1

INTRODUCTION

Channel of distribution is the most powerful element among marketing mix elements. The

main function of this element is to find out appropriate ways throughwhich goods are made

available to the markets. It is a managerial function and hence proper decisions are to be

taken in this matter before commercial production begins. This is so because the efficiency

of its channel of distribution is often what separates a successful firm from an unsuccessful

firm.

Marketing channels are the most complicated phenomena encountered in the study of

marketing. They encompass elaborate behavioral systems that usually involve many decision

makers and often extend over a wide geographical area. One aspect of these systems is their

constants interaction they lead, there follow, they control, they conflict, they co-operate.

This might be the reason why Peter Ducker qualified this function of marketing as a

‘Dark Continent’. IN the past, this aspect had not received its due attention and recognition

in marketing planning since the distribution was not usually under taken by the producers.

Later on, the producers were facing certain ‘gaps’ in their distribution process resulting in an

imbalance between production and sales. They also understood that many a product, which

was intrinsically food, had dies in infancy because it literally never found the right road to

the market.

1. Customers are usually scattered, where as production is concentrated in a few centers.

This may be treated as spatial gap. Transportation is used to cover up this gap and includes

all activities directly concerned with moving goods form the place of production to the place

consumption.

2. Customers make their purchases at regular intervals, where as production has to be

organized on continues process. This is a temporal gap. Inventory deals with these gaps.

This includes activities concerned with holding goods between the time of production and the

time of sale.

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3. Manufacturers organize large-scale production to reap benefits of economies whereas

customers prefer to by only in small quantities. This would naturally create a gap to be

called perceptional gap. This gap is covered by promotional activities. The include giving of

percussive information and buyers re prompted at make quick repeal purchases.

4. Basically customers cannot have full information of producers and products available and

naturally this prevents free exchanges. This may be designated as transactional gap. This is

the most difficult gap to be filled up. This gap could be effectively covered only by proper

distribution arrangements.

The concept of distribution as a ‘gap’s only theoretical value. This approach fails to

explain planning and control aspects needed in ‘channel management’. For eample, for one

type of product a particular channel would be ideal, but for another type an alterative channel

may be more suitable. In both cases ‘gap’ is the same but different approaches are necessary.

Again the channel selection end control might vary depending upon the nature of business.

Moreover, external environments condition distribution activities as the market is outside the

business. Above all, it should be noted that channels chooses for the company’s.

Products intimately affect every other marketing decision and they involve the firm in

relatively long-term commitments to other firms. For a consumer-oriented firm every

channel represents as customers and his needs and desires must be catered in full. The gap

approach therefore, would be of no value if the above factories were considered.

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DEFINITION:

Every producer seeks to link together a set of marketing intermediaries that fulfill the firm’s

objective. This set of marketing intermediaries is called the marketing channel. The

American marketing association defined the term as “the structure of introduced company

organization units and extra company agents and dealers. Whole wholesalers and retailer

through which a product or service is marketed”.

The definition includes two aspects:

1. The firm’s internal marketing organization units and the outside business units, which a

firm uses in its marketing work.

2. The channel structure of the individual firm and the firm entire channel complex available

to all firms.

The channel is also described as ‘a grouping of intermediaries from first owner to the last

owner, who take title to a product during the marketing processes.

The word”channel”has its origin in the French word used for channel. Thus a channel is a

medium through which goods are make to moves as smoothly as possibly to the desired

places. In other words, the route through which goods move from the place of production to

the place of consumption is termed as “channel of distribution”.

“As the application of motion to materials as they move from the times, places, forms and

conditions where they have value”.

- A.W.Shaw

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The channel is therefore the vehicle for viewing marketing organization in its external

aspects and for bridging the physical and non-physical gaps, which exists in moving goods

from producers to consumers through the exchange process, including the determination of

price.

The process of distribution encompasses the movement of goods form the point of

production, or from storage locations, along the channel of distribution. The marketing

function includes three elements.

1. The transportation of goods physical movement of goods or traffic management.

2. The location of goods storage.

3. The institutions facilitating the easy movement of goods.

The first two elements are discussed in detail in a previous chapter. The present chapter

deals with the third elements.

CHANNEL OBJECTIVES

There is, however, a misconception that channels are permanent features of a company’s

marketing activity. But this does not seem to be correct. Along with the shifts in overall

strategy of firm corresponding changes in channels system may be necessary. In other

words, existing trade channels are not a constraint in the design of marketing strategy;, for

this reason, channel decisions are included as a part of strategy rather than as part of the;

marketing organization.

The channel objectives may be numerous depending upon the marketing and corporate

objectives. A few examples are mentioned below:

1. Growth in sales by establishing distribution in new markets.

2. Improvements/maintenance of market share.

3. Creation of an efficient channel system.

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THE INDIAN SOFT DRINK INDUSTRY

The Indian soft drink industry has been growing at a healthy average of 12% per

annum. The industry sells millions of crates e very year giving sales revenue of cores the per

capita consumption of soft drink is certain to expand. Hence, the manufacturers are making

innovations in production & the distribution process as well as in advertising & creating new

kind of attractive packaging to accelerate their growth.

Soft drink market is very vast like an ocean as the demand is enormous, day to day

changes in tastes, fashions, trends etc, lead to tap the unexplored markets. However its’ a pity

that to have our own indigenous soft drink brand name of Indian origin through the length

and breadth of the country.

The entry of carbonated soft drink into the Indian soil is relatively new. The credit for

introducing branded soft drink goes to pure drinks private limited, Delhi. Later on this

company became the franchised bottler of coca-cola exports corporations. Accordingly in

1950, coca cola made its first debut of soft drink in India. After coca-cola, entered into the

market. But the company left India in 1961,as it could not get the expected business in the

market. The exit of coke, the undisputed leader in the soft drink market, this company too

was forced to leave India due to its non-competence with the & regulations of the

government I 1977,then coke became a boon to national manufacturers & all the players

started increasing their business among the many national player, like pure drinks emerged as

the leader in the Indian soft drink market. It is believed that by the end of parle captured

more than 75% of the national soft drink market.

In 1990, re-entered India& started making more not the market. All the same, it

grabbed a considerable market share parle. Besides this coke also re-entered India after 16

years of exile fearing that, it cannot cling to its market leadership, parle sold to coco-cola for

$40 million in November 1993. By buying over the local competition, the two American

giants have cleared up the arena & are packing all their power behind players see enormous

potentials in this country, where sprigging a carbonated beverage is still considered a treat

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virtually a luxury. With their big plans multinationals have changed the face of this business,

which had long been dominated by small businessmen. If demand continuous to increase

annually at an average of 20%, their volumes could reach billion cores within 10 years. As

they conceal their strategies keeping on eye on each other all the time, ultimately they have

to watch out for who will determine their futures, the consumers, real race to quench his

thirst has just begun.

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NEED FOR THE STUDY

Nowadays being a businessman, it is obvious one should have an eye on his

competitor. Coming to the study, there are only two market giants are here, which are PEPSI

AND COKE and it is very important to watch what other one is doing to react and respond.

While marketing, companies will follow many strategies to counter the competitor’s game

plan.

This way it would be viable by identifying target markets, manufacturing competing

products, building brands, brand image, and having a good asset management system,

increasing market share, customer satisfaction, effective advertising, getting customer feed

back, countionus analysis of environment are also essential to get more profits and to sustain

in the market.

Coming to the study it would be appropriate to analyze each organizations actions

and strategies to grab more market share, get more profits and derive who is going to be the

market leader.

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OBJECTIVES OF STUDY

To know the distribution strategy adapted by the organization.

To know the response of the dealer regarding the products of PepsiCo.

To find out the factors that influences the consumer’s preference of a particular flavor

of soft drink.

To know the market share of PepsiCo with respect to coke in terms of warm

stock,chilled stock and empty stock.

To analyze the problems of retailers and customers.

How many outlets are there which are covered with glow sign board, hanger and flexi

board.

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SCOPE OF STUDY

The main scope of this study is to ascertain the effectiveness of channels of

distribution and various methods to increase the sales volume of the concern.the methods

include regular information to the buyers creating a brand position in the market and taking

measures to make the brand remain in its position .one of the important aspects of this study

is also to increase the market segment for the product.

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METHODOLOGY OF THE STUDY

METHODOLOGY OF THE STUDY:

The requisite data has been gathered through two important sources i.e. primary and

secondary sources.

PRIMARY SOURCES:

The necessary primary data has been collected through personal interviews with the

executives concerned. By establishing a direct contract with dealers, the pros and the cons of

the distributors can be easily; interpreted. Information pertaining goes he production process

was gathered by direct observation.

SECONDARY SOURCES:

Following are the source of secondary data collection.

a. Annual reports

b. Magazines

c. Company files

d. Company web sites

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LIMITATIONS OF THE STUDY

1. Disclosure of the distribution network is hard due to its internalized nature.

2. The distribution network may vary over a period of time in accordance with the

changes in the market conditions

3. The non-availability of executives at an appropriate time renders the information

incomplete.

4. Some outlet owners are reluctant to share their information

5. The seven-week duration is a very limited period, which restricts us from

understanding the various aspects involved in the distribution network.

6. The study is confined to vizag city only

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INDUSTRY PROFILE

Soft drink

In both senses also called soda pop; also called regionally cold drink, drink; Also

called pop, soda; Also called soda water, tonic.

1. A nonalcoholic, flavored, carbonated beverage usually commercially prepared and

sold in bottles or cans.

2. A serving of this beverage. See Regional Note at tonic.

Food Glossary

Soft drinks

A generic term applied to beverages that do not contain alcohol. Soft drinks are most

often thought of as carbonated, though effervescence is not a requisite

WorldNet

Note: click on a word meaning below to see its connections and related words.

The noun soda pop has one meaning:

Meaning#1: a sweet drink containing carbonated water and flavoring

Synonyms: pop, soda, soda water, tonic

Soft drink

A soft drink is a drink that does not contain alcohol, as opposed to hard drinks, that

do. In general, the term is used only for cold beverages. Hot chocolate, tea, and coffee are not

considered soft drinks. The term originally referred exclusively to carbonated drinks (soda),

and is still commonly used in this manner.

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MARKETING

Soft drinks are commonly sold in stores in bottles and cans. Sales earn a significant amount

of money for the producers and distributors. Most famous name-brand soft drinks are

produced and bottled by local or regional independent bottling companies. These companies

license the name, and are usually sold the main ingredients, with syrup made by the main

manufacturing plants of the trademark holders. In the past, most colaflavoredd and other soft

drinks were sweetened with ordinary sugar (sucrose), but to save on production costs, most

companies in the USA have turned to the more economical HFCS (High-Fructose Corn

Syrup) as a sweetener, because of the high price of sugar in the USA due to sugar quotas. In

some countries outside the United States, sugar is still used. Competition in the industry

among soft drink producers is widely referred to as the "cola wars".

Diet soft drinks

In recent years, there has been a growing demand for alternatives to sugar-heavy soft

drinks. "Regular" soft drinks largely contain sugar or corn syrup, and have been blamed in

recent years for contributing to obesity. Sugars, like other carbohydrates, stimulate the

production of the hormone insulin, which causes the body to store fat rather than burn it.

"Diet" soft drinks are sweetened with chemicals, such as aspartame and saccharin, that are

perceived as sweet by most people, yet do not stimulate insulin production or have any food

energy or nutritional value.

Naming conversations

Pop vs. soda vs. coke in the United States

In the United States, "soft drink" commonly refers to cold, non-alcoholic beverages.

Carbonated beverages are regionally known as "pop" in the Midwest and the Pacific

Northwest. In the Northeast, parts of the South (near Florida) and Midwest (near St.Louis

and eastern Wisconsin), and California, they are known as "soda". In much of the South, they

are generically called "coke". (Atlanta, Georgia is home to the Coca-Cola Company.)

Internally, the Coca-Cola Company (and probably other such corporations) uses the term

"non-alcoholic carbonated beverage".

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In some other areas these drinks are called "soda pop", while in and around Boston,

Massachusetts, they are often called "tonic", particularly among older generations. In North

Carolina, the terms "drink" and "soft drink" are commonly used along with "soda" and

"coke" to refer to non-alcoholic cold drinks. Some older generations of Southerners refer to

such drinks as "dope". See The Great Pop vs. Soda Controversy for maps and geographical

trends.

At many restaurants in the U.S., one finds that the products of only a single major

beverage producer, such as The Coca-Cola Company or PepsiCo, are available. While a

patron who requests a “coke” may be truly indifferent as to which cola brand he receives, the

careful order taker will confirm intent with a question like “Is Pepsi OK?” Similarly, “7 Up”

or “Sprite” may indicate whichever clear, carbonated, citrus-flavored drink happens to be at

hand. The generic use of these brand names does not affect the local usage of the words

"pop" or "soda", to mean any carbonated beverage.

Mixed soft drinks

A graveyard / suicide / pop bomb / swamp water / garbage soda is made by mixing

many soft drinks together, usually from a soda fountain.

A float is created by dropping a scoop of ice cream into a soft drink. In the

Midwestern United States, a soft drink with ice cream added is most often called a

"soda," thus leading to quizzical looks from wait staff when people ask for a "soda"

instead of pop. The most common of these is the Root beer float. In Australia and

New Zealand, this is known as a Spider.

In Brazil, a scoop of ice cream into a soft drink may have different names:

vaca preta (black cow) - ice cream in cola.

vaca amarela (yellow cow) - ice cream in guarana flavoured soft drink.

pantera cor de rosa (the Pink Panther) - strawberry ice cream in lemon lime soft drink.

In the U.S., some floats have specific names as a Brown Cow or Black Cow, vanilla

ice cream in root beer, or Boston cooler, vanilla ice cream in Vernor's ginger ale.

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Controversy

Studies showing a correlation between soft drinks and obesity

A study from Harvard shows that soft drinks may be responsible for the doubling of

obesity in children over the last 15 years.

From 1991 and 1995, adolescent boys in the US, on average, increased their intake of

soft drinks from 345 mL to 570 mL. Most soft drinks are sweetened with sugar or corn syrup,

and not artificial sweeteners. Dr. David Ludwig of the Boston Children's Hospital showed

that school children drinking at least eight U.S. fluid ounces (240 mL) or more of regularly

sweetened drinks daily will consume 835 calories (3,500 kilojoules) more than those

avoiding soft drinks; i.e., children who drink soft drinks loaded with sugar tend to eat much

more food than those who avoid soft drinks. Either those taking sugared drinks lack the same

restraint on foods, or sugared drinks cause a rise in insulin that makes adolescents more

hungry, causing them to eat more. Soft drinks (including diet soft drinks) are also typically

consumed with other high-calorie foods such as fast food. Children who drink soft drinks

regularly are therefore fatter on average, in addition to being more likely to develop diabetes

later in life (see below).

This finding is controversial, because children in much of the Third World also

consume large numbers of soft drinks with even more sugar, and do not share the same

obesity rates as American children, suggesting that other factors are involved aside from

sugar consumption in soft drinks. Suggested factors include physical activity, and the fact

that American soft drinks are sweetened with high fructose corn syrup instead of cane sugar.

Monosodium glutamate (MSG), which is used to enhance the sweetness of some soft drink

beverages, could also play a role by stimulating appetite.

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Availability

Some argue that soft drinks are too widely available, from every restaurant, movie

theater, vending machine, and similar locations. The wide availability is said to cause young

people to somewhat mistake soft drinks for a major food group. Others believe that the high

price of soft drinks should offer a significant disincentive to impulse buy such beverages and

prevents sale to children without parental approval. They also believe that a small amount of

will power on the part of the individual is all that's required to reduce consumption and that

one should take personal responsibility for their own purchasing decisions.

Soft Drink Formula

Disclaimer:

Making soft drinks is not for the faint of heart, nor the dirty of finger. It is a solemn

enterprise not to be entered into lightly, as with marriage or buying used farm machinery.

With any food-prep, failure to observe basic hygienic principles, follow directions,

and exercise common sense can have grave consequences. OpenCola assumes no liability for

any problems that arise out of the use of this document. Proceed at your own risk. No one's

putting a gun to your head, so don't bother if you can't boil water.

Improper use of cola might result in blunt trauma, puncture wounds, physical illness, mental

illness, caffeine dependency, dental necrosis, acid reflux, death, devastation, and random tax

audits. Or it might not.

A list of warnings has been provided below. We did not include them for our health –

we included them for yours. Read them. Know them. Follow them. Tattoo them to your

backside.

Just in case you have any doubt: following the directions below may be hazardous to

your health and property. You assume any and all risk arising from the manufacture and

consumption of cola.

An important note: this is not the recipe for “OpenCola” – that is, the canned

beverage from OpenCola that you may have received at a trade show, or other venue or

outlet. Making canned cola requires millions of dollars in abstruse gear and manufacturing

gizmos. It's easier to make nerve gas than manufacture cola. This is a kitchen-sink recipe that

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you can make all on your own. It is our kitchen-sink recipe. We figured it out somewhere

between coding the COLA SDK and debugging the Linux build of the clerver.

Anyway, we've tried to be nice about the disclaimer. If it's not good enough for you,

here's what our lawyers have to say about the whole shootin' match.

By copying and/or distributing the Program, you hereby agree to the following:

Indemnity: You shall indemnify, defend, and hold harmless OpenCola, its affiliates,

directors, officers, and employees from and against any third-party claim, demand, cause of

action, debt, liability, cost or expense (including, but not limited to, reasonable attorneys'

fees) arising out of your use of the Recipe, or any derivative thereof, including, but not

limited to, any claims arising from your distribution of soft drink based on the Recipe or any

derivatives thereof.

Any derivatives thereof, may be appropriate for use in locations outside of the United

States or Canada, and accessing them from any location where their use is illegal is

prohibited. IInternational: OpenCola makes no representation that the Recipe, or any soft

drink based on the Recipe of you choose to access this Recipe from any location outside of

the United States or Canada, you do so at your own risk, and are responsible for compliance

with all local laws.

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How soft drinks are made

Water, Water, Everywhere

Soft drinks are mostly water. So the quality of the water going into your favorite soft

drink is very important. A series of filtration systems produces the high quality water that is

fresh, clean and clear.

The Flavor Secret

Here's where the magic happens. From secret recipes, flavorings are added to give

each soft drink its unique taste. By combining sweeteners, herbs, berries, and many other

ingredients, a syrup base is created which is added to the pure water.

Adding Bubbles Is a Gas

After the flavors are added to the water, the result is a great taste, but slightly boring

beverage. Now, the bottler brings it to life by adding carbon dioxide, a tasteless, odorless,

natural gas, with a machine called a carbonator.

Fill 'er Up

Now we're ready to put the great tasting, bubbly into a container. It is transferred

under pressure to a filling machine. The filling machine squirts just the right amount into

squeaky clean containers which are immediately sealed for freshness.

Now For the Warm-Up

Throughout the manufacturing process, soft drinks are usually chilled. If they are

transferred this way, condensation would form on the outside of the container and make

cartons and cases wet. Therefore, every container is sprayed with warm water to bring it to

room temperature and dried before moving on to shipping.

Name It and Send It Packing

Many soft drink containers have labels pre-printed before they arrive at the soft drink

plant. If not, they are applied, placed in cartons or trays, bundled into large pallets, and

whisked away to you.

SOFT DRINK NORMS &CONTENTS

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PRODUCT INFORMATION – Ingredients

We only use the finest ingredients to make Pepsi-Cola products. To guarantee our

consumers consistent quality, each ingredient must pass our high standards, rigorous quality

control tests and strict bottling procedures.

All ingredients are listed on the label in order of decreasing amount. Pepsi-Cola

products contain natural flavors, including extracts of the kola nut, vanilla beans and flavor

oils derived from natural sources such as citrus and other fruits. Caramel (made from corn

sugar) adds color and flavor to our colas. Other ingredients add a refreshing taste: phosphoric

acid in colas; citric acid and sodium citrate in Mountain Dew, Slice and Diet Pepsi.

We also put a freshness date on every can and bottle. Soft drinks may lose some

flavor over time so our freshness date tells consumers when the product is freshest and best

tasting.

Every can and bottle of Pepsi-Cola products has a Nutrition Facts panel, which shows

the number of calories and other nutrients per serving. There is essentially no fat in any

Pepsi-Cola products. The main ingredients found in Pepsi-Cola products include carbonated

water, carbohydrates, sugar, sodium, potassium and caffeine. For a complete breakdown by

ingredients by product, see our product information for Pepsi, Diet Pepsi, Pepsi ONE,

Mountain Dew, Slice, Mug Root Beer or Aquafina.

Acesulfame-K

Also known as Acesulfame-K, Ace-K, ASK and the brand name Sunett.

A non-nutritive, calorie-free sweetener discovered in 1967. Since Acesulfame-Potassium is

200 times sweeter than sucrose (table sugar), only a small amount is needed to sweeten a

product.

Acesulfame-Potassium is currently used in some of our diet beverages and in more

than 1,000 products around the world ie: desserts, baked goods, soft drinks, candies, canned

foods and pharmaceutical products) and has been the subject of approximately 90 scientific

studies to ensure its safety.

Ascorbic Acid

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Another name for Ascorbic Acid is Vitamin C. The Ascorbic Acid used in our

carbonated soft drinks functions as an antioxidant to protect the flavors, color, and taste. In

some beverages we also add it to provide the nutritive value found in Vitamin C.

Check out of the amount of Vitamin C that Aquafina Essentials provides by clicking onto its

website.

Aspartame

Aspartame is a sugar substitute used in our diet beverages and many other food

products. Aspartame is made of the same building blocks as protein, so it is considered a

"nutritive sweetener," but the very small amounts used in diet drinks contribute no calories.

Blue 1

Blue 1 is an FDA-approved food coloring used in a variety of products such as jellies,

condiments, puddings, and beverages.

For the past 50 years, health professionals have carefully evaluated the safety and

suitability of colors for use in foods. The types of food colorings we use here at Pepsi have

been reviewed by reputable scientific organizations and are safe for consumers to use.

Here at Pepsi, in our products we only use ingredients that are fully approved and

deemed safe for use in foods by the Food and Drug Administration.

For more information about Blue 1, we encourage you to contact the following organization:

Brominated Vegetable Oil (BVO)

Brominated vegetable oil has been used by the soft drink industry since 1931. It is a

widely used food additive that has been extensively tested and approved by the U.S. Food &

Drug Administration.

Brominated vegetable oil is derived from soybean oil that has been modified in order to keep

the flavoring oils well-blended.

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Caffeine

People have enjoyed foods and beverages containing caffeine for thousands of years.

Caffeine is a substance that occurs naturally in more than 60 plants including coffee beans,

tea leaves, kola nuts and cacao beans. Where caffeine is actually not occurring in a beverage,

caffeine is added to certain soft drinks as part of the flavor profile. Caffeine has a classic

bitter taste that enhances some flavors and balances the sweetness of other flavors. The

amount of caffeine in a soft drink is only a fraction of that found in an equal amount of

coffee or tea. The long history of caffeine's use confirms that it is safe when consumed in

moderation. Moderate amounts of caffeine intake have been deemed safe by the American

Medical Association, the American Cancer Society, and the U.S. Food and Drug

Administration. For people who wish to restrict their caffeine intake, many caffeine-free soft

drinks are available.

BBC Report

Carbonated soft drinks

More than 5,560 million litres of carbonated soft drinks are consumed every year in

the UK. Such drinks are crammed full of sugars and acid that attack our teeth and may result

in dental decay.

Tooth decay happens when teeth are attacked by acid, and this can happen in two

ways. Acid attacks can happen as a result of plaque bacteria acting on the sugars in our diet,

or as a direct result of the acids in food dissolving away the enamel on the surfaces of our

teeth. As carbonated soft drinks tend to contain high amounts of both sugars and acids,

they're the worst possible combination for dental health.

Not only are sugary drinks detrimental for oral health, they are calorific and provide

little in the way of nutrients. Even those drinks that are labelled as 'sugar free,' 'reduced sugar'

or 'low sugar' can still contain enough sugar to cause damage to your teeth, and have the

same acids as the standard carbonated drinks. It's therefore recommended to replace

carbonated drinks in the diet with other options where possible.

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Energy drinks

There are three basic types of energy drinks:

Refreshment energy - formulated to replenish energy levels for someone who is

perhaps run down or recovering from illness.

Sports drinks - formulated to rapidly replace fluids during exercise and maintain the

body's blood glucose levels.

Functional energy - aimed at anyone who wants to gain a quick burst of energy and

alertness.

Energy drinks contain complex carbohydrates - a blend of slow-, medium- and fast-

acting sugars - and are able to supply energy to the body over an extended period of time.

They may also contain 'energy enhancing' ingredients such as caffeine or taurine to boost

alertness.

The safety of energy drinks, in particular their energy enhancing ingredients, has been

investigated by a European committee. When it comes to caffeine, the majority of energy

drinks were found to contain the same amount as a cup of filter coffee. The committee

therefore felt there was no concern about the contribution of energy drinks for non-pregnant

adults.

However, it is recommended that pregnant women should moderate their caffeine

intake overall and this means not more than four cans of energy drink per day. Caffeine in

energy drinks may also lead to overexposure in children, who don't normally consume much

tea or coffee and are therefore more susceptible to the effects of caffeine on the body.

In relation to other energy enhancing ingredients, such as taurine, the committee was

unable to conclude that the level reported in energy drinks was within any upper safety limit.

It concluded that further studies are required in order to establish an upper safe level for daily

intake.

Soft Drinks linked to diabetes

In 2004, a study of 50,000 nurses over a period of 8 years found that drinking one or

more sugar-sweetened soft drinks per day increases one's risk of developing diabetes by

80%, when compared to those who drank less than 1 soft drink per month. This finding was

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independent of other lifestyle factors [1]. In the same study, a similar observation was made

for fruit juice consumption. This finding is controversial.

Soft Drinks in India

Euromonitor International's Soft Drinks in India report offers a comprehensive

guide to the size and shape of the market at a national level. It provides the latest retail sales

data, allowing you to identify the sectors driving growth. It identifies the leading companies,

the leading brands and offers strategic analysis of key factors influencing the market - be

they new product developments, packaging innovations, economic/lifestyle influences,

distribution or pricing issues. Forecasts illustrate how the market is set to change

Soft drinks in Indian market

Introduction

Soft drink market size for FY00 was around 270 m.n cases (6480mn bottles). The market

witnessed 5- 6% growth in the early‘90s. Presently the market growth has growth rate of 7-

8% per annum compared to 22% growth rate in the previous year. The market size for FY01

is expected to be 7000 mn bottles.

Soft Drink Production area

The market preference is highly regional based. While cola drinks have main markets

in metro cities and northern states of UP, Punjab, Haryana etc. Orange flavored drinks are

popular in southern states. Sodas too are sold largely in southern states besides sale through

bars. Western markets have preference towards mango flavored drinks. Diet coke presently

constitutes just 0.7% of the total carbonated beverage market.

Growth promotional activities

The government has adopted liberalized policies for the soft drink trade to give the

industry a boast and promote the Indian brands internationally. Although the import and

manufacture of international brands like Pepsi and Coke is enhanced in India the local brands

are being stabilized by advertisements, good quality and low cost. The soft drinks market till

early 1990s was in hands of domestic players like campa, thumps up, Limca etc but with

opening up of economy and coming of MNC players Pepsi and Coke the market has come

totally under their control.The distribution network of Coca cola had6.5 lakh outlets across

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the country in FY00, which the company is planning to increase to 8 lakhs by FY01. On the

other hand Pepsi Co's distribution network had 6 lakh outlets across the country during FY00

which it is planning to increase to 7.5 Lakh by FY01.

Types

Soft drinks are available in glass bottles, aluminum cans and PET bottles for home

consumption. Fountains also dispense them in disposable containers Non-alcoholic soft drink

beverage market can be divided into fruit drinks and soft drinks. Soft drinks can be further

divided into carbonated and non-carbonated drinks. Cola, lemon and oranges are carbonated

drinks while mango drinks come under non carbonated category.

The market can also be segmented on the basis of types of products into cola products

and non-cola products. Cola products account for nearly 61-62% of the total soft drinks

market. The brands that fall in this category are Pepsi, Coca- Cola, Thumps Up, diet coke,

Diet Pepsi etc. Non-cola segment which constitutes 36% can be divided into 4 categories

based on the types of flavors available, namely: Orange, Cloudy Lime, Clear Lime and

Mango.

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COMPANY PROFILE

Pepsi food India limited drinks is owned by multinational giant of beverages of

company incorporation; of New York, USA – which has a turn over of $28 billions and an

average sales volume of $10billion in the world. Prior of liberalization in 1990, corporation

entered into a joint venture with TATA group company voltas with 24% equity under the

Punjab agro industry corporation with 36% equity and with an investment of $95 million.

After LIBERLISATION of our economy, voltas share was acquired by leaving only 8% to

the Punjab agro industries and later on it bought all the equity shares and converted food

from a three – way joint venture to a fully owned subsidiary.

Pepsi foods India limited is head quartered in New Delhi. It has 11 companies –

owned bottling plants and 15 franchises through out the country. Company earlier used

“Lehar” as a prefix to each of its brand names. Later it was asked by the government to drop

the prefix. Another challenge is that parle has come from coca – cola.

Thus parle and coke dominated the Indian soft drink market in the ensuing days.

Coca cola purchased parle’s brand such as thumps up, Limca, etc., along with its distribution

network in 1993, at present has a market share of 48.5% and ranks number one in total sales

of soft drinks, where as Pepsi has a market share of 47.8% and ranks next.

PROFILE OF PEARL BOTTLING PRIVATE LIMITED

PBPL was incorporated in 1982 at Madhurwada in Visakhapatnam district of Andhra

Pradesh for the purpose of manufacturing soft drinks.

It was since then the company had started commercial production of company cola

products. It produced cola, orange and lemon flavors under the brand names of thrill, rush,

and sprint. It also produces Mc-Dowell – bagpiper soda.

It produced these drinks under franchise agreement, but the company could not exist

in the market due to the stiff competition from parle products. In February 1992, the

company signed to manufacture and market products under franchise agreements. Franchise

is a contract, which gives the company the right to do the business under the name and image

of principal’s. According to this agreement, PBPL has given its consent…

To manufacture soft drinks using the concentrate supplied by Pepsi foods

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To sell the soft drinks and prices fixed by.

To advertise and market within specified areas for the products of.

From April 23rd, PBPL started distributing the stocks received from Cuttack plant.

Commercial production started in PBPL from June 1992 on words.

Initially four brands viz., seven-up, Miranda, and Lehar soda were bottled and

distributed where as slice were supplied by Cuttack plant. In may 1993, a cloudy lemon

flavor called “TEEM” was introduced which was not very well received by consumers

because of the well – established “LIMCA”.

In April 1998 a new cloudy lemon flavor, namely Miranda lemon was introduced

after discounting TEAM.

PBPL limited was appointed as franchise by foods limited, in activities originally

constructed by campa-cola soft drinks in 1980 at Madhurwada due to losses suffered by

campa- cola, the unit became insolvent.

As a result Andhra Pradesh state finance corporation auctioned the premises, in 1990,

after which it was purchased by PBPL. It started production in 1991. Initially it produced

Mc-Dowell company’s brands – THRILL, RUSH, SPRINT, MC – DOWELL’S SODA AND

BAGPIPER SODA. In February 1992, PBPL signed a memorandum of understanding with

foods. The product was launched in 1992. From April 23rd it started its distribution on

receiving stocks from Cuttack. However commercial production started at Visakhapatnam

from June 1992 onwards. In the beginning FOUR drinks were bottled namely. PEPSI,

MIRINDA, LEHAR SODA, SEVEN-UP were bottled and distributed were as SLICE

continues to be supplied from Günter plant.

27

The company distributes its products in five districts, they are: -

VISAKHAPATNAM

SRIKAKULAM

VIZIANAGARAM

EAST GODAVARI

WEST GODAVARI

FINANCIAL STURCTURE

Any company, which has to start and operate its business, has to invest its capital in

fixed assets and floating assets and it also has to meet the daily requirements of the company.

However, depending on the nature of the business and the product being offered by the

company, the ratio of investment of capital in fixed and floating assets differs.

The following shows the financial structure of the pearl bottling limited

TYPES OF CAPITAL AMOUNT (IN LAKHS)

Funds employed 60

Working capital 15

Institution finance 40

PLANT LAYOUT

The layout of the bottling plant of PBPL confines for all the products based on the

line layout. The machines and equipment have been imported from Germany, which

produces the best capital equipment in the World. The machinery and all the equipment are

arranged as per the sequence of operations. The machines and workers are specialized in

operations such as the preparations of syrup, cleaning the bottles, filling the bottles, aerating

and sealing the bottles with crowns. All these operations are carried on a continuous

movement. The reasons for choosing the product layout are

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There is continuous supply of material.

The brands are all standardized products.

The demand for the products brand is reasonably stable.

The volume of production is adequate for the reasonable utilization of equipment.

Due to the above reasons, the product layout offers certain advantages. The product

cycle is speeded up since the company follows a continuous operation movement; the cost of

material handling goes low. The total floor space is required by the machine is less than for

other types of plant layout.

PLANT CAPACITY

The company installed latest up to date automatic plant confirming to plant layout.

The capacity of the plant is 24000 bottles per hour i.e., at the speed of 400 bottles per minute.

The months from March to June, the plant is used to its full capacity by running three shirts

everyday. Each shift consists of eight hrs of so, during the summer season, the plant is run

round the clock. This is because the demand reaches its peak in these summer months hence

the company has to produce enough bottles of soft drinks at a speed to keep in pace with the

disappearance of soft drinks from the shelves of the retailers.

PRODUCDTION SCHEDULE

The production schedule is fixed by taking into consideration the present or current

market demand. It also caters to the availability of empty bottles and also the inventory

position of filled up bottles of varying flavors. The production schedule for each brand fixed

daily- i.e. filling up of the bottles of each brand and flavor. This has an advantage wherein

the branded products can be manufactured one at a time. The glass bottles used for filling the

soft drink are of the volumes capable of containing 300ml of soft drink. There are also bottle

of 200ml, 500lm, 1 ltr, 1.5ltr and 2ltr capacities to filled bye soft drinks.

QUALITY CONTROL

PBPL takes great care to maintain the quality by controlling the products in their

factory. The bottles are usually examined for impurities continuously as the bottles move out.

Samples are checked after every 10 minutes of the production time by the chemist for its

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quality and hygienic condition. The chemical analysis is also made for flavors and the gas

content is also checked. If any defects are noticed, the production is suspended and the

corrective measures are taken so as to set right the bottling, process irregularities. Further

samples from each batch are dispatched to the affiliated parent agency company in each week

for quality checkup. Moreover, the agency of the company also lifts samples from the market

at random for quality check up at anytime to make sure that the quality is maintained to the

exact standard of the parent company.

At the end of the production schedule, daily all the equipment plant floor and wet

patches are cleared with bleaching powder or some other solution. The standard of hygiene

maintained inside the production steps are commendable.

SYRUP MAKING

In this process the syrup of a particular type is prepared by heating sugar with activated

carbon powder and filter aid (by flousuper cell’) in the treatment tank for a specified time and

up to a particular temperature. During the treatment most of the color, odor, and some

organic impurities are removed from the sugar syrup. This treated syrup then passes through

the filter press, fitted with; filter papers and heat exchangers, and then the clear syrup is

collected in the syrup-making tank. The essence of particular products will be added for

which a required amount of sugar is taken r treatment. Sugar syrup and essence are then

mixed in the tank with the help of a mechanical stirrer and eventually the favor syrup is ready

to be used in the end use of the product.

WATER TREATMENT

This is the second stage In the process of soft drink manufacture. Water is the basic

ingredient in the soft drink, which comprised up to 90% of the quantity. Hence, the quality of

water is of great significance to the soft drinks manufacturer. Here, when water is brought to

the treatment tank, it is treated with a few chemicals such as hydrated lime, bleaching powder

and ferrous sulphate, which are then mixed thoroughly with the help of a mechanical stirrer.

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The reasons for water treatment are as follows

It removes the hardness of water and converts it into soft water.

It frees the water from microorganisms.

It reduces the alkalinity to a required level.

This treated water passes through the specially designed filtration plant containing

chemicals such as activated carbon (granular) and finally the manufacturer will get the water

suitable for soft drink bottling. Soda bicarbonate is used for maintaining the equipments in

hygiene conditions.

BOTTILNG

In this process both the concentrate and the purified water are mixed together along

will carbon dioxide gas and then bottled. In the soft drink field, only reasonable glass bottles

are sterilized to make them sparkling clean, before the beverage is filled in the for this

purpose, the company makes use of machine known as ‘BOTTLED WORKER’. For

cleaning up of the bottles washing chemicals such as caustic soda sand tri sodium phosphate

are used. In the bottle washing system, through one end of the worker the dirty bottles are fed

which are washed automatically while passing through various designed chambers containing

chemical solutions at different temperatures and concentration. Hot water is used for cleaning

the bottles. The bottles, after sterilization are collected at the other end of the washer. They

are then sent towards the filler on conveyor belts. Before the beverage reaches the filling

machine it is saturated with carbon dioxide gas. This carbon dioxide gas gives “fizz” to the

soft drinks and alongside prolongs the shelf life of the products. The bottles are then moved

on the conveyor belts to the filling machines where the beverage is filled under pressure.

From there the bottles are sent to the crowner where sealing of the bottle in done with the

help of crowns. The crowns are used to retain the carbon dioxide flavors as well as to protect

the products from spoilage and contamination.

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CRATING

The bottles collected from conveyor belts are placed manually into plastic crates.

Each plastic case has a capacity of 24 bottles only. These crates protect the bottles form

breakage as well as it ensures easy handling of the bottle. These crates are put on specially

designed vans for carrying the bottles to their various consumption points. PERCENTAGE

OF FLAVOR MOVEMENT IN THE MARKET

PEPSI 46.65%

THUMSUP 19.45%

LIMCA 12.44%

7UP 12.22%

MANGO 9.22%

MANUFACTURING PROCESS OF A SOFT DRINK

For manufacturing a soft drink the following raw materials are required.

1. Water

2. Sugar

3. Activate carbon powdered

4. Hyflousuper cell

5. Filter paper

6. Essence

7. Hydrated line

8. Bleaching powder

9. Ferrous sulphate

10. Activate carbon (granular)

11. Soda-bi-carbonate

12. Carbon dioxide gas

13. Tri sodium phosphate

14. Plastic crates

15. Caustic soda

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The process of manufacturing soft drinks are mainly divided into four parts- they are:

1. Syrup making

2. Water treatment

3. Bottling

4. Crating

In syrup making process the syrup of a particular product is prepared by heating sugar

with activated carbon powder and filter (hyflousuper cell) in the treatment tank for a

specified time up to a particular temperature. During treatment most of the color, odor and

some organic impurities are removed from the sugar syrup. This treated syrup passes through

the filter press filter with filter papers and heat exchanges and the clear syrup is collected in

the syrup moving tank where the essence of a particular product will be added for which a

required amount of sugar is taken for treatment. The essence and sugar syrup are mixed into

the tank with the help a mechanical stirred and finally the flavor syrup is ready for use in

finished products.

The second process is water treatment. As an added ingredient water can compromise

up to 90% of a soft drink. The quality of water is thus of a particular importance to the soft

drinks manufacturers. In this process water will be brought to the treatment tank and then

water treatment chemicals such as hydrated lime, bleaching powder and ferrous sulphate are

added to the tank and are moved thoroughly by the help of mechanical stirrer. The treated

water-is then passed through the specially designed filtration plant containing chemicals such

as activated carbon (granular) and finally the manufactured will get the standard water i.e.

suitable for soft and then bottles are moved towards crowner where the sealing is done with

the help of crowns. The crowns are used in order to retain the carbonation flavors as well as

to protect the products from outside contamination and spoilage. The bottles are checked for

maintaining the required standard. Finally, the filled bottles are checked for maintaining the

required standard. Finally, the filed bottles are collected in plastic crates from the conveyor.

The marketable le lot is only comprised of a crate and is filled with 24 bottles in each plastic

crate. This crate is mainly useful to protect the bottles and keep them in good condition and

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eliminates breakage and is also collected back in the same crates. Then the finished products

are all transferred to the shipping department of shipment.

ORGANIZATION STRUCTURE AND MANAGEMNET

The word organization has two common meanings. The first meaning signifies

institution or functional group, and the second one refers to the process of organizing the way

of work, which is arranged and allocated among members of the organization, so that the

goal of the organization can be achieved efficiently. The organizing process involves

balancing the company’s need; both for stability on one hand and change on the other hand.

Na organization structure gives stability and reliability of its goals. While altering an

organizations structure can be a means of adopting and bringing in about a change, which

could otherwise be a source of resistance to change.

Organizing basically involves analysis of activities to be performed for achieving

organizational objectives grouping them into various individual’s and delegation them with

appropriate authority so that they can carry on their work properly. Organization structure

can be defined as an arrangement and relationship of component parts, which also helps to

determine the position of company. An organization structure specifies the division of work

activities and shows us how different activities are linked.

Organization structure is a basic framework within which the managers’ decision

making behavior takes place. Structure basically deals with relationships. It is an important

scientific concept. In simple terms-it may be defined as a pattern in which various parts or

components are inter-related or inter-connected

There are five elements that comprise an organization structure

Specialization of activities

Standardization of activities

Co-ordination of activities

Centralization and decentralization of activities

Size of the work unit

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The managing director, Mr. Haranath Reddy, is the head of the organization, which is

ably assisted by a team of senior, well-qualified and experienced managing personnel.

LIST OF STAFF

SL.NO DESCRIPTION NO OF EMPLOYEES

1. VICE PRESIDENT FINANCE 1

2. COMMERCIAL MANAGER 1

3. MARKETING DEVELOPMENT

MANAGER 1

4. SENIOR GENERAL MANAGER SALES 1

5. TERRITORY DEVELOPMENT

MANAGER 4

6. ACCOUNTS DEVELOPMENT

CO-ORDINATOR 3

7. TRADING MANAGER 1

8. ASSISTANT TRAINING

MANAGER 1

9. MARKET EQUIPMENT

MANAGER 1

10.GENERAL MANAGER (OPERATIONS) 1

11.ASSISTANT PERSONNEL

MANAGER 1

12.STORE EXECUTIVES 3

13.CUSTOMER CENTRAL EXECUTIVE 25

14.TERRITORY CO-ORDINATOR 1

15.ROUTE AGENTS 50

16.SALES TRAINEE 1

17.CHEMESTS 3

18.ACCOUNTANTS 5

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19.SUPER VISORS 8

20.CLERKS 8

21.OPERATIONS 10

22.ELECTRICALS 3

23.FITTERS 2

24.COMPUTER CUM TELEPHONE

OPERATORS 12

25.SECURITY GUARDS 6

26.OFFICE BOYS 13

27.SWEEPERS AND HELPERS 3

The above table shows the descriptions of employees along with their designation and

the total no of employees that constitute each designation.

PERSONNEL DEPARTMENT

At the top, it is the board of directors who are responsible managing the unit on

successful lines. They have delegated powers to oversee the day-to-day operations to the

executive directors. The factory manager works directly under the control of the executive

director. For all practical purposes he is the key figure in assuring the success of her

enterprise. Six officers assist the factory manager in different spheres of activity. For

instance, the quality manager is in charge of production in order to ensure good quality of the

product. The line managers primarily responsible for the smooth flow of operations in

various stages of the production process.

The quality controller assures that all the minute an aspect relating to the

preparation of the liquid is catered to by the plant engineer who is the most important person

in charge of the technical aspect of the plant and equipment. The automatic plant for bottle

washing is under the control of the bottle washer operator wherein few assistants help in

eliminating unclean bottles from the stream of the production process. The filter operator

likewise attends to the work of filter with the able assistance of his assistants. Whereas the

syrup room operators is responsible mixing quality syrup with the help of water and sugar.

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MARKETING DEPARTMENT

At the time release of the marketing strategy is the director, a very well experienced

and well-groomed personality with over 15 years of experience in bottling units. He is a very

good strategist and his decisions are always the best assets to the marketing department.

He is responsible for directing products aggressively into the market. The sales

manager ably steers the wheels of “ “ soft drinks in the entire territory. Before the onset of

summer two capable hands are given as assistants to the sales manager, and in addition to the

eight other sales executives are recruited to hammer out the volatile market.

The success of any enterprise directly depends upon the success of its marketing

function. Until 1990, a unit that was considered as sick is now slowly transformed into a

successful enterprise. The people behind the success are the marketing personnel.

M/S.PBLPL is only assisted bye one senior director in the area of marketing. As explained

earlier he is good and is considered to be practical businessman, his policies and programs

paves the wary for success. The executive director marketing is assisted bye the sales

managers.

M/S. PBPL is catering to north coastal Andhra Pradesh covering three districts such

as, Vizianagaram and Srikakulam. Each district is put directly under the control of the Area

sales manager; while four assists the area manager of Visakhapatnam sales supervisors-the

area managers of Vizianagaram and Srikakulam are assisted by only two sales supervisors

each. The management of the unit is putting extra emphasis on Visakhapatnam district. One

reason for this is that Visakhapatnam is now a day maintaining the fastest growth rate in the

entire Asian continents. Hence, the management determined to catch up with the potential

marketing of this steel city.

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SALES AND DISTRIBUTION:

Today’s sales executives are professional’s. They plan, build, and maintain effective

organizations and design and utilize efficient control procedures

SALES MANAGEMENT-DEFINED:

“The planning, direction and control of personal selling, including, recruiting,

selecting, equipping, assigning, routing, supervising, pay8ing and n0tivati8ng as these tasks

apply to the personal sales force”

EVOLUTION OF SALES DEPARTMENT

Prior to the industrial revolution there is no problem with selling because the

industries used to produce less quantity of goods, but after the industrial revolution newly

built machinery were truing out he quantities then the problem of sales marketing raised.

OBJECTIVES OF SALES MANAGEMNT

There are three general objectives of sales management

1. Sales volume

2. Contribution to profits

3. Continuing growth

SALESMANSHIP:

It is the art of successfully persuading prospects or customers to bring products or

services from which they can derive suitable benefits, thereby increasing their total

satisfaction.

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PROSPECTING:

The planning work, which is essential in elementary calls on non-buyers, is called

prospecting.

STEPS IN PROSPECTING:

1. Formulating prospect definitions

2. Searching out potential accounts

3. Qualifying prospects and determining probable requirements

4. Relating company products to each prospects requirement

SOME IMPORTANT TERMS

1. MARKET POTENTIAL:

A market potential is an estimate of the maximum possible sales opportunities present

in a particular market segment and open to all sellers of a good or services during a stated

future period.

2. SALES POTENTIAL:

A sales potential is an estimate of the maximum possible sales opportunities present

in a particular market segment open to a specified company selling again or service during a

stated future period

3. SALES FORECAST:

A sales forecast is an estimation of sales, in dollars of physical units in a future period

under a particular marketing program and an assumed set of economic and other factors

outside the unit for which the forecast is made

THE EFFECTIVE SALES EXECUTIVE:

The sales executive job like those of others laid executives is to make decision hand

to see it that others carry them out. The job of sales executive is more action oriented than

planning oriented. Sales executives get promoted into their positions because of their

39

previous performance as sales persons. It is widely believed that effective that sales persons

will become effective sales executives, but is not true. Sales person’s job is to implement the

plan assigned by sales executives. Sales executive’s job is more administrative oriented than

planning oriented.

QUALITIES OF EFFECTIVE SALES EXECUTIVES:

Abilities to define the position exact function and duties in relation to the goals the

company should expect to attain

Abilities to select and train capable subordinates And willingness to delegate sufficient

authority to enable to carry out assigned takes with minimum supervision

Ability to use time efficiently

Ability to allocate sufficient time for planning and implementing the plans

Ability to exercise leadership

SALES ORGANISATION:

Effective sales executives insist upon round organization they recognize that the sales

organization must achieve both quantitative and qualitative personal selling objective

PURPOSE OF SALES ORGANIZATION:

Sales organization is essential

To permit the developments of specialists.

To assure that all necessary activities are performed

To achieve coordination or balance

To define authority

To economize on executive time

40

SETTING UP A SALES ORGANISATION:

There are five major steps in setting up sales organization

Defining the objects

Delineating (outlining) the necessary activities

Grouping activities into jobs or positions

Assigning personal to positions

Provision for coordination and control

BASIC TYPES OF SALES ORGANIZATION STRUCTURE

Line sales organization

Line and staff sales organization

Functional sales organization

Committee sales organization

SALES DEPARTMENT RELATIONS:

The sales department occupies a strategic (virtual) position in an organization.

Good products at commutative prices are not enough. The dealings and associations with

customers and other publics affect company’s success. Sales department relations with other

departments influence the company’s relation with public.

INTER DEPARTMENTAL REALTIONS AND COORDINATION:

Both formal and informal coordination methods are necessary for effective

relationship building.

COORDINATION OF SALES DEPARTMENT WITH OTHER DEPARTMENTS:

Customers and other public. Sales department relations with other departments

influence the company’s reputations with public

41

INTER DEPARTMENTAL RELATIONS AND COORDINATION:

Both formal and informal coordination methods are necessary for effective

relationship building.

COORDINATION OF PROFESSIONAL SELLING WITH OTHER MARKETING

ACTIVITIES:

Sales and advertising.

Sales and marketing information

Sales and service

Sales and physical classification

COORDINATION OF SALSES DEPARTMENT WITH OTHER DEPARTMENTS:

1. Sales and production

2. Sales and research and development

3. Sales and personal

4. Sales and finance

5. Sales and accounting

6. Sales and purchasing

7. Sales and public relation

8. Sales and legal

SALES DEPARTMENT RELATIONS WITH OUTSIDERS

1. Final buyer relations

2. Industrial relations

3. Government relations

4. Educational relations

5. Press relations

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PERSONAL MANAGEMENT IN SELLING:

It is impractical to field close exercise and constant control over selling people,

because they work away from coworkers and immediate supervisors and at the same time

they visit the office only infrequently. Constant supervision like on finance people and

production people is not possible in case of marketing people.

RECRUITING SALES PERSONAL:

In recruiting sales personal it should be kept in mind what method is followed in the

past and what is the success and what is the failure ration to the recruitment, them depending

upon that ration we have to follow recruitment method

SOURCE OF SALES FORCE RECRUITMENT

1. Source within the company (internal source)

a. Company sales personal

b. Company executive

c. Internal transfer

2. External sources

a. Direct consolidated applications

b. Employments agencies

c. Sales people making calls on to the company

d. Employees of customers

e. Sales executive clubs

f. Sales of non-competing company’s

g. Educational institutions.

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MOTIVATING SALES PERSONNEL

Motivating is a goal directed behavior, underlining which are certain needs or

Desires why motivation is important to sales personal.

A. Inherent nature of the job

B. Sales person’s boundary position and role conflicts

C. Tendency towards apathy

D. Maintaining a fielding of group identity

E. Straight-commercial plan

F. Combination salary and incentive plan

CONTROLLING SALES PERSONNEL

Control is one of the main functions of the management. Without control effective

sales cannot be achieved, if anything goes wrong with this ‘control’ tool we car rectify and

take sufficient action.

STEPS IN CONTROL:

1. Setting standard

2. Recording actual performance

3. Comparing standard with actual

4. Taking corrective action

QUANTITATIVE PERFORMANCE STANDARDS:

a) Quotas

b) Selling expense ration

c) Territorial net profit or gross margin ration

d) Territorial market share

e) Sales coverage effectiveness index

f) Call frequency ratio

g) Calls per day

h) Order calls ratio

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i) Average cost per call

j) Average order size

k) Non selling activities

l) Multiple quantitative performance standards

THE SALES BUDGET

The sales budget consists of estimates of an operating profits probable dollar and unit

sales and the likely selling expense. It is a projection of what a given sales program means in

terms of sales volume, selling expense and net profits.

PURPOSE OF SALES BUDGET:

1. Mechanism of control.

2. Instrumentation of planning

People will not go the companies to buy product or service. The manufacturer has to

make available the goods/services to the consumer. To make available the manufacturer goes

through the root distribution. Through distribution, he makes available the goods to the final

user. Distribution plays a vital role in the marketing department. The main objective of

distribution is that to reach the wide no of customer’s distribution of produced goods and

services are a critical element in distribution strategy and involves the actual movement of

goods and services from producer to the final customer. Distribution plays a vital role in the

marketing department. The main objective of distributions is that to reach the wide no of

customers. Distributions of produced goods

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THEORITICAL FRAME WORK

Channel of distribution is the most powerful element among marketing mix elements. The

main function of this element is to find out appropriate ways throughwhich goods are made

available to the markets. It is a managerial function and hence proper decisions are to be

taken in this matter before commercial production begins. This is so because the efficiency

of its channel of distribution is often what separates a successful firm from an unsuccessful

firm.

Marketing channels are the most complicated phenomena encountered in the study of

marketing. They encompass elaborate behavioral systems that usually involve many decision

makers and often extend over a wide geographical area. One aspect of these systems is their

constants interaction they lead, there follow, they control, they conflict, they co-operate.

This might be the reason why Peter Ducker qualified this function of marketing as a

‘Dark Continent’. IN the past, this aspect had not received its due attention and recognition

in marketing planning since the distribution was not usually under taken by the producers.

Later on, the producers were facing certain ‘gaps’ in their distribution process resulting in an

imbalance between production and sales. They also understood that many a product, which

was intrinsically food, had dies in infancy because it literally never found the right road to

the market.

1. Customers are usually scattered, where as production is concentrated in a few centers.

This may be treated as spatial gap. Transportation is used to cover up this gap and includes

all activities directly concerned with moving goods form the place of production to the place

consumption.

2. Customers make their purchases at regular intervals, where as production has to be

organized on continues process. This is a temporal gap. Inventory deals with these gaps.

This includes activities concerned with holding goods between the time of production and the

time of sale.

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3. Manufacturers organize large-scale production to reap benefits of economies whereas

customers prefer to by only in small quantities. This would naturally create a gap to be

called perceptional gap. This gap is covered by promotional activities. The include giving of

percussive information and buyers re prompted at make quick repeal purchases.

4. Basically customers cannot have full information of producers and products available and

naturally this prevents free exchanges. This may be designated as transactional gap. This is

the most difficult gap to be filled up. This gap could be effectively covered only by proper

distribution arrangements.

The concept of distribution as a ‘gap’s only theoretical value. This approach fails to

explain planning and control aspects needed in ‘channel management’. For eample, for one

type of product a particular channel would be ideal, but for another type an alterative channel

may be more suitable. In both cases ‘gap’ is the same but different approaches are necessary.

Again the channel selection end control might vary depending upon the nature of business.

Moreover, external environments condition distribution activities as the market is outside the

business. Above all, it should be noted that channels chooses for the company’s.

Products intimately affect every other marketing decision and they involve the firm in

relatively long-term commitments to other firms. For a consumer-oriented firm every

channel represents as customers and his needs and desires must be catered in full. The gap

approach therefore, would be of no value if the above factories were considered.

DEFINITION:

Every producer seeks to link together a set of marketing intermediaries that fulfill the firm’s

objective. This set of marketing intermediaries is called the marketing channel. The

American marketing association defined the term as “the structure of introduced company

organization units and extra company agents and dealers. Whole wholesalers and retailer

through which a product or service is marketed”.

47

The definition includes two aspects:

1. The firm’s internal marketing organization units and the outside business units, which a

firm uses in its marketing work.

2. The channel structure of the individual firm and the firm entire channel complex available

to all firms.

The channel is also described as ‘a grouping of intermediaries from first owner to the last

owner, who take title to a product during the marketing processes.

The word”channel”has its origin in the French word used for channel. Thus a channel is a

medium through which goods are make to moves as smoothly as possibly to the desired

places. In other words, the route through which goods move from the place of production to

the place of consumption is termed as “channel of distribution”.

A.W.Shaw defined distribution as “as the application of motion to materials as they move

from the times, places, forms and conditions where they have value”. The channel is

therefore the vehicle for viewing marketing organization in its external aspects and for

bridging the physical and non-physical gaps, which

exists in moving goods from producers to consumers through the exchange process,

including the determination of price.

The process of distribution encompasses the movement of goods form the point of

production, or from storage locations, along the channel of distribution. The marketing

function includes three elements.

1. The transportation of goods physical movement of goods or traffic management.

2. The location of goods storage.

3. The institutions facilitating the easy movement of goods.

48

The first two elements are discussed in detail in a previous chapter. The present chapter

deals with the third elements.

CHANNEL OBJECTIVES

There is, however, a misconception that channels are permanent features of a company’s

marketing activity. But this does not seem to be correct. Along with the shifts in overall

strategy of firm corresponding changes in channels system may be necessary. In other

words, existing trade channels are not a constraint in the design of marketing strategy;, for

this reason, channel decisions are included as a part of strategy rather than as part of the;

marketing organization.

The channel objectives may be numerous depending upon the marketing and corporate

objectives. A few examples are mentioned below:

1. Growth in sales by establishing distribution in new markets.

2. Improvements/maintenance of market share.

3. Creation of an efficient channel system.

CHANNEL FUNCTION:

In any developing economy there is an increasing emphasis on specialization and the division

of labor. As a result of this a ‘gap’ gets developed between producers and users. The

primary purpose of a distributive channel is to bridge this gap by; resolving spatial and

temporal discrepancies is supply and demand. For this irrespective of the extent of these

discrepancies, certain essential functions need to be performed. These are:

1. Transfer of title to the goods involved.

2. Physical movements from; the point of production to the point of consumption.

3. Storage function.

49

4. Communications of information concerning the availability, characteristics and price of

the goods in transit, inventory and on purchase.

5. Marketing creates various utilize4 to the products. Most of utmost these utilities are, in

fact, created by performing the functions of physical distribution promptly and efficiently.

Channels of distribution help to move goo9ds from one place to another hence, they add

place utility; they bring goods to the consumer when the consumer in a convenient shape,

unit, size, style and package, Hence they add convenience value. They make it poss9hbel for

the consumer to obt6qin goods at a price he is willing to pay, and under a conditions bring

him satisfaction and pride of ownership hence, they add possession value.

The important of this function varies depending upon the nature of the goods

themselves. For example transportation and storage tend to predominate in the case of bulky

raw materials such as coal, petroleum products and iron ore,

Where price and specifications are standardized and the market comprises a limited number

of buyers and sellers. As the complexity of the product increase3s, the prohibition of

information and product service becomes predominant, for example computers, automobiles

etc.min the case4 of consumer goods, advertising and sales promotion constitute the ;major

communication channel. Contrary to this, industrial goods depend more on personal selling,

owing to the more heterogeneous nature of the goods involved. Therefore, it is necessary to

consider the precise nature of the product and the seller-buyer relationship to determine their

relative importance.

PHYSICAL DISTRIBUTION AND CHANNELS OF DISTRIBUTION

If distribution could be treated ax whole function of marketing, then it could be split into two

components. Physical distribution and channels of distribution. It is found that these two

streams are used, sometimes interchangeably.

50

CHANNEL OF DISTRIBUTION

Channel of distribution refers, primarily, to the middle or intermediary marketing institutions,

which performs certain marketing function. More than performing the functions these

institutions try to gain access to the target market.

PHYSICAL DISTRIBUTION

Physical distribution on the oh6er hand, concerns with material aspects of the flow of goods

to the consumers. It includes transportation, storage, warehousing, packing etc. it is a

technical function in the sense that it ensures availability of product at the right time , at the

right palace and in the right ;form. The term is used often in a broad sense to include

channels of distribution also.

KINDS OF CHANNEL MEMBERS

The channel of distribution includes the original producer; the final buyer and any

middlemen wither wholesaler or retailer. The term middlemen refer to those institutions or

individual s in the channel, which either take to the goods or negotiate or sell in the capacity

of an agent or taken broker. Thus from the marketing point of view the middlemen and

intermediaries are the same. ON the same basis of taking title to goods these middlemen are

decided into merchant middlemen and agent middlemen, merchant middlemen, obviously

take a title and later affect sales on their own accord. Agent middlemen, on the contrary do

not take title to goods,. They simply get an order from the buyer and pass it on to the

producer and seller they are also known as “functional middlemen”. ON the basis of the

position of the middlemen in the chnbne4l of distribution, they are also classified into

wholelsalee5rs and retailers. Wholesalers are closer to the manufacturers while retailers have

a close touch with customers. The various kinds of middlemen are:

51

1. AGENTS:

The middlemen who do not take any title to goods. They take active part in the marketing

mechanism rendering all services required. They do not usually repr4esent both the buyers

and the seller in the same transaction. Ex: - Commission agents, manufacturer’s agents,

selling agents etc.

2. BROKERS:

Agents who do not have direct physical control of the goods in which they deal. They

represent either the buyer or the seller in negotiation purchases or sales for their principal.

The broker’s powers as to prices and terms of sale are usually by limited their principals.

3. DEALERS:

Firms that buy or resell products t either retail or wholesale basis

4. DISTRIBUTORS:

It is a general term used to mean wholesalers.

5. JOBBERS:

This term is widely used as a synonym of wholesalers or distributors. The term is also used

in certain traders and localities to designate special types of wholesalers. They are usually

found in stock markets

6. Rack jobbers:

A Wholesaling business unit that markets specialized lines of merchandise to certain types of

retail stores and provides special services such as arrangement, maintenance and stocking of

products in display racks. The rack jobber, usually, but not always, put his merchandise in

the store of the retailer on consignment. Rack jobbers are more common in the food business

7. RESIDENT BUYER:

An agent or a person who specializes in buying on a fee or commission basis, chiefly for

retailers.

52

8. RETAILER:

A merchant, or occasionally an agent, whose business is selling directly to the ultimate

consumer.

9. WHOLESALER:

A business unit, which buys and resells merchandise to retailers and other merchants and to

industrial institution and commercial users but which does not sell in significant amounts to

ultimate consumers. Generally these merchants render a wide variety of services to their

customers. There are various kinds of wholesalers, such a distributors, services wholesalers

etc.

10. COMMISION HOSUES:

There are also referred to as commission merchants. These agents usually exercise physical

control over and negotiate the sale of the goods they handle. The commission houses usually

enjoy broader powers over the prices, methods and items of sales than the brokers but they

are also bound to obey instructions issues by the principal. They generally arrange delivery

extend necessary credit, collects, deduct their fees and remit the balance to the principal.

11. DISCOUNT HOUSES:

Discount houses is a retailing business units featuring durable consumer items, competing on

the basis of price appeal and operating on a relatively low mark-up and with a minimum m of

customer service.

12. BRANCH HOUSE:

It is an establishment maintained by a manufacturer detached from the head office and used

for the purposes of stocking, selling delivering and ser5vicing his product a branch office is

also similar to a branch house.

53

13. FACILITATING AGENCIES:

These agencies perform or assist in the per5formance of one or a number of marketing

function, but they neither take title to goods not negotiate purchase or sale. Common types

are banks, railways, warehouses, commodity exchanges, assurance etc.,

14. CONSUMER CO-OPERATIVE:

Tribute gods and services primarily to the member. Such societies are sometimes referred to

as purchase co/operative also.

15. INDUSTGRIAL STORE:

A retail store owned and operated by a company to sell primarily to its employees.

Non/governmental establishment are often referred to as company stores.

FUNCTIONS OF MIDDLEMEN

Nothing prevents a producer form meeting hi customers directly and effecting sales. If a

seller does not use this privilege then there must be certain unchallengeable advantages. The

advantages could be stated thus:

1. Many products do not have the resources to engage themselves in direct marketing.

2. Middlemen reduce transaction to an optimum number.

3. Middlemen are capable of eliminating discrepancies in quantity that is distributed. This is

done by breaking the bulk that is dividing a huge lot into small fractions.

4. Middlemen are capable of eliminating discrepancies in assortments. This happens when

different manufacturers produce a variety of items that become parts of another product or

each part is demanded separately as spares.

5. The producer can concentrate on the production function leaving the marketing problem to

the middlemen who specializes in the line.

6. The finance required for organizing marketing could profitably be used in production

where the rate of return would be greater.

54

7. The chief connection of selling intermediaries it to assemble to e goods from and many

producers in such a manner that a customer could affect purchase with ease. According to

Wore Alderson the goal of marketing is the catching of segments of supply and demand. The

matching process is undertaking by performing the following functions:

Contacting:

Contacting purchasers or potential of the product.

Sorting:

Buying a large number of products in large quantities and then dividing and rearranvbing

them into suitable combinations; for the buyer.

Stimulating demand:

help to sell merchandise through personal selling and advertising

Maintaining inventory: Stocking of goods at all times closer to the plight of purchase.

Transmitting marketing information:

X serves as conduct information flowing between the market and the manufacturer.

In short middleman, have to perform ‘connection’’ ‘Equalization’ and ‘dispersion’ functions

of marketing

8. Middleman collects huge orders and purchase products in bulk form the producers. This

enables a manufacture to undertake large-scale production.

9. The main function of middlemen is to pro vide the connecting link between the producers

and their respective markets.

10. Middleman helps to stabilize the price too. By stocking goods constant of gods to the

markets is assured. This equalizes demand and supply factors, which stabilizes prices not

only in a sign, single market but also maintains the same price level in all markets

11. Middlemen create place, time and possession utilities to the products.

Thus under the present complex system of production and distribution middlemen n appear

to the indispensable and inevitable. Industry and commerce are soil specialized these days

55

that the producers a cannot do full justice to every minute of production and distribution. For

this reason, they have some people specialized in the different adjuncts; of production and

distribution, so that their enterprise my may be crowned with success.

If There were no such specialized people; the producers would have to be; so busy

with all details of production and distribution they would hardly find any time to devote their

attention to the other vital requirements of business. This proportion becomes all the more

difficult in a competitive field where the question is of the ”Survival of the fittest” in short,

the services rendered by middlemen t to the producers and consumers in general are of

immense value.

CLASSIFICATION OF MIDDLEMEN

A few kinds of special middlemen occupying the trade channel were defined earlier in this

chapter. A proper classification and discussion is making hereto analyze their individual

position in the channel and their activities.

WHOLESALERS:

Wholesalers occupy a predominant position I the channels of distribution. This is more so in

a widespread economy, where the wholesaling function is of vital importance. They

assemble merchandise from many sources, warehouse4 it, and regroup the goods for

convenient buying by retailers. Sort modern wholesale merchants provide information and

advisory services to retailers, and they are often in a position to provide local market

information to manufacturers as well. Their most important services, of course is that of

marking it possible for the4 manufactures ;to sell ;to thousands of ;small ;retailers to whom

;the ;merchandise cannot to sold direct form ;the factory. This is more so because of their

lack of sources and storage space to purchase in larvae quantities to make such direct

purchase economically feasible. ON the basis of function they performed, wholesalers could

be groups as follows;

1. Limited function wholesalers:

56

They are basically merchant wholesaler but do not provide fully service, and often provide

only; the minimum services among limited functions. Wholesalers of certain types stand out

and have become trade institutions, which are as follows:

a. Wagon or truck jobbers: as the name implies a wagon and truck jobber sells from his

wagon. His main contribution is that he covers wide rural territories and distributes perish;

able goods to small and often out-of-the –way retail customers.

B Rack Jobbers: these are wholesaling units that market specialized lines of merchandise to

certain types of stores only. They keep their merchandise in tracks, and the retail buyers are

allowed to get their for themselves. They concentrate mainly on food items and therefore,

are helpful for supermarkets.

c. Cash and carry jobbers: as the name suggests, the wholesalers do not allow any credit

facilities to retailers. Naturally, their operations are less costly and the price of products is

also low.

d Mail order wholesalers: these wholesalers sell through the medium of post. They were

necessary in times when transport and communication were under developed. With the

modern improvement in these fields their importance has considerably decreases.

2. GENERAL MERCHADISE WHOLESALERS:

Such a wholesaler never restricts the varieties of products to be handled. Hew may even

handle unrelated products lines. These kinds of middlemen are fast disappearing from the

city areas since all fields are gradualoly6 getting specialized.

3. GENERAL LINE WHOLESALERLS :

Contrary to the above kind of wholesalers, they deal in closely related items. IN industrial

goods marketing, these wholesalers are known as “Industrial distributors”. This kind of

wholesalers is found in hardware and automobile spare parts business.

57

Specialty wholesalers:

As the name suggests this kind of wholesalers have introduced specialization in the

wholesale trade. Such a wholesaler deals only in one merchandise. But within that limited

line he might offer the who le range also specialize in concentrating on the products of a

single or a special group of manufactures. This will enable him to get all support from

manufacturers including the sales promotional supports

4. FUNCTIONAL WHOLESALERS/MIDDLEMEN

This kind of wholesalers actually falls under the category of agent middleman. They do not

take title to merchandise nor do they see goods they sell.Their main functions to facilitate

selling, although there are some buying functional middlemen. They are classified as:

A. Brokers: this group operates to bring the buyers and the seller together. Brokers are

especially important in the food, textile, and real estate and in second hand machinery

markets. Primarily, brokers sell information. Information of products available for sale or

purchase.

B. Drop-shipment wholesalers: through by nature they are also wholesalers, they; do not

handle the goods ;they sell. They simply collect orders from retailers and pass them on to the

retailer such wholesaling functions, with the 0065ceptgion of storage and handling

C. Commission merchants: they ;are mostly found in the agricultural marketing field and

handle the selling function for large numbers ;of products Like the broke a commission

merchant finds markets for the products. But unlike; the broker, he generally handles the

goods he sells but does not own them,. Consequent on the emergence; of co-operative

marketing tin the agricultural se4dtor in recent years, the importance of these merchants has

declined.

58

D. Manufactures; agents: these; agents; wor4k for several; no competing manufacturers and

act as sales representatives for them in a territoryTheir main job is to call on and sell to

wholesalers and industrial buyers. As a; rule, the manufactures and agent does not handle

goods. He sends the orders; to the; manufacturers who in turn deliver the; products directly;

to buyers.

E.Selling agents: like the manufacturers agents willing agents sell for ;the manufacturers but

usually ;handle the entire output of such manufacturers. They take over the entire marketing

job for a commission. The selling agent prominent in the textile and drugs and

pharmaceutical industries, where many small producers have to sell products fast and at the

lowest possible cost.

a. Converters: they operate both as manufacturers and wholesalers. But their

production operation would be simple, concentrating more on selling. This is found in

textile; industry6, where the raw cotton is brought and after dyeing, printing etc.findshed

cloth is sold. This kink of wholesalers is rarely found in India.

b. Assemblers: their specification is in the agricultural field. Some are agent

middlemen and some are merchant middlemen, and in most cases they combine both the

types. Their main job is assembling goods from various places.

CHANNEL MANAGEMENT

The selection of marketing channel systems by manufacturers is one of the most critical

marketing decisions to be made. It is strategic decision. The objective of this strategic action

is to place the firm and its products into a market position which is very safe.

The channel decision has far-reaching consequences and even affects the manufacture’s mix.

For ex: the producer’s freedom of pricing is limited by the trade discount arranged with

resellers. His advertising and use of personal selling are influenced by the role of the

middlemen promoting his brands. Even the products features or its packing may be affected

59

buy the assortment of needs and merchandising policies of important sellers. Consequently

the channel decision represe4nts one of the; most important decisions a manufacturers must

make and therefore, a decision that deserves extensive analysis and careful planning.

Two basic goals are commonly pointed out:

1. The achievement of a sufficiently board product availability in the market. This would

assure ready exposure of the product to potential buyers.

2. The creation of uninterrupted trading relationships with the middlemen. These goods are

often described as long-range goal of channel management. On the basis of this short-run

channel objectives are established. They are,

A. Coverage of geographical markets to ensure prompt and quick delivery.

B. Coverage of important resellers this will ensure product availability over a wide

area.

C. Coverage of personal selling support.

D. Effective sales promotion.

CHANNEL OPTIONS:

The second stage in the channel management is to choose from among the various adoptions

available. The options are made on the basis of

1. The degree of directness or number of levels of middlemen to be in the channel.

2. The degree of selectivity number of middlemen required in a specified area.

3. The types of middlemen what types of wholesalers, retailers and facilitation middleman

are needed.

4. The number of separate distribution channels.

5. The choice of the individual middlemen.

60

As pointed out earlier channel decision is not permanent and requires constant evaluation,

improvements, changes and abolition of channel altogether; might become necessary in the

course of time. On the basis of the natur5e of products also, these channels may take

different forms. A common of general approach is neither feasible nor practicable.

A few practical hints on channel selection are given below:

1. In case where a manufacturer product are frequently purchases the best course for him

would be to adopt direct distribution.

2. Fashionable and perishable commodities usually must be placed in the hands of final

sellers as quickly as possible. Especially departmental; stores are the best channels in their

case.

3. In the case of goods, which require technical knowledge or skills for sales, maintenance,

repairs, etc.the channel ;must be selective in ;nature. Middlemen also could be used provided

they could offer these services efficiently.

4. Goods with high unit cost are sold more directly and selectively; as also ;they bulk ones.

For branded able products, multiple shops would be the best channels.

5 because of widely spread market and low unit value, the convenience goods may be

distributed through intensive channels.

6. The length of the product line would compact direct sales. It is the case whe3n customers

are concentrated geographically.

7. The shopping goods are usually of high unit value of tend and involve a style element

therefore they tend to use more direct and selective channels. The channel objectives must

be maximization of sales good will and control and minimization of costs. These objectives

are of course conflicting in nature buy finally depending on the market marketing mix

resources and environment factors. They are more o less permanent in nature. An

understanding of these factors will enable a person to make a proper and selection of channel

for his product.

61

TYPES OF CHANNELS

1. PRODUCER ------- CONSUMER

2. PRODUCER ------- RETAILER ------ CONSUMER

3. PRODUCER ------- WHOLESALER ---- RETAILER ----- CONSUMER

4. PRODUCER ------ AGENTS ------------ RETAILER ----- CONSUMER

CHANNEL FOR INDUSTRIAL PRODUCTS;

1. PRODUCER----- INDUSTRIAL USER

2. PRODUCER ----- INDUSTRIAL DISTRIBUTOR -----. USER

3. PRODUCER----- AGENTS----------------------------- USER

4. PRODUCER----- AGENTS-------INDUSTRIAL DISTRIBUTORS----- USER

62

FACTORS AFFECTING THE CHOICE OF DISTRIBUTION CHANNELS

1. Market Consideration

a. This include the nature of market

b. The nature of potential customers

c. Geographical concentration of the ;market

d. Order and size

e. Customer buying and wealth

2. Product Consideration

a. Unit Sale value

b .Bulk and weight

c. Technical nature of the product

d. The broader the product line, the shorter shall be the channel

e. If the product is custom make.

3. Company Consideration

A. Financial sound companies

B. Desire for control of channel

4. Middlemen Consideration

a. Services

b. Maximum Sales volume

c. Choice of sales/channels

5. Consumer Consideration

a. Consumer4 requirements

b. Convenient location

63

SELECTION OF CHANNEL FOR NEW PRODUCT:

1. Consumer realizes they want it.

2. Aggressive promotion is needed.

3. All possible efforts will have to be made.

CHANGE IN CHANNELS OF DISTRIBUTION

1. The development of bett3er and cheaper means of transport.

2. The growing importance of branded

3. Controlling of facts and distribution

4. Development of retail trade.

5. The population growth and movement with in the country.

6. Conditions of business and market changes.

7. Remodel or change of the flow of goods.

64

DATA ANALYSIS & INTERPRETATION

Following are the data acquired from questionnaire by taking 100 samples:

Q.1 Which brand of soft drinks you deal in?

a. PepsiCo b. Coca-cola c. Both d. other

Table No :5.1

Brand Sample percentage

PepsiCo 40 40%

Coca-cola 24 24%

Both 31 31%

Other 5 5%

Source: sample survey

INTERPRETATION:

From the above data,we can clearly understand that 40% of retailers deal in PepsiCo

product’s, 24% of retailers deal in coke product’s, 31% of retailers deal in both pepsi and

coke product’s and 5% others product’s.by this analysis I conclude that pepsi co product’s

Deal by 40% of retailers in vizag.

65

Graph no:5.1

0

5

10

15

20

25

30

35

40

45

PepsiCo Coca-cola Both Other

brands of soft drinks

66

Q.2 Which brand of drinks provides you better facility?

a. PepsiCo b. Coca-cola c. Both

Table No:5.2

Brand Sample Percentage

PepsiCo 51 51%

Coca-cola 24 24%

Both 25 25%

Source: sample survey

INTERPRETATION:

From the above data, we can clearly understand that 51% retailers agreed that pepsi

provide the better facilities ,24% of retailers says coke and 25% retailers are says both

pepsi and coke . by this analysis i conclude that PepsiCo provides better facilities for

retailers in vizag.

67

Graph no:5.2

0

10

20

30

40

50

60

PepsiCo Coca-cola Both

provides better facility

provides better fecility

Sample

68

Q.3 How many crates of Pepsi you sell per day in summer?

a. 0-1 b. 1-2 c. 2-3 d. More than 3

Table No:5.3

Sales per day Sample percentage

0-1 12 12%

1-2 24 24%

2-3 26 26%

More than 3 38 38%

Source: sample survey

INTERPRETATION:

From above data, we can clearly understand that 12% of retailers sells 0-1 crates,

24% of retailers sells that 1-2 crates, 26% of retailers sells 2-3 crates , 38% of retailers sells

that sell more than 3 crates in one day.by this analysis I conclude that in summer 38% of

retailers sell more than 3 crates.

69

Graph no:5.3

0-1, 12%

1-2, 24%2-3, 26%

More than 3, 38%

0

5

10

15

20

25

30

35

40

0-1 1-2 2-3 More than 3

Sales per day

70

Q.4 Which kind of soft drink your customers prefer to drink?

a. Juice-based b. Cola-based c. Milk-based

Table No:5.4

Base Customer’s

preference

percentage

Juice-based 32 32%

Cola-based 54 54%

Milk-based 14 14%

Source: sample survey

INTERPRETATION :

From the above data, we can clearly understand that 54% customers like to prefer cola-

based drink and 32% of customers like to prefer juice-based drinks and 14% of customers

like to prefer milk- based drinks.by this analysis I conclude that 54% of customers in vizag

city prefer to drink cola-based drinks.

71

Graph no :5.4

0

10

20

30

40

50

60

Juice-based Cola-based Milk-based

Customer’s preference

Customer’s preference

72

Q5. Which type of customers like soft-drinks according to you?

a) Student b) Business

c) middle age group d) womens

Table No: 5.5

Type of customer Sample Percentage

Student 52 52%

Business people 18 18%

Middle age group 22 22%

Women 8 8% Source: sample survey

INTERPRETATION :

From the above data,we can clearly understand that they are different type of customers like

soft drinks in that 52% students like soft drinks , 18% business people like soft drinks,22%

middle age group like soft drinks and 8% housewifes like soft drinksby this analysis I

conclude that out of all types of customers 52% students like soft drink in vizag city .

73

Graph no:5. 5

TYPE OF CUSTOMER

0

10

20

30

40

50

60

Student Business people Middle age group Women

74

Q6. Which kind of drink you prefer to have?

a) Packaged

b) Unpackaged

Table no :5.6

Drink Customer’s

preference

percentage

Packaged 85 85%

Unpackaged 15 15%

Source: sample survey

INTERPRETATION :

From the above data,we can clearly understand that 85% of customers prefer to have

packaged drinks and 15% of customers prefers to have unpackaged drinks.by this analysis I

Conclude that 85% of customers prefer to have packaged drinks in vizag city.

75

Graph no:5.6

0

10

20

30

40

50

60

70

80

90

Packaged Unpackaged

Customer’s preference

Customer’s preference

76

Q.7 Was the outlet maintaining the glow sign board, hanger and flexi board effectively?

a. YES b. NO

table no:5.7

Boards Sample percentage

YES 75 75%

NO 25 25%

Source: sample survey

INTERPRETATION:

From the above data,we can clearly understand that75% of retailers are outlets

maintaining glow sign board, hanger and flexi board and 25% of retailers not maintaining

glow sign board, hanger and flexi board.by this analysis I conclude that most of the retailers

i.e 75% are maintaining glow sign board, hanger and flexi board in vizag.

77

Graph no:5.7

0

10

20

30

40

50

60

70

80

YES NO

The Outlet Maintaining The Glow Sign Board, Hanger

And Flexi Board

78

Q.8 Do you require service by Drink Company as follows

a. Daily b. Alternate Day c. Weekly 2 times

table no: 5.8

S.No. Name of the Area Daily Alternative Day

Weekly Twice

1. Maddilapalem Nil 84 16

2. Jagadamba 2 8 60

3. RTC Complex, Ramnagar Nil 55 15

4. Gajuwaka 1 16 43

percentage 1% 55% 44%

Source: sample survey

INTERPRETATION:

From the above data,we can understand that require service by drink company as follows

daily,alternative day,weekly twice, 1% of retailers needs daily service, 55% of retailers

needs alternative days and 44% of retailers needs weekly twice Service. By this analysis I

conclude that 55% of retailers needs alternative day service in vizag city.

79

Graph No.5. 8

REQUIRE SERVICE BY DRINK COMPANY

0

10

20

30

40

50

60

70

80

90

Maddilapalem Jagadamba RTC Complex,

Ramnagar

Gajuwaka

Daily

Alternative Day

Weekly Twice

80

Q.9 Are you satisfied with Pepsi service?

a.Good b.Satisfactory c.Bad

Table No. 5.9

S.No. PARTICULARS Pepsi percentage

1. Bad 15 15%

2. Satisfactory 60 60%

3. Good 25 25%

Source: sample survey

INTERPRETATION:

From the above data,we can clearly understand the retailers satisfactions about the pepsi

service is 15% of retailers says bad,60% of retailers says satisfactory,25% of retailers says

good.by this analysis I conclude that 60% of retailers says satisfactory about pepsi co service

in vizag city.

81

Graph No. 5.9

0

10

20

30

40

50

60

70

Bad Satisfactory Good

satisfied with Pepsi service

Pepsi

82

Q.10 which Consumer promotions offered which company is best?

A.Pepsi b.Coke

Table no: 5.10

S.No. Pepsi Coke

1. 72 38

Source: sample survey

INTERPRETATION:

From the above data ,we can clearly understand that 72% of consumers like pepsi co

promotions and 38% of consumers like coke promotions.by this analysis I can conclude that

pepsi co offers better consumer promotionsmore than coke consumer promotions.

83

Graph no: 5.10

0

10

20

30

40

50

60

70

80

Pepsi Coke

Consumer promotions

84

Q.11 Do you feel TV advertisements by drink companies help in more sale of Drinks

a. Yes b.No

SALES GROWTH RATE DUE TO TV & OTHER MEDIA’S

Table No. 5.11

Tv

advertisements

Sample percentage

YES 65 65%

NO 35 35%

Source: sample survey

INTERPRETATION:

From the above data,we can clearly understand that tv advertisements by drink companies

help in more sale of drinks, 65% of retailers says yes and 35% of retailers says no for tv

advertisements by drink companies help in more sale of drinks.by this analysis I conclude

that 65% of retailers says yes for tv advertisements by drink companies help in more sale of

drinks in vizag city.

85

Graph No. 5.11

SALES GROWTH RATE DUE TO TV & OTHER

0

10

20

30

40

50

60

Student Business people

86

Q.12 If less sale in your shop – reasons?

a. 200ml Bottle Cost 10 to 12 increase

b. 300ml bottle Cost 12 to 14 increase

c. Summer heat less than 2012

d. Other Beverages Sale

Table No. 5.12

S.No. Name of the Area No. of % age percentage

1. 200ml bottle 10 to 12 increase 33 33%

2. 300ml bottle 12 to 14 increase 22 22%

3. Summer heat less than 2013 10 10%

4. Other beverge sales 35 35%

Source: sample survey

INTERPRETATION:

From the above data ,we can clearly understand that reasons for less sales of drinks 33% of

retailers says 200ml bottle 10 to 12 increase,22% of retailers says 300ml bottle 12to 14

increase ,10% of retailers says summer heat less than in 2012,35% of retailers says other

beverges sales.by this analysis I can conclude that increase in other beverage sales in 2012.

87

Graph No. 5.12

LESS SALE IN YOUR SHOP

0

5

10

15

20

25

30

35

40

200ml bottle 10 to

12 increase300ml bottle 12 to

14 increaseSummer heat less

than 2012Other beverge

sales

88

Q.13 Condition of Pepsi Visi cooler ?

a. Full of Pepsi Drinks

b. Full of Pepsi + Coke Drinks

c. Pepsi Drinks + other packs

CONDITION OF PEPSI VISI COOLER

Table No.5.13

S.No. Name of the Area percentage

1. Full of Pepsi Drinks 69 69%

2. Pepsi + Coke Drinks 25 25%

3. Pepsi + Other Drinks 6 6%

Source: sample survey

INTERPRETATION:

From the above data,we can clearly understand that the retailers satisfies the condition of

pepsi visi cooler, 69% of retailers accept the condition of full of pepsi drinks,25% of

retailers accept the condition of pepsi+coke drinks,6% of retailers accept the condition of

pepsi+ other drinks.by this analysis I conclude that most of the retailers accept the full of

pepsi drinks condition in visi coolers in vizag city.

89

Graph No. 5.13

0

10

20

30

40

50

60

70

80

Full of Pepsi Drinks Pepsi + Coke Drinks Pepsi + Other Drinks

CONDITION OF PEPSI VISI COOLER

90

Q.14 Why do you keep other products in Pepsi cooler?

a. Electricity Bill

b. No own cooler

REASONS FOR KEEPING OTHER PRODUCTS

Table No. 5.14

S.No. Name of the Area percentage

1. Electricity Bill 85 85%

2. No own cooler 15 15%

Source: sample survey

INTERPRETATION:

From the The above data ,we can clearly understand that 85% of retailers keeping other

products in Pepsi cooler due to electricity bill and 15% of retailers keeping other products

in Pepsi cooler due to no own cooler.by this analysis I conclude that most of retailers are

keeping other products in pepsi cooler due to electricity bill in vizag city.

91

Graph No. 5.14

0

10

20

30

40

50

60

70

80

90

Electricity Bill No own cooler

REASONS FOR KEEPING

OTHER PRODUCTS

92

Q.15 What is the percentage contribution of soft drink business in your

total shop business?

a. 50% b.35% c.25% d.15%

Table No. 5.15

S.No. % CONTRIBUTION No.of percentage

1. 50% 18 18%

2. 35% 26 26%

3. 25% 25 25%

4. 15% 31 31%

Source: sample survey

INTERPRETATION:

from the the above data,we can clearly understand that 50% of retailers says that our

contribution is 18% in total business,35% of retailers says that our contribution is 26% in

total business, 25% of retailers says that our of contribution is 25% in total business and

15% of retailers says that our of contribution is 31% in total business.by this analysis I

conclude that 15% of retailers says that our of contribution is 31% in total business in vizag

city.

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Graph No. 5.15

0

5

10

15

20

25

30

35

50% 35% 25% 15%

AVERAGE % CONTRIBUTION OF SOFT DRINK

BUSINESS

94

Q.16 How do you buy soft drinks?

A.Cash b.Credit

MODE OF PURCHASES FOR SOFT DRINKS

Table No. 5.16

S.No. MODE OF PURCHASES percentage

1. CASH 100 100%

2. CREDIT - 0%

Source: sample survey

INTERPRETATION:

From The above data,we can clearly understand that shows Outlet people are purchasing Soft

Drinks on Cash payment mostly. Since soft drinks are becoming necessarily in these days

and also variable at a small price of 10/- or 12/- much of the sales of these are done on cash

basis generally.by this analysis I conclude that mode of purchase for soft drinks is 100% of

cash in vizag.

95

Graph No. 5.16

0

20

40

60

80

100

120

CASH CREDIT

MODE OF PURCHASES FOR SOFT DRINKS

96

FINDINGS

Even though Pepsi and Coke have soft drink brands only 4 an in top consumption.

Pepsi is not concentrating on regional advertising promotion.

Most retailer wants delivery service in alternative days.

Retailers satisfied with services of pepsi companies.

In trade schemes Pepsi has to be improve it’s schemes.

Pepsi is doing well in consumer promotions.

It is obvious that T.V. and other media helps in sales grow.

Pesticide issue in the main reason to less sales.

Out of the 100 shops only 69 shops have Pepsi vicis.

Because pepsi has given one Visi’s to one shop for promotion. But shopkeepers are

using it for Cock and Pepsi.

Soft drink business is playing a major role in whole shop business.

Soft drinks are consuming by all age group people. Not by specifically one group.

Shopkeepers are move interested in credit purchases but firms are not giving that

facility.

Soft drinks consumed up to 88% at shop it self.

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SUGGESTIONS

In my entire study I found some advantages and disadvantages, and threats and

opportunities. I would like to gives some suggestions on those particulars area where Pepsi is

lagging behind

Pepsi have to introduce new flavors with new brand names.

Pepsi have to replace the old glass bottles with new tetra packs.

Pepsi have to revise it’s pricing policy on 300 ml bottles because increase of 300 ml

bottles price from Rs 10/- to Rs 12/- is also a major reason for less sales

Pepsi have to provide credit facility to retail shop owners. Then there is a chance for

increase in sales.

Pepsi have to concentrate on regional promotional and advertisement activities Pepsi have to make aware the consumers that it doesn’t contains any pesticides.

Because it is the major reason in decline of sales

Pepsi have to provide more coolers to shopkeepers Pepsi’s consumer promotion is good but it has to concentrate on Trade Promotion.

98

SUMMARY

From the entire study of analysis it is found that Pepsi and Coke are the big players

in the soft drink industries. Pepsi and coke captured 61% and 39% market share respectively.

Both companies are good in trade promotions but in consumer promotions Pepsi is the best

one. Pepsi have 8 different flavors where as coke has 9 flavors. From these flavors each one

have two top flavors 7 up and orange Miranda for Pepsi, Thumsup and sprite for coke

The major reason for fewer sales is pesticide issue due to that sales have fall down

drastically. Shopkeepers are satisfied with both company services. They are looking for

credit facility, whoever will provide this facility they get edge in sales. Coming to coolers out

100 shops Pepsi having only 69own coolers where as coke has 31 coolers

Television adds and media will help cent percentage in increase in sales. All people in

respective of age consume mostly soft drinks. Consumption is very high at shops; consumers

are coming to the outlets and consuming the soft drinks up to 88% at outlets itself. Soft

drinks businesses is playing the major role its contribution in total shop business is up to 40%

99

CONCLUSION

Even pepsi has more market share, coke have it’s own advantages. pepsi is spending

too much amount on sales promotion activities in local and regional areas in this way it is

giving to shopkeepers at very low price. But the shopkeepers are using the coolers for both

companies’ drinks so for pepsi expenses are very high

Pepsi is not concentrating on regional promotions and advertising activities it is

concentrating on national wide advertisement. So consumers are very well aware of product

by media and in entire India Pepsi is the market leader for it’s unique promotional activities

and advertising campaign. Even though locally coke is not doing well but for rest of India is

market leader.

100

BIBLIOGRAPHY

1. Marketing Management -- Philip Kotlar

Published by Prentice hall of

India Pvt. Ltd.

2. Industrial Marketing -- Richard M. Hill,

Ralph S. Alexander

And James S.Cross

A.I.T.B.S Publishers

3. Business Policy -- P.K Ghosh,

Sultan Chand & co. Publishers

4. Information collected from the Management of Pearl Bottling Pvt. Ltd.

Magazines referred:

India Today

Business World

Websites referred:

HTTP://WWW.PEPSICO.COM

HTTP://WWW.GOOGLE.CO.IN

HTTP://WWW.WIKIPEDIA.ORG

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QUESTIONNAIRE

I had prepared questionnaire for Retailers during the survey.

Questionnaire for retailers:

Name of shop/outlet

Address/Location

Type of outlet

Q.1 Which brand of soft drinks you deal in?

a. PepsiCo b. Coca-cola c. Both d. other

Q.2 Which brand of cola provides you better facility?

a. PepsiCo b. Coca-cola c. Both

Q.3 How many crates of Pepsi and Coca-cola you sell per day?

a) 0-1 b) 1-2 c) 2-3 d) More than 3

Q.4 Which kind of soft drink your retailers prefer to drink?

a. Juice-based b. Cola-based c. Milk-based

Q.5 Which type of retailers like soft-drinks according to you?

a) Student b) Business people c) middle age group d) womens

Q6. Which kind of drink you prefer to have?

a) Packaged

b) Unpackaged

Q.7 Was the outlet maintaining the glow sign board, hanger and flexi board effectively?

a. YES b. NO

Q.8 Do you require service by Drink Company as follows

a. Daily b. Alternate Day c. Weekly 2 times

Q.9 Are you satisfied with Pepsi service?

a. Good b.Satisfactory c.Bad

102

Q.10 which Consumer promotions offered which company is best?

A.Pepsi b.Coke

Q.11 Do you feel TV advertisements by drink companies help in more sale of Drinks

a.Yes b.No

Q.12 If less sale in your shop – reasons?

a. 200ml Bottle Cost 10 to 12 increase

b. 300ml bottle Cost 12 to 14 increase

c. Summer heat less than 2012

d. Other Beverages Sale

Q.13 Condition of Pepsi Visi cooler ?

a. Full of Pepsi Drinks

b. Full of Pepsi + Coke Drinks

c. Pepsi Drinks + other packs

Q.14 Why do you keep other products in Pepsi cooler?

a. Electricity Bill

b. No own cooler

Q.15 What is the percentage contribution of soft drink business in your total shop business?

a. 50% b.35% c.25% d.15%

Q.16 How do you buy soft drinks?

A.Cash b.Credit

103