Title: Distributions Channel Strategies for Sustainable in the market for Beverages

Industries
Author:

Dr. Kiran Kumar Thoti, B.E, MBA, PhD,

Sr. Asst. Professor,
Sree Vidyanikethan Institute of Management,
Sree Sainath Nagar, Tirupati- 517102,
Andhra Pradesh,
Ph: +91-9686261185, 9642176451, Email: kirankumar3561@gmail.com

ABSTRACT
The days are gone when people were very unsure about the future and hardly cared about it in
terms of technological developments. But the situation has changed now. In the new millennium,
people often feel a growing uneasiness about the future. Certainly many countries today are
suffering from chronic high unemployment, a persistent deficit of economy and gradual
deterioration of purchasing power. Nations are passing through a phase of rapid transformation.
Two forces are mostly responsible for these types of drastic changes; they are explosive growth
of trade and international competition and the other force like technological change. This new era
has witnessed remarkable advancement in the availability of information and a number of large
companies operations in such market where the principal of natural selection lead to survival of
the fittest. Market provides a key to gain actual success only to those companies which match
best to the current environment i.e. imperative which can be delivered what are the people
needs and they are ready to buy at the right time without any delay. It is perfectly true but this
also depends on the availability of good quality products and excellent services, which further
attract and add a golden opportunity for huge sales. This also depends on the good planning
approach and provide ample opportunity plus sufficient amount of products for sales in the
coming next financial year. This report introduces a brief study of marketing strategy and sales
promotion technique of cool drink for retailers. The study report will provide an opportunity to
know retailers psychographic needs, it may provide an opportunity to the cool drink to frame a

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good future plan to satisfy maximum needs, taste preferences of the retailers and established its
guiding role in the market.

Keywords: Distribution Channel, Marketing Strategies, Channel Strategies, Marketing plans

INTRODUCTION:

Modern age is full of competition. Today only way of success is your continuous efforts towards

the growing market needs and in satisfying them. It is the marketer job to know what the market
speaks i.e. the ever changing needs of the customer through market research & adopt them

fruitfully. It is must for all the companies to make policies according to the customers and the
govt. Today to succeed for any organization has to target its customer needs, to create a culture in

the organization i.e. market conscious & responsive to customer needs. To make its products
available at the right place, at the right time in the market, at the right place, the sales department

of the company plays major attention towards controlling the channel of distribution. The

company right from its beginning stage maintains single type of marketing channel. The nature
of channel is as follows:

At first, soft drink is supplied to distributors. Retailers cannot take the delivery directly from the
company. They have to take it from their respective of nearest distributors. The distributors

selected on the basis of assurance given by them regarding minimum sales, which they have
mention annually. The selection is also done on the financial position and reputation of
distributing in the market. As for the example, first priority is given to those people who are in

cigarette business. Depending upon market each distributor in its initial stage deposits some

security money; this amount varies from five thousand to ten thousand. The distributors at first
have to seek the permission to the sales department for the number of cases of soft drinks

required by them. After getting for the proper authority from the sales department, they take the

delivery from the shipping department paying the requisite either in cash or as demand draft. The
supply of soft drinks to the distributors depends upon the ups and downs in the sales. But, in the

initial stages, the distributors have to sell up to a minimum target set by the company or as
decided by an agreement between the company and the distributors. In the last stages or as
decided by an agreement between the company and the distributors; In the last stages soft drink
is supplied as and when demanded by the distributors.
Industry Profile:
The beverage industry in India occupies USD 230 million markets in the USD 65 billion food
processing industry in India. Coca cola, pepsi, and Nestle are the leading beverage brands that
have been ruling the Indian beverage market since past few decades. Among all the beverages,
tea and coffee are manufactured as well as exported heavily in the international markets
succumbing to the individual demands around the world according the business maps of India,
2013. Pepsi is a soft drink that is produced and manufactured by PepsiCo. The drink was first
made in the 1890s by pharmacist Caleb Bradham in New Bern, North Carolina. The brand was
trademarked on June 16, 1903. There have been many Pepsi variants produced over the years
since 1898,including Diet Pepsi, Pepsi Wild Cherry, Crystal Pepsi, Pepsi Twist, Pepsi Max,
Pepsi Free, Pepsi AM, Pepsi Blue, Pepsi Gold, Pepsi Holiday Spice, Pepsi Jazz, Pepsi
Vanilla, Pepsi X (available in Finland and Brazil), Pepsi Next (available in Japan and South
Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One, Pepsi Ice Cucumber and Pepsi White in
Japan. On April 20, 2009, Pepsi released a natural sugar sweetened version of its drink named
Pepsi Throwback, along with Mountain Dew Throwback for a limited time, for veteran Pepsi
drinkers to remember the original Pepsi formula before the sweetener was changed to high
fructose corn syrup in the mid 80s.
ORIGIN: Pepsi was originally named "Brad's Drink", after its creator, a pharmacist in New
Bern, North Carolina. It was created in the summer of 1893 and was later renamed Pepsi Cola
in1898, possibly due the digestive enzyme pepsin and kola nuts used in the recipe Bradham
sought To create a fountain drink that was delicious and would aid in digestion and boost
energy .In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore into a rented
warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in sixounce bottles, and sales increased to 19,848 gallons. In 1926, Pepsi received its first logo
redesign since the original design of 1905. In 1929, the logo was changed again. In 1929,
automobile race pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads as "A bully
drink...refreshing, invigorating, a fine bracer before a race. In 1931, the Pepsi-Cola Company

went bankrupt during the Great depression - in large part due to financial losses incurred by
speculating on wildly fluctuating sugar prices as a result of World war1. Assets were sold and
Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went bankrupt
again. Pepsi's assets were then purchased by Charles Guth; the President of Loft Inc. Loft was a
candy manufacturer with retail stores that contained soda fountains. He sought to replace CocaCola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had
Loft's chemists reformulate the Pepsi-Cola syrup formula.
RISE: During the Great Depression, Pepsi gained popularity following the introduction in 1936
of a12-ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was slashed
to five cents, sales increased substantially. With a radio advertising campaign featuring the jingle
Peps cola hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too / PepsiCola is the drink for you," Pepsi encouraged price-watching consumers to switch, obliquely
referring to the Coca-Cola standard of six ounces a bottle for the price of five cents (a nickel),
instead of the 12 ounces Pepsi sold at the same price. Coming at a time of economic crisis, the
campaign succeeded in boosting Pepsi's status. In 1936 alone 500,000,000 bottles of Pepsi were
consumed.
CORPORATE PROFILE OF PEPSI: PepsiCo entered India in 1989 and in the span of a little
more than a decade, has grown to become the country's largest selling soft drinks company. The
Company has invested heavily in India making it one of the largest multinational investors. The
group has built an expansive beverage, snack food and exports business and to support the
operations are the group's 39 bottling plants in India, of which 17 are company owned and 22 are
franchisee owned. PepsiCo stays committed to providing its consumers with top quality
beverages. Its diverse portfolio of brands includes the flagship cola brand - Pepsi; Diet Pepsi;
7Up; Mirinda; Mountain Dew; Slice fruit drink; Tropicana brand 100% fruit juices in various
flavours; Aquafina packaged drinking water; Gatorade plus local brands Lehar Evervess Soda,
Dukes Lemonade and Mangola. PepsiCo is also a dominant player in the snack food segment in
India. PepsiCo's snack food company Frito-Lay is the leader in the branded potato chip market. It
manufactures Lay's Potato Chips; Cheetos extruded snacks, Uncle Chipps; traditional namkeen
snacks under the Kurkure and Lehar brands; and Quaker Oats. PepsiCo is one of the largest
MNC exporters in India and its export business consist of three categories - agro business,
commodities and Pepsi system sales. PepsiCo has made significant investments with the Punjab

Agriculture University to develop a comprehensive agro -technology program that has helped
thousands of farmers across India improve the yield of their farms and the quality of their
agricultural products. PepsiCo has leveraged its knowledge in contract farming to develop
seaweed cultivation in Tamil Nadu and has partnered with the Government of Punjab to help
farmers of the state through the utilization of developed technology for citrus farming. As part of
its sustainable development initiatives, PepsiCo India has been a committed leader in the
promotion of rain water harvesting, water conservation recycling and the reduction of effluent
discharge. PepsiCo has also established zero waste centers and PET recycling supply chains and
assisted victims of natural disasters. PepsiCo stays dedicated in its endeavor to develop
community outreach programs by supporting rural water supply schemes, administering medical
camps in villages, providing computers to rural schools and creating opportunities for women in
rural areas through vocational training as an alternate means of livelihood. PepsiCo India has
worked closely with the Defense forces in rehabilitation of Defense Personnel through projects
like Mission Vijay-2. Under this project Pepsi in association with Castrol helped soldiers set
booths in rural area to sell Pepsi and Castrol products there by helping them to not only earn a
decent living but to also add some color to their lives. Through this project PepsiCo India also
tries to give these soldiers distribution rights for its soft drinks. It gives PepsiCo India great
pleasure in associating with Defense India and Samvedna for an event to bring cheers and smiles
for our Jawaans of BSF (Border Security Force) at Wagah.
Objective of the study:

To find out the problems faced by the channels of distribution.

To increase penetration in the market.

To find out availability of Pepsi & Coke in the outlets.

To see the distribution gap by which the product is selling

Scope of the study:

Scope of the study mainly to know the channel of distribution of pepsico.
Scope of the study mainly to know the loyalty of the customer towards the company.
To give suggestion regarding improvement of performance standard of the Company.
To inform the management about current level.

Problems of distribution channel: These are real conditions that exist in too many distribution
channels across the country, preventing some supply chains from operating efficiently. Theres
no doubt that the end game of solving these problems would be significant cost reduction,
improved profits, and better service. Theres a natural synergy between various manufacturers to
exploit this excess capacity, so what keeps it from coming together? It seems to me there are two
main obstacles to making the most of the synergy and the capacity. The first is the inability or
unwillingnessto collaborate effectively. The second is that even though technology exists that
could develop a formula by which manufacturers could share in the cost reduction and savings,
such a formula has rarely been achieved.
Limitation of the study:
Findings are based on the views expressed by the consumers. So it may suffer from
biased prejudices.
Some of the respondents were not co-operative & many seem to be having no interest.
It is extremely difficult to persuade retailer to respond to questionnaire.
The retailer knows us as people from Pepsi there by the responses could have been
biased.
I had lack of knowledge about the product of the local market.
In beverage, we consider only Pepsi and Coca-Cola industries
RESARCH METHODOLOGY
Research in common refers to a search of knowledge. One can also define research as a scientific
& systematic search for pertinent information of a specific topic. It is the pursuit of truth with the
help of study observation, comparison & experiment.
DEVELOPING RESARCH PLAN
After deciding the objective of marketing research the next step is deciding Research plan for
gathering effective information related to this research project. The research consists of
following steps, which are discussed subsequently.
Descriptive Research: In my market survey descriptive research process was carried out to
describe the market characteristics, consumer profiles, distribution strategies, and market
potential.

Data Source: During project study I use both primary as well as secondary data source. For
primary data collection I visited various retailers in Sahibabad & for secondary data I went
through Books, Journals & Internet. The information collected is relevant, correct & unbiased.
Research Design: I followed survey technique for collecting the data. In market survey research
approach; Here, I carried out information from retailers have carefully selected the instrument &
methods of surveying like I have chosen personal contact methods because of higher response
rate & meaningful responses this helped me to get the general feedback in Pepsi, etc.
Research Instrument: The research instrument used was EDS form. In which market
information detail of each outlet should be filled in EDS form. For this I have visited each &
every outlet & check all the brands & packs of Pepsi are available or not or which one is
available in comparison with Coke & filled it in EDS forms. In my research process I have used
closed ended & open-ended questionnaire where respondents could answer in their own manner.
Through this I was able to extract information from the respondents about Pepsis products & the
competitors.
Sampling technique: The sampling technique adopted was simple random sampling. As
the universe is mass and cannot survey the whole and due to lack of time. Among the total
population researcher conveniently selected 100 retailers has been derived from the sample
studied and the estimates are those based on a part and not whole. Hence there is a risk of the
sampling giving rise to certain errors as sampling errors and also the opinion of the respondents
may not be the opinion of the population.
SIMPLE RANDOM SAMPLING:
It refers to that sampling technique in which each and every unit of the population has an equal
opportunity of being selected in the sample. In simple random sampling which items get selected
in the sample is just a matter of chance personal bias of the investigator does not influence the
selection.
Sampling Unit: It includes who is to be a surveyed retailer of Sahibabad.
Sampling Size: I have surveyed about 100 retailers.
Contact Method: In my research process, I have collected information through personal
interview process with the help of EDS. Form given by the company because it is the most

reliable & accurate method for collecting primary data. Through this, the analysis of body
language & facial expressions can be made.
DISTRIBUTION STRATEGIES
A Company can choose any of the following distribution types:

Exclusive Distribution

Selective Distribution

Intensive Distribution

PEPSI HAS ADOPTED THE INTENSIVE DISTRIBUTION STRATEGY.

INTENSIVE DISTRIBUTION:A Strategy of intensive distribution is characterized by placing the goods or services in as many
outlets as possible. When the consumer requires a great deal of location convenience, it is
important to offer greater intensity of Distribution. This strategy is generally used for
convenience items such as Tobacco, gasoline, and soap, snack foods & bubblegum.
Manufactures are constantly tempted to move from exclusive or selective distribution to more
intensive distribution to increase their coverage and sales and you could find Pepsi in nursing
homes, confectionery shops, departmental stores; you name it & Pepsi is available there.
DISTRIBUTION CHANNEL REDIFINED:
Pepsi has redefined distribution to strengthen their competitive advantage in the emerging
consumer and market scenario. Their earlier focus was to drive wide availability and enable easy
access to their brands for consumers. Now they seek to go well beyond this distribution
paradigm. Their new approach is more holistic touching consumers in multiple ways at the point
of purchase and more importantly, creating opportunities for customers to receive brand message
and experience our brands.
They are proactively addressing these emerging trends by approaching distribution and channels
in a much broader way. They are shifting emphasis from mere reach or availability expansion to
touching consumers with a 3- way convergence- of product availability, brand communication
and higher level of brand experience.
They are thus going beyond delivering products and creating greater engagement and interaction
around the purchasing experience.

Pepsis reinvention of distribution is built on an understanding of emerging consumer trends, the

retail environment and the growth drivers of our brands.
Pepsis distribution system is a key external resource. Normally it has taken years to build and
cannot be easily changed. It ranks in importance with key internal resources such as
manufacturing, research, engineering and field sales personals. It represents significant corporate
commitment to set policies and practices that constitute the basic fabric on which is woven an
extensive set of long run relationship.
Product Availability

Point Of Purchase

Brand Communication

Brand Experience

CHANNEL FUNCTION AND FLOWS

Marketing channel perform the following functions

To gather the information about potential and current customers, and competitors.

To reach agreements on Price

To list orders with manufacturers.

They provide the successive storage and movement of physical products.

It can be defined as backward and forward integration i.e. starting from supplier of the raw
material to the end customer.

Data Analysis:
Market share
70
57.65

60
50

42.35

40

Percentage of shares
Pepsico

Cococola

30
20
10
0

Pepsico

Cococola
Products

(3) VISICOOLERS :No. of outlets having only Pepsi Visicoolers

17.65%

No of outlets having only Coca-Cola Visicoolers.

19.70%

No. of outlets having both Pepsi and Coca-Cola Visicoolers.

10.58%

No of outlets having only own Visicoolers

27.64%

No. of outlets having no Visicoolers

4.41%

Pe rcentage of hav ing Visi coolers

30
25
20
15
Percentage
Pepsi 10

27.64
24.41
19.7
17.65
10.58
Coco cola

Both

Own

No

5
0
Pepsi

Coco cola

Both

Own

No

Products

There are 17.65% Visicoolers is of PepsiCo, 19.7% is of Coca Cola, 10.58% is both & 27.64% of
total is own. Here it is very clear that the majority of the retailers are not having visicooler.
SIGNAGE: No. of outlets having only Pepsi Signage

11.66%

No of outlets having only Coca-cola signage

6.66%

No of outlets having both Pepsi & Coca-Cola signage

No. of outlets having no signage

1.66%
80.02%

No. of signage

Percentage

No

120
100
80
60
40
20
0

85.88

Both

Coco cola

1.47
5.88
9.7

Pepsi

Coco cola

Both

Pe ps i

No

Product

There are 11.66% of signage is PepsiCos. 6.66% of signage is Coca Colas, 1.66% of signage is
both & 80.02% of signage is no available. Most of the outlets are not having singage.

Pepsi

52 %

Coke

41 %

Thamsup

6%

Campa

1%

From the above table the market share of cola flavor of pepsi is 52 %, coke 41 %, thamsup 6 %,
& campa is 1 %. Here it is very clear that Pepsi Co is having more market share of cola flavor.
MARKET SHARE OF IN LEMON FLAVOUR
LIMICA
MIRINDA LEMON

70%
30%

From the above table it shows that limica lemons market share is 70 % & mirinda lemon is only
30 %. Here it is very clear that limca has captured the market in lemon flavor.
Number of soft drinks bottles sold each day in seasonal wise:

W inter
20.35%

Summer
79.65%

From the above table it can be seem that the 20.35 % soft drinks sold in winter season & 79.65 %
sold in summer season. Here it is very clear that most of the customers want to drink soft drink in
summer season.
Better supply is give by:

Chart Title
both; 15%
pepsi; 45%
coke; 40%

From the above table it can be seem that 45 % respondents says better supply is given by pepsi,
40 % coke, & 15 % says both pepsi & coke. Here it is very clear that Pepsi Co is giving better
supply to the retailers.
Supply related problems of Pepsi :

From the above graph it can be seem that the problem is not on time is 44.44 %, incomplete
product length is 22.22 % & other reason is 33.33 %. Here it is very clear that Pepsi Co supply
related problem is mainly not on time & incomplete product length.
Defect in Product:

Coke,
34.00%

P epsi,
66.00%

From the above graph it can be seems that the 66 % defects in pepsi & 34 % defects in coke.
Here it is very clear that Pepsi Co is having some problem thats why pepsi is providing more
defective product to the customer.
Type of Defect:
Leakages

14.29 %

Spurious

28.57 %

Less fizzy

57.14 %

From the above table it can be seem that the types of defect is mainly less fizzy 57.14%, than
spurious problem 28.57 % leakages problem 14.29 %. Here it is very clear that Pepsi Co is
having main problem is less fizzy.
Peak Selling Period

peak selling period

Jan-Mar

Apr-Jun

Jul-Sep

Oct-Dec

10%
20%

20%
50%

From the above table it can be seem that selling of soft drinks jan-mar is 20%, Apr-Jun is 50 %,
Jul-sep is 20 %, & Oct-Dec is 10 %. Here it is very clear that in the month of Apr-Jun selling of
soft drinks is very high.
Better relationship with the distributors:

better relationship
pepsi

coke

Both

10%
40%

50%

From the above table it can be seem that the 40 % of the respondents are having good
relationship with the Pepsi distributor, 50 % are with the coke distributor & 10% of the both

Pepsi & coke. Here it is very clear that most of the retailer is having good relationship with the
coke distributor & than Pepsi distributor.
FINDINGS OF DISTRIBUTION NETWORK
After visiting nearly 100 outlets I have found there are some common problems of retailers,
which are:
1. The problem is of non-availability of Lemon & Dew flavors of Pepsi.
2. Every retailer wants that vehicle should come in the morning so that they will keep the
bottles in the fridge as soon as possible.
3. One of the major problems is that most of the chilling equipment is not in good working
conditions. Retailers have complained many times but no response is being taken.
4. Delay in replacement of burst bottles.
5. Some shopkeepers do not get scheme on time.
6. Some shopkeepers require signage.
7. All the retailers appraised the regular supply of the companys products.
8. Also at some places Pepsis signage is still hanging inspire of no transactions with those
outlets.
RECOMMENDATIONS
1. PEPSI, the choice of Generation next is not providing the first choice of young generation. A
young generation wants something strong in cold drinks & thus prefers Thumsup. Pepsi should
come out with some extra strong taste to catch up maximum young generation & to become
exactly Generation Next drink.
2. Company should appoint competent & honest salesman so that they could provide schemes to
the entire retailers & cover their full route.
3. It is often seen that some salesman do not intimate schemes to the retailer & few of the
retailers complained about it. So there should be frequent visits of Customer Executives to their
respective areas to keep the shopkeepers benefited with various schemes.
4. Delay in starting of supply vans from respective depot should be checked & a proper time
register should be maintained.
5. Most of the retailers are complaining about non-fulfillment of commitments regarding their
sampling. Company should make sure that the retailers get the sampling on time so that they are
satisfied.

6. Most of the retailers are complaining about delay & no replacement of burst bottles.
Marketing Management should sort some solutions to this major problem of replacing burst
bottles.
7. Half filled bottles should also be checked at the time of issue of goods from the distributors
go down to the respective routes.
8. Company should try to give some credit facility to the distributors so that they get motivated.
9. Credit facility for retailers should be provided.
10. Proper feedback system should be developed by ensuring regular visits & check randomly at
the various outlets.
CONCLUSION:
After visiting nearly 100 outlets I found that Pepsi & its Brands is not doing a good job in
Sahibabad. It is clear that Pepsi (58%) has lagging Coke (38%) in the soft drink market in
Sahibabad region. If we compare it with Signage or display material than Pepsi has an edge over
coke;
1. At this time it is solely depends on the retailer which brand he offers to the consumer?
Although the company has been unable to satisfy the retailers. The company must take
immediate steps in order to resolve its disputes with these retailers.
2. It was also found that the schemes that are brought up in the market by Pepsi & Coke after
every couple of day is not making any net effect on the sale of Cola, whereas one is
cannibalizing others market only.
3. It was also seen that Pepsi brand is better sold than coke. But it is Thumsup, which is making
the major difference in the market.
4. The sale in age wise section, it was found that 200ml is sold in all the age groups with same
frequency but 300ml is sold mostly in 16 to 45yr. of age group where as CAN is sold in hi
younger generation only. Finally 2lit. Are used only for family or party purpose.
5. It was also seen that Pepsi brand is lagging the Coke especially in Muslim dominated area,
which makes a major difference in the market.
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