to give some credit facility based on the credit worthiness distributors so that they get motivated.
7. Proper feedback system should be developed by ensuring regular visits & check randomly at the various outlets.
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BIBLIOGRAPHY
-Sustainable Distribution Partnerships through Credible Threats and Credible Commitments." Discussion paper, J L Kellogg Graduate School of Management. Northwestern University. -http://papers.ssrn.com/sol3/papers.cfm?abstract_id=909957 - Choi, S. C. 1991. "Price Competition in a Channel Structure with a Common Retailer." Marketing Science 10 (4) 271-296. - Chu, W. and P. R. Messinger. 1997. "Information and Channel Profits." Journal of Retailing 73 (4) 487-499. - Courtney. H., Kirkland, J. and Viguerie, P. 1997. "Strategy under Uncertainty." Harvard Business Review (Nov/Dec) 67-79. - Gal-Or, E. 1985. "Information Sharing in Oligopoly." Econometrica 53 (March) 329-343
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QUESTIONNAIRE
Questionnaire related to academic purpose, which is prepared to take feedback from retailers. Name of outlet Address . Contact person with phone no.. Type of outlet:Glossary .. Kiosk .. provision store .. eatery .. other 1. You are interested to sale Pepsi . Coke . Reason: 2. Which pack of Pepsi is demanded more 200ml 250/300ml 500ml 1000ml 2000ml 3. Demand of different customer group Group Male Female Children Pepsi _____ _____ _____ Coke _____ _____ _____
4. Do you get the delivery at right time? 1).Always. 2.)sometimes.. 3.)Never. 5. Are you happy with companies distribution channel? 1.)Very happy2.) Happy 3.) Partially happy..4.)Not happy
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6. Which of the company you feel is suitable to meet your requirements in a better way? Coke . Pepsi .. Others Specify..
7. Do you get the benefits of daily schemes launched by the company? 1).Always. 2.)sometimes.. 3.)Never.
8. Do you always receive the ordered quantity? 1).Always. 2.)sometimes.. 3.)Never. 9. what is the visit the Companies Officers give you ? 1).Always. 2.)sometimes.. 3.)Never. Use the notes taken during the exercise to answer the questions below 1.)Strongly Agree 2.) Agree 3.)Neutral 4.)Disagree 5.)Fully Disagree
12. Number of carets sold per month of soft drinks. (a) 0 - 50 crts (b) 50 to 100 crts(c) 100 to 150 crts(d) 150 to 200 crts..
13.Which brands of soft drinks are available in the outlet? (a) Pepsi Cola (b) Mirinda (c) 7Up (d) Slice (e)Mountain Dew (e)Aquafena water
14. When a customer comes to your shop which brand of soft drinks does he/she demands? (a) Pepsi ..(b) Coca Cola (c) Others
15. Do you know about all flavors pack (size) and respective wholesale price Pepsi 49
16. What is the position of delivery of Pepsi products? (a) Very Good (b) Good (c) Bad (d) Worse
17. What is the frequency of the visit of Pepsi executive? (a) Daily (c) Weekly (e)Monthly (b) Alternate Day (d) Fortnightly (f)More than these durations
18.Which time suits you for visiting a sales person to your store? (a) Morning (c)Afternoon (b) Noon (c) Evening
19.Which factors affect the sale most? (a) Advertisement (c) Presence (e) Price (b) Scheme (d) Taste (f) Others
20. Which company Visi-Cooler do you have? (a) Pepsi (d) Own (b) Coca Cola (e) Others
21. What is the position of maintenance work of refrigerator done by Pepsi Company? (a) Highly satisfactory (b) satisfactory (c) Less satisfactory (d) Not satisfactory
22. Have you been provided with sign board/display rack by Coke Company? (a) Yes (b) No
23. How many times delivery van comes? (a) Ones in a day (b) In alternate days 50
24. Have you any type of dissatisfaction regarding the product. It yes then why?
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