PepsiCo marketing channel Executive summary

January 19

2015

Purpose of this project is study marketing channel Pepsi .Pepsi International is a world renowned brand. It is a very well organized multinational company. They produce, one of best carbonated drinks .As we audited the Pepsi marketing channel we find Pepsi cola a three level channel .Pepsi marketing channel is supported by channel flows which are performed by Pepsi channel members with their specific proportional, weightage, potential with cost as well. we find that Pepsi cola strictly follow the exclusivity to sell their products with intensive distribution providing the channel members attractive packages .Although they have a big edge in their assortment variety and sale but gaps are both on demand and supply side .In service out puts end user is not satisfied with Pepsi cola black drink .As supply side is concerned PepsiCo incurred high cost on physical possession by giving distribution against old distributor .Pepsi don’t have direct negotiation with members due to which conflict are arises like on retailers end they make deal with Pepsi to exclusive sale but cheat them to sell other drinks in Pepsi freezers .Conflict with old distributors in sharing areas are also there. Suggestions are always there to remove gaps and conflicts .Pepsi must focus on main product Pepsi by developing taste not to disturb old distributor make negotiation proper with channel member specially retailer and end user by teams from PepsiCo directly .We find Pepsi marketing channel with extraordinary promotion n financing .Although gaps and conflict PepsiCo is well recognized marketing channel.

Group members : Amir roll#03, Zeeshan roll#9 Tayyaba roll#02 Khurram roll#16 Sajjid Imran roll#21 M.Adnan roll#20

TABLE OF CONTENT

Introduction and History………………………………………………………….02

Pepsi in Pakistan ………………………………………………………………...03

Company Profile…………………………………………………………………04

Distribution of PepsiCo………………………………………………………05-07

Allocation of channel function and flow …………………………………….07-10

Service output………………………………………………………………..10-11

Verity and Assortment…………………………………………………………..11

Ability to meet the target customer……………………………………………..12

Gap Analysis …………………………………………………………………12-14

Channel conflict………………………………………………………………14

Suggestions and Recommendations…………………………………………14-15

Conclusion …………………………………………………………………….15

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History of the PepsiCo

Pepsi-Cola was created in 1898 in New Bern, North Carolina by Caleb Bradham, named “Brad’s Drink” and later renamed “Pepsi-cola”. In 1902, Bradham launched the Pepsi‐Cola Company in the back room of his pharmacy, and applied to the U.S. Patent Office for a trademark which was awarded on June 16, 1903. The Pepsi‐Cola Company was one of the first companies in the United States to switch from horse‐drawn transport to motor vehicles. Pepsi is a USA based public company whose stocks are available in New York.Mountain Dew, acquired by Pepsi-Cola in 1964, switches its advertising and package graphics room hillbillies to action-oriented scenes.The third Mountain Dew slogan appeared in 1973 "Put A Little Yahoo in Your Life."PepsiCo acquired Pizza Hut, Inc. Pizza Hut was founded in 1958 by Dan and Frank Carney.Taco Bell is was acquired by Pepsi. Taco Bell was established in the mid-1960s by Glen Bell.PepsiCo purchased Kentucky Fried Chicken, the leader in the quick service chicken market. KFC was founded by Colonel Harland Sanders. Colonel Sanders began franchising the company in 1952. KFC was spun off along with Pizza Hut and Taco Bell businesses as Tricon Global Restaurants, Inc. in 1997.PepsiCo purchases Seven-Up International, the third largest franchise soft drink operation outside the United States

 INTRODUCTION TO THE COMPANY

Pepsi International is a world renowned brand. It is a very well organized multinational company, which operates almost all over the world. They produce, one of best carbonated drinks in the world. Pepsi is a symbol of hygiene, quality and service, all over the world. Pepsi is producing Cola for more than 100 years and it has dominated the world market for a long time. Its head office is in New York.

MISSION STATEMENT

"To be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity."

VISION STATEMENT

"To be the world's best beverage company". Being the best means providing outstanding quality, service, cleanliness and value, so that their every customer is contented and happy with their products."

"To increase the value of their shareholder's INVESTMENT through sales growth, cost control and wise investment of resources."

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PEPSI PAKISTAN

The market in Pakistan is surely dominated by Pepsi. It has proves itself to be the No.1 soft drink in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In 1971, first plant of Pepsi was constructed in Multan, and from their after Pepsi is going higher and higher. Pepsi is the choice soft drink of every one. It is consumed by all age groups because of its distinctive taste. Compared with other Cola in the market, it is a bit sweeter and it contributes greatly to its liking by all. Consumer's survey results explain the same outcome and Pepsi has been declared as the most wanted soft drink of Pakistan.

FOUNDERS OF THE COMPANY

The company was initially owned by late Nawab Saddiq Hussain Qureshi & family till 1989. The Pepsi International franchise declared the management incompetent, thus, the company was handed over to a new set of personnel. The factory set up was reorganized & reestablished with expansion in various sectors. The Pepsi International did this by offering it to Mr. Jehangir Tareen, who formed up his new team. Mr. Jehangir Tareen is Nephew of General (late) Akhtar AbdurRehman.

COMPANY PROFILE Board of Directors: Akbar Akhta Khan(Chairman)Mr.Haroon Akhtar Khan(Chief Executive)Mr.Gazi Akhtar KhanMrs.Rasheeda BegumMrs.Mudina Akbar KharMr.Saifullah Khan ParachaMr.Saeed ullah Khan Paracha

Company SecretaryMr.Amjad Jhanzeb KhanBankersAllied Bank of Pakistan Ltd.Citibank N.A.MCBNDFC

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The Bank of PunjabUBL

Legal AdvisorCornehus, Lane & Mufti,Nawa-i-Waqat Building,4-Shahrah-e-Fatima Jinnah, LHR.

AuditorTaseer Hadi Khalid & Co.Chartered Accountants.

MillKanjawani, Tehsil Samundri, District Faisalabad.

REGISTERED OFFICE

31 – N,Gulberg II,Lahore,Pakistan.UAN: 111-724-725 Web Site: http://www.Pepsico.com

Distribution Structure of PepsiCo

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Pepsi distribute their product by using a three level channel

1. MANUFACTURE2. DISTRIBUTOR3. WHOLESALLER4. RETAILER5. END USER

This is the distributer network of the Pepsi co the company has using a three level channel in which the product has been reached to the end user .the company has this channel about a 30years old . first the company use this channel to provide the product their customer The customer also buy the product to their near whole sale point and distributer directly there are whole seller and distributer in the city to sale the product. The distributer is used because a to compete a large part of the market and increase their sale level

Intensity of the channel

Pepsi co used the intensive distribution the has mind to provide the product all area of the city for this purpose the company should be used a large number of the distributer to provide their product .The area has any type you should be find the Pepsi co every retails shape . the company should provide the freezer to the shopkeeper to sale their product . there is also a condition in this the shopkeeper should not sale any other company product .the Pepsi co also used the selective distribution in which only the Pepsi co sale like the k f c has sale only the Pepsi co not any other drink .and the Pepsi should provide the only the bottle to the k f c not mickdonalthe company has try to cover all area of the city for this purpose the company used the distributer to sale their product the company bear a extra cost to increase their sale level the company the company target the youngster to increase the sale of the company the company reach the every colleges and university to target the customer

Member of Pepsi co channel

There are five member in Pepsi co channel is given below

Manufacture

He is the person who provides raw materials to the producers or sellers. Suppliers form an important link in the company's overall customer value delivery system. They provide the resources needed by the company to produce its goods and services. PepsiCo International provides raw materials to Pepsi franchises in Pakistan. Supplier problems can seriously affect marketing. Marketing managers must watch supply availability i.e. supply shortages or delays, labor strikes and other events can cost sales in the short run and damage customer satisfaction in

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the long run. The company should monitor the price trends of their key inputs. Rising supply costs may force price increases that can harm the company's sales volume

2.WHOLESALLER

The manufacture provide the Pepsi co to distributor to sale them. The distributor appoint the wholesaler the product the Pepsi co whole seller sell the Pepsi by two way

1 the wholesaller sell the Pepsi co direct to the retailer. In this way wholesaler earn more profit because he has not share their profit another person and not bear any other cost

2 The second way to sell the Pepsi co through the distributer In this way they increase the sale level but their commission should be reduced and their cost increase

3 Distributer

The distributer is appointed by the company the distributor is distribute the Pepsi coto different area The Pepsi co distributer is appointed by the company and the whole seller all the control is in the hand of the company.The distributer vehicle is provided by the company. The company received the installment to the whole seller and when the installment is complete the vehicle is the whole seller .

4 Retailer

There retailer sell the Pepsi to the end user they get their profit to sale the Pepsi The retailer get the Pepsi by two way The retailer buy directly to the whole seller and. the distributer also provide the Pepsi co to the retailer The retailer is the main member of the channel who sell the Pepsi to the end user and earn profit.

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5 End user

The channel is work because Pepsi co is reach to end user all the channel activity is done because the end user if he satisfied then sale level increase otherwise not the company is try to provide Pepsi co all the area at minimum cost because the end user is satisfied and purchase the Pepsi co

Allocation of channel function and flow

Physical possession

Ownership

Promotion

Negotiation

Financing

Risking

Ordering

Payment

Physical possession

The producer provide the physical possession to the distributor. In this segment Pepsi co has perform this function.

Physical custody The distributor has get the physical custody of the bottles .the distributor have pay all the cost of the bottles and get the custody. The distributor have stock all the bottles in their warehouse and then send the bottles to the retailer .

Carriage cost

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producer

distribuer wholesaler retaile

r

Enduser

The cost of the carriage is bear by the producer .all the carriage and duties is paid by the producer .the loading and unloading cost is also bear by the producer. When the bottles reach to the distibutor then they bear the storage and other cost of the bottles the publicity and other cost is bear by the company

Responsible for loss and damages

The producer is responsible for all the damages .if any bottle is brake and defect the distributor is return to the producer .Any claim is made by the distributor the producer is accept and pay the damages. Any accident a road accident and any other accident is happen the producer is responsible for this loss and pay the damages to the whole seller

Ownership

Hold title When the distributor paid the cost of the bottles he got the title and possession of the bottles. He got the title for the purpose of sale only. In Pepsi co Company all the cost is paid at the time if the delivery no credit is make by the company. The company has made the business on the cash basis only. the company is get the amount as the cash cheque and online payments system.

Have May or may not accept the return

The Pepsi co company have accept the return sent by the distributor if any defect and leakage in the bottle the company is accept the returnIf the demand is low and the supply is excess the company is also accept the return The distributor is also accepting the return made by the retailer n whole seller.

Promotion of Pepsi co company

All the promotion of the Pepsi co is mad by the company. the promotion make the company Following way Advertisement of Pepsi coAll the advertisement expenses bear by the company. The company is responsible to make advertisementThrough media The Pepsi co makes advertisement through media like print and electronic media for the promotion purpose. The purpose of is that to attract the customer. The advertisement is a big expense of the company. Display shelf space For the promotion purpose the company has make flexes to promote their product the company also make the wall chalking to display their product. To color the shop and vehicle is also a way to promote their product.

Negotiation

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The Pepsi co make the negotiation following waySettlement of term deal The Pepsi co make deal to their in term of price At what price he offered the bottle to retailer and retailer next sell to the end user.In this condition they also distribute the expenses of the channel and profit of the channel share by the member.Responsibility The responsibility of the each member is also discussed in this term. Responsibility of loss and complete their target is also discuss in this term.The company is also negotiate the following termPromotionQuantities sold and offeredDelivery schedule

Finance

The flow of the cash has following way.Producer pays the cash to the whole seller.The dis distributor needs the van to distribute the bottle. The producer has purchase the van and provide to distributor and get the possession of the van. The distributor pays the installment to producer and when the installment is complete the he get the right of the van.distributor pays the cash to the producer When the producer has enough cash for packing and bottling then the producer demand the cash to distributor. he pay the cash as a advance and when the full amount is paid the advance is settlement in the full amount. The producer is also get the cash to pay the other expenses of the whole company Whole seller pays the cash to the distributer The distributer received the cash to the distributor when he has need. He needs the cash for the purpose to purchase the fuel of the van.And also to pay the duty of the van and repair the.

Discount and commissionThe discount and commission pay by the producer to distributor is also discuss The distributor has paid the discount to retailer. The producer gives the permission to distributor to give the discount to their retailer according to the term and condition

Risk

All the risk of the bottle is bear by the company The company bears the following riskDamage, spoilageObsolescence If any risk happen the above the company is responsible to bear them The company received the return bottle. The company is also responsible if any accident happen in the way the company bear all the loss and the damages to the distributor.

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Ordering

The order is made by the distributor to the producer.The Pepsi cause the direct ordering method. in this method the distributor directly made the order to the producer and the producer is complete the order in time The retailer and the wholesaler is not make the directly order to the producer.The distributor is responsible to received the order of them and complete in time.

Payment

The payment is directly mad by the distributor to the producer The Pepsi co company has use cash basis method. They not make any credit to distributor and the company tells the distributor to not make any credit to their retailer.

Service output

channel system perform duties that reduce end users search, waiting time ,storage and other cost .These benefits are called service output of the channel.

Bulk breakingSpatial convenienceWaiting timeProduct varietyCustomer informationCustomer services Bulk breaking of Pepsi co

The distributor purchase a bulk of Pepsi co to the producer and then make bulk breaking and sale the bottles to the retailer and the consumer according to the requirement of them. The distributor sells the pet and shall of the Pepsi co to their retailer and retailer sell to the consumer a single bottle. This enables the consumer to purchase a single unit and a pet and the quantity whatever he wants to purchase. The bulk breaking of Pepsi co increase the sale level of the Pepsi co. and the profit of the Pepsi co Bulk breaking is beneficial for the Pepsi co because everyone buy the bottle according to his desire.

Spatial convenience

The Pepsi co provides the consumer spatial convenience. The company reduces the customer transportation cost and the searching cost because the whole seller sent the distributer to all the target area. The distributor sent the bulk to the retailer where the consumer easily buys the bottle. The Pepsi co bottle available every retailer shop easily The company also provide the spatial convenience to their retailer to provide them the freezer in which they easily store the bottle and easily sell to their consumer

Customer information

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Pepsi has now about their customer . the Pepsi aware about the requirement of their customer. The Pepsi now about the target area. The purchasing power of the customer in a specific area. What the customer demand. The Pepsi provide all the things

Customer servicesCustomer is all about quality, taste, packing, and customer satisfaction.

Waiting time

The waiting time of the Pepsi co is very low because the producer sent the bulk to the whole seller in term as soon as possible.Whole seller sent every day his distributer to market to distribute the bottles.The retailer easily purchases the stock. The retailer is not wait for the delivery. The stock of bottle is always available to the retailer. he should be easily sell the stock.The stock is always available in retailer shop the consumer is easily purchase the bottles .The low the waiting time and always availability of the stock create the goodwill and also increase the sale level of the company.

VARIOUS PRODUCTS IN PAKISTANI MARKET

STINGPEPSI COLA, MIRINDA, TEEM, 7UP, MOUNTAIN DEW, DIET 7UP, DIET PEPSI, LAYS, KURKURE, AQUAFINA, PEPSI TWIST AND TROPICANA JUICES

Assortment

The whole seller has large number of Pepsi co bottles. to sale retailer .The retailer has assort them according to their need like 2.25 lite 1.50 liter 1.00 liter 0.50 liter 0.25 liter The retailer has assort the bottle and sale to their customer .

Ability to meet target customer segments

It means that you divide the target market in to different groups. Market consists of buyers and buyers differ in one or more ways. They may differ in wants, resources, locations and buying practices. Through market segmentation companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.

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Segmentation is done on basis of the previously mentioned external factors and the following:

Behavioral Base

It is how people perceive a specific product, in short psychological analysis of a product. Pepsi all over the world is recognized as a quality drink and therefore people drink it without any hesitation whenever they are thirsty or otherwise. So marketers of Pepsi have made it a drink for all people and for diabetic people they introduced diet Pepsi.

Cognitive Base

It pushes and pulls the consumer. If the outlook of Pepsi bottle is desirable and it attracts the consumer, he will buy it even if he isn't thirsty.

GAP ANALASIS OF PEPSI CHANNEL

DEMAND SIDE

As we audited the Pepsi channel the service output level is performed in the following manners:

1. BULK BREAKING: Pepsi is providing high bulk breaking. In their service output the customer is getting the required quantities to use the Pepsi product , so there is no gap in the bulk breaking.

2. SPATIAL CONVEINCE: Spatial convince is good regarding the service outputs. Pepsi providing the product in a proper way so that customers could get it from everywhere at any time. The company is providing Freezers , Empty,, etc. So there is no gap in spatial convince.

3. DELIVERY TIME: Delivery time of Pepsi is very excellent that the retailer or other channel member could get it easily. If the retailer feels shortage of stock he can call the distributor to get the delivery on time. So there is no gap in delivery time.

4. CUSTOMER INFORMATION: Customer information regarding the PEPSI product is good but the customer is not satisfied due to the taste of the product PEPSI so it is neglected by the customer. As we see the other products of PEPSI like as STING, DEW, MARINDA, 7UP, are good in the taste of customerSolutionPepsi should focus on increase the taste of the black water because it is the mother brand of Pepsi

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5. ASSORTMENT VARIETY: Assortment

There is a proper assortment regarding the Pepsi the customer can get the require quantity easily. there is no gape in the assortment

VARIETY Pepsi has a large variety. due to this the black water of Pepsi is neglected. a gape is created due to decline the quality of the peeps

SOLUTION The Pepsi should focus to increase the quality of the Pepsi to satisfied the customer.

GAP types regarding the service out put;

1. Bulk Breaking SOS=SOD2. Spatial Convince SOS=SOD3. Delivery Time SOS=SOD4. Customer Info. SOS>SOD5. Assortment verity SOS>SOD

SUPPLY SIDE ANYLASIS OF PEPSI

1 .PHYSICAL POSSESSION:

During the audit of PepsiCo channel there are channel flows which are performed by channel members physical possession is divided by Pepsi n increase commission n storage cost . 2. OWNERSHIP:

The Pepsi co. provides only license to distributor because if company provides ownership then the copy of Pepsi’s original bottle will be prodused.so that’s why company do not allow the ownership to distributor. 3. NEGOTIATION:

PEPSI have not a good negotiation system for retailer . Due to the low demand of Pepsi bottle the retailer donot kept the stock of black water, to solve this problem the Pepsi company do not communicate with the retailer. So it is a gap.Solution: Pepsi should increase the worker force to communicate with the retailer. 4. FINANCING:

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There is no problem in financing of Pepsi company because the Pepsi company is a very famous and reliable company. The third party rely on the Pepsi company for financing. So there is no gap in the financing. 5. RISKING: As we audited the channel of Pepsi we found that the company provides complete risking issuance. If there is any problem accurse during the transportation of stock like as accident then company compensate the loss.So there is no gap in the risking. 6. ORDERING: There is no gap in the ordering because company properly maintains the orders of the distributors. 7. PAYMENT:

During the audit of marketing channel of PEPSI we got the information that the payment of order must be made before the delivery. If the ordered not made payment before the delivery then the company do not made the delivery. So there is gap in payment.Solution: The company should give relaxation to the ordered for the payment. CHANNEL CONFILICT During the audit of Pepsi. We should find the following conflict in the channelDisturb the channel member The Pepsi disturb the channel member. Due to this a conflict is created in the channel. Pepsi should change area of the existing member and appoint the new channel member in this place. The new member not works properly. The new member required sometimes to settle in the market and make worth in the market. SOLUTION The Pepsi should not change the member of the channel. The old member has make a good relation to their retailer. The old member now the behavior and worth of the retailer. He should manage all the things properly. The new member not handles all the procedure.Pirated bottles The pirated bottles create a conflict. When the customer drinks the pirated bottles he claim the retailer to the taste and flavor of the pepso. Retailer claims the whole seller. In this way the whole channel member is disturb.Solution The Pepsi should make a proper check and balance to about the bottle. The company hire the special person to check the quality and taste of the bottle Suggestion for improvement

1by doing the audit of Pepsi we find that the Pepsi required no proper storage. As other many compony required proper storage to store their product. The Pepsi bottle not store properly. the whole seller not care about the safety of the product. They not care about the weather. In a very hot weather the taste of the bottle is change. The taste is as the pirated bottle. The customer is claim about the taste.

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The pepsi can make the condition to their whole seller to store the bottles in a proper way. The whole seller can care about the temperature. In a very hot weather the bottles store in very proper way.

The company provides the freezer to their retailer. The retailer stores the bottles of the other competitors. They not store the bottles of the Pepsi. In this way company sale decrease.

The company makes a proper method of check and balance. The Pepsi whole seller and distributer check their retailer. The retailer stores the bottles of the Pepsi. If they store the bottles of the competitors the company makes a strong action against the retailer.

The company faces a serious problem about the quality of the black water Pepsi. It is a mother brand of the company. The demand of the black water is decrease.

The company focuses on the quality of the black water Pepsi. Because it is mother brand of the Pepsi. If the taste is better the sale should be increase.

Conclusionwe concluded this project with the study of 3 level marketing channel with five members and the allocation of channel flows between members along with the channel duties which are called service out puts. We also studied the gap and conflicts and gave solutions about gaps and conflicts aries in marketing channel of PepsiCo . Suggestions are also part of our study here for the improvement of channel efficiency. Now days Pepsi is recognized as Pakistanis National drink Pepsi's greatest rival is Coca Cola. Coca Cola has an international recognized brand. Coke's basic strength is its brand name. But Pepsi with its aggressive marketing planning and quick diversification in creating and promoting new ideas and product packaging, is successfully maintaining is No.1 position in Pakistan.

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