Product - Pepsi, unlike its major competitor Coca cola, has expanded in the breakfast as well

as snacks segment. Coca cola on the other hand is present only in the beverages section.
The advantage of Pepsi’s snacks segment is that brands like Lays, Kurkure and Cheetos
are in great demand. Quaker oats which is a recent addition is also increasing in demand.
Thus the turnover resulting from the Food products is helping the bottom line of the
company.

Place –

Pepsi has a huge distribution network in India. It has to be huge because the

brand needs to be present in every nook and corner of the country to increase its sales. The
primary mode of distribution is through distributors who in turn give it to retailers,
restaurants, and convenience stores. The secondary mode of distribution is directly through
the company to bulk buyers and major retailers who buy directly from the company.

Thus distribution channel is as follows

1) Company > Distributor > Small retailers / Small buyers > End customer
2) Company > Bulk buyers > End customer

As cost is saved in the 2nd example, companies are able to give better margins to Bulk
buyers. The major challenge in distribution is the cost of bottling as well as the cost of
transportation.

Bottling of Pepsi is done at bottling plants. In India, Pepsi has 36 bottling plants out of which
13 are franchisees whereas 23 are company owned. The soft drink once packed is moved
to the company warehouse from where it goes to distributors and bulk buyers.

Several of pepsi’s soft drink distributors themselves might act as distributors of Kurkure,
Lays and other snacks products as the distribution is through the same channel. The
products are also sold from the same convenience store. Thus, it makes sense if the
distributor of the soft drink is given the authority to distribute snacks as well. However, in
some cases, the distributor of soft drink might be separate from that of Snacks.

Price - Pepsi is in an industry which is dominated by the two biggies – Coca cola and
Pepsi. Pricing is competitive.

1. In a war between Coca cola and pepsi, neither of the brands can win if they enter a
price war. This is because the cost of manufacturing and transportation is huge.
Thus, these companies are likely to enter a brand war rather than enter a price war.
2. Pepsi is known to give promotional discounts as well as discounts on bulk buying.
For customers, as the container size rises, the discounts also rise. Thus a 2 litre
bottle of Pepsi will be relatively cheaper per 100ml as compared to a 250 ml pack.
 For distributors, the discount is based on the quantity as well as the payment terms.
The better the payment terms or the higher the quantity, the more is the discount
given thereby keeping the distributor motivated.
3. Pepsi has to lower its price for the top retailers and bulk buyers. For example –
Indian retailers like Big Bazaar, Reliance fresh, as well as hypercity are bulk buyers.
Similarly fast food chains like Mcdonalds, KFC are also bulk buyers. These bulk
buyers negotiate with the soft drink brands on the basis of price and sell their
products in huge quantities. Thus, pepsi has to drop prices in these places which
affects the operating margin of the brand. The margins of the company are better
through the distributors and lesser through bulk buyers. However, the sales of the
company are higher to bulk buyers as compared to distributors.

Promotion:

One of the strongest reason Pepsi retains its brand image is its promotions. Pepsi targets
mainly youngsters through various Brand ambassadors. In India, the brand ambassadors
have been the best celebrities as well as sports person of the country including Sachin
tendulkar, M S Dhoni, Amitabh Bacchan, Ranbir kapoor and others.

Mountain dew has a message of “Darr ke age jeet hai” which is again focused on adventure
sports thereby targeting youngsters. Snacks like Kurkure and Lays target different
segments. Kurkure is known to target household snacks and middle aged group whereas
Lays targets youngsters and the party mood. Gatorade targets only sports as it is a sports
drink. And Quaker oats, which is a recent launch as compared to the other products, targets
breakfast with a bit of masala.

Pepsi uses all the media channels for its promotions. Along with ATL, pepsi is also present
in BTL marketing. Furthermore, along with traditional media channels, Pepsi also uses trade
promotions and sales promotions at point of purchase. Discounts and packaging are always
being bundled to give the best combination and value to the customer to increase
purchases as well as the brand equity.