DAYALBAGH EDUCATIONAL INSTITUTE AGRA

SUMMER TRAINING REPORT ON ‘PARTNER RELATIONSHIP MANAGEMENT OF PEPSICO INDIA’S FOBO VARUN BEVERAGES LTD.’ & ‘ACCEPTANCE OF SLIM DIET CANS IN THE TRANS-YAMUNA AND AGRA MARKETS.’ SUBMITTED BY – C. TILAK PRAKASH

ROLL NUMBER: 077508

ACKNOWLEDGEMENT
There is always a sense of gratitude one expresses to others for the helpful and needy service they render during all phases of life. I have completed this training with the help of different personalities. I wish to express my gratitude towards all of them. It gives me immense pleasure to express my deep regards and sincere sense of gratitude to Mr. Manmohan R Paul Vice-president (marketing)for his guidance throughout the training. Thank you sir for your able and worthy guidance. I would also like to thank Mr. Rana, Mr. Prashant Sharma and Mr. Hitesh for their support which helped me throughout my training. I would also like to thank my teacher Prof. K Shanti Saroop for steering my confidence and capability for giving me insight into training by giving me exposure to the arena of competitive and real world. Lastly I would like to thank my parents and friends for their constant support during the duration of my training. Thank You One and All

C. TILAK PRAKASH
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ROLL NO. 077508 BBM 5TH SEMESTER

TABLE OF CONTENTS
ABSTRACT………………………………………………………………………12 Research Methodology........................................................................................15 Report and Analysis of Data Collection …………………………………………….26 CSD Industry Overview……………………………………………………….27 CSD Industry analysis…………………………………………………………31 Market Analysis and Industry Challenges………………………………......37 Industry process Improvement Opportunities………………………………46 PepsiCo International…………………………………………………………………61 History…………………………………………………………………………..61 PepsiCo – The parent Company…………………………………………….64 Overview PepsiCo International…………………….……………………….66 How PepsiCo overcame Competition……………………………………….68 SCA’s……………………………………………………………………………70 PepsiCo India…………………………………………………………………………..74 Introduction……………………………………………………………………..74 Overview Of PepsiCo India…………………………………………………...76 PepsiCo with RKJ Group……………………………………………………..78 Strategic Divisions…………………………………………………………….80 Marketing Overview of PepsiCo India………………………………………………81 Marketing environment……………………………………………………….81 Value Delivery…………………………………………………………………83 Value Chain……………………………………………………………………85

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.112 SCA’s…………………………………………………………………………...115 Advertising……………………………………………………………116 Porters Five Forces…………………………………………………………..147 Conclusion…………………………………………………………………………….....153 Bibliography………………………………………………………………….158 Appendices……………………………………………………………………………160 4 ..113 Communicating with Customer…………………………………………….100 Factors Influencing Marketing Strategy……………………………………100 Key Success Factors……………………………………………………….4 P’s…………………………………………………………………………….....135 SWOT Analysis………………………………………………………………138 Porters Grand Strategies……………………………………………………143 BCG Matrix……………………………………………………………………145 Recommendation……………………………………………………………………..88 Strategic Marketing………………………………………………………………….

ABSTRACT Title: PARTNER RELATIONSHIP MANAGEMENT OF PEPSICO INDIA’S FOBO VARUN BEVERAGES LTD.’
This study titled as above aims at exploring the strategies followed by PepsiCo India to manage its various partners both internal as well as external since it started its operations in India. This study will also explore what changes PepsiCo India is bringing in order to increase its visibility and market presence to tackle the ever increasing hold of Coca Cola on the Indian beverage market. This study aims to explore the overall functioning and position of PepsiCo India in the marketplace. It also aims to know customer perception regarding PepsiCo India. To know about these facts this report will primarily focus on the partner relationship management of PepsiCo India’s main carrying and forwarding agency Varun beverages limited. To know the overall functioning of PepsiCo India is important in order to get an understanding of the topic. It is also important because is will explore the sales and distribution system of Pepsi India which is considered to be one of the strongest not only in the country but also worldwide. This project also covers a detailed observation and study of the VISI-PURITY campaign and the various retail initiatives specially related to the Slim Diet Cans and their acceptance in the Trans-Yamuna and Agra markets both of which are upmarket towns

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

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LITERATURE REVIEW
PepsiCo is one of the oldest, largest and most successful beverage and snack food companies in the world. PepsiCo was founded by Caleb Bradham in 1902 in USA. Today PepsiCo and its affiliates operate in more than 140 countries in the world and generate revenues in excess of $ 40 Billion. In its pursuit of never ending growth and expansion, PepsiCo entered India in 1989 in a joint venture with Punjab Government. However, PepsiCo India very soon started its beverage operations in collaboration with the R K Jaipuria group. Soon after entering the beverage segment PepsiCo Established its dominance in the market owing to its expertise in sales, marketing, operations and local collaboration. PepsiCo maintained its market dominance for many more years to come. However, this advantage slipped and PepsiCo had to concede the market leadership to Coca Cola India. Several actors were responsible for this development. But, the most important are; • • Ad campaigns targeting regional markets. Discontinuation of Slums in the distribution network by PepsiCo. This move by PepsiCo adversely affected its position of a market leader because while PepsiCo discontinued the use of Slums in its distribution network, Coke continued it and within one year, it was able to snatch considerable market share from PepsiCo. • Acquisition of well-established and favored brands like Thums Up and Limca by Coca Cola India. These two brands still constitute a bulk of sales for Coca Cola India.

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To explore the reasons behind these developments this study will analyze the marketing initiatives and policies of PepsiCo India in detail with particular focus on its partner relationship management. The data collected for research is primary and secondary. interviews and questionnaires. Observation method was carried in East-Delhi to know the market position and market share of PepsiCo products. Secondary data is used to know about the CSD industry and the Company i. The above-mentioned objectives can be achieved by carrying a proper and planned research involving different types and methods. While secondary data is collected from the internet through different case studies and reports on the CSD industry. while questionnaire method was used to know about the customer perception of the slim diet can portfolio.e. The data collected fo laid the foundations for the study and gave a platform for the analysis and findings which lead to the fulfillment of the objectives. PepsiCo. Interviews of people from the sales department were conducted to know the sales and distribution network and marketing policies of PepsiCo India. The data collection and analysis paves way for the recommendation ad conclusion of the study that reveals some important findings regarding the strategy and corporate structure and strategy of PepsiCo India. Primary data is collected by observation. 8 .

CSD INDUSTRY OVERVIEW The soda drink and bottled water industry includes more than 3. The manufacture and distribution of most national soda brands. or CSD). or selling at lower prices. Competitive Landscape: Demand for non-alcoholic beverages is driven by consumer tastes and demographics. Products.000 companies that manufacture and distribute beverages. including Coke and Pepsi. The primary manufacturer produces a flavored syrup called concentrate that is sold to local bottlers who manufacture and distribute the finished product. with average annual revenue per production worker close to $1 million. Sodas account for about 60 percent of the market. corn syrup (sugar). Large manufacturers have economies of scale in production and distribution. and a large variety of mixtures. Small companies can compete by producing new products. Most are local or regional manufacturing and bottling operations with annual revenue under $100 million. In a typical bottling operation. the flavored syrup. juices. and the finished soda product is poured into bottles or cans. Operations & Technology: Nonalcoholic beverages include sodas (carbonated soft drinks. Only a few other companies have annual revenue above $500 million. Only in the USA combined annual revenue is more than $70 billion. bottled waters. and filtered water are mixed in appropriate proportions. which are capped. carbon dioxide gas is injected. is a two-tiered process. The profitability of individual companies depends on effective marketing. 9 . following strong consolidation in the past decade. labeled. Coca-Cola and PepsiCo hold more than 50 percent of the market. catering to local tastes. and packaged.

In most cases. Fountain products are often sold separately through wholesalers. is expensive to ship and is available locally. Bottle and fountain territories may overlap and bottlers may also be fountain distributors. although bottlers may also participate. that specify the territory within which the bottler has an exclusive right to make. because the manufacturing process is simple and because water. are corn syrup and containers -. the main ingredient of sodas. aluminum cans. brokers--used by food manufacturers. About 35 percent of Coca-Cola's US product is in the form of fountain sales and 60 percent in bottled sales. over 3 billion. distributors. a rapidly growing category of beverage. For soft drink bottlers. non-soda products are bottled by the manufacturer and distributed through the same types of channels--wholesalers. Bottled waters. aside from the flavored syrup. Coca-Cola sells products through about 80 local bottlers and 500 fountain wholesalers.The two-tiered structure is most efficient for national companies with large volume. under Distributor Agreements. the major raw materials. sell. and distribute the manufacturer's brand in bottles or cans. large manufacturers sell sweetened syrups to restaurants and other retailers that produce the finished product at the point of sale by mixing the syrup with carbonated water to produce fountain products. Smaller companies combine the syrup production and bottling operations in one plant. Manufacturers and bottlers typically operate under contracts. Production and distribution volume is usually measured in cases of 192 ounces. although actual cases of 12-ounce cans now contain 288 ounces. or plastic bottles made from polyethylene terephthalate (PET). In addition to producing canned and bottled soft drinks.glass bottles. Bottlers frequently operate sizable distribution systems. Coca-Cola produces more than 4 billion cases of soft drinks per year. are either bottled at specific springs or made locally from filtered tap water. PepsiCo. including warehouses and fleets of specialized delivery trucks. 10 . The manufacturing process for most non-soda beverages is usually more complicated than the mix-carbonate-and-bottle soda process and therefore isn't usually handled by local bottlers. called Bottler Agreements.

Manufacturers typically produce a line of brands and often test and introduce new products into the market through their existing distribution channels. and usually isn't obligated to spend money for marketing or promotions in the bottler's territory. restaurants. such as food and convenience stores. mass merchandisers. Often. the manufacturer will provide marketing and promotion support. bottlers. In one year. including schools and colleges. vending machines. and that the bottlers not handle competing products. Many Coke and Pepsi bottlers hold perpetual contracts that can be terminated only for breach of contract. Coca-Cola provided about $600 million in marketing support to Coca-Cola Enterprises. Sales & Marketing: Beverage manufacturers. Large manufacturers may also sell directly to national accounts and usually advertise on national or regional TV and in print. Agreements also specify the price that the bottler must pay for concentrate. The manufacturer has no control over the prices the bottler charges customers. The industry depends on technology for developing new products in the labs and packaging product at the plants.Bottler Agreements usually require that container and packaging materials be bought from suppliers that are approved by the manufacturer. its largest bottler. 11 . and institutions. Most bottling plants are highly automated with a combination of mechanical automation and computerized robotics. for example. however. and wholesalers sell products through a variety of channels. Soda bottlers typically own local vending machines. The marketing approach to each of these channels is quite different and often includes promotional spending.

gaining high penetration in the children's and teenagers' market is of key importance to manufacturers with long-term ambitions and growth targets. Targeting Soft Drinks to Youths enables companies to: • • • • • Assess the size of the soft drinks opportunity by age group Understand children's values and motivations and their impact on the soft drinks market Develop incumbent market position through enhanced targeting and promotion Assess trends in new product development in the children's market over the course of the past 2 years Combine business to business executive opinion and local field research Analysis and Industry Challenges: In order to survive in this environment. greater profitability. enhanced flexibility and. featuring a shift toward health-oriented wellness drinks Growing friction between bottlers and manufacturers in the distribution system 12 . Market trends for the soft drink industry can be summarized by six fundamental themes: • • Changing consumer beverage preferences. companies must consider the market trends that will likely shape the industry over the next few years. With many life-long consumption habits formed during youth. This will help soft drink companies to understand the challenges they will encounter and to turn them into opportunities for process improvement. ultimately. making them a substantial and lucrative consumer base.Target Segment – Youth: The child/youth market is of crucial importance to drinks manufacturers as under-19s constitute 20-30% of the population in western countries.

the industry is now more evenly balanced between carbonates. While previously dominated by carbonated soft drinks. a shift that is reflected in their choices in the beverage aisles: • • Demand has increased for beverages that are perceived to be healthy Energy drink consumption has also climbed. Consequently. many people have started to actively manage their weight and change their lifestyles. due to the increasingly active lifestyles of teenagers This trend towards healthier drinks has created a number of new categories. energy drinks and juice: 13 . such as bottled water. This includes two-thirds of Americans and an increasing number of Europeans. and product categories with a healthier image. a significant portion of the population is overweight or obese.• • • • • Continually increasing retailer strength Fierce competition Complex distribution system composed of multiple sales channels Beverage safety concerns and more-stringent regulations Consumers turn to wellness and healthy drinks In much of the developed world. and changed the consumption trends of the beverage industry as a whole.

and by diversifying within existing ones. Similarly. For example. This growth is being partially driven by increasing awareness of the health benefits of proper hydration. Among individual countries. Overall. with an average of 58 liters consumed annually per capita. The industry has responded to consumers’ desire for healthier beverages by creating new categories. the leading carbonated soft drink companies have recently introduced products with 50% less sugar that fall mid-way between regular and diet classifications. beverage companies use bottlers to package and distribute products. a South African juice company has recently released a fruit-based drink that contains a full complement of vitamins and nutrients. Many factors are contributing to the friction between bottlers and beverage companies: • • • Beverage companies often profit from increased concentrate sales at the expense of bottlers’ margins Beverage companies have historically had higher returns and lower capital requirements Bottlers have historically had lower returns and higher capital requirements for building and maintaining production and distribution networks 14 . bottled water is catching up fast. the concept of “one face to the customer” must be maintained. This structure often causes conflicts of interest between manufacturers and bottlers. expanding at 9 percent annually. such as energy drinks. Nevertheless. bottled water represents the fastest growing soft drink segment. Despite any dissonance. Beverage companies and bottlers are conflicting: In the soft drink markets of Europe and the US. with the average Italian drinking 177 liters per year. Italy ranks number one in bottled water consumption.While carbonates are still the largest soft drink segment. the supply chain must consistently deliver value to the market in order for the segment to prosper.

Vanilla Coke. Examples include: Coke with Lemon. Increasingly. size helps them to: Spread fixed costs over greater volume Make larger investments in automated production lines Contain the costs of acquiring new customers Increase customer loyalty Declining prices have further reduced bottlers’ margins Soft drink manufacturers continue to develop new products and packaging. Sierra Mist. SoBe Mr. India’s dominant retailers are demanding better service and shorter order-to-delivery cycles from soft drink companies. Pepsi Blue. while taking pricing power out of their hands. therefore. More new soft drinks have been introduced in the last two years by the top beverage companies than were introduced in the entire decade of the 1990s. The dual need for improved supply chain agility and cost efficiency is challenging suppliers to reevaluate the ways in which they plan and manage their supply chains. This is dramatically reshaping the industry. Vishal and other discount stores leading the charge. forcing soft drink companies to become more efficient. Retailers’ power continuously increases: With Big Bazaar . they are turning to innovation 15 . and Mountain Dew Code Red. Dr.Green. the growth of private-label products is encouraging manufacturers to take a number of steps to compete more effectively. DnL. Fanta Berry. Furthermore. While manufacturers view these new products as a way to build a portfolio of options to hedge against product successes or failures. expenses for bottlers. Specifically. which increases operational complexity and. bottlers see them as a burden since they often require additional capital expenditures.• • • • • • Bottlers continue to consolidate in an attempt to offset margin pressure through cost reduction. as they constantly search for approaches that will help them achieve the rock-bottom prices and operational excellence now expected in the industry. Pepper Red Fusion.

Branded manufacturers are also looking to get closer to the consumer. retailers have a deeper knowledge of consumer behavior. They are also trying to better understand the in-store consumer experience by monitoring the execution of instore activities. many suppliers are losing brand equity. Because of their direct relationships with consumers. competition is growing due to the following factors: Constant demand for new niche products related to consumer preferences for healthier and more diversified offerings Industry consolidation.and new product introduction as a means to achieve real differentiation as well as growth. These competitive pressures have led to: • • • • SKU proliferation . with many of the larger ones piloting direct-to-consumer marketing approaches. In recent years. Nevertheless. Competition is becoming more and more difficult: In the beverage manufacturing industry. a couple of factors have been fueling the growing competition between manufacturers and retailers: Retailers are using their power to set higher standards for marketing and operational excellence. which has significantly raised the bar for the “scale needed to compete” The growth of private-label products. including escalating demands for improved service quality and shorter orderto-delivery cycles from manufacturers and distributors.number of SKUs in a typical beverage company has doubled from 1991 to 2001 A plethora of new product failures: Only 20% are effective Only 10% generate significant revenue 16 .

high growth companies Mid-market players are vertically integrating Declining soft drink prices: Profitability can only be improved through greater efficiency in the supply chain or through more-effective trade promotions. • • • • • • Sales channels are very complex The macro environment in which soft drink manufacturers operate has several unique characteristics: Market to consumers/sell to retailers through wholesalers Must have the ability to communicate directly with retailers Multiple distribution channels Seasonal demands 17 . which usually require considerable expenditures.• • • • • • Most fail within the first two years Further consolidation and rationalization to capture cost savings by improving operations and eliminating redundancy: Industry leaders are acquiring small.

soft drink companies have several types of customers with diverse characteristics: 18 . Therefore.CHANNELS OF BEVERAGE INDUSTRY The beverage industry is a multi-channel industry.

including: • • • • • Tracking product in various package sizes Special labeling requirements for customers International/domestic packaging Tracing / recall capabilities. taking into account differing points of sale and diverse customer needs. Statutory regulation is increasing. each beverage manufacturer must provide customers with an extensive set of packaging options. products and services coherently within the various channels. etc. Due to the complexity of the marketplace. presence of competitor’s beverages. the entire logistical chain must be able to sustain brands. Additionally. assortment. 19 .Modern Trade/Large Chain Retailers Greater power in negotiating purchases of concentrations and merges Direct access to the consumer and a tendency to protect this relationship from manufacturer intrusion Request contributions and discounts from brand companies Small Individual Retailers Huge number of small point sales Sometimes buy products directly through cash and carry or modern trade Indirect Channel (wholesalers) Medium-sized organizations as a consequence of aggregation through consortia and merging Playing a fundamental role in beverage distribution Possess critical information regarding individual points of sale in terms of volume.

With DSD. a significant move back to direct store delivery (DSD). safety failures make big news in the global press. Industry Process Improvement Opportunities Improve customer relationships with Direct Store Delivery: Branded beverage manufacturers are attempting to get closer to the consumer. Amid this growing concern. when looking for ways to drive innovation. with many larger manufacturers piloting direct-to-consumer marketing approaches. in some markets. Manufacturers can use DSD to: • • • • • • Make beverage goods available to stores and customers quickly Optimize process settlement in sales and distribution through complete coverage of the supply chain Improve customer retention and build customer relationships through personal service Realize additional sales opportunities Obtain first-hand information about the market Better position brands against competitors 20 . regulators are cracking down on sanitation and a variety of other food-safety requirements. Direct Store Delivery is a business process used in the beverage industry to sell and distribute goods directly to the customer’s point-of-sale. accelerate growth and increase margins. restaurants and pubs and other outlets where consumers can obtain the product. as well as its own strengths and market position.Governments around the world are concerned about food safety and quality. These include active monitoring of in-store activity and. Each soft drink company must take these industry challenges into consideration. Periodically. the soft drink company gets in direct contact with retailers.

displays. reporting on in-store merchandising activities. the process should involve more than just bringing goods to the point of sale. wholesalers.). prices.• Ensure product quality up to the point of sale Best in class DSD companies couple the process of direct delivery with a cultural change in how they view their employees and how their delivery personnel operate: They are not just drivers but they have sales skills. The mix of products on the truck is dependent on what is most likely to be sold on a certain trip. May also include some preventive maintenance. Support provided by handheld devices enables drivers to skip back-end paperwork and to close the process through printed invoices. Direct Store Delivery is characterized by variable orders and deliveries. carrying out competitive intelligence (competitive products. commercial priorities. communication skills and a global view of the company’s offerings. picking up empties. and more. Enhance relationship with indirect partners . conflicts of interest frequently arise between beverage manufacturers and beverage distributors: 21 . product mixes. Consequently.Indirect sales are the process of selling to an end customer through a third party and tracking that sale as such. etc. collecting money. such as: Merchandising activities . These activities include tracking merchandising of other entities (suppliers. Due to the complexity of the beverage supply chain. Best in class DSD operations typically include many value added activities. It should eventually encompass taking additional orders.Allows a company to sell goods “off the truck” without any preceding order. and monitoring store/account execution. Additional sales opportunities .). etc.Enables the company to leverage frequent delivery visits to the point of sale. and initiatives.

• • • Soft drink manufacturers profit from increased sales at the expense of distributors’ margins Soft drink distributors profit from positive local pricing environments. reduce volume sales Soft drink distributors continue to consolidate in an attempt to offset margin pressure through cost reduction Despite these conflicting interests. For the distributor. The indirect relationship is a partnership that must be nurtured by both the supplier and the distributor.” These companies jointly market and sell the product in the marketplace. The stakes are high for everyone. But how can strategic information flow freely between partners? Although 22 . and close co-operation yields benefits for both parties. a poor relationship with a distributor may cause it to give a competitor “greater share of mind” in the local marketplace. if exploited. For the manufacturer. A strong manufacturer/distributor relationship is also important because consumers are becoming more difficult to capture and classify. It is not only about sales. which. it is also about information. it is crucial that beverage manufacturers and beverage distributors maintain “one face to the customer. a negative relationship with a supplier means constant threats of contract termination and reduced marketing dollars spent in the local market.

In some cases.sharing is implied in the word partnership. the critical path to a company’s success is the effectiveness of its sales force. customers) Technology Data interpretation Marketing and sales actions. A beverage manufacturer’s sales force typically comprises 17%-25% of the company’s cost basis. Consequently. These distributors have been at the forefront of facilitating partnership initiatives. No matter how efficiently the company runs its manufacturing processes.to medium-sized companies that only dedicate a few people full-time to operational activities. Increase sales force effectiveness through incentives management In the beverage industry. or how well it markets its products. distributors are small. they are rarely open to implementing a truly “collaborative” environment. have significantly modified many operating and ownership structures. Recently. the reality is that companies are still uncomfortable about exchanging strategic information. Beverage distributors have an even higher percentage of their tot al costs 23 . a beverage company cannot succeed without an effective sales force that ensures product placement on the store shelves. however. and acquisitions of distributing companies by manufacturers. The importance of the distributor’s role in the indirect channel for beverage distribution suggests that it would be beneficial to establish a common understanding between distributors and manufacturers regarding: • • • • Coding (products. it is critical for companies to share information regarding sales volume and market intelligence on both the microscopic and macroscopic levels. Nevertheless. channels. mergers between distributing companies. a few well-structured and managed distributors have emerged that possess a better understanding of the value of collaboration. As a result of this structure.

how can beverage companies get the most out of their investments and ensure that their sales forces are operating optimally? Properly managed commission programs allow beverage companies to effectively motivate their sales forces to increase or maintain volume by brand or package. best-in-class companies take a more holistic view of commission metrics. In each individual plant or warehouse. Food safety legislation. A commission could be a rebate. 24 . In order to actively manage sales behavior. each resource requires a different level of control/analysis. While commissions are usually paid based on sales volume. it should be paid when the internal or external sales representative meets a pre-established benchmark for a tracked metric. requiring a batch control system that is able to track and document all related characteristics. Some other important measures include: • • • • • Account revenue growth Profit results Number of new accounts Customer service metrics Account retention. Manage safety requirements through tracking and traceability As recent history has shown. or other payment to a third party or in-house employee.allocated to their sales forces. Inventory items need to be tracked. The commission could take the form of either a cash payment or an item. such as EU Directive 178. and controlled in different ways and at very detailed levels. discount. impacts the whole process flow. Yet. Traceability is a goal that must be achieved over the entire value chain. the ability to track inventory accurately – and to perform a timely and cost-effective product recall – is critical in the beverage industry. monitored.

25 . In other words. which is often a selling point that differentiates one brand from another and that can command a price premium with the consumer. track and trace improvements help companies to maintain high quality standards. These improvements reduce the company’s exposure to litigation and regulatory fines. In the final analysis.At the batch level. it is now possible to assign different product attributes when searching for the product including: • • Manufacturing Expiration Dates Shelf Life Dates Classifying production lots into batches allows companies to identify specific inventory and automatically record its history. Recording and tracking that quality is critical. soft drink companies must strive for the highest quality standards they can achieve – ones that are superior to those of their competitors. it allows full recall of the materials that have been involved in the overall manufacturing process. In addition. including the history of the raw materials (and their associated batch numbers) used in its production.

the beverage supply chain is under significant pressure. a complex distribution channel. customers. their loyalty to that brand suffers. 26 . This confluence of factors is forcing manufacturers to become more efficient. • Flexible ordering. companies should consider taking the following steps to improve their supply chains: • Ensure product availability on-shelf – On-shelf availability is becoming a critical issue for both manufacturers and retailers. Moreover. builds brand and store loyalty. The traditional practice of filling out-of-stocks with other products is no longer sufficient – particularly from the manufacturer’s point of view. flexible delivering – Most retailers are demanding increased flexibility in order lead-times and delivery methods. while taking into account different channels. which require flow-through distribution and cross-docking. If consumers cannot find the brand they want. the world’s dominant grocery retailers (with Wal-Mart paving the way) continue to demand increasingly better service quality and shorter order to delivery cycles from manufacturers. increases sales and – most importantly – boosts category profitability. changing consumer preferences. products and services cohesively. putting additional pressures on the supply chains of manufacturers and distributors. companies need to streamline product movement through programs such as store-specific shipments. They must also meet the strategies of progressive retailers. points of sale and customer needs. The logistic chain must be able to sustain brands. while taking pricing power out of their hands. and conflicting relationships between soft drink manufacturers and distributors. Accordingly. To withstand these pressures. Less conservative estimates put this figure as high as $20 billion. The need for both improved supply chain agility and cost-efficiency is challenging suppliers to re-assess how they plan and manage their supply chains. A 2002 GMA study found that out-of-stocks jeopardize $6 billion in retail sales every year. A system that avoids out-ofstocks improves consumer value.Optimize the extended supply chain In a business environment characterized by strong competition.

• Accurately forecast demand – Properly forecasted demand drives two of the primary metrics used to measure the efficiency of a beverage company’s supply chain: customer service and inventory. According to the 2003 GMA Logistics Study. Accurate forecasts are essential to achieving improved customer service and lower inventory levels. although their plants run on weekly plans. However. bottles and crates(an essential part of direct store delivery). differences in store formats and sizes hamper the forecasting process. This figure jumps to almost one out of every two at the regional (distribution-center) level. at the store level. Meanwhile. CO2 tanks. more than one-third of all forecasts are inaccurate at the national level. That means they have to squeeze weekly totals out of monthly boxes. new products must be developed tactically. and the product’s potential must be understood and analyzed before 27 . A successful empties management system gives the manufacturer a detailed picture of the entire empties lifecycle. Furthermore. forecasting inaccuracy remains a significant industry problem. • Implement a fully integrated empties management process – Empties management is the process of managing returnable containers. and few have the tools to accurately manage the sheer volume of data generated by forecasting. Even with recent success in developing and maintaining efficient supply chain processes. New products need to be brought to market quickly in order to capitalize on changing consumer preferences and competitive threats. Many manufacturers are still forecasting sales in months. including kegs. including the location and status of a company’s assets. many manufacturers do not have the technology to properly support their planning and forecasting efforts. • Reduce time-to-market for new products An efficient new product development system is essential in the beverage industry. This process: • Lowers costs by controlling high-value empties assets • Increases control by managing empties at customer locations • Decreases manufacturing issues by tracking empties.

they must make a favorable impact at the point of sale through promotional activity. consolidation and reuse of knowledge from all involved parties (including beverage manufacturers and bottlers). marketing. and financials.) with the new product introductions. In addition.g. To ensure new product success. beverage manufacturers use packaging innovation to increase product shelf life. Increase customer retention through effective trade promotions: In an environment characterized by strong retailers and discriminating consumers. sales promotions. and it can involve changes to the product itself or to the product’s packaging: • • Product innovation – Focuses on providing new tastes and flavors to demanding consumers.40% and. beverage companies can reduce lead-time from concept to shelf by 25 . at the same time. beverage companies must oversee the integration. Currently. success rates for new products are astonishingly low – dropping from 75% to 25% in the last decade according to AMR – and most fail within the first two years after introduction. Innovation is one of the primary growth drivers for beverage companies. 28 . beverage companies must utilize processes and tools to protect their market shares. etc. Often. By emphasizing greater collaboration and implementing Web-based workflow. The companies that are best able to execute the whole product development cycle will clearly have an advantage. To do this. and down to sales. from R & D through production. better integrate safety controls into the development process.it hits the market. great attention must be paid to aligning the related marketing initiatives (e. advertising. Packaging innovation -– Emphasizes developing differentiated packaging according to the consumption situation. This requires reducing time-to-market as well as making effective use of scarce internal resources and improving collaboration with partners.

in the case of coupons. while others require significant investment and involve pre-scheduling in co-operation with national chains. Therefore. the competition for shelf space has never been higher. they have also become more targeted. If a beverage company fails to execute a trade promotion at Wal-Mart. A properly executed coupon program enables beverage companies to pass savings directly to the end consumer. Coupon and rebate management are critical to enhancing relationships between the beverage manufacturer and wholesalers. Rebates are often part of special trade promotions. which make the sales process more costly and complex. contractual terms and conditions between the manufacturer and the retailer must be monitored and executed. channels. Two of the most commonly used trade promotions in the beverage industry are coupons and rebates. as trade promotions have proliferated over the past few years. can be applied immediately or reserved for the next purchase. Coupon programs. approach. customers and. which are in essence trade promotions addressed to the final consumer. a competitor will. and retailers.Trade promotions have become a necessary and expensive cost of doing business. With a sizable percentage of volume being driven through a smaller base of retailers. On the other hand. and structure. a certificate with a stated value. Many local promotions are run ad-hoc with marginal capital investments by field sales associates. are mainly executed via discounts at large retailers. In response. beverage companies must create promotions for specific demographics. rebate programs are trade promotions addressed to the retailer. and management of the rebates typically follows one of the following flows: 29 . Furthermore. The coupon. Trade promotions vary widely in terms of method. consumers.

Figure .Rebate management in direct sales Figure.Rebate management in Indirect Sales 30 .

Improve margins by optimizing the telesales channel For a large number of companies in the beverage industry. sell new business. and expand and retain the current customer base. When correctly executed. such as DSD and field assets management. This is accomplished by integrating the phone sales function with the company’s other operations. it helps build client relationships. This effectively “closes the loop. Some of the key benefits that a company can gain through telesales include: Revenue Enhancement • • • • • • Improved sales effectiveness by consolidating the customer relationship Better up-selling Improved cross-selling Increased customer retention Expanded customer base Enhanced competitiveness via services that match or surpass those of competitors Margin Improvement • Reduced costs for order processing 31 . telephone sales is the primary method of order taking and customer interaction. Well-implemented telesales functionality also enables business processes to be integrated and standardized. inbound and outbound telesales functionality enables companies to manage effectively and efficiently all contacts related to sales and customer services. An effective telesales process can increase revenues and complement other sales processes.” creating a consistent experience for customers within a multi-channel environment. In addition.

how can soft drink companies drive profitable growth and create value for their owners or shareholders? In practical terms. and better management of customer relationships • Cost reduction/margin improvement – for example. improved product availability. planning calls. through demonstrating quality by participating in retailer assurance schemes and assisting trade customers in achieving full compliance with new traceability legislatiON 32 . and prioritizing sales opportunities and activities. lower labor costs.• • • • Accelerated sales process Lower sales costs in comparison to field sales Increased flexibility and speed to market Differentiated service levels according to customer relevance and need. Implementing closed-loop processes between the telesales operations and other departments can provide agents with a comprehensive view of all customer interactions across the enterprise – in real time. In order to optimize the telesales channel. agents must have tools to manage the entire sales process. to managing contacts and placing orders quickly. through reduced inventory levels of soft drinks held in cold storage and faster turnaround of re-usable transit packaging in the supply chain • Regulatory/assurance – for example. differentiated quality. there are four areas on which companies in the soft drink business need to focus: • Revenue protection and enhancement – for example. reduced waste and the capture of operational synergies from acquisitions • Improved asset utilization – for example. Business performance improvement priorities – the path to value Against the backdrop of these market challenges. through improved operational efficiency. from generating leads. as driven by product and packaging innovation.

the company begins selling its 12-ounce drink for five cents (the same cost as six ounces of competitive colas). 33 . 1902-. is renamed "Pepsi-Cola" on August 28. North Carolina. Washington D. known as "Brad's Drink. Caleb Bradham. rare oils and cola nuts. The drink is a hit and to attract even more sales. Patent Office.S.PEPSICO INTERNATIONAL HISTORY OF PEPSICO 1893--Caleb Bradham.C. 1934--A landmark year for Pepsi-Cola. vanilla. 1867-February 19th. and forms the first Pepsi-Cola Company. 1898. a young pharmacist from New Bern. its first change since 1898. 1905--Pepsi-Cola's first bottling franchises are established in Charlotte and Durham. Pepsi-Cola receives its frist logo. 1898--One of Caleb's formulations." dies at 66 (May 27th. the founder of Pepsi-Cola and "Brad's Drink. begins experimenting with many different soft drink concoctions. Pepsi receives its new logo..Bradham applies for a trademark with the U. North Carolina." a combination of carbonated water. 1934). sugar. patrons and friends sample them at his drugstore soda fountain.

1941--The New York Stock Exchange trades Pepsi's stock for the first time. when the 12-ounce bottle gives way to the 16-ounce size. Inc. Military 12-ounce cans are such a success that full-scale commercial distribution begins. recyclable. and Pepsi-Cola merge. Pepsi is also the first company to respond to consumer preference with light-weigh. Pepsi's bottle crown colors change to red. 1965--Expansion outside the soft drink industry begins. Twelve-ounce Pepsi cans are first introduced to the military to transport soft drinks all over the world.Pepsi-Cola continues to lead the soft drink industry in packaging innovations. 1984--Pepsi advertising takes a dramatic turn as Pepsi becomes "the choice of a New Generation. Texas. Frito-Lay of Dallas." 34 . white." 1963-. forming PepsiCo. In support of the war effort. 1960--Young adults become the target consumers and Pepsi's advertising keeps pace with "Now it's Pepsi. and blue. plastic bottles. for those who think young. 1970--Pepsi introduces the industry's first two-liter bottles.

creating the PepsiCo Foods and Beverages Company.1985--After responding to years of decline. 1998-.PepsiCo. Inc.Pepsi introduces the first beverage bottles containing recycled polyethylene terephthalate (or PET) into the marketplace. 1994-. However. the new formula is met with widespread consumer rejection. forcing the re-introduction of the original formulation as "Coca-Cola Classic. 1991-.Pepsi-Cola and Lipton Tea Partnership is formed. & KFC. announces that it will spin off its restaurant division to form Tricon Global Restaurants. Coke loses to Pepsi in preference tests by reformulating.Pepsi celebrates its 100th anniversary. 35 . Including Pizza Hut." when a Pepsi "space can" is successfully tested aboard the space shuttle. The development marks the first time recycled plastic is used in direct contact with food in packaging. Taco Bell. it will be the largest restaurant company in the world in units and second-largest in sales. Pepsi will destribute single serve Lipton Original and Lipton Brisk products. 1997-." The cola war takes "one giant sip for mankind.Pepsi Foods International and Pepsi-Cola International merge. 1992-.

PEPSICO – THE PARENT COMPANY PepsiCo. with 15 brands – each generating more than $1 billion in annual retail sales. Pepsi-Cola North America. which offers a wide range of drinks with herbal ingredients.Y. Tropicana was acquired in 1998. N. Dole single-serve juices and SoBe. Pepsi-Cola North America's non-carbonated beverage portfolio includes Aquafina. PepsiCo’s success is the result of superior products. is the refreshment beverage unit of PepsiCo Beverages and Foods North America. Pepsi-Cola North America's carbonated soft drinks. PepsiCo merged with the Quaker Oats Company. headquartered in Purchase. a division of PepsiCo. The company also 36 . high standards of performance. was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. PepsiCo Beverages and Foods North America also comprises PepsiCo's Tropicana. In 2001. Inc. distinctive competitive strategies and the high level of integrity of our people. Pepsi Twist. Mountain Dew. Sierra Mist. Mountain Dew Code Red. Inc. is one of the world's largest food and beverage companies. creating the world’s fifth-largest food and beverage company. Gatorade and Quaker Foods businesses in the United States and Canada.. The company's principal businesses include: • • • • • Frito-Lay snacks Pepsi-Cola beverages Gatorade sports drinks Tropicana juices Quaker Foods PepsiCo. including: Pepsi. and Mug Root Beer account for nearly one-third of total soft drink sales in the United States. Diet Pepsi. Inc. which is the number one brand of bottled water in the United States.

and a third for food and drinks abroad. Fritos) and potato chips (Lay's.makes and markets North America's best-selling. PepsiCo may be vying for more Pepsi-drinking people but its hefty snacks and juice sales help to quench the company's thirst for bottom-line growth. and Africa. 37 . Asia. Ruffles). the rest of Europe. PepsiCo also sells Dole juices (licensed) and Lipton ready-to-drink tea (licensed from Unilever). and PepsiCo International includes business in the UK. PepsiCo Americas Beverages includes North American beverage sales. The company announced a major restructuring in 2007. and Slice. PepsiCo is approaching a size that can be better managed as three units rather than two. Gatorade sports drink. OVERVIEW – PEPSICO The PepsiCo challenge (to keep up with archrival The Coca-Cola Company) never ends for the world's #2 carbonated soft-drink maker. and side dishes (Near East). the Middle East. Its Quaker Foods division offers breakfast cereals (Life). respectively. CEO Indra Nooyi said that due to the company's healthy growth in recent years. and Aquafina water. the snack division accounts for about one-third of company sales. rice (Rice-A-Roni). including Gatorade and Tropicana. The company's soft drinks include Pepsi. a second for US drinks. The split looks like this: PepsiCo Americas Foods includes Frito-Lay North America. Mountain Dew. Wal-Mart is PepsiCo's largest customer. Cola is not the company's only beverage: PepsiCo sells Tropicana orange juice brands. accounts for 9% of sales. and the Latin American food and snack businesses. ready-to-drink iced teas and coffees via joint ventures with Lipton and Starbucks. It owns Frito-Lay. splitting its two business units (Pepsi-Cola North America and PepsiCo International) into three: one for US food. Quaker. Frito-Lay's salty snacks rule the US market. the world's #1 maker of snacks such as corn chips (Doritos. pasta (Pasta Roni).

a smoothie drink. the 11th female CEO of a FORTUNE 500 company. and the American Beverage Association agreed to sell only water. has been instrumental in strategic decisions at the company.With a saturated soft-drink market. Cadbury Schweppes. as well as a deal with Starbucks for the distribution of the coffee purveyor's Ethos water brand. such as the acquisition of Tropicana and merger with Quaker Oats. the company continues to try new iterations: In 2007 the company introduced its first vitamin-enhanced water. As for high schools. Hot on the heels of Coke's introduction of Blak. Bowing to the public's growing concern about childhood obesity. along with Coca-Cola. Venturing further into the non-cola category. called Aquafina Alive. Shortly after her appointment. the agreement calls for no sugary sodas to be sold and one-half of the offered drinks to be water. Indianborn Nooyi. in the UK. reporting directly to her. 38 . PepsiCo acquired sparkling juice companies IZZE and Naked Juice in 2006. His replacement was Indra Nooyi. and low-fat milk to public elementary and middle schools in the US. It also began selling Fuelosophy. Pepsi Max Cino. The agreement was facilitated by former president Bill Clinton. lemonade. and struck a deal to develop products with juice maker Ocean Spray Cranberries. or iced tea. She appointed John Compton. It signed a licensing agreement with Ben & Jerry's in 2006 for the sale of Ben & Jerry's milkshakes in the US. Nooyi restructured the top level of power at the company. named. diet sodas. in 2006 Pepsi. unsweetened juice. CEO Steve Reinemund stepped down as CEO in 2006 in order to spend more time with his family. at organic grocery store chain Whole Foods. the company's president and CFO. in 2006 Pepsi launched a coffee-flavored cola. to the newly created position of CEO for PepsiCo North America. previously head of the Quaker-Tropicana-Gatorade unit.

HOW PEPSICO OVERCAME COMPETITION
How PepsiCo outgunned Coke:
Losing the cola wars was the best thing that ever happened to Pepsi while Coke was celebrating, PEPSI took over a much larger market. Pepsi beat Coke in December for the first time in their 108-year rivalry, surpassing its nemesis in market capitalization. The great irony of Pepsi's rise is this: It has never sold more soda than Coke, even today. "Pepsi's been on fire," notes Robert van Brugge, beverage analyst with Sanford 55Bernstein. Over the past five years its stock has risen more than a third, while Coke's has sunk 30 percent. Even ten years ago, it was easy to write off PepsiCo (Research) as the loser in the cola wars against Coke (Research): the proof was everywhere. The company's profits trailed those of its rival in Atlanta by 47 percent. Its value in the stock market was less than half of Coca-Cola's. Coke's CEO at the time, Roberto Goizueta, was so sure of his company's dominance that he practically dismissed Pepsi, telling FORTUNE, "As they've become less relevant, I don't need to look at them very much anymore." PepsiCo turned its cola Waterloo into an opportunity to retrench, regroup, and ultimately outflank its old foe. Losing the cola wars, it turns out, was the best thing that ever happened to Pepsi. It prompted Pepsi's leaders to look outside the confines of their battle with Coke. A decade ago, Coke offered investors a compelling story: a recession-resistant product inexpensive enough that consumers would buy it in good times and bad, but valued enough that they would willingly pay an extra nickel or so above what no-name brands charged.

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What Coke investors didn't envision was that an emerging preference for other soft beverages --water, sports drinks -- would fracture demand. Nor did they see that the business strengths that once applied to cola would take hold across a broadened soft drink and snack-food market -- a market that Pepsi, and not Coke, dominated. "They were the first to recognize that the consumer was moving to noncarbonated products, and they innovated aggressively," observes Gary Hemphill of Beverage Marketing. PepsiCo embraced bottled water and sports drinks much earlier than its rival. Pepsi's Aquafina is the No. 1 water brand, with Coke's Dasani trailing; in sports drinks, Pepsi's Gatorade owns 80 percent of the market while Coke's Powerade has 15 percent. Throughout the past five years under CEO Steve Reinemund, the company has deftly moved with every shift in consumer tastes. "He's thinking about what the products should look like in the future," says Victor Dzau, a director of PepsiCo.

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Sustainable competitive advantage
Three major sustainable competitive advantages give PepsiCo a competitive edge as it operates in the global marketplace: • • • • • • • Big muscular brands; Proven ability to innovate and create differentiated products; and Powerful go to market systems. Cost and Quality. Timing and know how. Strongholds. Deep pockets.

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Dropped price of its 10c. Pepsi: 1893.Strategic Competitive Advantage Exploitation Profits from a sustained competitive advantage Launch Counterattack Traditional View Time Firm has already moved to advantage 2 Profits from a series of actions Exploitation Counterattack Hypercompetition Time Launch Coke: 1886. making it a better value. Price / Ounce Coke Pepsi Coke Price / Ounce 42 Pepsi Perceived Quality Perceived Quality . 1933: Pepsi struggling to stave off bankruptcy. Ad jingle “twice as much for a nickel” better known in the US than the Star Spangled Banner. bottle to 5c. 12 oz.

Deeper pocketed and lower cost Coke initiated a price war in selective markets where Pepsi was weak in the 70s. Pepsi responded with its discounts and by the end of the 80s.Pepsi keeps price advantage through 60s and 70s. 43 . with Pepsi targeting the youth.” To break price spiral. So. it raised price to Coke’s level giving it a war chest to fuel an aggressive ad campaign. But this move from Coke was rejected by the market. when Pepsi charged its bottlers 20% less for its concentrate. What followed was the Pepsi Challenge & “Real Thing” Coke ads Price / Ounce Pepsi Youth & Middle Class Segments Perceived Quality Price / Ounce Coke First move: Pepsi Challenge 2nd move: Coke’s Ad war Perceived Quality Perceived quality caught up. Coke launched New Coke to keep Coke loyals and induce switching among Pepsi buyers. Battle shifted from Price to Quality. But the two major players forced price down to “ultimate value. With rising ingredient costs. 50% of food store sales were on discount Other companies moved into the lower left quadrant of the market. Pepsi could no longer offer twice as much for the same price.

Price / Ounce Price / Ounce Generics RC Cola Coke & Pepsi Price Spiral NewCoke Classic Coke & Pepsi Actual NewCoke Intended Perceived Quality Perceived Quality 44 .Attempts to move to next arena via niches in caffeine and sugar substitutes were adopted.

Gatorade plus local brands Lehar Evervess Soda. 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. The group has built an expansive beverage. PepsiCo stays committed to providing its consumers with top quality beverages. Diet Pepsi. commodities and Pepsi system sales.PEPSICO INDIA Introduction: PepsiCo entered India in 1989 and in the span of a little more than a decade it became the country's largest selling soft drinks company. Aquafina packaged drinking water. Tropicana brand 100% fruit juices in various flavours. Dukes Lemonade and Mangola. Slice fruit drink. PepsiCo has leveraged its knowledge in contract farming to develop seaweed cultivation 45 . snack food and exports business and to support the operations are the group's 43 bottling plants in India. 7Up. and Quaker Oats. of which 15 are company owned and 28 are franchisee owned. It manufactures Lay's Potato Chips. PepsiCo has made significant investments with the Punjab Agriculture University to develop a comprehensive agro-technology program that has helped thousands of farmers across India improve the yield of their farms and the quality of their agricultural products. PepsiCo is one of the largest MNC exporters in India and its export business consist of three categories . Mountain Dew. Mirinda.Pepsi. Uncle Chips. traditional namkeen snacks under the Kurkure and Lehar brands. Cheetos extruded snacks.agri business. The Company has invested heavily in India making it one of the largest multinational investors. Its diverse portfolio of brands include the flagship cola brand .

PepsiCo has also established zero waste centers and PET recycling supply chains and assisted victims of natural disasters. 46 . As part of its sustainable development initiatives. PepsiCo stays dedicated in its endeavor to develop community outreach programs by supporting rural water supply schemes. PepsiCo India has been a committed leader in the promotion of rain water harvesting. water conservation recycling and the reduction of effluent discharge.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. providing computers to rural schools and creating opportunities for women in rural areas through vocational training as an alternate means of livelihood. administering medical camps in villages.

Tropicana100% fruit juices. One of the largest multinational investors in the country. 47 . Dukes Lemonade and Mangola add to the diverse range of brands.S. and juice based drinks – Tropicana Nectars." PepsiCo in India PepsiCo entered India in 1989 and has grown to become one of the country’s leading food and beverage companies. hydrating and nutritional beverages such as Aquafina drinking water. PepsiCo India and its partners have invested more than U. PepsiCo has established a business which aims to serve the long term dynamic needs of consumers in India. in addition to low calorie options such as Diet Pepsi. we strive for honesty. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees. our business partners and the communities in which we operate. is the leader in the branded salty snack market and all Frito Lay products are free of trans-fat and MSG. fairness and integrity.$700 million since the company was established in the country. that deliver joy as well as nutrition and always. good taste. PepsiCo’s foods company. Local brands – Lehar Evervess Soda. Mirinda and Mountain Dew. Tropicana Twister and Slice. And in everything we do. Frito-Lay. PepsiCo nourishes consumers with a range of products from treats to healthy eats.OVERVIEW OF PEPSICO INDIA: PepsiCo Mission "To be the world's premier consumer products company focused on convenience foods and beverages. 7 UP.000 people and indirect employment to 60.Gatorade. It manufactures Lay’s Potato Chips. isotonic sports drinks . PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi.000 people including suppliers and distributors. PepsiCo provides direct employment to 4.

PepsiCo’s commitment to living by this vision every day is visible in its contribution to the country. PepsiCo’s Frito Lay foods division has 3 state-ofthe-art plants. Frito Lay’s core products. and low fat and roasted snack options enhance the healthful choices available to consumers. The company’s high fibre breakfast cereal. 48 . In addition to this. PepsiCo India will build on the incredibly strong foundation of achievement and scale up its initiatives while focusing on the following 4 critical areas that have a business link and where we believe that we can have the most impact. Quaker Oats. Performance With Purpose Performance with Purpose articulates PepsiCo India's belief that its businesses are intrinsically connected to the communities and world that surrounds it. Uncle Chipps and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary nutritional labeling on their packets. To support its operations. Performance with Purpose means delivering superior financial performance at the same time as we improve the world. consumers and farmers. The group has built an expansive beverage and foods business. Uncle Chipps and traditional snacks under the Kurkure and Lehar brands. PepsiCo’s business is based on its sustainability vision of making tomorrow better than today. of which 15 are company owned and 28 are franchisee owned. To deliver on this commitment. Lay’s. PepsiCo has 43 bottling plants in India.Cheetos extruded snacks. Kurkure.

K. Jaipuria. It has exclusive franchise rights for Northern & Eastern India. Pepsi Foods Limited. USA. Food Chain and Education. and delight all stakeholders by making economic value additions in all corporate functions. R. in the presence 49 . The award was presented by Mr. The business of the company was started in 1991 with a tie-up with Pepsi Foods Limited to manufacture and market Pepsi brand of beverages in geographically pre-defined territories in which brand and technical support was provided by the Principals viz. Donald M. founder of PepsiCo Inc. K.. It can be said with absolute certainty that the RKJ Group has carved out a special niche for itself. Jaipuria for the year 1998 at a glittering award ceremony at PepsiCo’s centennial year celebrations at Hawaii. Varun Beverages Ltd. Headed by Mr. is the flagship company of the group. food and beverages. Our services touch different aspects of commercial and civilian domains like those of Bottling. Mission Continuously excel to achieve and maintain leadership position in the chosen businesses. Kendall.The group also became the first franchisee for Yum Restaurants International [formerly PepsiCo Restaurants (India) Private Limited] in India. the group as on today can lay claim to expertise and leadership in the fields of education. It has total 46 Pizza Hut Restaurants & 1 KFC Restaurant under its company.PEPSICO INDIA WITH RKJ GROUP: Vision Being the best in everything we touch and handle. R. The manufacturing facilities were restricted at Agra Plant only. The group added another feather to its cap when the prestigious PepsiCo “International Bottler of the Year” award was presented to Mr.

Strategic Divisions: PepsiCo India consists of different divisions that include Beverage division. PepsiCo Inc. Enrico. These divisions work as separate SBU’s and have their separate management. Mr. The heads of these divisions report directly to the CEO. Ltd. Roger A. George Bush. Chairman of the Board & C. The heads of these divisions are in charge of their respective areas and are accountable for the proper functioning of all the regions.of Mr. Snack food division and the Restaurant division (Yum Restaurants India Pvt.. President of Pepsi Cola Company. the 41st President of USA. 50 . Craig Weatherup. The FOBO’s also report to the regional heads apart from the COBO’s. PepsiCo India divided its beverage division into different operating divisions.E. and Mr.O.).

The main players are the company.e. banking and insurance companies. But. The dealers and distributors include agents. These include the Pet bottles and the Glass bottles. Suppliers include the material and service suppliers such as marketing research agencies. and telecommunications companies. This consists of the Task Environment and the Broad Environment.CSD category. manufacturer representatives and others who facilitate finding and selling to customers. Task Environment Task Environment includes the immediate players involved in producing. The distributors and dealers are part of the sales and distribution network. because of increasing competition from Coke PepsiCo has expanded its target customer base which now includes people who are prospects for beverages beyond the CSD category. PepsiCo has started targeting this segment by offering products in the Non.MARKETING OVERVIEW OF PEPSICO INDIA Marketing Environment: Marketing environment is the overall environment in which a Company operates. instead they are supplied by different vendors who get time bound contracts from the company. dealers and the target customers. One of the most vital products required in the operation is Refrigerator. energy drinks. distributors. transportation companies. advertising agencies. suppliers. sports drinks. PepsiCo does not manufacture the refrigerators. in the 4 P’s segment. The target customer for PepsiCo is primarily the youth. snack food (from the snack food division i. distributing and promoting the offering. 51 . these include fruit based non-carbonated drinks. brokers. juice based drinks. The suppliers for PepsiCo India include the bottle suppliers for the soft drinks. This will be explained later under the section of ‘Place’. ‘Frito Lay’).

physical environment. Targeting and Positioning and is the essence of strategic marketing. Once the business unit has chosen the value. the second phase is providing the value. and other communication tools to announce and promote the product. and socio – cultural environment. 52 . This will be explained in detail in the strategic marketing segment. This is done in three phases. technological environment. Marketing is required to segment the market. select the appropriate the target market. The task in the third phase is communicating the value by utilizing the sales force. political – legal environment. choosing the value. advertising. prices and distribution. This is known as Segmentation. Each of these value phases has different cost implications. economic environment. The first phase.Broad Environment: This contains forces that can have a major impact on the players in the task environment. Companies need to pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies in order survive and succeed in the market. and develop the offering’s value proposition. Value Delivery Process: The value delivery process consists of the value creation and delivery sequence. Marketers need to determine specific product features. This includes six components: demographic environment. represents the homework done by the marketing department before the product exists. sales promotion.

Choose the Value (Strategic Marketing) Customer Segmentation Market Selection / Focus Value Positioning Provide the Value (Tactical Marketing) Distributi on / Servicing Sourcing / Making Pricing Service Develop ment Product Develop ment Communicate the Value (Tactical Marketing) Sales Force Sales Promotion Advertising Fig. 2 – Value Creation and Delivery Sequence 53 .

they are water and the concentrated salt that is used to produce the final product. In order to be more precise only the primary activities in the value chain of PepsiCo India are analyzed. For the carbonated drinks industry only two raw materials are required.Generic Value Chain: Firm Infrastructure Suppo rt Activit ies Human Resource Management Technology Development Procurement Outbound Logistics Marketing and Sales Margin Inbound Logistics Operations Service Primary Activities The generic value chain is a tool to identify ways to create value for the customer. 15 are owned by PepsiCo and the rest 17 are (FOBO). owned by R K Jaipuria Group. produce market. deliver and support its product. This model proposes that every firm is a synthesis of activities performed to design. Of the 32 plants. Primary Activities: Inbound Logistics – This involves bringing and procuring raw materials for the business. For this purpose water is extracted from the ground and the concentrated salt is provided by PepsiCo India to all the plants in the country. Currently there are 32 bottling planting in India that operate for PepsiCo. Operations – Operations primarily includes all the bottling plants. 54 .

They are required to collect all the damaged glass bottles and give to the respective salesperson who gives them the replacement within the next few days after getting it approved from the CE or ADC. 55 . namely. Marketing mix decisions should be made to influence trade channels as well as final consumers. making huge investments in Advertising. The only exception being leak or burst bottles. including changes in the product and distribution channel as well. From the C & F centers and Distributor Points the product is sent out for sale in the market to the retailers. launching promotional for any launch or re launch of a product. In that case. Marketing and Sales – The sales and distribution network of Pepsi is very strong and comprises of different layers and a dedicated sales force. Price. This is one of the important factors for the success of Pepsi. while the replacement for glass bottles is provided between 25th and 30th of every month. Marketing Mix / 4 P’s: Marketing Mix has been defined as the set of marketing tools that a firm uses to pursue its marketing objectives. PepsiCo puts lot of effort in its marketing activities. the shopkeeper gets replacement for plastic bottles from the salesmen instantly. from where it is sent to the C & F centers and the Distributor Points according to their demand. To keep the company abreast with competition and to provide support to its channel partners and to increase the sales. These tools are classified into four broad groups.Outbound Logistics – The Outbound logistics of Pepsi can be divided into three stages. Service – In this industry after sales service is generally not required. A firm can alter any of the four P’s accordingly. signing of Megastars as its brand ambassadors. First the finished product from the bottling plants is sent to the depot or the territorial office. Product. This includes maintaining excellent relations with its channel partners. sponsoring various events. Place and Promotion.

The four P’s represent the seller’s view of the marketing tools available for influencing buyers. from a buyers point of view. Whereas. Marketing Mix Target Market Place Channels Coverage Marketing Variables: The Four P Components of the Marketing Mix Assortments Locations Inventory Transport 56 . each marketing tool is designed to deliver a customer specific benefits according to his or her requirements.

Product Product Prod. Variety Quality Quality Design Design Features Features Brand Name Brand Name Packaging Sizes Packaging Services Sizes Warranties Services Returns Warranties Returns Price List Price Discounts Allowances Payment period Credit Payments Promotion Sales Promotion Advertising Sales Force Pubic Relations Direct Marketing Fig. These include – Pepsi Cola Mirinda ( Lemon and Orange ) 7 Up Dew Slice Tropicana Aquafina (Mineral Water) 57 . 3 – Four P’s Product:Pepsi offers different variety of products ranging from carbonated to Non Carbonated Soft Drinks. Variety Prod.

state-of-the-art process that helps prevent any foreign material from entering the product. needs to address. Each bottle and can undergoes a thorough inspection and testing process. 600 ml. we take great care to ensure that the highest standards are met in everything we do. In our products. maintains that : “At every level of Pepsi-Cola Company. Pepsi does that by following one quality standard worldwide and according to the official website of pepsi. Therefore pepsi has to maintain stringent quality norms and standards and norms. 1200 ml. 2 lt. we strive for excellence because our consumers expect and deserve nothing less. from warehouse to store shelf”. strict quality controls are followed to ensure that Pepsi-Cola products meet the same high standards of quality that consumers have come to expect and value from us. packaging. Additional quality control measures help to ensure the integrity of Pepsi-Cola products throughout the distribution process. Specially in the case of Pepsi this is even more important because of the controversies and claims regarding the CSE report on Pesticides in Pepsi. Containers are then rinsed and quickly filled through a high-speed.These Products come in different size – 200 ml. the Co. Brand Name: 58 . We also follow strict quality control procedures during the manufacturing and filling of our packages. Product Quality: This is one of the most important aspects that any Co. marketing and advertising. there are nearly 42 SKU’s which are monitored and regulated on daily basis. 300 ml. “At every step of our manufacturing and bottling process. We promise to work toward continuous improvement in all areas of our organization”.

half filled bottle etc. Salesmen are not authorized to make any change. in this Business needs to do if it wants to remain and succeed in the Business. Returns : There are no warranties and services (post sales) provided for these products but there is provision of returns in case there is any problem with the product. Sachin. Pepsi has successfully done that for so many years. e.g. Price: List Price: The Price of each product is fixed and there is no discrepancy. Services. Different packaging is also provided for different products like Tetra Packs. bottles is high in areas in which middle and high income group customers stay. sale of 2 lt. But the sale of 200 and 300 ml bottles is high in areas where people in the lower income group bracket stay. g. This is done to facilitate the use according to the requirements of the Customer. alteration or give discounts unless authorized by the Company.This is the most important thing any Co. Packaging and Size : The products are available in packaging and sizes. ganguly. e. leak or burst bottle. Dravid etc. 59 .) that attracts to the youth and this is one of the main reason for the success of Pepsi. Pet Bottles and Glass Bottles (in 200 and 300 ml). stay. Warranties. The pet or plastic bottles are returned the same day and a replacement is provided for the same but in the case of glass bottles the retailer has to collect all the burst bottles and return it to the salesman around 25th of every month to get a replacement. Different packaging also affects the usage pattern of the product in various markets. Pepsi has targeted the youth and has invested heavily in advertising and building a brand image (by launching several campaigns and roping in mega stars such as Shahrukh. The sale of 600 ml bottles is high in areas where students etc.

This target is given to every Salesman everyday before he goes on his designated route. At times. The discounts are negotiated directly with the Company and the C&F or the Distributor point is not involved in the price negotiation.Discounts: Discounts are provided to Wholesalers and Slums but there is no discount for retailers. Payment period and Credit terms: No credit is provided. If the sale of any particular product declines or shows a declining trend then a suitable Sales Promotion Campaign is launched to increase the sale of that product. These promotions are used from time to time depending upon the sale of the products. Advertising: Advertising is done by PepsiCo. The wholesalers are also required to make in advance but at times they also defer the payment and make the payment at a later date. The payment procedure is not flexible as the retailers are required to make on the spot payments. The Depot In charge (Sr. Allowances: Allowances are given to salesmen on achieving their daily targets. the Salesman either shows a shortage or pays the rest of the amount by himself. Promotion: Sales Promotion: This is the most frequently used form of promotion which is used to increase the sale of the selected product. 60 . they defer the payment and in that case. C E / C E) gives the target to every salesman in consultation with the TDM. The advertising account of Pepsi is handled by JWT (J Walter Thomson) in association with the Corporate office of PepsiCo India. COBO (Company owned Bottling Operations) and FOBO (Franchisee owned Bottling Operations) have no say in the advertising campaigns and their planning.

These include informing the retailer about the promotional scheme. registration for the scheme. Pepsi believes in maintaining good and healthy relations with all its Channel partners and every other person in the value chain. These are Market Reach and Market Penetration. Place: Channels: ‘Channels are independent organizations involved in the process of making a product or service available for use or consumption’. CE / CE) about any issue any retailer has on the route. Public Relations: This is one important aspects related to the success of PepsiCo in India. The Salesman has to take care of all the Shops on the designated route and address and inform (to the Sr.Sales Force: There is a dedicated sales force at every C&F and Distributor point. Market Reach can be termed as accessibility and Market Penetration can be termed as Frequency. This has helped Pepsi in maintaining an extremely competitive position in the market in spite of the continuous onslaught from Coca Cola. 61 . Every Salesman is assigned a specific route that he has to cover every day. Coverage: Two things come under market coverage. The Salesman is also assigned the task of registering maximum possible outlets on his assigned route. The Salesmen are also assigned the task of providing all the information to the retailers regarding the daily schemes and the details of all the promotion schemes launched from time to time. terms and conditions of the scheme etc. There are different intermediaries in channels that facilitate the availability of goods to the consumer.

FIG. 4 – SALES AND DISTRIBUTION NETWORK OF PEPSICO INDIA. COMPANY COBO FOBO WAREHOUSE C&F DISTRIBUTOR SALESMEN SALESMEN WHOLESALER SLUMS RETAILER RETAILER CUSTOMER CUSTOMER 62 .

They get their stock directly from the Company and thus get special rates and extra discounts from the Company. C & F Centers: These are the biggest centers in the distribution network and receive proper assistance from the Company (either COBO or FOBO). Stocks are sent from the bottling plants to these warehouses. Everything at the Distributor point owned and managed by the distributor. 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. 63 . The vehicles (Delivery Vans) are owned by the Company. The C & F center is owned by a private player and not by the Company. COBO: These are Company owned bottling operations operating directly under the Company. and the Salesmen at the C & F points are on the Company Payroll. currently R K J Group has 17 bottling plants for Pepsi. Distributors: These are small. Company (PepsiCo): PepsiCo India provides the salt to all the bottling plants in the Country that carry out the bottling operations. FOBO: These are Franchise owned bottling operations. from where they are sent to the C & F centers and Distributor Points. compared to C & F centers. even the salespersons are on the Distributors payroll. R K Jaipuria group does all the franchisee-bottling operations for PepsiCo India. PepsiCo owns 15. Out of 32 bottling plants. Wholesalers: These are smaller than C & F centers and Distributor points and get the stock directly from the Company or Franchisee.Initially the focus of the Company remains on reaching all the markets and then the Company shifts its focus on increasing the frequency of sales in the respective markets so that the sales and profitability of the Company can be increased.

Retailers get their stock from all the other channel members in the distribution channel. All the different players in the distribution channel namely C & F centers. Wholesalers and Slums have different designated markets and are not supposed to operate in the market designated to any other player. Distributor points. they get special discounts from the C & F centers and Distributor points.Slums: They are generally smaller than the Wholesalers are. Retailer: Retailers are the most important chain in the distribution channel of Pepsi as they are the only point of contact with the customers. 64 . However.

STRATEGIC MARKETING OF PEPSICO INDIA Demographic/ Economic Environment Technological/ Physical Environment Marketing Intermediarie s Marketing Information System 4 P’s Target Customers Marketin g Planning System Public Suppliers Marketin g Control System Marketing Organization & Implementatio n System Competitor s Political/ Legal Environment Social/ Cultural Environment 65 .

Technical / Physical Environment: Technical and physical environment refers to the technical capabilities and the infrastructural capabilities and requirements of the Company. This determines the ingredients (of 66 . This was instrumental in helping Pepsi handle the pesticide controversy. Pepsi has access to the best technology for its products and it uses the same technology worldwide for its products. While political environment is important as it can play an important in forming opinions regarding the company. establishing and expanding operations in any country. Pepsi distributes its products considering this in mind. Similarly. of families. Social / Cultural Environment: This plays an important role in determining the acceptability of the product according to he socio cultural norms of the market and the effect the company has on each of these. Companies need to be very careful about this issue as people are very sensitive about their culture and may not tolerate any infringement. economic environment helps the Company in deciding how much to spend and accordingly price the products. initially it started its operations in India with Punjab Government and then it started its operations in the carbonated and non-carbonated beverage segment n collaboration with RKJ group. 200 ml bottles are primarily distributed in areas with lower income group people. Legal Environment is important because a company needs to confirm to the laws of the land and carry out its operations accordingly. Cans are distributed in areas that have more youth population and two lt.Demographic / Economic Environment: Demographic environment comprises of people of different ages and class. Political / legal Environment: This is one of the most important factors that a company needs to consider while starting. This is the reason why Pepsi operates in India in collaboration. This helps the Company in identifying specific target market for specific products. bottles are distributed in areas that have more no.

Pepsi primarily uses intensive distribution for its products. They are Exclusive distribution. Intensive Distribution consists of the manufacturer placing the goods or services in as many outlets as possible. Because of these factors. The salt used by all the bottling plants to make the beverages is supplied to them by PepsiCo irrespective of whether they are COBO or FOBO. Selective Distribution and Intensive Distribution. Primarily there are three strategies for distribution through market intermediaries. The concentrated salt is the only ingredient apart from water that is required to manufacture the beverages.the products) and the type advertisement and promotions used by the Company. Pepsi primarily uses Bollywood stars and Cricket stars in India as they are the biggest celebrities and role models and are widely accepted. It often involves exclusive leading arrangements. Suppliers: There are no suppliers for the carbonated beverage industry including PepsiCo. It is used when the producer wants to maintain control over the service level and outputs offered by the resellers. The sales and Distribution network of Pepsi is already discussed in detail. It is used by established companies and by new companies seeking distributors. This is done to increase the market reach and market penetration of its products and to counter competition from its largest and biggest rival Coke. 67 . Selective Distribution involves the use of few selective intermediaries who are willing to carry a particular product. Market Intermediaries: Market Intermediaries facilitate the availability of products to the customers. Exclusive Distribution means severely limiting the number of intermediaries.

Strategic Marketing plan – This lays out the target market and the value proposition to be offered. too late information and inaccurate information. Marketing Information System: Definition – “Marketing Information System” consists of people. The type of information required by Pepsi is regarding new products launched by its competitors primarily Coke. equipment and procedure to sort. Information regarding new product launches is required by PepsiCo so that they can accordingly plan their strategy. This is evident in the immense expenditure Pepsi incurs on its advertisements and endorsements of its brand ambassadors. analyze. Marketing planning System: This is required to make a marketing plan that is a central instrument for directing and coordinating marketing effort. Decisions regarding strategic marketing plan are taken at the corporate level. sales channel and service. while information regarding promotional schemes and daily are required by all the regional and territorial offices so that they can accordingly introduce and test the schemes. Even outside India Coke is Pepsi biggest competitor. pricing. including product features. evaluate and distribute needed timely and accurate information to marketing decision makers. MIS is needed to counter issues like – too much information. merchandising. promotion. The marketing plan primarily operates at two levels. While most of the decisions regarding tactical marketing plan are taken at the regional and territorial 68 . Because of the fierce competition from Coke. Pepsi has to be very aggressive in promoting itself through advertisements and other methods like sales promotions. promotional schemes and daily schemes of Coke and new brand endorsements etc. too little information.Competitors: For Pepsi the biggest competition comes from Coke. Tactical marketing Plan – Specifies marketing tactics.

These are. These tasks primarily comprise off Sales analysis. Profitability Control. This is also done at regional offices apart from the corporate office. segment. order size etc. For PepsiCo India. channels. In PepsiCo India. Marketing Control System: It is a system comprising of different procedures and various levels of management to bring efficiency and to keep a check on different marketing functions within the organization. Profitability is measured in terms of product category. Annual plan control – These are top and middle management tasks that try to examine whether the planned results are being achieved. this is beyond annual plan.level. It is done on monthly basis. Sales to expense analysis. These systems include methods of promotion. There are primarily four types of marketing control systems. Profitability Control – This is done to examine whether the company is making or losing money while carrying out its business. 69 . Sales analysis is the primary tool to identify the type and scope of promotions launched by the Company. Financial analysis etc. Sales promotion primarily includes displays and incentives to retailers in the form of gifts. apart from annually and bi annually. merchandise and discounts on purchase of products. Market share analysis. Every territory is required to monitor and increase its profitability. territory. These regional offices comprise off the COBO and FOBO offices. The sales analysis is done to know the sales and sales trend of different brands individually and with respect to their competitors. Annual Plan Control. like sales promotion. the most profitable product / brand among all the products is Pepsi Cola. These decisions are required for the formulation of marketing planning system for specific markets. The territorial offices are required to report to the head office and send a detailed report for analysis and planning. Efficiency Control and Strategic Control. Sales to expense ratio.

Before and after measures of attitude towards the product. sales promotion and distribution is measured. Advertising efficiency is measured at the corporate level. The incentives are announced in advance. and doing post testing. of outlets visited. advertising cost per thousand target buyers reached by the media vehicle. the daily incentives are cash based and if any promotional incentives or monthly incentives are there. To motivate the sales force they are given daily targets and if they achieve their targets then they receive incentives accordingly. and strike rate is the no. Another important factor to be taken into consideration while analyzing the efficiency is the distribution efficiency. Scheduled calls are the total no. These can be summed up as. pre testing the Ads. Completed calls are. completed calls and strike rate. of outlets on which sales is successful. For this purpose. Although it is generally believed that its very difficult to get a precise idea of the advertising efficiency.Efficiency Control – Used to evaluate and improve the spending efficiency and impact of marketing expenditures. We will analyze the Advertising campaigns of PepsiCo India in greater detail later. supervisors (sales executives) 70 . Efficiency of sales force. associated or read the Ad. Advertising efficiency can also be improved by better product positioning. percentage of audience who noted. total no. looking for better media buys. Consumer opinions on the Ad’s content and effectiveness. of outlets on a particular route. The sales and distribution network of PepsiCo is very strong and has a very specific structure. saw. The effectiveness of the distribution network is judged based on market reach and market penetration. advertising. PepsiCo makes sure that this structure is not altered and works within the specified framework and to its full potential. still some of the factors are taken into consideration to measure advertising efficiency. they are generally in the form of gifts or merchandise. This is a very important aspect of the operations of PepsiCo India because this industry primarily relies on the push strategy and if the sales and distribution network is not strong then the company will not be able to achieve the desired the sales of its products and will also find it extremely difficult to cope with the competition from the largest soft drinks manufacturer in the world. Salesmen are also judged on their monthly and weekly data and asked to improve their performance if it is not up to the mark. Sales force efficiency is primarily measured by scheduled calls.

products and channels. To do a proper assessment for strategic control different instruments including marketing audit. Marketing audit is a comprehensive. systematic. strategies and activities with a view to determine problem areas and recommending a plan of action to improve the company’s marketing performance.accompany the salesmen regularly and make sure that they cover all the shops on the route and also report and any issues found in the market. 71 . marketing effectiveness. objectives. marketing excellence review and the ethical and social responsibility review. Strategic Control – This is used to examine whether the Company is pursuing its best opportunities with respect to markets. independent and periodic examination of a company’s or business unit’s marketing environment.

MUM UM UM TDM MDM ADC MDC CE ME SALESPERSONS MARKETING ASSISTANTS 72 .SALES AND MARKETING HIERARCHY OF PEPSICO INDIA.

MDM . Responsible for the daily. The Unit Manager reports to the MUM. He decides and approves the boards. TDM . monthly and annual sales within the territory decides the daily schemes for products and incentives for salespersons. south.Unit Manager: In charge of day to day operations and supervision of all the functions within the organizations including operations. sales and distribution.MUM – Marketing Unit Manager: In charge of specific zones (e. displays and hoardings in the area. He is also responsible for cost effectiveness. Decides the format and time frame of the marketing and promotional activities and the incentives given to the retailers. ADC .Territory Development Manager: TDM is the in charge of the sales and distribution network of a particular territory within a zone.g. east. profit generation and profit maximization within the territory. He is directly responsible for any issues in the area and is supposed to ensure the smooth functioning of the entire sales and distribution network in the area. and is in charge of a C & F center and the distributor point in the area. logistics. ADC is responsible for timely disposal of any issue faced by the retailers. marketing. west) and report to the corporate office.Marketing Development Manager: MDM is responsible for all the marketing activities and their effectiveness within a territory.Area Development Coordinator: Reports to the TDM. UM . north. 73 .

He is responsible for the execution and success of marketing and promotional activities. and retain the old ones. They are also required to push for the sale of any new product launched in the market and make sure that the retailers are following the company guidelines regarding the launch and the maintenance of Vizicoolers. are responsible for acquiring new customers. boards. Coordinates with the outside agencies for displays.Marketing Development Coordinator: Reports to MDM. and is in charge of carrying out all the marketing activities in the area. He is the first person to get information about the market / area and is the first contact if the salespersons or retailers face issue. Their work also includes informing the retailers about the promotions and any new scheme launched. He is required to visit the market and accompany every salesperson as frequently as possible. checks conducted in the market. He is also responsible to keep a check on the expenditure of the marketing activities in the market. 74 .Marketing Executive: Reports to the MDC and is responsible for the daily functioning of the marketing activities in the including awareness of promotions in the market and the response in the market Salesperson: They are the most important asset for the company as they are the ones who sell the products.MDC . They report to the CE.Customer Executive: Reports to the ADC and is in charge of the salespersons. Responsible for assigning and achieving daily sales target given to the salespersons. ME . CE .

Faced with the existing policy framework at the time.Marketing Assistant: Reports to the ME and is responsible for the distribution and usage of the displays and boards in the area. PepsiCo entered India in 1989 and is concentrating in three focus areas – Soft drink concentrate. They report to the ME. The government has approved more than US$ 400 million worth of investments of which over US$ 330 million have already flown in. PepsiCo intends to expand its operations and is planning an investment of approximately US$ 500 million in the next three years. and at the same time the company has added value to Indian agriculture and industry. "Outside North America two of our largest and fastest growing businesses are in India and China. the company entered the Indian market through a joint venture with Voltas and Punjab Agro Industries. The company has an extremely positive outlook for India. The company has set up 8 greenfield sites in backward regions of different states. Pepsi is one of the most well known brands in the world today available in over 160 countries. Also has to check whether retailers are following the guidelines of the company regarding promotional displays. Pepsi took complete control of its operations. India is a key market for Pepsico. snack foods and vegetable and food processing. Pepsi has 15 company owned factories while their Indian bottling partners own 28. 1999) This reflects that India holds a central position in Pepsi’s corporate strategy. One of PepsiCo’s key strategies was to develop a completely local management team. which include more than a third of the world’s population. With the introduction of the liberalisation policies since 1991. 75 ." (PepsiCo’s annual report. other displays and displays in the Vigicoolers.

Sustainable Competitive Advantage: Competitive advantage is a company’s ability to perform in one or more ways that its competitors cannot or will not match. Any competitive advantage must be seen by customers as a customer advantage. They are: 76 . Three major competitive advantages give PepsiCo India a competitive edge in the market place. Then only that competitive advantage can be transformed into a sustainable competitive advantage. this advantage is termed as sustainable competitive advantage. When a company is able to maintain that advantage a long period of time that gives it an edge over its competitors then.

Communicating with the Customer: Marketing Communication is the means by which firms attempt to inform. Making it all work are the extraordinarily talented and dedicated people who are an integral part of PepsiCo India. but this study will examine various aspects of communication with the internal customers. Powerful go to market system built with the help of superior relationship base and an impeccable sales and distribution network. Marketing Communication is the central instrument of making brand equity.• • • Big Muscular Brands built through better market positioning and heavy investment in advertising and promotions. pursued and remind consumers directly and indirectly about the products and brands they sell. Personal Selling. Although PepsiCo uses all the modes in some form or the other. Proven ability to innovate and create differentiated products through superior operating base. Public Relations and Publicity. Sales promotion. 77 . • • • • • • Advertising. Events and Experiences. Marketing Communication consists of six major modes of communications called the marketing communication mix. Direct Marketing.

FIVE FORCES EFFECTING THE ENVIROMENT 78 .

3. Switching Cost of Firms in the Industry 6. Switching Cost. Product difference. Buyer Information.Bargaining Power of Suppliers 1. Degree of Rivalry 1. 8. Buyers Incentive. 4. Cost Advantage. 10. 8. Price Sensitivity. 9. 2. Supplier Concentration 2. Economies of Scale. Buyer Concentration Vs Industry. 8. Price performance trade off of Substitutes. Treat of Backward Integration. 2. Diversity of Rivals. Access to Inputs. Brand Identity. 6. Exit Barriers 2. Bargaining Leverage. Threat of Forward Integration Threat of New Entrants 1. 7. Presence of Substitute Inputs 7. Product differentiation. Impact of Inputs on Cost of Differentiation 5. 6. Industry Growth. Buyer inclination to Substitute. Overcapacity. Government Policy. Brand Identity. 9.Retaliation. 5. Differenciation of Inputs 4. 5. Distrbution Access. Buyer Volume. Brand Identity. 10. 9. Threat of new entrants: 79 . 10. 3. Importance of Volume to Supplier 3. 6. 4. Proprietary Products 3. 7. Switching Costs. 4. Capital Requirement 7. Switching Costs. Existing Rivalry Among Firms Bargaining Power of Buyers 1. 2. Threat of Substitutes 1. Substitutes Available. Corporate Stakes. Fixed costs / Value added. 5. Industry concentration 3.

the biggest deterrent is brand image and reputation. But. Bargaining power of buyers: The level of bargaining power differs among groups of buyers. promotions and displays. The bargaining power of the consumer is low. In addition. but a high degree of brand loyalty mitigates this loyalty. this can also be harmful for the retailers and they losing customers if they refuse to stock a particular brand. More importantly. it is important for the suppliers to contain whatever bargaining power they have.Pepsi’s product differentiation caused by their marketing strategy has limited the threat of new entrants. Also the heavy start up costs of manufacturing and packaging plants would be a deterrent. The overall bargaining power of the suppliers is considered low. Thus. Bargaining power of suppliers: There are very few suppliers for the entire soft drink industry. which are largely commodities. Big Bazaar. a new company would be very hard pressed to take market share away from established players like Pepsi. This is particularly true for pet bottles. we can say that the end consumer has medium bargaining power. the access to distribution channels is currently one of the biggest barriers to entry. The bottlers. it is safe to assume that Pepsi accounts for a large percentage of the suppliers total revenues. In short. Although the presence of substitutes does serve to increase buyer power for consumers. But. Threat of Substitutes: 80 . retailers and distributors have significantly greater bargaining power than the end consumer does. Coke etc. and this barrier remains because both Coke and Pepsi maintain very strong relation with their channel partners. Subhiksha are able to extract profits from the Company through incentives such as volume-based purchases. Large retailer such as Reliance. They are a fragmented group and no one individual’s purchase accounts for a significant portion of manufacturer’s profit. The end product is comprised of few ingredients.

To do a complete analysis of the overall environment is not possible due to the huge sample size of the population therefore before presenting my findings I would like to remind the reader the limitations or constraints under which the survey was done. because the substitute products are. They are bottled water. the taste buds of consumers. FINDINGS 81 . contained with each manufacturer’s product portfolio. Thus. juices. suppliers. In India the local beverages like tea and nimbu paani pose a threat to some extent to the established players. energy drinks. In a maturing market such as domestic carbonated drinks.There are many substitutes to sweetened carbonated beverages. Coke and Pepsi fight heatedly over prices. This survey may not be fruitful for the entire population of internal partners of PepsiCo butit will surely be useful for the particular regions mainly Trans-Yamuna and East-Delhi. for the most part. tea. retail space and ore importantly. This rivalry leads to a downward pressure on prices and significant investment in advertising in an attempt to build and maintain brand loyalty. Existing Rivalry among firms: There is intense rivalry between Coke and Pepsi. spokespeople. The challenge lies in increasing brand loyalty within these substitute markets. coffee. the only way to gain market share is to steal from one’s rival. energy drinks and CSD from its main competitor Coca Cola India. Specially in India there are several substitutes that pose a threat to PepsiCo. Therefore the threat of substitutes is very high specially because of negligible switching costs.

Also the findings of prior research studies on outsourcing of accounting processes would give an ample amount of historical data or decision making patterns.RESEARCH METHODOLOGY Every research methodology includes a research design which may be defined as the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research process with economy in procedure. The secondary data are those studies made by others for their own purposes. the reason behind using this method even though the time consumption when taken into consideration is more is to divide the whole set of population I am considering for my work into different group according to type of information gathered from each set and by that a perfect co-relation could also be done. My data collection processes would consist of series of procedures which would be further divided into primary and secondary data collection. namely• • direct interviews. Primary data collection Secondary data collection Primary data collection: Primary data was collected through Questionnaire Surveys and 82 . The secondary data for my research would be collected from the companies own data. archives and their annual financial reports. The sampling method that I am being using is the stratified sampling method. DATA COLLECTION METHOD The data collection mode used to get the desired information from primary sources & Unstructured Direct Interviews &the instruments used in the Questionnaire. In this research data was collected through two different modes. Also I would use internet to get some more information about the industry and use journals for getting guidance from the past researches in this topic.

As the data included is secondary in nature. authentication of the data is major concern.Secondary Data Collection: Secondary data was collected from old reports and magazines and data provided by Varun Beverages itself. Also there were huge constraints when it came to time as a one month period only allowed me a bit of primary research plus the population size being humongous my sample pf 50 retailers does not necessarily represent the entire population rather it can be taken as a representative group of the regions in which the survey was taken. thus it could affect the recommendation and conclusion part. The next difficulty was the facts and figures had change due to change in financial year. Limitations The limitations faced during the training and while undergoing my research was lack of availability of first hand data. 83 .

AIDING TO INCREASING VISIBILTY OF THE PRODUCT? Q8)HOW ARE THE SALES OF DIET PEPSI IN COMPARISON TO DIET COKE? Q9)HOW MUCH DO U THINK A RETAILER SETS TO GAIN BY INTRODUCING DIET PEPSI TO HIS CUSTOMERS? Q10)WHAT ARE YOUR SUGGESTION TO IMPROVE THE STANDING OF DIET PEPSI IN THIS PARTICULAR MARKEt? 84 .SURVEY RESULTS Q1) WHAT DO YOUT THINK OF PEPSI’S PERFORMANCE AS A BRAND? Q2) HOW ARE THE SALES FIGURES IN THE PRESENT PEAK SEASON AS COMPARED TO COKE? Q3)WHAT KIND OF CUSTOMER BASE DO YOU TO CATER TO? Q4)WHAT IS THE DEMAND OF DIET CARBONATED DRINKS IN THE MARKET? Q5)HOW IS DIET PEPSI PERFORMING IN THE MARKET? Q6) WHEN DIET PEPSI WAS IMTRODUCED FOR THE FIRST TIME. HOW WAS THE RESPONSE? Q7) DO U THINK THE PRESENT DISPLAY SCHEMES AND VARIOUS PROMOTIONAL MEASURES LIKE STANDYS BANNERS ETC.

Also the recently introduced retailer benefit schemes such as the gold card membership and other free gifts and offerings not only motivate the retailers but also helped us create visibility for the Slim Diet Can range in a profound.SWOT ANALYSIS In order to get clear understanding of the position of Diet Pepsi in the various markets we did a SWOT analysis from the data obtained from the survey and the various retailer interviews STRENGTHS: PACKAGING AND PRICING – Pepsi has the advantage of having provided the same kind of health based carbonated drink the Slim Diet Pepsi Can which in comparison to the Diet coke is a much more attractive offering because it is slim sleek equally healthy and way cheaper. 85 . Also in the particular market where the survey was done the sales people have developed a network which is powerful enough to make or break sales for Pepsi in any given quarter P R – One of the most important factors of success of PepsiCo in India is the relationship the company and its constituents have with the channel partners. The experience of working with people who welcome us with a smile rather than a frown will always be remembered. DISTRIBUTION – As already mentioned Pepsi India has one strongest and most efficient sales and distribution networks not only in India but also throughout the globe. The Company officials and even the employees of FOBO have very good rapport and relations with the Channel partners.

This compels to incur extra expenditure in Advertising.Diet Pepsi Cola does have the first mover advantage which Diet Coke has and this may prove to be a major shortcoming also in the Agra Market no Extensive efforts have been made to popularize it. 86 . Pepsi – Pepsi Cola is the biggest strength of Pepsi as it is the market leader in the Cola segment and clearly outsells both the products the Coca Cola Company namely Coke and Thums Up. Now Pepsi is trying very to bridge this gap in the near future. Aquafina clearly outsells Kinley without ay fuss. RKJ Group controls almost 65% of the bottling operations of PepsiCo in India. In the mineral water segment. The non-carbonated segment is dominated by Pepsi.NON-CARBONATED – This is one those strengths of Pepsi that often goes unnoticed but plays a very important role in success of Pepsi in India and even around the globe. Pepsi controls almost 60% market share in the Cola segment. Similarly. the R K Jaipuria Group. Tropicana is the market leader in fruit juices. Bottling – Pepsi has the advantage of being in partnership with the largest bottler in India. Brand – On a comparative scale Diet Coke proves to have a better brand image in customers mind than. Promotions and Sponsorship. WEAKNESS: SECOND MOVER DISADVANTAGE . in India Diet Pepsi may suffers in sales because of institutional sales. MCDONALDS – This is one of the most important reason why Diet Coke outsells Pepsi worldwide and specially in the United States. At times this is also seen as a weakness of Pepsi in India attributing to the fact that the Jaipuria group is so strong that in certain circumstances it can even defy the parent Company.

Pepsi is not able to get refrigerators in India so they have to import it other namely Sri Lanka. Mauritius etc. retailers are facing lot of problems in vigicoolers. Vizicoolers – At presently this is one the biggest problems faced by Pepsi. Health Based: apart from its Juice Based drinks portfolio Pepsi can Use the Slim Diet can to the maximum by promoting it as a health drink at Cheaper prices. even the repair work takes lot of time because at times even the spares are not available on time. They are not able to get new refrigerators. THREATS: NGO’s – NGO’s like CSE can seriously hamper the sales and prospects of companies operating in this industry.EXPENDITURE – Right from the very beginning Pepsi has hired the biggest and the most expensive stars in the country as its brand ambassadors and has spend heavily on advertising which has affected its balance sheet. This happened during the pesticide controversy involving both coke and Pepsi. OPPORTUNITIES: Lowest Per Capita Consumption – Even after almost decades of presence in the market. replacements for old ones. 87 . Because of this. HEALTH – Growing health awareness among people and some of ill effects of carbonated beverages have pursued many people to switch over to non-carbonated beverages that can seriously hamper the long-term prospects of the entire Industry and not Pepsi. there are growth opportunities for Diet Pepsi in India as here the per capita consumption of carbonated beverages is one of the lowest in the world.

In this way. In the intensification strategy. by using the best technology to produce the products. In India PepsiCo adopted the strategy of growth through intensification. it used market penetration by developing one of the strongest sales and distribution network in the world and utilizing it to the fullest. sports drinks.ENVIRONMENT – Environmental concerns are often raised because of the massive amount of water extracted by the bottling plants resulting in the drop in groundwater level which affects the local population adversely. snack food division. Pepsi expanded and established itself in the market place by constantly developing new products to the customers. Pepsi was also able to effectively counter the threats posed by substitutes and new entrant 88 . by properly communicating with the customer. and Pepsi Blue. Pepsi did market development by making the aware of the best products available at their disposal. Pepsi also explored new markets by venturing new segments like fruit based beverages. Gatorade. like Tropicana. and making the customer realize that he is important.

• As already mentioned Vizicoolers are a major reason of dissatisfaction among retailers. Some of the important recommendations are as follows • There should be and correct feedback from the retailers on the performance of salesmen. I arrived at certain recommendations for PepsiCo India(Trans-Yamuna and Agra markets) after the analysis of the data. Moreover. This will help improve their efficiency and accountability. and then a proper budget and plan should be made for their availability at the required places. • Pepsi should also introduce a version of Diet Pepsi Cola as a sports drink range this is a completely new and untapped market which will help in providing the impetus for Diet Pepsi 89 . This should be done at an interval of 45 days or 60 days instead of the current practice of 90 days • A complete survey of the every territory should be done for standys. banners logo racks etc. The periodical maintenance check of Vizicoolers is done at three months.RECOMMENDATION This is one of the most important and most difficult part of the study. this will also help in reducing the confusing that the retailers have at times because the salesmen does not explain the schemes properly. instead of doing it in bits and pieces as the current practice is this will help with promotion at every retailer level • There should be incentives for salesmen for every display they enroll because they are assigned this task and if they get incentives for the same then it will greatly increase the efficiency of the promotional activities.

meeting internal and external reporting requirements. contract management. providing real-time data access. encompassing variable pricing. invoicing and payment. In order to respond effectively to changing market trends and challenges. soft drink companies must support their improvement efforts with industry-specific solutions.• Pepsi should start more aggressive marketing of its Diet Pepsi range of products as they have very good growth and future prospects while there is not much growth in the carbonated beverages sector. It should support 90 . Manage procurement process – Necessary capabilities for efficient procurement include supporting vendor price comparisons and flexible pricing processes for the actual value of the raw ingredients. generating a high overall return on investment and a low total cost of ownership. It should also support quotation handling. When a world-class solution tailored to the specific needs of the soft drink industry is coupled with a rapid implementation approach. and drilling-down to greater levels of detail. Manage financials including cost management – An effective solution must provide an integrated finance system capable of handling cost management. These solutions should have the following characteristics and provide the following capabilities: Basic processes Pre-configured processes with clearly defined implementation scope – A streamlined implementation strategy is necessary to minimize disruptions to the business while maximizing enterprise-wide adoption. it can deliver immediate business value. Meet customer expectations for managing Their Orders – An effective solution should be able to effectively manage the entire process for handling customers’ orders. delivery. and batch handling.

Provide efficiencies in integrated inventory management – Integrated inventory management capabilities are crucial. companies could reap potential cost savings of 25% to 50%. and providing optimal payment methods for customers. This includes the ability to perform automatic batch determination based on expiration date during production-order processing. An effective solution should have the functionality to find a defective batch that has already been delivered to a customer. and take quick action to resolve item discrepancies.beverage companies in shortening order cycle times. By extending route management into the order management system. Optimize planning and manufacturing to suit specific business requirements – Solutions in this arena should support a multi-step manufacturing process. dispatch. Best-in-class solutions provide powerful check-in and check-out functions that record all deliveries and returned goods. The system should be able to automatically update all stock figures after material movements have been posted. and track any number of deliveries. 91 . Beverage-specific processes Plan deliveries – Effective solutions feature powerful tools that businesses can use to efficiently load. making on-time and in-full deliveries. Manage product safety – As food safety requirements become more advanced across the beverage industry. track and trace capabilities are a prerequisite. An emphasis should be placed on eliminating redundant trips and matching the appropriate vehicles and drivers to customers for each delivery. Monitor route business – Beverage companies must be able to account for every item delivered. These figures should be accessible in real-time for decision support.

complex commission structures are needed to motivate the sales force and to encourage them to push certain brands and to develop specific markets. complex partner constellations with any number of bonus or rebate arrangements. or pallets. wholesalers and customers. and helping optimize return logistics. Keep track of empties – Best-of-breed beverage industry solutions paint a detailed picture of the entire empties situation. They should also provide coupon management. Yet.They should also provide tools to monitor quickly and accurately the entire transportation operation. Manage rebates and bonus agreements – Rebate and bonus agreements are critical to enhancing relationships among beverage manufacturers. The system as a whole should ensure complete loads. It should also permit quick access of each customer’s empties account as well as print delivery notes or invoices recording the empties involved in a delivery. showing the location and status of crates. including many that are not directly involved in the initial transactions. 92 . kegs. on-time deliveries. from loading and delivery to accounting and settlement of returned goods. and seamless invoicing. make payments both to internal and external sales forces. and track the payment of these commissions over time. solid inventory control. the task of managing rebate programs is becoming increasingly difficult as current rebate arrangements often involve numerous parties. Best-in-class solutions allow companies to complete commission based transactions. or that of a transportation supplier. Manage commissions – In the beverage industry. Effective beverage solutions provide companies with the tools needed to manage easily and accurately large. These functions apply both to direct and indirect customers.

PepsiCo India had the first mover advantage when it entered the market and it capitalized on that advantage to grab the market. The data collected provided a sound base for understanding the overall organizational set up of PepsiCo in India. • Franchisee based operations combined with the Company’s operations add strength to the overall presence of the Company in the market. following conclusion was inferred: • • The Sales and Distribution Network of Pepsi is very strong and almost flawless. The Franchisees are required to report to the Company at specific time intervals. before starting the conclusion part. 93 . The primary objective of this research was to develop a complete understanding of the overall functioning of PepsiCo India including the sales and distribution network and marketing (Partner Relationship Management to be precise). By analyzing the data and the literature review.CONCLUSION After analyzing all the aspects of the data available and giving some important recommendations a suitable conclusion which should be derived for this study. However. implemented by the PepsiCo and Franchisee has no say in that. the objective of the research must be kept in mind so that we can arrive at a befitting conclusion for the research problem. • The Advertising Campaigns are conceived. • Franchisee takes care of its operations and PepsiCo does not interfere in its operations.

restaurants etc. sorts drink. non carbonated beverages. 94 . • Because of fierce competition PepsiCo has spend heavily on Ads in order to increase the brand recall and successfully face the competition. • Pepsi has good brand image and recall in the customer’s mind but the most surprising thing is that when compared with Coke. there are certain areas that can be improved.• Promotional activities within every territory are under the territory office and the officials of that office are responsible for the effectiveness and successful implementation of these campaigns. • PepsiCo is finding it difficult to counter the competition from Coke in carbonated Beverages Segment but it has distinct advantage and upper in almost all the other segments like snack food. • Diet Pepsi even though newly introduced hasn’t yet caught up with Diet Coke the way it should. • Although the overall functioning of Pepsi is very efficient. Pepsi lags behind in terms of brand image.

95 . • PEPSICO INTERNATIONAL OFFICIAL WEBSITE.BIBLIOGRAPHY • PHILIP KOTLER. • PEPSICO INDIA WEBSITE. • PEPSICO INTERNATIONAL INTERNAL REPORT. 12TH EDITION.

INCOME GROUP o Q4)WHAT IS THE DEMAND OF DIET CARBONATED DRINKS IN THE MARKET? Q5)HOW IS DIET PEPSI PERFORMING IN THE MARKET? Q6) WHEN DIET PEPSI WAS IMTRODUCED FOR THE FIRST TIME. HOW WAS THE RESPONSE? Q7) DO U THINK THE PRESENT DISPLAY SCHEMES AND VARIOUS PROMOTIONAL MEASURES LIKE STANDYS BANNERS ETC.APPENDICES Q1) WHAT DO YOUT THINK OF PEPSI’S PERFORMANCE AS A BRAND? o VERY GOOD o GOOD o AVERAGE o POOR o VERY POOR Q2) HOW ARE THE SALES FIGURES IN THE PRESENT PEAK SEASON AS COMPARED TO COKE? o PEPSI IS IN FRONT o THEY ARE AT PAR o COKE IS AHEAD Q3)WHAT KIND OF CUSTOMER BASE DO YOU TO CATER TO? 1. AIDING TO INCREASING VISIBILTY OF THE PRODUCT? 96 .

Q8)HOW ARE THE SALES OF DIET PEPSI IN COMPARISON TO DIET COKE? Q9)HOW MUCH DO U THINK A RETAILER SETS TO GAIN BY INTRODUCING DIET PEPSI TO HIS CUSTOMERS? Q10)WHAT ARE YOUR SUGGESTION TO IMPROVE THE STANDING OF DIET PEPSI IN THIS PARTICULAR MARKET? 97 .

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