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1.1 Soft Drink Industry in India:
A soft drink is a non-alcoholic beverage that typically contains carbonated water, a sweetener, and a flavoring agent. The sweetener may be sugar, high-fructose corn syrup, or a sugar substitute in the case of diet drinks. Soft drinks are available in glass bottles, aluminum cans and PET bottles for home consumption. Fountains also dispense them in disposable containers Nonalcoholic soft drink beverage market can be divided into fruit drinks and soft drinks. Soft drinks can be further divided into carbonated and non-carbonated drinks. Cola, lemon and oranges are carbonated drinks while mango drinks come under non carbonated category. The market can also be segmented on the basis of types of products into cola products and noncola products. Cola products account for nearly 61-62% of the total soft drinks market. The brands that fall in this category are Pepsi, Coca- Cola, Thumps Up, diet coke, Diet Pepsi etc. Non-cola segment which constitutes 36% can be divided into 4 categories based on the types of flavors available, namely: Orange, Cloudy Lime, Clear Lime and Mango. In 2011, soft drinks registered its highest off-trade value growth rate for the review period. This growth was helped by high double-digit volume sales growth in most categories as well as appreciably higher unit prices in 2011. Sports and energy drinks, bottled water, ready to drink (RTD) tea and fruit/vegetable juice all maintained bullish growth even as abundant rainfall seemed to halt the spectacular recovery of carbonates witnessed in 2010. Table 1.1: Sales volume of non-alcoholic drinks in India Liters mn Bottled water Carbonated drinks Juice 2009 3.290 1.323 456 2010 3.885 1.430 538 2011 4.515 1.536 623 2012 5.169 1.639 709 2013 5.825 1.731 796 Growth Rate 14.5% 6.7% 14.9%
1.2 Company Profile:
PepsiCo, Inc. is one of the world's top consumer product companies with many of the world's most important and valuable trademarks. Its Pepsi-Cola Company division is the second largest soft drink business in the world, with a 21 percent share of the carbonated soft drink market worldwide. Pepsi was founded in New York in 1965. Its head quarter is in Purchase, New York. It is Producing Nonalcoholic beverage and Food processing items. Pepsi is a carbonated beverage that is produced and manufactured by PepsiCo. It is sold in retail stores, restaurants cinemas and from vending machines. It was first introduced as "Brad's Drink" in New Bern, North Carolina in 1898 by Caleb Bradham, who made it at his pharmacy where the drink was sold. It was later named Pepsi Cola, possibly. Fig 1.1: PepsiCo‘s LogoPepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994 and in a short period of 20 years has grown into the largest and one of the fastest growing food & beverage business in the country. 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 is concentrating in three focus areas – Soft drink concentrate, Snack foods and Vegetable and Food processing.
Fig 1.2: PepsiCo‘s Brands A. Foods PepsiCo‘s foods division Frito-Lay is the leader in the branded salty snack market. All its 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 like Aliva increase the number of healthy choices available to consumers. 1. Kurkure : tedhahai par merahai Launched in 1999, developed entirely in India. 100 percent vegetarian.
2. LAY‘S – ‗BE A LITTLE DILLOGICAL‘ Launched in 1995. 100 percent vegetarian. Lehar Namkeen: KhushionKaKhazana Launched in 1996 and re-launched in 2006. Range of varied Namkeen using fresh and good quality oil
3. QUAKER OATS – ‗SAY GOOD MORNING TO YOUR HEARTS‘ Launched in 2006. Nutritious breakfast which helps reduce cholesterol.
4. UNCLE CHIPPS – ‗BOLE MERE LIPS, I LOVE UNCLE CHIPPS‘ Launched in 1992 Pioneer in branded potato chips in India.
5. ALIVA – CHATPATE CRACKERS WITH WHEAT AND DAAL Launched in 2009. Baked savory crackers.
B. Beverages PepsiCo India‘s expansive portfolio includes iconic refreshment beverages Pepsi, 7UP, Nimbooz, Mirinda, Slice and Mountain Dew, in addition to low-calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drink Gatorade and fruit juices such as Tropicana and Tropicana Twister. 1. Pepsi: ‗YEH HAI YOUNGISTAN MERI JAAN‘ Flagship brand of PepsiCo. 100 year old brand loved by over 200 million people worldwide. An iconic youth brand in India. The single largest selling soft drink brand in India.
2. 7UP – ‗MOOD KO DO LEMON KA LIFT‘ 7UP was created in 1929 7UP was launched in India in 1990
3. MOUNTAIN DEW – ‗DARR KE AAGE JEET HAI‘ Mountain Dew was invented in Virginia in 1948. It was launched in India in 2003.
4. SLICE – ‗PURE MANGO PLEASURE‘ Slice was launched in India in 1993
Slice Mangola was introduced in 1994
5. MIRINDA – ‗WEEKEND AAYE THO PAGALPANTI CHAYE‘ Mirinda Orange launched in India in 1991. Mirinda Lemon launched in India in 1998.
6. NIMBOOZ – ‗EKDUM ASLI INDIAN‘ India‘s first nationally available packaged NimbuPani. It was launched in India in 2009.
7. AQUAFINA – ‗THE PUREST PART OF YOU‘ 1.2.2 Mission: PepsiCo‘s mission is to be the world's premier consumer products Company focused on convenient foods and beverages. They seek to produce financial rewards to investors even as they provide opportunities for growth and enrichment to their employees, business partners and the communities in which they operate. And in everything they do, they strive for honesty, fairness and integrity. 1.2.3 Vision: PepsiCo's responsibility is to continually improve all aspects of the world in which they operate – environmental, social, economic – creating a better tomorrow than today. Our vision is to put in to action through programs and a focus on environmental stewardship, activities to benefit society, and committed to build shareholder value by making PepsiCo truly sustainable company. 1.2.4 Performance with Purpose: At PepsiCo, we‘re committed to achieving business and financial success while leaving a positive imprint on society – delivering what we call performance with purpose. Aquafina was launched in India in 2000.
Our approach to superior financial performance is straightforward –drive shareholders value. By addressing social and environmental issues, we also deliver on our purpose agenda, which consists of human, environmental, and talent sustainability. PepsiCo believes that its performance is fundamentally connected to its purpose agenda which represents the commitment to give back as the company grows. Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006. During her time, healthier snacks have been marketed and the company is striving for a net-zero impact on the environment. This focus on healthier foods and lifestyles is part of Nooyi‘s "Performance with Purpose" philosophy. Performance with purpose agenda is comprised of three platforms: A. Human Sustainability: This reflects PepsiCo‘s goal of nourishing consumers with products that range from treats to healthy eats. PepsiCo‘s products have always offered consumers nutrition as well as great taste. The progress that PepsiCo has made under the Human Sustainability pillar includes reformulating some of its products to improve their nutritional profile while launching products that reflect consumer demand for healthier nutritious snacks and beverages. PepsiCo partners with Governments, health officials and Non Governmental Organizations to help address obesity concerns and it continues to provide consumers with new product choices and innovations. B. Environment sustainability: This is based on PepsiCo‘s commitment to strive to replenish the resources used where possible, and minimize the impact on the environment. PepsiCo continues to work to further reduce its water and electricity consumption and improve its packaging sustainability. Across the world, PepsiCo has re-used water from its processing plants and has worked with local communities to provide access to clean water, while supporting farmers to deliver ―More crop per drop.
C. Talent sustainability: This is founded on PepsiCo‘s belief that cherishing its extraordinary group of people is crucial to building an empowered workforce. PepsiCo pursues diversity and creates an inclusive environment which encourages associates to bring their whole selves to work. PepsiCo has increased female and minority representation in the management ranks and has encouraged employees to participate in community service activities while continuing to create rewarding job opportunities for people with different abilities 1.2.5 Commitment: PepsiCo is one of the great companies dealing with customer and their employee in good manner. PepsiCo is committed to delivering sustained growth through empowered people acting responsibly and buildingtrust. They uphold this commitment with six guiding principles: I. II. III. IV. V. VI. Care for our customers, our consumers and the world we live in. Sell only products we can be proud of. Speak with truth and candor. Balance the short term and long term. Win with diversity and inclusion. Respect others and succeed together.
Fig 1.3: Commitment and Guiding Principles of PepsiCo
1.3 Purpose of the Project:
The Indian food and drinks market has observed strong growth over the past few years. Economic liberalization and rising income of middle class population have had a positive impact on consumer spending and consumption in both rural and urban areas. Indian consumer now spends a significant proportion of disposable income on food and other essential commodities. Several other factors like demographic and macro economic conditions have also given fillip to expenditure on food and beverages in the country. PepsiCo want to take the advantage of this opportunity by expanding its market in the weak areas. Hence the main purpose of this project is to find out the weak patch areas in Aurangabad and improve the distribution by understanding the needs of customers i.e. outlet owners.
1.4 Objectives of the Project:
The objective of study is ―Comparative analysis between PepsiCo and Coca-Cola to improve the distribution in weak areas in Aurangabad‖ & also to understand various marketing strategy by PepsiCo to attract non users & current users (Retailers). My main area of working was –To Activate ―No sale outlets‖ (Those who sold Pepsi before not now) and ―New sale Outlets‖ (Those who never sold Pepsi) finalize the total no. of outlets in weak areas why they are not selling Pepsi and activate no. of sells outlet by convincing them. It was also to plan their new course of action keeping in mind the current market position of Pepsi as well as of Coke. This was an analysis of the market share of Pepsi in comparison of Coke. This report gives information to management about the outlets uncovered by Pepsi in weak areas and their requirements towards the company. To study the overview of PepsiCo Company. To know the merchandising of Pepsi in retail outlets. To improve the distribution in weak areas. Increase sales ratio and opening of new sales outlets. To analyze the reasons of not selling Pepsi at retailers level. To study the retailers satisfaction. To study supply chain management in PepsiCo.
1.5 Outline of the Project Report:
This report gives us a general preview of soft drink industry in India, mainly about the Pepsi.The first chapter of report is introduction which gives the rising popularity of soft drinks in India and preview about the PepsiCo India. It also highlights the problem poser and defines the topic,aim and scope of the project work. The second chapter of report is the literature survey which talks about the critical appraisal of the previous work published in the literature related withthe project work. The third chapter is the research methodologyin this chapter technique andmethodologies
adopted for implementing the research work are explained. The fourth chapter isresults and
interpretations which include a thorough evaluationof the field work. The fifthchapter is conclusions it includesconclusions derived from the logical analysis presented in theresults and
discussions chapter. The sixth chapter gives limitations of the project and lastly theseventh chapter
which is recommendations gives the recommendation based on theconclusions. After this there is appendix and bibliography.
Chapter 2 Review of Literature
2.1 Analysis of Soft Drink Industry:
The carbonated soft drinks industry in India comprises over 100 plants across all states. It provides direct and indirect employment for over 125.000 employees. It has attracted one of the highest foreign direct investments in the country amounting to around 1049 US $ million. Soft drinks constitute the third largest packaged food segment in India after packaged tea and packaged biscuits. But the penetration level of carbonated soft drinks in India is still low compared with other developing markets, an indication for further potential for rapid growth. The market size for bottled water in India has been estimated at 670 US $ million in 2012. With an annual growth rate of 14.5 percent volume sales of bottled water will increase rapidly within the next five years. The market size for juice will grow also dynamically within the next years with an annual growth rate of almost 15 percent. Every food companies have their competition. Pepsi‘s main competitor is Coca-Cola co. Both have been selling thirst quenchers for 100 years that are now global brands. Coke was born 11 years before Pepsi in 1887 and, a century later it still maintained its lead in the global cola market. Pepsi, having always been number two, kept trying harder and harder to beat Coke at its own game. The two companies and their principal products are complete substitutes for each other. CocaCola and Pepsi are perfect substitutes; an increase in consumption on Pepsi would result in a proportionate decrease in the consumption of Coca-Cola. Coca-Cola and PepsiCo together control about 90% of the carbonated beverage market in India. Their bottles move through the world‘s most pervasive distribution network.
Coke is mainly a franchise driven operation with a company supplying its soft drink concentrate to its soft bottles around the world Coke management releases that a soft drink is a convenience as well as an impulse product. According the company‘s expertise lies in consumers marketing. Idea is to reduce the effect span as Also coke will be experimenting with mobile dispensing units at beaches and stadiums going out towards consumers the much as possible. Cokes infrastructure plan include setting up new subsidiaries. It is also considering a 35 Greenfield venture to set-up a
model plant in westerns corridor most likely in Gujarat. This will have 4 product lines with a capacity of 600 bottles per minutes with a build in flexibility to about top different and flavors and sizes. Another option for building capacity is to bringing in bottlers from overseas to invent jointly in fresh capacity. The company wants to go a stem further and set-up COCA-COLA institute a training facility for bottlers. Coke continues to stay with its multi brand strategy. This enhances the ability to leverage self-space at the retail outlet. It also gives then flexibility to offer price on brand others then lead once. Coke has launched MAJA pineapple and MAJA orange. As far as new product launched is concerned coke plans a dual brand approach by bringing in FANTA lemon. This comes about because volumes of LIMCA have increased by 20% shares, which have an 80% - share of the cloudy lemon segment—so this dual brand approach will extend to those flavors too. Pepsi‘s decision to take in company owned bottling operation (COBO) alongside franchise has proved to be winning edge over its competitor. By 1994 Pepsi‘s has bought over five bottles in the key markets. This ensuring maximum control. The franchise now sees the company not just as advisor but also as carrying the weight of experience. Company system and franchisee system can now be properly aligned to meet the required objectives. On expanding reach and availability 80% of all cold drinks are consumed at the point of purchase (POP) rather than at home. The fountain initiative has paid off in higher of countrywide and they offer consumers a whole new way experience soft drinks. Also expanding teach and availability. Coke tied up with Indian oil to set up dispensing units at petrol pumps. Pepsi followed suit by striking a deal with Bharat Petroleum. Pepsi has mainly focused a brand Pepsi. Their strategy has been to keep pace with the market growth rate in non-Colas but to emerge as the definite cola they have put there might behind the brand Pepsi as the flagship brand. In 1987, Pepsi ranked 29 in the fortune list of the 500 largest industrial corporations in the U.S. Coca Cola was way down at 54, while Pepsi Co. improved its position from 34 in 1986 Coca Cola tumbled to 38 after missive public outcry; the company had to reintroduce the original coke classic. Pepsi has so far made inroads in 151countries (150 before India) including the much-publicized ventures in the Soviet Union and China. Patience in Pepsi Co.‘s long suit. At the base of every beverage business lays the all important secret formula of success the ―Concentrate‖. In India the concentrate is prepared by Pepsi food limited representatives of Pepsi-Cola international.
They came, spent, and conquered. The size of their combined business adds up to more than Rs. 5500 Cr. The equity investment put in it tots up to a humungous $ 1347 million (Rs. 5700 Cr.). Yet almost 10 year after Pepsi Coca-Cola Company entered India, birth is yet to turn a profit. Their accumulated losses are estimated to over Rs. 800 Cr. In a bid to comer a larger market share, invariably, either Pepsi or Coke ends up raising the stakes to a point where the math simply doesn‘t add up. Just that the two cola giants have been in an unseemly hurry to grow the Indian market and, at the same time deny each other any advantages, irrespective of whether it makes economic sense. In the mid 90‘s breakeven was pegged at 40 million cases. Today, both players together do 150 million cases, but break-even is still elusive. The battle spilled into almost every area of operations in early 1999, that discounts were also unleashed. If the industry norm was around three to four bottles free with every case, the Cola majors began to offer six to seven bottles. In 2000 particularly in the month coke went berserk, giving 500/0 discounts. Both cola warriors targeted a clutch of key accounts about 67% of the total retail base, primarily restaurants, movie halls and hotels. In many cases the owner would play one against the other and drive a hard bargain. In many cases the cola companies, paid close to Rs. 100 per case of expected off take as advance to secure a monopoly over the key account. The gross margins a case of returnable glass bottles was just Rs. 40. Aluminum cans too suffered from the same problem effective. Aluminum cans too suffered from the same problem. Now every year, both companies had to invest in fresh glass capacity and crates. Back-of-the envelop calculations suggested that to put an additional million bottles in the market required close to Rs. 40 Cr. investment in glass and carats, and glass bottles had to be replaced every four year after they had done 40 cycles, during which time depreciation had been charged. Till the cola companies began to concentrate on the urban centers. As soon as they pushed into the winter land, the first signs of problems surfaced. In a state like Tamil Nadu the off take per 1000 people was barely 0.9 as a result, when a Pepsi or a coke truck went into interior markets, the glass simply wouldn‘t come black fast, either consumption was low or the volumes were being split between the volumes were being split between the two competitors as a market. But that would have been completely out of character for the company. ―It is a bit like asking the Brazilian Soccer team to adopt German-Style total football‖. Across global market Pepsi has always reveled in grabbing share away from coke. But in India it finds itself in a peculiar position. It is the Numero Uno brand, outselling both coke and Thums up put together. That‘s helped Pepsi‘s Indian team to build quite
a reputation. Pepsi has managed to constantly find ways to connect with the youth. So it Coke is the universal drink, which cuts across-age groups, Pepsi is the icon of the real cola aquifers Young-people between the age 0f 15-29. In order to fully understand the competition between the two companies we have to understand the soft drink industry, for the same following should be considered: the dominant economic factors, five competitive sources and SWOT analysis. 2.1.1 Dominant Economic Factors: Market size, growth rate and overall profitability are three economic indicators that can be used to evaluate the soft drink industry. The market size of this industry has been changing. Soft drink consumption has a market share of 46.8% within the non-alcoholic drink industry, clearly, the soft drink industry is lucrative with a potential for high profits, but there are several obstacles to overcome in order to capture the market share. The growth rate has been recently criticized due to the U.S. market saturation of soft drinks. Datamonitor (2010) stated, ―Looking ahead, despite solid growth in consumption, the global soft drinks market is expected to slightly decelerate, reflecting stagnation of market prices.‖ The change is attributed to the other growing sectors of the non-alcoholic industry including tea and coffee (11.8%) and bottled water (9.3%). Sports drinks and energy drinks are also expected to increase in growth as competitors start adopting new product lines. Profitability in the soft drink industry will remain rather solid, but market saturation especially in the U.S. has caused analysts to suspect a slight deceleration of growth in the industry. Because of this, soft drink leaders are establishing themselves in alternative markets such as the snack, confections, bottled water, and sports drinks industries. In order for soft drink companies to continue to grow and increase profits they will need to diversify their product offerings. 2.1.2 Porter’s Five Forces: An industry analysis through Porter‘s Five Forces reveals that market forces are favorable for profitability. The Five Forces Model provides a way to think about how information resources
can create competitive advantage. Using Porter‘s Model one can identify key sources of competition, uses of information resources to enhance the competitive position against competitive threats. Power of Suppliers: The inputs for Coke and Pepsi‘s products were primarily sugar and packaging. Sugar could be purchased from many sources on the open market, and if sugar became too expensive, the firms could easily switch to corn syrup, as they did in the early 1980s. So suppliers of nutritive sweeteners did not have much bargaining power. Selection of supplier
Industry Competitors: Revenues are extremely concentrated in this industry, with Coke and Pepsi, together with their associated bottlers, commanding 90% of the case market in 2011. In fact, one could characterize the soft drink market as an oligopoly, or even a duopoly between Coke and Pepsi, resulting in positive economic profits. Cost Effectiveness Market Access
Fig 2.1: Porter‘s Five Forces Model
Substitutes: Through the early 1970s, soft drinks were synonymous with ―colas‖ in the mind of consumers. Over time, however, other beverages, from bottled water to teas, became more popular, especially in the 1980s and 1990s. Coke and Pepsi responded by expanding their offerings, through alliances, acquisitions, and internal product innovation, capturing the value of increasingly popular substitutes internally. Proliferation in the number of brands did threaten the profitability of bottlers through 1986, as they more frequent line set-ups, increased capital investment, and development of special management skills for more complex manufacturing operations and distribution. Improve price Improve performance
Power of buyers: The soft drink industry has different level of bargaining power exist among the group of buyers such as Supermarkets, the principal customer for soft drink makers, were a highly fragmented industry. The stores counted on soft drinks to generate consumer traffic, so they needed Coke and Pepsi products. But due to their tremendous degree of fragmentation these stores did not have much bargaining power. On other hand the buyers with dominant power were fast food outlets. Although these outlets captured most of the soft drink profitability in their channel, they accounted for less than 20% of total soft drink sales. Through other markets, however, the industry enjoyed substantial profitability because of limited buyer power. Buyer selection Switching Cost Differentiation
Potential Threat of New Entrants:It would be nearly impossible for either a new CP or a new bottler to enter the industry. New CPs would need to overcome the tremendous marketing muscle and market presence of Coke, Pepsi, and a few others, who had established brand names that were as much as a century old.Entering bottling, meanwhile, would require substantial capital investment, which would deter entry. Further complicating entry into this market,
existing bottlers had exclusive territories in which to distribute their products. Switching cost
Access to distribution channels Economics of scale
The main objective of the marketing process is to distribute the products to the actual users. This function involves a number of sub-functions to be performed by a producer or manufacturer. These two functions are most important first, the creation of demand is made through the process of advertising and sales promotion activities. On the other hand the distribution through the channels of distribution. The decision relating to the channel of distribution is a very important decision from the firm point of view because the selected channels affect considerable other marketing decision. Such decisions are of long term nature and exercise their impact on the cost structure of the firm also. Channel distribution means the intermediaries or the process through which the goods products are transferred from the producer to the ultimate users. Now a day any of the producers possibly do not sell their goods directly to the final users. There are a lot of intermediaries between producers and consumer, bearing a variety of name performing various kinds of function. Some intermediaries like wholesalers and retailers buy and resale taking the bill. They are known as merchant middle men and other are brokers, representative sales agent who seeks or search for customers and negotiate on the behalf of the producer but do not take of goods. These are called as middlemen. The manufacturer and its distributive outlets share common objective to sell the manufactured products at a profit. No doubt its objective differs with the marketing circumstance. Even though many variation of specific objective fits into some categories. These are as follows: To built distribution network loyalty To stimulate distribution To develop managerial efficiency in distribution organization To identify the source of supply for the product line at the final buyers level The channel of distribution is a structure which organized and presents a choice among alternative channels of distribution of the different marketing situations faced by retailers, whole
sellers and producers within the structure. It may be considered as a series of function which must be performed in order to make producers efficiency. To bearing maximum profits of all institutions concerned a channel of distribution should be treated as a unit of total system of action. The activities of the manufacturer need to be coordinated with these middlemen used in the distribution of given product. The whole market depends on the availability of product. One of the important things in soft drink industry is to packaging wich is returnable i.e the company takes back the glass bottle for refilling to mack them available once again in market.
Agents/brokers Wholesalers/distributors Retailers Retailers
Consumers and organizational end users
Fig 2.2 Distribution Channel 2.2.1 Distribution Channel in Aurangabad: There are two categories of plants such as Franchise Owned Bottling Operation (FOBO) and Company Owned Bottling Operation (COBO) where the bottling takes place and from here; the soft drink is supplied to different destinations. There are plants at Paithan, Chembur and Roha where the bottles are filled and dispatched to Aurangabad warehouse where loading and unloading of bottles take place. There are three
intermediaries involved in the transfer of product from company to end consumers which are hubs, distributors and retailers. A. Hubs: The hub (warehouse) serves as the nodal point for a particular region and supplies to various distributors and they cater to all surrounding market. At Aurangabad there is only one hub which is the main warehouse.
B. Distributors: Distributors are appointed agents of the company who make orders to the company by paying in advance through drafts, stock the products in their godowns and supply them to outlets through their fleet of delivery was and a team of salesmen and drivers. They are allowed to sell to company's product to the retailers in a specified area. The company divides this area into routes. Each route is covered by one unit i.e. one de livery van, one salesman one driver, one helper etc. These units and godown are their main investment. Distributors have to invest in empty bottles and crates too, so t hat they can maintain a specified quantity of reserve stock and facilitate the quick rotation of glass crates. The company evaluates its distributors at the end of the year and makes plans for the next year. Company fixes the targets for each distributor according to market size, last year‘s sales, potential growth assumption based on deposit of empties and installation of coolers at outlets. Distributors are awarded with a fair margin of Rs. 10 per crate for their service. This margin could be increased for the sale above the targets, company offers are met with distributors before appointing them. Distributor complying with many schemes and contests for its customers for pushing different brands and giving various services. Company also offers many gifts like, briefcase, and handbags, T-shirts, and capsetc to encourage the distributors. If distributor does not agree with the conditions of these agreement company may reduce the area of distributor or may even terminate the relationship. C. Retailers: Includes all the activities involved in selling goods or services directly to final consumers for personal non-business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing.
The sale of particular soft drinks depends a lot entirely on retailer‘s wish. Like if he does not keep Aquafina and if his shop is at the prime location then certainly the customer with turn towards other cola drinks like Bisleri, Bailley, and Kinley etc. This all goes to prove that retailer is king. So retailers require special focus from the company. Pepsi Co. helps the retailers to serve its customer better by providing good margin to them for storing its product using merchandising to improve in-store product display, installing cooling. There are different types of retailers in India such as following: 1. Department stores: Department stores are general merchandisers. They offer to the customers mid- to high-quality products. Though they sell general goods, some department stores sell only a select line of products. Examples in India would include stores like "Westside" and "Lifestyle"--popular department stores. 2. General Stores: These are small family-owned businesses, which sell a small collection of goods to the customers. They are individually run and cater to small sections of the society. These stores are known for their high standards of customer service. 3. Malls: One of the most popular and most visited retail formats in India is the mall. These are the largest retail format in India. Malls provide everything that a person wants to buy, all under one roof. From clothes and accessories to food or cinemas, malls provide all of this, and more. 4. Modern Trade: Modern trade mean to supply product in high quantity to big retail store like Big Bazaar, Spencer, More, & Vishal mega mart.
2.3 PepsiCo Eight Steps of Calling:
Fig 2.3: PepsiCo Eight Steps of Calling
2.4 Market Share:
Market share is the portion or percentage of sales of a particular product or service in a given region that are controlled by a company. If, for example, there are 100 widgets sold in a country and company A sells 43 of them;then company A has a 43% market share. It in strategic management and marketing is the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as a company's unit sales volume (in a market) divided by the total volume of units sold in that market. It is generally necessary to commission market research (generally desk/secondary research) to determine. Sometimes, though, one can use primary research to estimate the total market size and a company's market share. Following are different concepts which are used to evaluate market shares of PepsiCo in weak area in Aurangabad. 2.4.1 Market Penetration: When a company enters/penetrates in a market with existing products; the best way to achieve this is by gaining competitors & customer‘s part of their market share. Other ways include ―Attracting non-users‖ of your product or convincing current users to use more of your product/service (by advertising). It was required to find out those outlets which are either not selling Pepsi or selling in very less proportion. The project was conducted in Aurangabad city. This project was aimed at finding out the shops, which were not promoting or selling Pepsi and selling competitor brands and activate them by convincing. It was also aimed at knowing the reason for not selling Pepsi, their requirements from company and willingness to sell Pepsi brands. 2.4.2. Signage: Here Signage refers to visibility of brand names and different flavors in the outlet. There a various ways through which the brand names and different flavors are made visible to the consumers. They are: Dealer boards Glow sign boards shop painting counter rack floor rack.
One of the important philosophy company follows is: ―JO DIKHTA WO BIKTA HAI‖ means the thing which is visible in any outlet, consumer demands for it. And this philosophy of company is very much true. 2.4.3 Chilling equipments: There are series of chilling equipment of Pepsi and its competitor. They are namely PBI code (Visicooler) – Chilling machine provided by the company free of cost to the retailers having goodwill in the soft drink market.PBI OYC & CCI OYC – The equipments provided by Pepsi and its competitor respectively on the payment and the mode of payment is draft. 2.4.4 Numeric Distribution and Weighted distribution: Numeric distribution is simply the number of items that have that thing divided by the total number of the sample, regardless of size or contribution. If you sell to 1 outlet out of 10, then your NumDist=10% ND = No. of outlets where company‘s product is present /Total No of Outlets * 100 Weighted distribution is the number of items that have that thing multiplied by the weight of that thing divided by the total number of the sample. WD=Industry volume of outlets where company‘s product is present/ Total Industry Volume * 100 Terminology used in ACNielsen or IRI retail audits. Basically numeric distribution is the % of stores that a product is sold in. Weighted distribution is the % of stores that a product is sold in but weighted by the importance of the outlets (usually on category volume).Therefore if you have a universe (sample or geography) that contains 4 stores and the product is present in one store then numeric distribution = 25%. However, if that one store was for example a supermarket and the other three were corner stores then that single outlet might account for 75% of all category sales. In this case weighted distribution would be 75%. Numeric distribution gives you an idea of the reach of distribution whilst weighted gives you an idea of the quality of distribution. If companys strategy is to have a product available to consumers 100% of the time then it would go with numeric. If company were looking to have a
focused availability that met the majority of demand (for the category) you would use weighted. But to incerase the over all market share company need to use both numeric as well as weighted.
Chapter 3 Research Methodology
3.1 Research Design:
The research process designed was conclusive and statistical in nature. Which would enable the company to take rational decision? This is because the sample size taken was large and the techniques adopted were for mass data. The data obtained from each locality was tabulated and the results were obtained in from of percentages. It was required to visit all the outlets in the specified area of his distributor, which was told to us by the CE concerned. We were required to be given the route map of the specified area. The area was to thoroughly survey without leaving any of the outlets. Table 3.1: Research Design Time period Sample area Six weeks Weak Areas in Aurangabad (Joyti Nagar, Usmanpura and Padampura) Research type Research Approach Research Instrument Contact Method Survey population Total Population Descriptive Observation & Survey Questionnaire Visit to Outlets 100 outlets 1000 + outlets
Initially the survey was to start with the route vehicle of the distributor of that area. Two days had to be devoted with the route vehicle and noting down the name of the outlets and other particulars where ever their route vehicle visited the outlets. It was to get familiarized with the area. The next couple of days had to be surveyed individually in the same area trying to find out those outlets in that area which was not attended by the route vehicle. This was how the whole survey was to be conducted. The main aim of this survey was to find out those outlets which are
either new or remain unnoticed/unattended by the route vehicle or where the Pepsi products were not reaching. 3.1.1 Data collection sources: A. Primary sources Primary data is collected, by first hand information from the concerned company person. Primary data is collected by three different ways such as: a) Observation – The observation was done by the following meted: • Keeping the markets in view • Keeping the customers and consumers in view • Interacting with various group of retailers and consumers b) Survey- which includes various categories of retailers. A questionnaire was prepared to get the relevant information from retailer. c) Personal interviews : This method of date collection involves the interviewers asking question in a face to face con tact situation there in direct personal investigation and the interview inn properly structured as it involves the use of set of predetermined questions which are asked in the form and order pre-decided. This technique is preferred as it is economical; more informative, non responses are low, spontaneous reactions which are realistic. Lots of supplementary information comes up. B. Secondary Data: Secondary data consists of information that already exists somewhere and may have collected for a different purpose, it provide a starting point. The list of retailers was obtained from company officials, designed by company. 3.1.2 Data Collection Instrument: Under Research Methodology there are two types of methods for marketing research. They are:
A. The Observation Method: In observation method data are collected on the direct observation. No talks take place. By observing the person the analysis makes the inventory as to product used by him at his home or kept as retailers stocks. B. The Survey Method: It is an inclusive of panel method. In survey method information is gathered directly from individuals by Personal Interview. The survey method is also mentioned as the Questionnaire Technique. For my projectt point of view, the methods mainly used are: i. Survey by route ride:
The survey method by route ride I usually went with Pepsi van also with salesman. I met the retailers from outlets to outlets. This survey method helps me a lot to understand about the distribution system and to understand the problem of retailers and other people. ii. Personal Interview by Questionnaire Technique:
In addition to the personal interview by questionnaire technique; in this survey method I saw that the respondent was shown the exhibit and advertisement to give his personal opinion and attitude. In this method the direct interaction of occurred with the retailers and I could collect the reliable information from them it has also cost disadvantage that‘s why some were difficult to covered. The final questionnaire is shown in Appendix I.
3.2 Processing and Analysis of Data:
Data collected from personal interview is processed and tabulated so that the data analysis becomes easy. Appendix II gives the data tabulated form.
Chapter 4 Results and Interpretations
Q-1: Which company‘s stock do you have? This gives total number of monopoly outlets in weak areas. When it was asked about the brand preference from the customer the answer varied from one route to another. In routes like railway station route, Cidco N-11, N-3 etc. which are considered the best route of Aurangabad the figures are impressive. About 57% of costumer prefers Pepsi and the remaining 33% goes in the hand of the competitors.Whereas when it was asked in the routes which company considers it as its week routes there was marginal difference in the in the figures generated in comparison to strong routes. The brand preference of customer in the week route is Pepsi 39% and Coke 61%. Table 4.1: Result for Q-1 Before Pepsi Cole Both 22 29 33 After 22 24 38
Q-2: Is there regular supply of Pepsi? When asked about the regular supply of PEPSI the response was very bad in weak areas the sales man visits on once in a week. Table 4.2: Result for Q-2 Before 34 21 29 After 41 19 24
Yes No Can‘t Say
Q-3: Does PEPSI salesman behave properly? Since the satisfaction level of customer is measured, so the behavior of sale personnel is one of the important things to be measured in this context. So talking about interpersonal relationship with the costumer it is quite satisfactory but some reasons are there which do not supports the satisfaction of the customer that is the routes for a sales man is never permanent so the sales man faces difficulty in establishing good relation with the customers. Table 4.3: Result for Q-3 Before 40 44 After 46 38
Q-4: Does salesmen provide you with right scheme given by the Company? When the above question was asked the reply of the costumer was satisfactory.This is one of the important finding surveyed in different routes. Table 4.4: Result for Q-4 Before 25 20 39 After 30 18 36
Yes No Can‘t Say
Q-5: Which company‘s Visi you have? Table 4.5: Result for Q-5 Before 37 35 After 38 35
Q-6: How much stock do you have in hand? Table 4.6: Result for Q-6 Before Pepsi Coke 217.5 279 After 253.5 284
Q-7: How much stock do you take in a month? Table 4.7: Result for Q-7 Before 1118 2124 After 1230 2124
Q-8: Did you sold Pepsi in the past? Table 4.8: Result for Q-8 Yes No 64 20
Q-9: Are u satisfied by Pepsi‘s product line? Table 4.9: Result for Q-9 Yes No 50 34
Q-10: Any suggestions:Some common suggestions are: 1. 2. 3. 4. Scheme should be clear to costumers. There should be uniformity in the schemes. The outlet should be provided with proper signage index and Visi cooler. There should be regular visit of company officials for the problem hearings and the remedies to the problem.
Chapter 5 Conclusions
The cold-drink industry is fighting it hot war since years and in the times to come it will only intensify. The only weapons to be used are the distribution and marketing strategies. The company that usages its weapons properly will survive and the rest will vanish. Pepsi has built a reputation around the world as a major player in the soft drink market as well as the leader in the snack food industry. Creating a whole some environment for their customer all the while maintaining its integrity has done this. Currently they are facing stiff competition from Coca-cola, but their various distribution and marketing ventures , Pepsi is posed to give Cock a definite battle in the future as to which cola consumer want. Since last five years the sales of PepsiCo‘s are increasing in Aurangabad city the promotional activity of the seasons are quite good and the work force in Aurangabad city in PepsiCo India Holding Pvt. Ltd. are working tremendous hard to increase the market shares of PepsiCo in Aurangabad.
1) Route vehicles are not regular on weak routes and on other routes they are regular but they reach to their destination late. 2) It is observed that the competitor vehicle reaches quite early and fills the empty glasses; this may be one of the reasons of decrease in the sale. 3) Even key outlets are very unsatisfied with the signage efforts put on by company even all Pepsi exclusives are not having signage. 4) Complains handling was not proper, there were some old cases or complaints. 5) Big retailer / fat agent are involved in undercutting which should be stopped immediately. 6) Most of the cooling equipments are not working properly. 7) Due to the shortage of Pepsi product in the market in this season Pepsi could not reach to that mark where it can reach.
5.2 SWOT Analysis:
A. Strength: 1) Good market penetration. 2) Motivated channel partner. 3) Well defined routes. B. Weakness: 1) All brands were not available in at least 80% shops. 2) Complaint handling was not up to mark. 3) Supply in certain area is very irregular and also route agents are not covering full routes. 4) Poor signage and display is making the routes week for the sale of Pepsi. 5) Interpersonal relationship with the company officials and the route agent is not satisfactory. C. Opportunity: 1) It is observed that in some newly establishing areas many new outlets are opening, Pepsi needs to concentrate on these new outlets and can gradually increase its sale in these areas. 2) Large number of mix outlets can be changed to Pepsi exclusive and coke exclusive to mix only by luring them good and efficient supply, glow sign and cooling equipments. D. Threats: 1) Coke is the only nearest competitor and it is catching up in the market penetration through price skimming and other promotional scheme. 2) Local Brands.
Chapter 6 Limitations of Study
It is well known fact that constraint and limitations are bound to be present in any study; Following are some limitation as:1. The survey has been conducted only in few areas of Aurangabad due to limited time 2. It is very difficult to make people understand the significance of conducting survey. 3. Lack of retailer‘s interest to answer the questions is also an important limitation. 4. Lack of knowledge of area has affected the research. 5. The information given by the client may be false and biased.
Chapter 7 Recommendation
7.1 Recommendation based on conclusions:
1) Signage: Majority of outlets is not satisfied with signage and they are also very unsatisfied with the shortage problem. This problem results in the multiple problems leading to the marginal level of dissatisfaction. There for it is very necessary to provide with effective signage to the outlets. 2) Uniformity in the routes of sales agent: It was observed that none of the salesmen is permanent to any route but to build up a good interpersonal relation proper interaction with the outlets should be there so that company can position its product to the respective routes and outlets. 3) Communication and motivational class: There is need of proper communication and motivational class for the sales agent and the employs so that they can give their best effort and contribute to the target announced by the company. 4) Display and Seasonal scheme: If display or seasonal scheme is allotted to any outlet it is necessary to provide the outlets with the gifts items to encourage them, so that they can follow the display or seasonal scheme in next season. 5)Complaint handling and its rectification: To enhance the effectiveness in complain handling about cooling equipment it is advised to authorized at least one shop per two route , this will help in complain handling which is biggest dissatisfaction in this season. 6) Awareness policies: The outlet needs awareness about the routes and daily scheme announced by the company. It is recommended that the sales agent should carry some proof, document concerned with the daily scheme so as the outlets can be satisfied.
7.2. Procedure for implementation:
1. CE needs to personally contact with retailers who help in knowing the activities of the distributors as well as help in Promoting the business.
2. The company should try to increase the point‘s availability of its product by increasing its breadth distribution. 3. All the outlets in the route should be covered, as sometimes the salesman tries to escape the small outlets, which purchase less. 4. Salesman should be motivated so that they remain with company. 5. There should be timely reimbursement of the monetary and other type of schemes to the retailers. 6. Regular check should be made by company‘s executive to see that the promotional scheme reaches each outlet if it is eligible. 7. It should focus its attention to the untapped market where it can considerably increase its market share 8. Distributors should from time to time take the pain of finding out the requirement of retailers and the problem they are facing. 9. The process of Visi installation should be made easy. 10. There should attention be paid to the repairing of Visi out of order. 11. Advertisement and publicity in the untapped market by way of signage, racks, paintings, banners, hoarding etc. should be expanded. 12. Distributors should check the working of route agents or salesman on regular basis. 13. Shortages of the product during the summer season if possible should be reduced. It communicates bad message among the retailers as well as the consumers. 14. Signages& merchandise should be installed against the sale performance of the outlets as well as the need of the market. 15. The company should keep contest for the a. Best salesman b. Best Retailers c. Best distributors
Appendix I: Questionnaire for Retailers Name of Outlet: __________ ________________________ Address/Contact No.: _____________ _______________________________
Q1: Q2: Q3: Q4: Q5: Q6: Q7: Q8: Q9:
Which company‘s stock do you have? a) Pepsi b) Coke c) Both
Is there regular supply of Pepsi? a) Yes b) No
Does PEPSI salesman behave properly? a)Yes
b)No c)Can‘t Say
Does a salesman provide you with right scheme given by the Company?
Which company‘s Visi you have? a) Pepsi b)Coke c)Both
How much stock do you have in hand? a) Pepsi: ______ b) Coke:________
How much stock do you take in a month? a) Pepsi:______ b) Coke:_______
Did you sold Pepsi in the past? a)Yes b)No Are u satisfied by Pepsi‘s product line? a) Yes b) No
Q- Any suggestions: --------------------------------------------------------------------------------------10: ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Appendix II: Data collected form weak areas before implementing the recommendations. Appendix III: Data collected form weak areas after implementing the recommendations.
Websites: 1) www.pepsicoindia.co.in 2) www.pepsico.com 3) www.coca-colaindia.com 4) www.drinktec.com 5) www.businessweek.com