project report crystallization on nsi.docx

7/28/2019 project report CRYSTALLIZATION ON NSI.docx

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Project Report

OnCRYSTALLIZATION ON NSI

2011-2012

Submitted By:-

Jyoti PalRoll No. 1055450023

Naraina Vidya Peeth Management Institute

Panki, Kanpur-208020


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Naraina Vidya Peeth Management Institute

Gangaganj,Panki, Kanpur-208020

DATE. . . . . . .

To Whom It may Concern

This is to certify that Mr./M Krishna Kumar Tripathi student of

M.B.A Course (2008-10) at Naraina Vidya Peeth Management Institute with dualSpecialization in Marketing & Finance has satisfactorily completed the summerresearch project on STUDY OF MARKET ANALYSIS AND STRATEGIC OF PEPSICO ATGORAKHPUR

study is done under the guidance of the undersigned by partil fulfillment for the

award of M.B.A .I wish him /her all the best for bright future ahead.

Suervisor Head of Department Director


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ACKNOWLEDGEMENTS

The training will be incomplete without acknowledge giving my sincere, gratitude to all persons

who have helped me in the preparation of this dissertation.

First of all, I thank GOD ALIMIGHTY for the blessings showered on me throughout this project

work, which has helped me in the successful completion of the training.

I feel privileged in expressing profound sense of gratitude and in debtness of Mr. PRAKASHCHANDRA who gave me, excellent opportunity to work with Pepsi family .I feel thankful to

PRAKASH CHANDRA (Asst. manager) Pepsi. Pvt Ltd who gave me my project title in guided

me to complete my project her valuable guidance constant encouragement and

inspiration were instrumental in the complexion of this report. He always allowed me to

encroach upon his precious time and showed his generosity ideas.

KRISHNA KUMAR TRIPATHI

M.B.A. 2 year

NARAINA VIDYA PEETH

KANPUR


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CONTENTS

Page No.

Preface 6-10

Acknowledgement 11-12

Certificate from organization

Certificate from institute

Introduction 13-18

company 19-59

Objective of study 60-61

Research methodology 62-68

Analysis 69-74

Limitation 75-76

Findings 77-79

Conclusion 80-81

Recommendation 82-85


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PREFACE


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Preface

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 Indias main carrying and

forwarding.

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 up market towns.

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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INTRODUCTION


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Introduction

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 above-mentioned objectives can be achieved by carrying a proper and planned research involving

different types and methods. 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.

The data collected for research is primary and secondary. Primary data is collected by observation,

interviews and questionnaires. While secondary data is collected from the internet through different

case studies and reports on the CSD industry. Observation method was carried in East-Delhi to know the

market position and market share of PepsiCo products. Interviews of people from the sales department

were conducted to know the sales and distribution network and marketing policies of PepsiCo India,

while questionnaire method was used to know about the customer perception of the slim diet can

portfolio. Secondary data is used to know about the CSD industry and the Company i.e. PepsiCo.

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.


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COMPANY


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Company

The soda drink and bottled water industry includes more than 3,000 companies that manufacture and

distribute beverages. Only in the USA combined annual revenue is more than $70 billion. Coca-Cola and

PepsiCo hold more than 50 percent of the market, following strong consolidation in the past decade.

Only a few other companies have annual revenue above $500 million. Most are local or regional

manufacturing and bottling operations with annual revenue under $100 million.

Competitive Landscape:


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Demand for non-alcoholic beverages is driven by consumer tastes and demographics. The

profitability of individual companies depends on effective marketing. Large manufacturers have

economies of scale in production and distribution, with average annual revenue per production

worker close to $1 million. Small companies can compete by producing new products, catering

to local tastes, or selling at lower prices.

Products, Operations & Technology:

Nonalcoholic beverages include sodas (carbonated soft drinks, or CSD), bottled waters, juices,

and a large variety of mixtures. Sodas account for about 60 percent of the market. The

manufacture and distribution of most national soda brands, including Coke and Pepsi, is a two-

tiered process. The primary manufacturer produces a flavored syrup called concentrate that is

sold to local bottlers who manufacture and distribute the finished product. In a typical bottling

operation, the flavored syrup, corn syrup (sugar), and filtered water are mixed in appropriate

proportions, carbon dioxide gas is injected, and the finished soda product is poured into bottles

or cans, which are capped, labeled, and packaged.

The two-tiered structure is most efficient for national companies with large volume, because the

manufacturing process is simple and because water, the main ingredient of sodas, is expensive to

ship and is available locally. Smaller companies combine the syrup production and bottlingoperations in one plant. For soft drink bottlers, the major raw materials, aside from the flavored

syrup, are corn syrup and containers -- glass bottles, aluminum cans, or plastic bottles made from

polyethylene terephthalate (PET).

Bottlers frequently operate sizable distribution systems, including warehouses and fleets of

specialized delivery trucks. Production and distribution volume is usually measured in cases of

192 ounces, although actual cases of 12-ounce cans now contain 288 ounces. Coca-Cola

produces more than 4 billion cases of soft drinks per year; PepsiCo, over 3 billion. In addition to

producing canned and bottled soft drinks, 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. About 35 percent of Coca-Cola's US

product is in the form of fountain sales and 60 percent in bottled sales.


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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. In

most cases, non-soda products are bottled by the manufacturer and distributed through the same

types of channels--wholesalers, distributors, brokers--used by food manufacturers, although

bottlers may also participate. Bottled waters, a rapidly growing category of beverage, are either

bottled at specific springs or made locally from filtered tap water.

Manufacturers and bottlers typically operate under contracts, called Bottler Agreements, that

specify the territory within which the bottler has an exclusive right to make, sell, and distribute

the manufacturer's brand in bottles or cans. Fountain products are often sold separately through

wholesalers, under Distributor Agreements. Bottle and fountain territories may overlap and

bottlers may also be fountain distributors. Coca-Cola sells products through about 80 localbottlers and 500 fountain wholesalers.

Bottler Agreements usually require that container and packaging materials be bought from

suppliers that are approved by the manufacturer, and that the bottlers not handle competing

products. Agreements also specify the price that the bottler must pay for concentrate. The

manufacturer has no control over the prices the bottler charges customers, and usually isn't

obligated to spend money for marketing or promotions in the bottler's territory. Often, however,

the manufacturer will provide marketing and promotion support. In one year, for example, Coca-

Cola provided about $600 million in marketing support to Coca-Cola Enterprises, its largest

bottler. Many Coke and Pepsi bottlers hold perpetual contracts that can be terminated only for

breach of contract.

The industry depends on technology for developing new products in the labs and packaging

product at the plants. Most bottling plants are highly automated with a combination of

mechanical automation and computerized robotics.

Sales & Marketing:

Beverage manufacturers, bottlers, and wholesalers sell products through a variety of channels, such as

food and convenience stores, restaurants, vending machines, mass merchandisers, and institutions,

including schools and colleges. Soda bottlers typically own local vending machines. The marketing


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approach to each of these channels is quite different and often includes promotional spending. Large

manufacturers may also sell directly to national accounts and usually advertise on national or regional TV

and in print.

Manufacturers typically produce a line of brands and often test and introduce new products intothe market through their existing distribution channels.

Target SegmentYouth:

The child/youth market is of crucial importance to drinks manufacturers as under-19s constitute

20-30% of the population in western countries, making them a substantial and lucrative

consumer base. With many life-long consumption habits formed during youth, 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, companies must consider the market trends that will likely

shape the industry over the next few years. This will help soft drink companies to understand the


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challenges they will encounter and to turn them into opportunities for process improvement, enhanced

flexibility and, ultimately, greater profitability.

Market trends for the soft drink industry can be summarized by six fundamental themes:

Changing consumer beverage preferences, featuring a shift toward health-oriented wellness

drinks

Growing friction between bottlers and manufacturers in the distribution system

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, a significant portion of the population is overweight or obese. This

includes two-thirds of Americans and an increasing number of Europeans. Consequently, many people

have started to actively manage their weight and change their

Lifestyles, 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, due to the increasingly active lifestyles of teenagers

This trend towards healthier drinks has created a number of new categories, and changed the

consumption trends of the beverage industry as a whole. While previously dominated by carbonated

soft drinks, the industry is now more evenly balanced between carbonates, and product categories with

a healthier image, such as bottled water, energy drinks and juice:


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While carbonates are still the largest soft drink segment, bottled water is catching up fast, with an

average of 58 liters consumed annually per capita. Among individual countries, Italy ranks number one

in bottled water consumption, with the average Italian drinking 177 liters per year. Overall, bottled

water represents the fastest growing soft drink segment, expanding at 9 percent annually. This growth is

being partially driven by increasing awareness of the health benefits of proper hydration.

The industry has responded to consumers desire for healthier beverages by creating new categories,

such as energy drinks, and by diversifying within existing ones. For example, the leading carbonated soft

drink companies have recently introduced products with 50% less sugar that fall mid-way between

regular and diet classifications. Similarly, a South African juice company has recently released a fruit-

based drink that contains a full complement of vitamins and nutrients.

Beverage companies and bottlers are conflicting:

In the soft drink markets of Europe and the US, beverage companies use bottlers to package and

distribute products. This structure often causes conflicts of interest between manufacturers and

bottlers. Nevertheless, the supply chain must consistently deliver value to the market in order for the

segment to prosper. Despite any dissonance, the concept of one face to the customer must be

maintained.


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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

Bottlers continue to consolidate in an attempt to offset margin pressure through cost reduction.Specifically, 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, which increases operational

complexity and, therefore, expenses for bottlers.

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. Examples include: Coke with Lemon, Vanilla Coke,

Dr. Pepper Red Fusion, Pepsi Blue, DnL, Fanta Berry, SoBe Mr.Green, Sierra Mist, and Mountain Dew

Code Red.

While manufacturers view these new products as a way to build a portfolio of options to hedge against

product successes or failures, bottlers see them as a burden since they often require additional capitalexpenditures.

Retailers power continuously increases:


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With Big Bazaar , Vishal and other discount stores leading the charge, Indias dominant retailers are

demanding better service and shorter order-to-delivery cycles from soft drink companies. This is

dramatically reshaping the industry, forcing soft drink companies to become more efficient, while taking

pricing power out of their hands. 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, as they

constantly search for approaches that will help them achieve the rock-bottom prices and operational

excellence now expected in the industry.

Furthermore, the growth of private-label products is encouraging manufacturers to take a number of

steps to compete more effectively. Increasingly, they are turning to innovation and new product

introduction as a means to achieve real differentiation as well as growth. Branded manufacturers arealso looking to get closer to the consumer, with many of the larger ones piloting direct-to-consumer

marketing approaches. They are also trying to better understand the in-store consumer experience by

monitoring the execution of in-store activities.

Nevertheless, many suppliers are losing brand equity. In recent years, 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,

including escalating demands for improved service quality and shorter order-to-delivery cycles from

manufacturers and distributors.

Because of their direct relationships with consumers, retailers have a deeper knowledge of consumer

behavior.

Competition is becoming more and more difficult:

In the beverage manufacturing industry, competition is growing due to the

following factors:


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Constant demand for new niche products related to consumer preferences for healthier and more

diversified offerings

Industry consolidation, which has significantly raised the bar for the scale needed to compete

CHANNELS OF BEVERAGE

INDUSTRY


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The beverage industry is a multi-channel industry.

Therefore, soft drink companies have several types of customers with diverse characteristics:

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


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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, assortment, presence

of competitors beverages, etc.

Due to the complexity of the marketplace, the entire logistical chain must be able to sustain brands,

products and services coherently within the various channels, taking into account differing points of sale

and diverse customer needs. Additionally, each beverage manufacturer must provide customers with an

extensive set of packaging options, including:

Tracking product in various package sizes

Special labeling requirements for customers

International/domestic packaging

Tracing / recall capabilities.

Statutory regulation is increasing.

Governments around the world are concerned about food safety and quality. Periodically, safety failures

make big news in the global press. Amid this growing concern, regulators are cracking down on

sanitation and a variety of other food-safety requirements.

Each soft drink company must take these industry challenges into consideration, as well as its own

strengths and market position, when looking for ways to drive innovation, accelerate growth and

increase margins.


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Industry Process Improvement Opportunities

Improve customer relationships with Direct Store Delivery:

Branded beverage manufacturers are attempting to get closer to the consumer, with many larger

manufacturers piloting direct-to-consumer marketing approaches. These include active monitoring of in-

store activity and, in some markets, a significant move back to direct store delivery (DSD).

Direct Store Delivery is a business process used in the beverage industry to sell and distribute goods

directly to the customers point-of-sale. With DSD, the soft drink company gets in direct contact with

retailers, restaurants and pubs and other outlets where consumers can obtain the product.

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

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, communication skills and a global view of the

companys offerings, commercial priorities, and initiatives. Direct Store Delivery is characterized by

variable orders and deliveries. Consequently, the process should involve more than just bringing goods

to the point of sale. It should eventually encompass taking additional orders, picking up empties,

collecting money, and more. Best in class DSD operations typically include many value added activities,

such as:


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Merchandising activities - Enables the company to leverage frequent delivery visits to the point

of sale. These activities include tracking merchandising of other entities (suppliers, wholesalers, etc.);

reporting on in-store merchandising activities; carrying out competitive intelligence (competitive

products, product mixes, prices, displays, etc.); and monitoring store/account execution. May also

include some preventive maintenance.

Additional sales opportunities - Allows a company to sell goods off the truck without any

preceding order. The mix of products on the truck is dependent on what is most likely to be sold on a

certain trip. Support provided by handheld devices enables drivers to skip back-end paperwork and to

close the process through printed invoices.

Enhance relationship with indirect partners - Indirect sales are the process of selling to an

end customer through a third party and tracking that sale as such. Due to the complexity of the

beverage supply chain, conflicts of interest frequently arise between beverage manufacturers and

beverage distributors:

Soft drink manufacturers profit from increased sales at the expense of distributors margins

Soft drink distributors profit from positive local pricing environments, which, if exploited, reduce

volume sales


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Soft drink distributors continue to consolidate in an attempt to offset margin pressure through

cost reduction

Despite these conflicting interests, it is crucial that beverage manufacturers and beverage distributors

maintain one face to the customer. These companies jointly market and sell the product in the

marketplace, and close co-operation yields benefits for both parties. The indirect relationship is a

partnership that must be nurtured by both the supplier and the distributor. The stakes are high for

everyone. For the manufacturer, a poor relationship with a distributor may cause it to give a competitor

greater share of mind in the local marketplace. For the distributor, a negative relationship with a

supplier means constant threats of contract termination and reduced marketing dollars spent in the

local market.

A strong manufacturer/distributor relationship is also important because consumers are becoming more

difficult to capture and classify. It is not only about sales; it is also about information. But how can

strategic information flow freely between partners? Although sharing is implied in the word partnership,

the reality is that companies are still uncomfortable about exchanging strategic information.

Nevertheless, it is critical for companies to share information regarding sales volume and market

intelligence on both the microscopic and macroscopic levels.

The importance of the distributors 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, channels, customers)

Technology

Data interpretation

Marketing and sales actions.

In some cases, distributors are small- to medium-sized companies that only dedicate a few people full-

time to operational activities. As a result of this structure, they are rarely open to implementing a truly

collaborative environment. Recently, however, mergers between distributing companies, and

acquisitions of distributing companies by manufacturers, have significantly modified many operating

and ownership structures.


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Consequently, a few well-structured and managed distributors have emerged that possess a better

understanding of the value of collaboration. These distributors have been at the forefront of facilitating

partnership initiatives.

Increase sales force effectiveness through incentives management

In the beverage industry, the critical path to a companys success is the effectiveness of its sales force.

No matter how efficiently the company runs its manufacturing processes, or how well it markets its

products, a beverage company cannot succeed without an effective sales force that ensures product

placement on the store shelves.

A beverage manufacturerssales force typically comprises 17%-

25% of the companys cost basis.

Beverage distributors have an even higher percentage of their tot al costs allocated to their sales forces.

Yet, 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. A commission could be a rebate, discount,

or other payment to a third party or in-house employee. In order to actively manage sales behavior, it

should be paid when the internal or external sales representative meets a pre-established benchmark

for a tracked metric. The commission could take the form of either a cash payment or an item.

While commissions are usually paid based on sales volume, best-in-class companies take a more holistic

view of commission metrics. 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


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As recent history has shown, the ability to track inventory accurately and to perform a timely and cost-

effective product recall is critical in the beverage industry. Inventory items need to be tracked,

monitored, and controlled in different ways and at very detailed levels. In each individual plant or

warehouse, each resource requires a different level of control/analysis.

Food safety legislation, such as EU Directive 178, impacts the whole process flow. Traceability is a goal

that must be achieved over the entire value chain, requiring a batch control system that is able to track

and document all related characteristics.

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, including the history of the raw materials (and their associated batch

numbers) used in its production. In other words, it allows full recall of the materials that have been

involved in the overall manufacturing process. These improvements reduce the companys exposure to

litigation and regulatory fines.

In addition, track and trace improvements help companies to maintain high quality standards, which is

often a selling point that differentiates one brand from another and that can command a price premium

with the consumer. Recording and tracking that quality is critical. In the final analysis, soft drink


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companies must strive for the highest quality standards they can achieve ones that are superior to

those of their competitors.

Optimize the extended supply chain:-

In a business environment characterized by strong competition, changing consumer preferences, a

complex distribution channel, and conflicting relationships between soft drink manufacturers and

distributors, the beverage supply chain is under significant pressure. Moreover, the worlds dominant

grocery retailers (with Wal-Mart paving the way) continue to demand increasingly better service quality

and shorter order to delivery cycles from manufacturers. This confluence of factors is forcing

manufacturers to become more efficient, while taking pricing power out of their hands. 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.

The logistic chain must be able to sustain brands, products and services cohesively, while taking into

account different channels, customers, points of sale and customer needs. Accordingly, 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. A system that avoids out-of-stocks improves

consumer value, builds brand and store loyalty, increases sales and most importantly boosts

category profitability. The traditional practice of filling out-of-stocks with other products is no

longer sufficientparticularly from the manufacturers point of view. If consumers cannot find

the brand they want, their loyalty to that brand suffers. A 2002 GMA study found that out-of-

stocks jeopardize $6 billion in retail sales every year. Less conservative estimates put this figure

as high as $20 billion.

Flexible ordering; flexible delivering Most retailers are demanding increased

flexibility in order lead-times and delivery methods, putting additional pressures on the supply

chains of manufacturers and distributors. To withstand these pressures, companies need to

streamline product movement through programs such as store-specific shipments. They must


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also meet the strategies of progressive retailers, which require flow-through distribution and

cross-docking.

Accurately forecast demand Properly forecasted demand drives two of the

primary metrics used to measure the efficiency of a beverage companys supply chain: customerservice and inventory. Accurate forecasts are essential to achieving improved customer service

and lower inventory levels. Even with recent success in developing and maintaining efficient

supply chain processes, forecasting inaccuracy remains a significant industry problem. According

to the 2003 GMA Logistics Study, more than one-third of all forecasts are inaccurate at the

national level. This figure jumps to almost one out of every two at the regional (distribution-

center) level. Meanwhile, at the store level, differences in store formats and sizes hamper the

forecasting process, and few have the tools to accurately manage the sheer volume of data

generated by forecasting. Furthermore, many manufacturers do not have the technology to

properly support their planning and forecasting efforts. Many manufacturers are still forecasting

sales in months, although their plants run on weekly plans. That means they have to squeeze

weekly totals out of monthly boxes.

Implement a fully integrated empties management process Empties

management is the process of managing returnable containers, including kegs, CO2 tanks,

bottles and crates(an essential part of direct store delivery). A successful empties management

system gives the manufacturer a detailed picture of the entire empties lifecycle, including the

location and status of a companys assets. This process:

Lowers costs by controlling high-value empties assets

Increases control by managing empties at customer locations

Decreases manufacturing issues by tracking empties.

Reduce time-to-market for new products

An efficient new product development system is essential in the beverage industry. New products need

to be brought to market quickly in order to capitalize on changing consumer preferences and

competitive threats. However, new products must be developed tactically, and the products potential

must be understood and analyzed before it hits the market. Currently, success rates for new products


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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.

The companies that are best able to execute the whole product development cycle will clearly have an

advantage. This requires reducing time-to-market as well as making effective use of scarce internalresources and improving collaboration with partners. In addition, great attention must be paid to

aligning the related marketing initiatives (e.g. advertising, sales promotions, etc.) with the new product

introductions.

Innovation is one of the primary growth drivers for beverage companies, and it can involve changes to

the product itself or to the products packaging:

Product innovation Focuses on providing new tastes and flavors to demanding

consumers.

Packaging innovation - Emphasizes developing differentiated packaging according to

the consumption situation. Often, beverage manufacturers use packaging innovation to

increase product shelf life.

To ensure new product success, beverage companies must oversee the integration, consolidation and

reuse of knowledge from all involved parties (including beverage manufacturers and bottlers), from R &

D through production, and down to sales, marketing, and financials.

By emphasizing greater collaboration and implementing Web-based workflow, beverage companies can

reduce lead-time from concept to shelf by 25 - 40% and, at the same time, better integrate safety

controls into the development process.

Increase customer retention through effective trade promotions:

In an environment characterized by strong retailers and discriminating consumers, beverage companies

must utilize processes and tools to protect their market shares. To do this, they must make a favorable

impact at the point of sale through promotional activity.


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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, the competition for shelf space

has never been higher. If a beverage company fails to execute a trade promotion at Wal-Mart, a

competitor will. Furthermore, as trade promotions have proliferated over the past few years, they have

also become more targeted. In response, beverage companies must create promotions for specific

demographics, channels, and retailers, which make the sales process more costly and complex.

Trade promotions vary widely in terms of method, approach, and structure. Many local promotions are

run ad-hoc with marginal capital investments by field sales associates, while others require significant

investment and involve pre-scheduling in co-operation with national chains.

Two of the most commonly used trade promotions in the beverage industry are coupons and rebates.

Coupon and rebate management are critical to enhancing relationships between the beveragemanufacturer and wholesalers, customers and, in the case of coupons, consumers.

Coupon programs, which are in essence trade promotions addressed to the final consumer, are

mainly executed via discounts at large retailers. The coupon, a certificate with a stated value, can be

applied immediately or reserved for the next purchase. A properly executed coupon program enables

beverage companies to pass savings directly to the end consumer.

On the other hand, rebate programs are trade promotions addressed to the retailer. Therefore,

contractual terms and conditions between the manufacturer and the retailer must be monitored and

executed. Rebates are often part of special trade promotions, and management of the rebates typically

follows one of the following flows:

Figure - Rebate management in direct sales


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Figure- Rebate management in Indirect Sales


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Improve margins by optimizing the telesales channel

For a large number of companies in the beverage industry, telephone sales is the primary method of

order taking and customer interaction. An effective telesales process can increase revenues and

complement other sales processes, such as DSD and field assets management. This is accomplished by

integrating the phone sales function with the companys other operations.

When correctly executed, inbound and outbound telesales functionality enables companies to manage

effectively and efficiently all contacts related to sales and customer services. In addition, it helps build

client relationships, sell new business, and expand and retain the current customer base.

Well-implemented telesales functionality also enables business processes to be integrated and

standardized. This effectively closes the loop, creating a consistent experience for customers within a

multi-channel environment.

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

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.


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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, from generating leads, planning calls, and prioritizing sales opportunities and activities, to

managing contacts and placing orders quickly.

Business performance improvement priorities the path to value Against the backdrop of these market

challenges, how can soft drink companies drive profitable growth and create value for their owners or

shareholders?

In practical terms, there are four areas on which companies in the soft drink business need to focus:

Revenue protection and enhancement for example, as driven by product and packaging

innovation, differentiated quality, improved product availability, and better management of

customer relationships

Cost reduction/margin improvement for example, through improved operational efficiency,

lower labor costs, reduced waste and the capture of operational synergies from acquisitions

Improved asset utilization for example, 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, through demonstrating quality by participating in retailer

assurance schemes and assisting trade customers in achieving full compliance with newtraceability legislatiON


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PEPSICO INTERNATIONAL

HISTORY OF PEPSICO

1893--Caleb Bradham, a young pharmacist from New Bern, North Carolina, begins experimenting with

many different soft drink concoctions; patrons and friends sample them at his drugstore soda fountain.

1898--One of Caleb's formulations, known as "Brad's Drink," a combination of carbonated water, sugar,

vanilla, rare oils and cola nuts, is renamed "Pepsi-Cola" on August 28, 1898. Pepsi-Cola receives its frist

logo.

1902-- Bradham applies for a trademark with the U.S. Patent Office, Washington D.C., and forms the

first Pepsi-Cola Company.

1905--Pepsi-Cola's first bottling franchises are established in Charlotte and Durham, North Carolina.

Pepsi receives its new logo, its first change since 1898.

1934--A landmark year for Pepsi-Cola. The drink is a hit and to attract even more sales, the company

begins selling its 12-ounce drink for five cents (the same cost as six ounces of competitive colas).

Caleb Bradham, the founder of Pepsi-Cola and "Brad's Drink," dies at 66 (May 27th, 1867-February 19th,

1934).


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1941--The New York Stock Exchange trades Pepsi's stock for the first time.

In support of the war effort, Pepsi's bottle crown colors change to red, white, and blue.

1960--Young adults become the target consumers and Pepsi's advertising keeps pace with "Now it's

Pepsi, for those who think young."

1963-- Pepsi-Cola continues to lead the soft drink industry in packaging innovations, when the 12-

ounce bottle gives way to the 16-ounce size.

Twelve-ounce Pepsi cans are first introduced to the military to transport soft drinks all over the world.

1965--Expansion outside the soft drink industry begins. Frito-Lay of Dallas, Texas, and Pepsi-Cola

merge, forming PepsiCo, Inc.

Military 12-ounce cans are such a success that full-scale commercial distribution begins.

1970--Pepsi introduces the industry's first two-liter bottles. Pepsi is also the first company to respond

to consumer preference with light-weigh, recyclable, plastic bottles.

1984--Pepsi advertising takes a dramatic turn as Pepsi becomes "the choice of a New Generation."

1985--After responding to years of decline, Coke loses to Pepsi in preference tests by reformulating.

However, the new formula is met with widespread consumer rejection, forcing the re-introduction of

the original formulation as "Coca-Cola Classic."

The cola war takes "one giant sip for mankind," when a Pepsi "space can" is successfully tested aboard

the space shuttle.

1991-- Pepsi introduces the first beverage bottles containing recycled polyethylene terephthalate (or

PET) into the marketplace. The development marks the first time recycled plastic is used in direct

contact with food in packaging.


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1992-- Pepsi-Cola and Lipton Tea Partnership is formed. Pepsi will destribute single serve Lipton

Original and Lipton Brisk products.

1994-- Pepsi Foods International and Pepsi-Cola International merge, creating the PepsiCo Foods and

Beverages Company.

1997-- PepsiCo. announces that it will spin off its restaurant division to form Tricon Global Restaurants,

Inc. Including Pizza Hut, Taco Bell, & KFC, it will be the largest restaurant company in the world in units

and second-largest in sales.

1998-- Pepsi celebrates its 100th anniversary.

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. The Company has invested heavily in India making it one of the

largest multinational investors. The group has built an expansive beverage, snack food and exports


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business and to support the operations are the group's 43 bottling plants in India, of which 15 are

company owned and 28 are franchisee owned.

PepsiCo stays committed to providing its consumers with top quality beverages. Its diverse

portfolio of brands include the flagship cola brand - Pepsi; Diet Pepsi; 7Up; Mirinda; Mountain

Dew; Slice fruit drink; Tropicana brand 100% fruit juices in various flavours; Aquafina

packaged drinking water; Gatorade plus local brands Lehar Evervess Soda, Dukes Lemonade

and Mangola.

PepsiCo is also a dominant player in the snack food segment in India. PepsiCo's snack food

company Frito-Lay is the leader in the branded potato chip market. It manufactures Lay's Potato

Chips; Cheetos extruded snacks, Uncle Chips; traditional namkeen snacks under the Kurkure and

Lehar brands; and Quaker Oats.

PepsiCo is one of the largest MNC exporters in India and its export business consist of three

categories - agri business, commodities and Pepsi system sales. PepsiCo has made significant

investments with the Punjab Agriculture University to develop a comprehensive 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 has leveraged its knowledge in contract

farming to develop seaweed cultivation in Tamil Nadu and has partnered with the Government of

Punjab to help farmers of the state through the utilization of developed technology for citrus

farming.

As part of its sustainable development initiatives, PepsiCo India has been a committed leader in

the promotion of rain water harvesting, water conservation recycling and the reduction of

effluent discharge. PepsiCo has also established zero waste centers and PET recycling supply

chains and assisted victims of natural disasters. PepsiCo stays dedicated in its endeavor to

develop community outreach programs by supporting rural water supply schemes, administering


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medical camps in villages, providing computers to rural schools and creating opportunities for

women in rural areas through vocational training as an alternate means of livelihood.


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PEPSICO INDIA WITH RKJ GROUP:

Vision

Being the best in everything we touch and handle.

Mission

Continuously excel to achieve and maintain leadership position in the chosen businesses; and delight all

stakeholders by making economic value additions in all corporate functions.

It can be said with absolute certainty that the RKJ Group has carved out a special niche for itself. Our

services touch different aspects of commercial and civilian domains like those of Bottling, Food Chain

and Education. Headed by Mr. R. K. Jaipuria, the group as on today can lay claim to expertise and

leadership in the fields of education, food and beverages.

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., Pepsi Foods Limited. The manufacturing facilities

were restricted at Agra Plant only.

Varun Beverages Ltd. is the flagship company of the group.The group also became the first franchisee

for Yum Restaurants International [formerly PepsiCo Restaurants (India) Private Limited] in India. It has

exclusive franchise rights for Northern & Eastern India. It has total 46 Pizza Hut Restaurants & 1 KFC

Restaurant under its company.

The group added another feather to its cap when the prestigious PepsiCo International Bottler of the

Year award was presented to Mr. R. K. Jaipuria for the year 1998 at a glittering award ceremony at

PepsiCos centennial year celebrations at Hawaii, USA. The award was presented by Mr. Donald M.


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Kendall, founder of PepsiCo Inc. in the presence of Mr. George Bush, the 41st President of USA, Mr.

Roger A. Enrico, Chairman of the Board & C.E.O., PepsiCo Inc. and Mr. Craig Weatherup, President of

Pepsi Cola Company.

Strategic Divisions:

PepsiCo India consists of different divisions that include Beverage division, Snack food division and the

Restaurant division (Yum Restaurants India Pvt. Ltd.). These divisions work as separate SBUs and have

their separate management.

PepsiCo India divided its beverage division into different operating divisions. The heads of these

divisions report directly to the CEO. The heads of these divisions are in charge of their respective areas

and are accountable for the proper functioning of all the regions. The FOBOs also report to the regional

heads apart from the COBOs.

Beverages


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MARKETING OVERVIEW OF PEPSICO INDIA

Marketing Environment:

Marketing environment is the overall environment in which a Company operates. This consists of the

Task Environment and the Broad Environment.

Task Environment

Task Environment includes the immediate players involved in producing, distributing and promoting the

offering. The main players are the company, suppliers, distributors, dealers and the target customers.

Suppliers include the material and service suppliers such as marketing research agencies, advertising

agencies, banking and insurance companies, transportation companies, and telecommunications

companies. The dealers and distributors include agents, brokers, manufacturer representatives and

others who facilitate finding and selling to customers.

The suppliers for PepsiCo India include the bottle suppliers for the soft drinks. These include the Pet

bottles and the Glass bottles. One of the most vital products required in the operation is Refrigerator.

PepsiCo does not manufacture the refrigerators, instead they are supplied by different vendors who get

time bound contracts from the company.

The distributors and dealers are part of the sales and distribution network. This will be explained later

under the section ofPlace, in the 4 Ps segment.

The target customer for PepsiCo is primarily the youth. But, 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- CSD category, these include fruit based non-carbonated drinks, juice based drinks, energy

drinks, sports drinks, snack food (from the snack food division i.e. Frito Lay).


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Broad Environment:

This contains forces that can have a major impact on the players in the task environment. This includes

six components: demographic environment, economic environment, physical environment,

technological environment, political legal environment, and socio cultural 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. This will be

explained in detail in the strategic marketing segment.

Marketing Mix / 4 Ps:

Marketing Mix has been defined as the set of marketing tools that a firm uses to pursue its marketing

objectives. These tools are classified into four broad groups, namely, Product, Price, Place and

Promotion.

Marketing mix decisions should be made to influence trade channels as well as final consumers. A firm

can alter any of the four Ps accordingly, including changes in the product and distribution channel as

well.


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The four Ps represent the sellers view of the marketing tools available for influencing buyers. Whereas,

from a buyers point of view, each marketing tool is designed to deliver a customer specific benefits

according to his or her requirements.

Marketing Mix

Target Market

Marketing Variables: The Four P Components of the Marketing Mix

Place

Channels

Coverage

Assortments

Locations

Inventor


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Product

Prod. VarietyQualityDesign

Features

Brand NamePackaging

SizesServices

WarrantiesReturns

Product

Prod. Variety

Quality

Design

Features

Brand Name

Price

List Price

Discounts

Allowances

Payment period

Promotion

Sales Promotion

Advertising

Sales Force

Pubic Relations


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Product:Pepsi offers different variety of products ranging from carbonated to Non Carbonated

Soft Drinks. These include

Pepsi Cola

Mirinda ( Lemon and Orange )

7 Up

Dew

Slice

Tropicana

Aquafina (Mineral Water)


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These Products come in different size200 ml, 300 ml, 600 ml, 1200 ml, 2 lt. there are nearly42 SKUs which are monitored and regulated on daily basis.

Product Quality:

This is one of the most important aspects that any Co. needs to address. 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. Therefore pepsi has to maintain stringent quality norms and

standards and norms. Pepsi does that by following one quality standard worldwide and accordingto the official website of pepsi, the Co. maintains that :

At every level of Pepsi-Cola Company, we take great care to ensure that the highest standards

are met in everything we do. In our products, packaging, marketing and advertising, we strive for

excellence because our consumers expect and deserve nothing less. We promise to work toward

continuous improvement in all areas of our organization.

At every step of our manufacturing and bottling process, strict quality controls are followed toensure that Pepsi-Cola products meet the same high standards of quality that consumers have

come to expect and value from us. We also follow strict quality control procedures during the

manufacturing and filling of our packages. Each bottle and can undergoes a thorough inspection

and testing process. Containers are then rinsed and quickly filled through a high-speed, state-of-

the-art process that helps prevent any foreign material from entering the product. Additional


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quality control measures help to ensure the integrity of Pepsi-Cola products throughout the

distribution process, from warehouse to store shelf.

Brand Name:

This is the most important thing any Co. in this Business needs to do if it wants to remain and

succeed in the Business. Pepsi has successfully done that for so many years. 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, Sachin, ganguly, Dravid etc.) that

attracts to the youth and this is one of the main reason for the success of Pepsi.

Packaging and Size : The products are available in packaging and sizes. This is done to

facilitate the use according to the requirements of the Customer. Different packaging also affects

the usage pattern of the product in various markets. e. g. sale of 2 lt. bottles is high in areas in

which middle and high income group customers stay. But the sale of 200 and 300 ml bottles is

high in areas where people in the lower income group bracket stay. The sale of 600 ml bottles is

high in areas where students etc. stay. Different packaging is also provided for different products

like Tetra Packs, Pet Bottles and Glass Bottles (in 200 and 300 ml).

Services, Warranties, 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, e.g. leak or burst bottle, half filled bottle etc. 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 25 th of every month to get

a replacement.

Price:

List Price:The Price of each product is fixed and there is no discrepancy. Salesmen are not

authorized to make any change, alteration or give discounts unless authorized by the Company.


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Discounts: Discounts are provided to Wholesalers and Slums but there is no discount for

retailers. The discounts are negotiated directly with the Company and the C&F or the Distributor

point is not involved in the price negotiation.

Allowances:Allowances are given to salesmen on achieving their daily targets. This target is

given to every Salesman everyday before he goes on his designated route. The Depot In charge

(Sr. C E / C E) gives the target to every salesman in consultation with the TDM.

Payment period and Credit terms:No credit is provided. The payment procedure is not

flexible as the retailers are required to make on the spot payments. At times, they defer the

payment and in that case, the Salesman either shows a shortage or pays the rest of the amount by

himself. The wholesalers are also required to make in advance but at times they also defer thepayment and make the payment at a later date.

Promotion:

Sales Promotion: This is the most frequently used form of promotion which is used to

increase the sale of the selected product. These promotions are used from time to time depending

upon the sale of the products. 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.

Advertising: Advertising is done by PepsiCo. COBO (Company owned Bottling Operations)

and FOBO (Franchisee owned Bottling Operations) have no say in the advertising campaigns

and their planning. The advertising account of Pepsi is handled by JWT (J Walter Thomson) in

association with the Corporate office of PepsiCo India.

Sales Force: There is a dedicated sales force at every C&F and Distributor point. Every

Salesman is assigned a specific route that he has to cover every day. The Salesman has to take

care of all the Shops on the designated route and address and inform (to the Sr. CE / CE) about

any issue any retailer has on the 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. These include informing the retailer about the promotional


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scheme, registration for the scheme, terms and conditions of the scheme etc. The Salesman is

also assigned the task of registering maximum possible outlets on his assigned route.

Public Relations:

This is one important aspects related to the success of PepsiCo in India. Pepsi believes in

maintaining good and healthy relations with all its Channel partners and every other person in

the value chain. This has helped Pepsi in maintaining an extremely competitive position in the

market in spite of the continuous onslaught from Coca Cola.

Place:

Channels: Channels are independent organizations involved in the process of making a

product or service available for use or consumption. There are different intermediaries in

channels that facilitate the availability of goods to the consumer.

Coverage: Two things come under market coverage. These are Market Reach and Market

Penetration.

Market Reach can be termed as accessibility and Market Penetration can be termed as

Frequency.


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SALES AND DISTRIBUTION NETWORK OF PEPSICO

INDIA.


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COMPANY

COBO FOBO

WAREHOUSE

C & F DISTRIBUTOR

WHOLESALER SLUMS RETAILER

RETAILER CUSTOMER

CUSTOMER

SALESMEN SALESMEN


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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.

Company (PepsiCo): PepsiCo India provides the salt to all the bottling plants in the Country that

carry out the bottling operations.

COBO: These are Company owned bottling operations operating directly under the Company.

Out of 32 bottling plants, PepsiCo owns 15.

FOBO: These are Franchise owned bottling operations. R K Jaipuria group does all the

franchisee-bottling operations for PepsiCo India; currently R K J Group has 17 bottling plants for

Pepsi.

Warehouses: These are Company or franchisee owned warehouses spread over various

locations that cover the respective territories and come under the purview of their respective

Area or Territory Offices. Stocks are sent from the bottling plants to these warehouses, from

where they are sent to the C & F centers and Distributor Points.

C & F Centers: These are the biggest centers in the distribution network and receive proper

assistance from the Company (either COBO or FOBO). The C & F center is owned by a private

player and not by the Company. The vehicles (Delivery Vans) are owned by the Company, and

the Salesmen at the C & F points are on the Company Payroll.

Distributors: These are small, compared to C & F centers. Everything at the Distributor point

owned and managed by the distributor, even the salespersons are on the Distributors payroll.

Wholesalers: These are smaller than C & F centers and Distributor points and get the stock

directly from the Company or Franchisee. They get their stock directly from the Company and

thus get special rates and extra discounts from the Company.


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Slums: They are generally smaller than the Wholesalers are. However, they get special

discounts from the C & F centers and Distributor points.

All the different players in the distribution channel namely C & F centers, Distributor points,

Wholesalers and Slums have different designated markets and are not supposed to operate in the

market designated to any other player.

Retailer: Retailers are the most important chain in the distribution channel of Pepsi as they are

the only point of contact with the customers. Retailers get their stock from all the other channel

members in the distribution channel.


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Demographic/ Technological/

Economic Physical

Environment Environment

Marketing

Intermediarie

PublicSuppliers

Competitors

Marketing

Information

System

Marketing

Planning

System

MarketingControl

System

Marketing

Organization

&

4 Ps

Target

Customers

STRATEGIC MARKETING OF PEPSICO INDIA


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Demographic / Economic Environment:

Demographic environment comprises of people of different ages and class. This helps the Company in

identifying specific target market for specific products. Similarly, economic environment helps the

Company in deciding how much to spend and accordingly price the products. Pepsi distributes its

products considering this in mind. Cans are distributed in areas that have more youth population and

two lt. bottles are distributed in areas that have more no. of families. 200 ml bottles are primarily

distributed in areas with lower income group people.

Technical / Physical Environment:

Technical and physical environment refers to the technical capabilities and the infrastructural

capabilities and requirements of the Company. Pepsi has access to the best technology for its productsand it uses the same technology worldwide for its products. This was instrumental in helping Pepsi

handle the pesticide controversy.

Political / legal Environment:

This is one of the most important factors that a company needs to consider while starting, establishing

and expanding operations in any country. Legal Environment is important because a company needs to

confirm to the laws of the land and carry out its operations accordingly. While political environment is

important as it can play an important in forming opinions regarding the company. This is the reason why

Pepsi operates in India in collaboration, 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.

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. This determines the ingredients (of the products) and the type advertisement and

promotions used by the Company. Because of these factors, Pepsi primarily uses Bollywood stars and

Cricket stars in India as they are the biggest celebrities and role models and are widely accepted.


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SALES AND MARKETING HIERARCHY OF PEPSICO INDIA.

MUM

UM

TDM MDM

MDCADC

CE ME

UM

SALESPERSONS MARKETING

ASSISTANTS


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MUM Marketing Unit Manager:

In charge of specific zones (e.g. north, south, east, west) and report to the corporate office.

UM - Unit Manager:

In charge of day to day operations and supervision of all the functions within the organizations including

operations, logistics, sales and distribution, marketing. The Unit Manager reports to the MUM.

TDM - Territory Development Manager:

TDM is the in charge of the sales and distribution network of a particular territory within a zone.

Responsible for the daily, monthly and annual sales within the territory decides the daily schemes for

products and incentives for salespersons. He is also responsible for cost effectiveness, profit generation

and profit maximization within the territory.

MDM - Marketing Development Manager:

MDM is responsible for all the marketing activities and their effectiveness within a territory. Decides the

format and time frame of the marketing and promotional activities and the incentives given to the

retailers.


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ADC - Area Development Coordinator:

Reports to the TDM, and is in charge of a C & F center and the distributor point in the area. 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. ADC is responsible for timely disposal of any issue faced by

the retailers. He decides and approves the boards, displays and hoardings in the area.

MDC - Marketing Development Coordinator:

Reports to MDM, and is in charge of carrying out all the marketing activities in the area. He is

responsible for the execution and success of marketing and promotional activities. Coordinates with the

outside agencies for displays, boards, checks conducted in the market. He is also responsible to keep a

check on the expenditure of the marketing activities in the market.

CE - Customer Executive:

Reports to the ADC and is in charge of the salespersons. He is required to visit the market and

accompany every salesperson as frequently as possible. He is the first person to get information about

the market / area and is the first contact if the salespersons or retailers face issue. Responsible for

assigning and achieving daily sales target given to the salespersons.

ME - 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


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Salesperson:

They are the most important asset for the company as they are the ones who sell the products, are

responsible for acquiring new customers, and retain the old ones. Their work also includes informing the

retailers about the promotions and any new scheme launched. 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. They report to the CE.

Marketing Assistant:

Reports to the ME and is responsible for the distribution and usage of the displays and boards in the

area. Also has to check whether retailers are following the guidelines of the company regarding

promotional displays, other displays and displays in the Vigicoolers. They report to the ME.

Pepsi is one of the most well known brands in the world today available in over 160 countries. Thecompany has an extremely positive outlook for India. "Outside North America two of our largest and

fastest growing businesses are in India and China, which include more than a third of the worlds

population." (PepsiCos annual report, 1999)

This reflects that India holds a central position in Pepsis corporate strategy. India is a key market for

Pepsico, and at the same time the company has added value to Indian agriculture and industry. PepsiCo

entered India in 1989 and is concentrating in three focus areas Soft drink concentrate, snack foods and

vegetable and food processing.

Faced with the existing policy framework at the time, the company entered the Indian market through a

joint venture with Voltas and Punjab Agro Industries. With the introduction of the liberalisation policies

since 1991, Pepsi took complete control of its operations. The government has approved more than US$

400 million worth of investments of which over US$ 330 million have already flown in.


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One of PepsiCos key strategies was to develop a completely local management team. Pepsi has 15

company owned factories while their Indian bottling partners own 28. The company has set up 8

greenfield sites in backward regions of different states. PepsiCo intends to expand its operations and is

planning an investment of approximately US$ 500 million in the next three years.

Sustainable Competitive Advantage:

Competitive advantage is a companys ability to perform in one or more ways that its competitors

cannot or will not match. When a company is able to maintain that advantage a long period of time thatgives it an edge over its competitors then, this advantage is termed as sustainable competitive

advantage. Any competitive advantage must be seen by customers as a customer advantage. Then only

that competitive advantage can be transformed into a sustainable competitive advantage.

Three major competitive advantages give PepsiCo India a competitive edge in the market place. They

are:


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Big Muscular Brands built through better market positioning and heavy investment in

advertising and promotions;

Proven ability to innovate and create differentiated products through superior operating base;

Powerful go to market system built with the help of superior relationship base and an

impeccable sales and distribution network.

Making it all work are the extraordinarily talented and dedicated people who are an integral partof PepsiCo India.


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Communicating with the Customer:

Marketing Communication is the means by which firms attempt to inform, pursued and remind

consumers directly and indirectly about the products and brands they sell. Marketing

Communication is the central instrument of making brand equity. Marketing Communication

consists of six major modes of communications called the marketing communication mix.

Advertising.

Sales promotion.

Events and Experiences.

Public Relations and Publicity.

Direct Marketing.

Personal Selling.

Although PepsiCo uses all the modes in some form or the other, but this study will examine various

aspects of communication with the internal customers.


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OBJECTIVE OF STUDY

OBJECTIVE OF STUDY


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The purpose of research is to discover answers to questions through the

application of the sciencetific procedures the main aim is to find out the truth

which is hidden and which is not yet discovered yet

To find the share of PepsiCo and coca-cola in soft-drinks

To study the preference of people for soft drink

To determine the target market for soft drinks.

To identify the ways to increase the market share of PepsiCo

in soft drinks.

To identify the impact of distribution on sales


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RESEARCH

METHODOLOGY


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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 sampling method that I am being using is the stratified sampling method, 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. The secondary data are those studies made by others for their own

purposes. The secondary data for my research would be collected from the companies own data,

archives and their annual financial reports. Also the findings of prior research studies on outsourcing of

accounting processes would give an ample amount of historical data or decision making patterns. 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.

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, namely-


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Primary data collection

Secondary data collection

Primary data collection: Primary data was collected through Questionnaire Surveys and direct

interviews.

Secondary Data Collection: Secondary data was collected from old reports and magazines and data

provided by company itself.

DataAnalysis


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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.


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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. 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 Company officials and even the employees of

FOBO have very good rapport and relations with the Channel partners. 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. The

experience of working with people who welcome us with a smile rather than a frown will always be

remembered.

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. The non-carbonated segment is

dominated by Pepsi, Tropicana is the market leader in fruit juices. In the mineral water segment,

Aquafina clearly outsells Kinley without ay fuss.

BottlingPepsi has the advantage of being in partnership with the largest bottler in India, the R K

Jaipuria Group. RKJ Group controls almost 65% of the bottling operations of PepsiCo in India. 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.


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PepsiPepsi 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. Pepsi controls

almost 60% market share in the Cola segment.

WEAKNESS:

SECOND MOVER DISADVANTAGE - 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.

Brand On a comparative scale Diet Coke proves to have a better brand image in customers mind than.

This compels to incur extra expenditure in Advertising, Promotions and Sponsorship.

MCDONALDS This is one of the most important reason why Diet Coke outsells Pepsi worldwide

and specially in the United States. Similarly, in India Diet Pepsi may suffers in sales because of

institutional sales. Now Pepsi is trying very to bridge this gap in the near future.

EXPENDITURE Right from the very beginning Pepsi

project report crystallization on nsi.docx

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