CIA-I

Channel Analysis Report

Study of Distribution and supply chain networks of

COCA - COLA

Under the Guidance of

Prof. SURESH A. S

MBA PROGRAMME
SCHOOL OF BUSINESS AND MANAGEMENT
CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE

JULY 2021

Done by:

2027801 Shimanta Sankar Dutta

2027817 Sahil Chelat

2027821 Vishnu Karunakar

2027842 Shivangi Tomar

2027845 Chinmai B. Patil

2027824 Vigneshwaran K
INTRODUCTION

The Coca-Cola company is a manufacturer of carbonated non-alcoholic soft drink beverages.

It is a one hundred percent Make in India product. Coca-Cola has around 57 factories
employing 25000 people directly and over 2 lakh people indirectly. 95% of the raw materials
required by the company are procured locally. This company’s operations impact 400,000
farmers and 25 lakh retailers across the country. Apart from the soft drink, the company also
supplies Agri-based products and packaging materials to 44 countries from India. Coca-Cola
has thousands of shareholders and investors across the world and is hence it’s a public company
trading its shares on the New York stock exchange.

Hindustan Coca-Cola Beverages Private Limited (HCCBPL) is the part of Bottling Investments
Group (BIG) of TCCC. There are fifteen licensed franchise bottling partners of TCCC, who
are authorised to prepare, package, sell and distribute beverages under certain specified
trademarks of TCCC.

Coca-Cola was first sold to public in Atlanta at Jacob’s pharmacy. Back then, only 9 servings
were sold per day with the sales of just $50 in the first year. The food and beverage industry
consists of harvesting, processing, milling, packaging, transport and distribution of products to
consumers.

Coca-Cola is leading the market globally in more than 200 countries which accounts to almost
43 percent of the entire carbonated beverages consumed in the United States every year. Every
day around 1.7 billion servings of Coca-Cola beverage are consumed. It’s not just the iconic
red can soda but the varied range of products is trying to quench the world’s thirst for years. If
one could drink one type of coke beverage every day, it would take him/her more than nine
years to try them all. Coca-Cola’s product portfolio is close to 3500 beverages and 500 brands
which includes everything from sodas to energy drinks.

Coca-Cola is doing extremely well with the brand name throughout the world. Coca-Cola has
been satisfying their customers of all age groups with its products. The best target range can be
looked at the age falling between 18 to 34 years, this age group contains a huge volume
potential. Next to this age group, the age falling in 18- to 24-year-olds is also large enough for
Cola-Cola to cater. The best targeting strategy for Coca-Cola is the combination of the above
two age groups.
PRODUCTS AND SERVICES

Coca-Cola is one of the largest corporations operating the non-alcoholic beverage industry.
The company manufactures, retails, and distributes more than 500 brands over 200 countries.

The major beverage brands consist of various categories

1) Sparkling soft drinks

a) Coca-Cola

It is the flagship product of the company and it has been in production since 1886. Even
though it has been in production for over 100 years Coca-Cola is still one of the top
selling brands in the category.

b) ThumsUp

The brand was created by parle to offset the withdrawal of Coca-Cola from India due
to government regulation in 1977. The brand was later acquired by Coca-Cola after
their re-entry in the Indian market in 1993.

c) Sprite

Sprite acts a major competition the PepsiCo product 7-up.

d) Fanta

Fanta is an orange flavoured soft drink.

e) Limca

Limca also was a part of Parle Bisleri which Coca-Cola acquired along with ThumsUp
in 1993
These products are sold in 2 types of packaging, aluminium cans of 375 ml and plastic bottles
ranging from 2 litres, 1.25 litres, 600ml and 300 ml bottles.

2) Waters and Hydration

a) Rani float
b) Smart water
c) Aquarius
d) Kinley
e) Georgia

3) Juice’s dairy and plant based

a) Rimzim

Rimzim is masala soda brand which also was a part of Parle Bisleri which Coca-Cola
acquired along with ThumsUp and Limca in 1993

b) Minute maid

Lemonade or orange-based beverage product line

c) Raji float –

Fruit-based juice beverage

d) Maaza

Maaza was also a part of the Parle Bisleri brand portfolio which was acquired by coca
cola in 1993.

4) Coffees
a) Georgia coffee
INDUSTRY ECOSYSTEM

The non-alcoholic beverage market is showing exponential growth in markets such as asia and
Europe which is primarily inclined to tea and coffee. The consumption has seen a tremendous
increase in recent years and it is expected to grow even more. Coca-Cola is one of the major
players in the market and has set the gold standards for the supply chain. Coca-Cola has a very
large customer base spanning over 200 countries and it has a highly optimized supply chain to
carry out the process seamlessly.

Coca-Cola collects raw materials such as water, sweeteners, sugar, beverage concentrate and
glass, aluminium, PET resin from around 17800 suppliers worldwide. The company sources a
major portion of the materials used locally optimizing the transportation process of the
materials.

The main ingredient in the production of Coca-Cola soft drinks is the concentrate (concentrated
syrup) which is manufactured at the company headquarters which is manufactured on a weekly
basis and this is sold to the various Coca-Cola enterprises (CCE) or distributed to bottling
partners. The company has a network of company-owned, co-owned and independent bottling
facilities and partners who send this to a manufacturing facility where the concentrate is mixed
with other raw materials to produce the final product which in this case is the soft drink which
is then packaged.

The packaged products are moved to a warehouse and is distributed. The company has both
modern trade and general trade and it is distributed to the sellers using both Direct and Indirect
routes. The sellers consist of supermarkets, Airlines, clubs, Restaurants, hotels, vending
machines, kerana stores etc.

All the products sold by the company is regulated by Food Safety and Standards Authority of
India (FSSAI) who regulates and monitors the manufacture, processing, storage, distribution,
sale and import of food or raw materials or any component that is mixed in the product and
certifies the compliance to the various regulatory requirements such as safety, sanitary and
hygienic requirements of the product according to Indian food standards.

The beverage market in India is a high competition market where the major chunk of the market
is dominated by the multinational players such as Cocoa-cola itself along with Pepsi, Red Bull
etc, but at the same time the market is challenged with intense competition from small-scale
regional players as well. Even with the heavy competition Coca-Cola has stayed on top of its
competitors using its strong distribution strategy. Even though brands like Pepsi also show
cases a strong distribution strategy coca cola has outdone its competitors by a large margin.
Some of the major players in the market are Pepsi, Red Bull, Dr Pepper etc

TYPE OF MARKET STRUCTURE

Market structures describe the competitive environment in which a firm operates. Coca cola
operated in an OLIGOPOLY market.

Competitors: The Coca-Cola Company, along with the competitors, operates in collusion with
one another in an effort to maintain consistency and sustainability in the soft drink market.
Coca cola’s competitors include Pepsi co, red bull, nestle. Coca-Cola enjoyed the advantages
of a monopoly until the resurgence of Pepsi which is a direct competitor of coca cola. These
two firms control the vast majority of the market share (72%). There are other competitors in
the market, but their market share in the industry is miniscule by comparison to these two
dominant firms.

These two companies engage in non-price product differentiation. They sell the homogeneous
product so they can control over price. Since the customer can’t differentiate one product from
the other it becomes very difficult for a seller to compete on the benefits. The homogeneous
goods are perfect substitutes for each other and are generally sold in perfect competition. In
this case both companies invest a lot in advertising to differentiate their products and gain more
sales.

LEVELS OF CHANNELS

The Company produces and sells and the beverage bases, concentrates and the syrups to the
bottling operators and they manufacture, packages and distribute the final beverages to the
vending partners and customers who then again sell the products to the consumers

The bottling partners work in close relation with the customers i.e., the restaurants, grocery
stores, the convenience stores, amusement parks and the movie theatres so that localized
strategies that have been developed in partnership with the company can be executed efficiently

Thus, the distribution of coca cola is categorized into Direct and indirect channel.
DIRECT CHANNEL OR ZERO LEVEL CHANNEL

In direct the goods are sold directly from the product direct to the customer. A producer does
not have to share its profit with intermediaries and so it is a low-cost channel. The company
controls the whole marketing process and as a result can protect and maintain its brand image.
Customers are increasingly using direct sales though the internet and can purchase from the
comfort of their own home. For example, ecommerce platforms like Big Basket. Here Big
Basket sourcing partner will give orders to manufacturing hub directly, or different business
development team under Big Basket will look at requirement in different stores and based on
the they will generate an order size which will be ordered directly to manufacturers hub to store
in Big Basket warehouse.

Coke2home is another e-commerce platform which is launched by the company where

customers can order Coke’s full beverage portfolio offered in India.

In case of direct channel, the company’s products are supplied to places through their own
transport. Vending machines, shops and corner stores are some examples of direct channel.

INDIRECT CHANNEL

In case of indirect channel, the company maintains wholesalers and anciencies that cover
different regions.

Indirect channel in coca cola is described as:

GENERAL TRADE DISTRIBUTION

Manufacturing unit > Warehouses > wholesalers> Stores> customers

MODERN TRADE DISTRIBUTION

Manufacturing unit > Retail malls/hyper market >customers

WHOLESALER

A wholesaler is normally an intermediary between the producer and the retailer; although some
wholesalers have their own outlets. Wholesalers are prepared to buy in considerable bulk from
a producer. They break bulk by distributing smaller quantities to individual retailers. Goods
are normally stored in regional warehouses where they are distributed using the wholesaler's
vehicles to retailers.

AGENTS/BROKERS

Agents and brokers are intermediaries between the producer and the wholesaler and/or retailer.
They are experts in certain markets and bring buyers and seller together in return for a
commission on the value of the sales. They very rarely take possession of any physical items;
they just a facilitate negotiations and the selling process.

Agents and brokers are particularly useful when a firm is selling into a market or geographic
region, of which they have little knowledge and experience. Brokers and agents will know the
local market and, if it is in an overseas location, will help with the language and the legal
requirements. They may also negotiate joint ventures with local firms.

Agents and brokers are probably best known in the buying and selling of land and travel
services, but virtually all markets require employ such intermediaries.
RETAILERS

A retailer is an intermediary, which buys products either from manufacturers or from

wholesalers and resells them to consumers. They come in all shapes and sizes from the corner
shop to the hypermarket.

The advantage of manufacturers using retailers is that they:

• are prepared to buy in bulk

• accept responsibility for storing stock and for any unsold items
• may have strong customers loyalty which may is an attractive proposition for the brands
that they stock.

Disadvantage for the producer is that the retailer will demand a share of the profits and they
will also decide how, and where, to display the product. With considerable competition for
shelf space in multiple retailers, this placement of a product is a key element of the purchasing
decision.

Distribution strategy

STRATEGIC PARTNER

A strategic partner is another business entity with which one enters into an agreement to
exchange resources to achieve mutual success and growth. There are various kinds of strategic
partnerships.
HORIZONTAL PARTNERSHIP

Partnered company: Monster Energy

In Horizontal partnership, businesses in the same industry form alliances to strengthen their
market position. In India, Coca-Cola strategically partnered with Monster Energy in the year
2018. Thus, with this partnership, Coca-Cola handles the sales of Monster Energy drink in
India.

CARRIER: Coca-Cola

RIDER: Monster Energy

Monster Energy is an energy drink that was created in April 2002 by Hansen Natural Company.
Monster Energy has a 35 percent stake in the energy drink market as of 2019, the second-
highest percentage behind Red Bull in America.

In India, Coca-Cola is the market leader in the beverage industry, and its distribution and supply
chain across India is well spread.

In the case of Monster Energy, they are entering newly into India; hence entering India on their
own and creating the distribution and supply chain will be a high-cost project.
Thus, Monster Energy strategically partnered with Coca-Cola to utilize its distribution and
supply chain.

Source: https://www.businesswireindia.com/monster-energy-now-available-in-india-with-
coca-cola-india-partnership-58763.html

VERTICAL PARTNERSHIP

In vertical partnership, business organizations collaborate with other organizations in the same
supply chain (suppliers, distributors, and retailers) to stabilize supply chains and enhance sales.

SUPPLIER PARTNERSHIP

The bottling operation of the Coca-Cola beverages is not only done by Hindustan Coca-Cola
Beverage (HCCB) ltd. Coca-Cola has a franchise model for bottling operations where the
franchisee partners with Coca-Cola. The beverages produced with syrup and other ingredients
are then bottled and sent to wholesalers and distributors. The Coca-Cola Export Corporation
(TCCEC) is responsible for selling the syrup/concentrate across the globe from The Coca-Cola
Company (TCCC) through the regional offices of bottlers that TCCEC supervises. Once the
bottlers produce the beverages in their manufacturing plant, they are sent to retailers, vending
machines, restaurants, and foodservice distributors through its supply chain.

The company’s bottling network in India comprises 14 bottlers, including HCCB, and no
further immediate realignment is envisaged currently. And some of the bottling
partners/franchisees of Coca-Cola are Moon Beverages, Enrich Agro Pvt. Ltd, Kandhari
Beverages.

Source: https://www.thehindubusinessline.com/companies/coca-cola-divests-hccbs-bottling-
operations-to-franchisees-in-north-india/article30169390.ece

Coca-Cola will divest its ownership as the bottling partner's activities take off in the long run,
allowing Coca-Cola to keep its capital requirements low while maintaining a tiny stake in the
bottling partner, ensuring control and cooperation.

As a result, the distribution system and bottling partners are structured as a combination of
chain and franchise. At the same time, Coca-Cola acts as a chain of bottling companies in the
short run. In the long run, it functions more like franchising, with bottling partners remaining
essentially independent but remaining attached to the Coca-Cola brand.
Source: https://fourweekmba.com/coca-cola-business-strategy/
RETAILER PARTNERSHIP

Coca-Cola made partnerships with different brands that sell their products through retail stores.
Coca-Cola with a particular brand’s food products is made as a combo product and sold to
customers. Mostly the partnership is done with the gold and platinum category of retailers or
brands, or restaurants that sell their food products. Some of the examples of the partnership are
given below.

Domino’s combo product

7-eleven combo product

 Oven story combo product

Sometimes, an exclusive variant of Coca-Cola products that’s not available in the typical retail
stores is provided to a potential brand capable of attracting its customers to buy Coca-Cola
products, and a partnership agreement is made with them.

RESEARCH PARTNER

Coca-Cola has a research partner who will send their field people to analyze the product's
visibility, positioning of the product, how many units of Coca Cola there on the shelf compared
to the competitor’s products, and many more things.

Based on the analysis, recommendations will be given to Coca-Cola.

MULTI-CHANNEL

Multi-channel marketing is the combination of many distributions and promotional channels

for marketing purposes. The multichannel distribution in Coca-Cola consists of

1. General trade
2. Modern trade
GENERAL TRADE

General trade is a network through which direct customers are approached, or interpersonal
interactions between buyer and supplier are formed. Retailers, shop owners, distributors,
wholesalers, kiosks, corner stores, and other businesses participate in this commerce. They
typically deal with little amounts required by the end customer. The vast majority of people get
their daily foodstuffs from these establishments. Some of the general trade partners are,

• Local stores
• Café
• Wine stores
• Pubs
• Restaurants
• Hotels

CHANNEL COST AS A PERCENTAGE OF SALES

Sales made by Coca-Cola in Bengaluru

Average price of Coca-Cola products in India = ₹ 40

Source: https://www.globalproductprices.com/India/coca_cola_price/

The Coca-Cola Company made a 25% operating margin which got revealed in their
income statement from the year 2009.

Source: https://www.slideshare.net/furqanaslam3/coca-cola-channel-management-
report

Average selling price of Coca-Cola products in India to distributors = 75% of ₹ 40

= ₹ 30

Number of shops in Bengaluru = 4,00,000

Number of shops closed in Bengaluru = 15%

Source: https://timesofindia.indiatimes.com/city/bengaluru/50k-shops-in-bengaluru-
down-shutters-due-to-lack-of-business/articleshow/77291345.cms

Number of shops currently active in Bengaluru = 85% = 3,40,000

 Assuming the name shops include local stores, Café, Wine stores, Pubs, Restaurants,
Hotels, etc.

Assuming the average number of Coca-Cola units sold per shop per month = 60

Number of units of Coca-Cola products sold in Bengaluru per month = 2,04,00,000

Sales per month in Bengaluru = Number of units of Coca-Cola products sold in

Bengaluru per month

* Average price of Coca-Cola products in India

Sales per month in Bengaluru = ₹ 61.2 crores

General trade distribution

Manufacturing hub ➔ Warehouses of distributors ➔ Stores/Retailers/Restaurants

Assuming the number of distributors in Bengaluru is 20, who control the north, east, south,
west, and central Bengaluru.

Number of distributors in Bengaluru = 20

Assuming transportation cost to a distributor per month = ₹ 40,000

Total transportation cost to distributors in Bengaluru per month = ₹ 8,00,000

Assuming other costs in general trade such as marketing cost per month = ₹ 6,00,000

Total channel cost for general trade in Bengaluru = ₹ 14,00,000

The distribution centers are responsible for storing and managing the inventory comprising of
different Stock Keeping Units (SKU). Hence this cost is not considered in the channel cost for
Coca-Cola.

It is then despatched off to the market of different retailers. The distribution and sales centers
have multiple predefined zones and divisions of areas to capture all the retailers and contact
points in the market.

Source: https://www.slideshare.net/furqanaslam3/coca-cola-channel-management-report
MODERN TRADE

Modern trade includes organized retail, distribution, and logistics management. They are
typically supermarket chains, mini-marts, hypermarkets, and so on. In modern trade, there are
no intermediaries. The products are directly supplied from the manufacturing hub to modern
traders.

Manufacturing hub ➔ Retail malls, hypermarkets, etc.

Assuming the number of modern traders in Bengaluru as 30.

Assuming the transportation cost to a modern trader per month = ₹ 50,000

Total transportation cost in modern trade = ₹ 15,00,000

Assuming other costs in modern trade such as marketing cost per month= ₹ 5,00,000

Total channel cost for general trade in Bengaluru = ₹ 20,00,000

Total channel cost for multi-channel = Channel cost for general trade

+ Channel cost for modern trade

Total channel cost for multi-channel = ₹ 34,00,000

Channel cost as a percentage of sales = 5.54%

OMNI CHANNEL

Distribution in e-commerce platforms such as Big Basket is one of the examples of

omnichannel.

Big Basket sourcing partner will give orders to the manufacturing hub directly, or different
business development teams under Big Basket will look at the requirement in different stores.
Based on that, they will generate an order size that will be ordered directly to the manufacturer's
hub to store in the Big Basket warehouse. And as customer orders, the product will be
transported to them.

The channel costing method for omnichannel is similar to the modern trade, but since the
ordering quantity in omnichannel will be higher than the modern trade, the cost for the
omnichannel will be higher than the modern trade.
MARKET COVERAGE (Territories/route plans/mapping)

Coca-Cola is leading the market globally in more than 200 countries which accounts to almost
43 percent of the entire carbonated beverages consumed in the United States every year. Every
day around 1.7 billion servings of Coca-Cola beverage are consumed. It’s not just the iconic
red can soda but the varied range of products is trying to quench the world’s thirst for years. If
one could drink one type of coke beverage every day, it would take him/her more than nine
years to try them all. Coca-Cola’s product portfolio is close to 3500 beverages and 500 brands
which includes everything from sodas to energy drinks.

Coca-Cola is doing extremely well with the brand name throughout the world. Coca-Cola has
been satisfying their customers of all age groups with its products. The best target range can be
looked at the age falling between 18 to 34 years, this age group contains a huge volume
potential. Next to this age group, the age falling in 18- to 24-year-olds is also large enough for
Cola-Cola to cater. The best targeting strategy for Coca-Cola is the combination of the above
two age groups.

COCA-COLA IN INDIA:

Coca-Cola is the largest beverage company in India, with a 60 percent market share in
carbonated soft drinks, a 36 percent market share in fruit drinks, and a 33 percent market share
in packaged water. Coca-Cola sold 7 billion packs of its products to over 230 million people in
4,700 municipalities and 175,000 villages in 2004.

Coca-Cola has invested over $1 billion in India to far and employs over 5,000 people there. In
India, there are 25 totally owned bottling facilities and another 35 franchisee-operated bottling
operations in the Coca-Cola system. The company's products are also manufactured via a
network of 27 contract packers.

Between 2001 and 2004, the company more than doubled its volume and tripled its
profitability. Coca-Cola's commitment to India is being reaffirmed through aggressive
"Citizenship Efforts." In India, all of its factories work with local NGOs to address local
community issues in a variety of ways. It has an unblemished track record when it comes to
quality.
DISTRIBUTION:

Key accounts are the customers who contribute to the major chunk of the total sales of the
products. These accounts are basically of the organizations that buy in huge quantities in one
lone transaction. Coca-Cola distributes these products to such companies on credit, the
payments are received after a certain period of time. Ex: Restaurants, cafes, corporate offices
etc.

For future consumption: There are certain outlets in the route of Coca-Cola’s distribution
which contains stock of the products required for future consumption. This stock does not
exhaust in a short time, it is instead restocked every time the shortage is approached, to avoid
the non-availability of the products. Ex: General stores, super markets etc.

For Immediate consumption: These outlets are setup for meeting the daily requirements of
the consumers. The stock here is not kept for future consumption, but is it exhausted in a day
or two. The products here are consumed at a very fast pace. Ex: small cafes, restaurants,
colleges etc.
General route of distribution: All the outlets that fall in a particular area or an area along
with its neighbouring areas are served/catered to. In his route the consumption period and
amount are not taken into consideration. Ex: High crowd places like Bus stand, Railway
stations etc.

Coca-Cola India distributes using two routes:

1) Direct Route
2) Indirect Route

The distribution structure is as follows:

Direct Route:

Indirect Route:
The flow of the product is as follows:

DISTRIBUTION PROCESS IN BENGALURU

For General Trade:

Each area is allotted with a Area sales Manager. Around 8-10 Sales team leaders work under
each Area Sales manager. Market Growth representatives or Sales Executives work under
Sales team leaders. Each MGR is given a route to operate on. This route is geographically
aligned and assigned to the MGRs. Each route encompasses around 100 retail stores. These
retail Stores are classified into Premium and Non-Premium customers based on the volume of
consumption. Each Premium and Non-Premium division contains stores which are divided
into Gold, Platinum, Silver, Bronze and Iron again based on the volume of order. MGR
covers at least 25 stores every day and checks on the stock status and orders through the
integrated ERP system for replenishment requirement if any. The order placed is directly
received at the manufacturing unit and the requirement is met accordingly.
For Modern Trade:
In Modern Trade, the orders are dealt directly between the customer and the company
eliminating the middle men.
COMMISSION, INCENTIVE, PRICING POLICY

Sales force Motivation: Commission & Incentives

• Incentives are based on quarterly performance
• No of units & or total revenue work as a base for the incentives.
• Every executive needs to add new outlets every year to get unit incentives.
• The Target achievers are also rewarded by fridges, certificates, or trophies.

Rewards at Coca-Cola Company

• Yearly basis: Employee salary Increment, grade jump, designation change, annual
incentive plan (For performance, not fixed), annual appraisal.

• Monthly basis: Making the move (MTM Sales target achievers)

• Weekly basis: Employee of the quarter, monetary/non-monetary rewards

PRICING POLICY
Throughout the year, Coca-Cola employs the following various pricing schemes for Coke:
1) Psychological pricing
2) Promotional pricing
3) Segmented pricing
4) Discriminatory pricing

PROMOTIONAL PRICING
Coca-Cola began using the psychological estimating system for its Original Coke in 2009. A
2-liter jug of Original Coke, for example, cost $2.49. To communicate with the client, they set
the amount to end in 9, as this induces customers to believe the cost is less than $2.50.

PROMOTIONAL PRICING
Coca-Cola also employs the promotional price technique. Coca-Cola has used promotional
pricing as frequently as feasible. To create short-run discounts, costs are frequently
unintentionally valued beneath the rundown cost in stores that sell Coca-Cola. During some
events, such as Ramadan, Coca Cola reduces its prices to as low as 5 Rupees for a 1.5-litre
container. It gives the item a sense of urgency, and people purchase the goods because of the
cheaper price. The Coca-Cola organisation provides incentives to middlemen or retailers in the
form of free samples and free empty bottles, allowing these stores and middlemen to promote
their product into the market. That is also why Coca-Cola is becoming increasingly popular in
the market.

SEGMENTED PRICING
Coke employs a divided pricing approach. Coca Cola is priced differently depending on the
package. They can enhance their revenue by selling their goods in multiple sizes and at varying
prices because the costs to create the products aren't that different. Following are the different
packages available for various target audiences:

1) RGB - Returnable/ Refillable Glass bottles

2) PET – Plastic Bottles
3) CAN – Aluminium Cans (Tins)
4) Tetra – Tetra Packs
5) BIB - Beverages in bag
Following is the different pricing for varied sizes and types:

DISCRIMINATORY PRICING
Pricing Discrimination Coca-Cola also uses a discriminatory pricing technique, with different
pricing when marketed through different channels. The channels where it is charged differently
are listed below.
 • Wholesalers/ distributors
• Retail/ corner stores/ super markets
• Restaurants/ cafes/ night clubs
• Petrol stations
• Automated teller machines (AMTs)

ROI OF CHANNEL MEMBERS

DISTRIBUTOR ROI

The deposit of 2000 cases at the rate of ₹250 per case = ₹ 5,00,000

Assuming average value of liquid including all mini, 300ml, ½ litre & 2 litre = ₹ 2,00,000

Assuming Godown deposit = ₹ 25,000

Assuming Vehicle transportation cost = ₹ 5,00,000

The total investment by distributor = ₹ 12,25,000

ROI (Return of investment) = {(Volume * Case rate) – Expense}/ Investment

Let,

The volume that distributor has = 20,000

Cost per case = ₹ 15

Other expense = ₹ 35,000

ROI = {(20,000 * 15) – 35,000}/ 12,25,000

ROI = 21.63%

RETAILER ROI

Assuming,

Number of Coca-Cola products bought from distributor per month = 200

Average selling price of Coca-Cola product to retailer = ₹ 35

Total cost for purchasing Coca-Cola products = ₹ 7000

Cost for purchasing refrigerator = ₹ 10,000

Space used for Coca-Cola products = 40%

Cost for using Coca-Cola product in refrigerator = ₹ 4,000

Total investment by retailer = ₹ 11,000

Volume sold per month = 180

Average selling price of Coca-Cola product to customers = ₹ 40

Other expense = ₹ 2,000

ROI (Return of investment) = {(Volume * Case rate) – Expense}/ Investment

ROI = {(180 * 40) – 2,000}/ 11,000

ROI = 47.27%

Special merchandising requirements, Storage requirements, Visual

merchandising at POS.
MERCHANDISING AT POS

For a successful business, point-of-sale displays are a must-have marketing tool. Customers
are drawn to point-of-sale displays in a variety of retail settings.

Coca-Cola produces a variety of beverages, including Sprite, Fanta, and others. Because Coca-
Cola offers such a diverse selection of products, the firm ensures that each one is promoted
actively and creatively. Coca-Cola sells a variety of drink brands from a single stand in a
particular pack. This type of campaign will allow target customers to select which things they
would like to purchase from a list of options. Choosing the proper POS display for your new
location and customer marketing. Furthermore, it has the potential to push your company to
new heights of success.

Following are a few examples of merchandising at POS that Coca-Cola applies.

CHANNEL PROMOTIONS ATL AND BTL

Coca Cola and its product faces intense competition from both branded beverage drinks like
peps as well as non-branded locally available beverages. Consumers generally do not
differentiate much between Coca Cola and Pepsi and there is higher tendency to switch among
products between competitors. Thus, it becomes important for the company to have an effective
pull strategy which attracts consumers to the retail shops and promotes sales as well as ensure
availability of the product at all times in more attractive positions in the shelf space than the
competitors by incentivizing retailers using Push strategy. The various Above the line and
below the line promotion strategy used by the company are as follows. Coca Cola has spent
significant amount of money globally in promotions and advertising and promotion is a central
element in companies’ success globally.

ABOVE THE LINE PROMOTION STRATEGIES

Coca Cola uses various Above the line strategies in attracting consumers, branding initiatives
and positioning strategies. The major Above the line strategies used by the company are

1) Television & Print Media Advertising

With high penetration of television and print media across all geographies in India, Coca Cola
has used Television & Print Media advertising effectively to reach out to consumers. TV
commercials focusing on rural and urban areas with various Celebrity endorsements of the
product like Deepika Padukone, Salman Khan etc are used to generate higher brand recognition
and acceptance.

2) Outdoor Advertising

Bill boards, banners, flexes etc are used as an effective medium of advertizing

3) Internet & Social Media Marketing

Coca Cola uses the internet and social media to promote its products. They have their own
website and uses social media platforms like Facebook, Instagram, Twitter etc to reach out to
consumers. They also engage in interactive campaigns in social media

4) Event Sponsorships

Coca Cola sponsors many events in various categories like sports, music, events etc. This helps
in creating greater brand awareness and enhances brand value.
5) Promotional Pricing

Coca Cola uses promotional pricing strategy to increase customer pull. In store that offer Coca-
Cola, costs are regularly incidentally valued underneath the rundown cost to build short-run
deals. Particularly on some event Coca Cola diminishes its rates like in Ramadan Coca Cola
decreases its rate unto 5 Rupees on 1.5 litre container. It gives the item a feeling of criticalness
and customers buy the item in view of the lower cost.

6) Competitions and Campaigns

Coca Cola carries out various competitions and campaigns to increase customer engagement
as well as improve brand recognition and brand value.

BELOW THE LINE PROMOTION STRATEGIES

With high competition in the market and with the need to cover larger geographical areas
distributers, wholesaler and retailers becomes very important to push the products to final
consumers. Coca Cola uses various below the line strategies to achieve these objectives of
which some are

• Merchandising Assets- provide special discounts to retailers and provide them products
at whole sale rates if they stock their product on special shelves that have increased
visibility and tend to attract customer attention. Provide refrigerator to exclusively store
Coca Cola products
• Return back allowances
• Free Goods or Free Tours
• Discounts on prices
• Help small shop owners set up their shops if they agree to store a certain amount of
their product every month.
EVALUATION OF THE CHANNEL EFFECTIVENESS

Coca Cola uses various channels for effective distribution which can help in increasing market
share of products. The different channels used are

1) Zero Level Channel- Directly sold to consumers via exclusive vending machines
2) One Level Channel- Directly sold to consumers through various retailers like restaurants,
theatres, fast food chains like McDonalds, e-commerce retailers like Jio Mart, Big Basket
etc
3) Two Level Channel- Distributed via Wholesalers/Distributors, retailers and then consumers

EFFECTIVENESS OF CHANNELS

• Zero level channel

Is directly sold to consumers. It has the advantage of not sharing profits with intermediaries
and has low cost and the producer controls the whole marketing process and as a result, can
protect and maintain its brand image. However, it is expensive to set up these channels and
all the cost of distribution like storage and damage rests on the producer. It also has limited
market coverage which can result in low returns in this channel
• One level channel
Coca Cola company sells directly to retailers like fast food chains, restaurants, theatres,
Modern Trade retailers like Big Bazaar, Jio Mart etc. This has the advantage of retailers
buying in bulk, accept responsibility of the stock, having existing and loyal customers and
can effectively use carrier and rider distribution to distribute other products of the company
there by reducing the overall cost of distribution and also increasing retailer ROI. However,
this channel would demand higher share of profits and would have limited market
penetration especially in rural areas
• Two level channels
A wholesaler/Distributor is normally an intermediary between the producer and the retailer;
although some wholesalers have their own outlets. Wholesalers are prepared to buy in
considerable bulk from a producer. They break bulk by distributing smaller quantities to
individual retailers. Goods are normally stored in regional warehouses where they are
distributed using the wholesaler's vehicles to retailers. Using of two-level channels has the
advantage of buying in bulk, effective market penetration, covering wider geographical
area and markets. Carrier rider distribution strategy can be effectively implemented to
distribute similar products of the company effectively. However, Distributors and retailers’
 high ROI from the products, higher BTL initiatives in the form of incentives, promotions,
which can reduce margins on the product for the company. Non-Exclusive distributors and
retailers also have the discretion on products which they carry, product placements in shops
etc. Increasing number of intermediaries also can result in bull whip effect where demand
can be overestimated and direct market feedback from consumers become difficult.

REFERENCES

• Primary resource – Bhargava, done SIP in Coca-Cola

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