A study on Distribution Channel of Pepsi Products in Hyderabad

In Partial Fulfillment of the Requirements For the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION BY

Submitted By

DECLARATION
I, -------------l declaring that all the information given in this project report is true and correct as far as I know. I am also declaring that all the work in this project is done by me and not copied from anywhere.

STUDENT NAME

Certificate of Originality

ACKNOWLEDGEMENT

TABLE OF CONTENTS

Page numbers Chapter 1. Introduction to the Study Objective of the Study Importance and relevance of the Study Scope of the Study Methodology used in the study Limitation of the study Chapter 2. Industry and Company Profile History of Soft Drinks in India History of Pepsi Production Process Product Manufactured and Main Consumer Chapter 3 Chapter 4 Chapter 5 Chapter 6 Literature Review Data Analysis and Interpretation Conclusion and Suggestions Bibliography Questionnaire

CHAPTER 1.
INTRODUCTION TO THE STUDY
Objective Of The Study Importance And Relevance Of The Study Scope Of The Study Methodology Used In The Study Limitation Of The Study

INTRODUCTION
INTRODUCTION: DISTRIBUTION Distribution is the important component of Supply chain and also important part of the marketing mix. The other three are Product, Price and Promotion. The Nature of Distribution Channels Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as "All the organizations through which a product must pass between its point of production and consumption" Why does a business give the job of selling its products to intermediaries? After all, using intermediaries means giving up some control over how products are sold and who they are sold to. The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself. Functions of a Distribution Channel The main function of a distribution channel is to provide a link between production and consumption. Organizations that form any particular distribution channel perform many key functions:

Information Promotion Contact Matching Negotiation Physical distribution Financing Risk taking

Gathering and distributing market research and intelligence - important for marketing planning Developing and spreading communications about offers Finding and communicating with prospective buyers Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging Reaching agreement on price and other terms of the offer Transporting and storing goods Acquiring and using funds to cover the costs of the distribution channel Assuming some commercial risks by operating the channel (e.g. holding stock)

All of the above functions need to be undertaken in any market. The question is - who performs them and how many levels there need to be in the distribution channel in order to make it cost effective INTRODUCTION TO THE STUDY Distribution is also a very important component of Logistics & Supply chain management. Distribution in supply chain management refers to the distribution of a good from one business to another. It can be factory to supplier, supplier to retailer, or retailer to end customer. It is defined as a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

Channels A number of alternate 'channels' of distribution may be available: 8

Distributor, who sells to retailers, Retailer (also called dealer or reseller), who sells to end customers Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alike from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. process of transfer the products or services from Producer to Customer or end user. There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.

Channel decisions
Channel Sales is nothing but a chain for to market a product through different sources.

Channel strategy Gravity & Gravity Push and Pull strategy Product (or service) Cost Consumer location

Managerial concerns

The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order. Many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if they have any aspirations to be market-oriented, their job should really be extended to managing all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier:

Channel membership Channel motivation Monitoring and managing channels

Type of marketing channel 1. Intensive distribution - Where the majority of resellers stock the 'product' (with convenience products, for example, and particularly the brand leaders in consumer goods markets) price competition may be evident. 2. Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product. 3. Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'. Channel motivation It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or compensation is offered to the distributors' sales personnel, so that they are tempted to push 10

the product. Julian Dent defines this incentive as a Channel Value Proposition or business case, with which the supplier sells the channel member on the commercial merits of doing business together. He describes this as selling business models not products. Monitoring and managing channels In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain. In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales force, calling on the larger accounts, with agents, covering the smaller customers and prospects. These channels show marketing strategies of an organization. Effective management of distribution channel requires making and implementing decision in these areas. Distribution Management: Control and Collaboration from Supplier to Customer Your distribution network extends from your supplier's loading dock to your customer's front doorfar beyond the walls of your warehouse. Save a step or simplify a process, and you deliver fasterwhich not only enhances your bottom line, but also improves service levels. When you're dealing with scores of suppliers on distant continents, third-party logistics companies, multiple distribution centers and customers around in the world, getting visibility into the full distribution process can be extremely challenging. With confidence in your ability to work closely with your network, suppliers and customers, you can fill orders even before you have received the product. You will have the information you need to motivate your suppliers, as well as your own workforce, to move products faster and more accuratelyfor happier customers and less happy competitors. Solutions for Every Link in a Competitive Supply Chain Distribution Management spans your supply chain network with this extensive suite of products: 11

Warehouse ManagementFine-tune your facility with a more efficient layout, well utilized resources, streamlined inventory and flawless order fulfillment. Slotting OptimizationMatch slots to demand, weight and other product characteristics for faster, more accurate picking resulting in improved productivity. Labor ManagementStandardize and track workforce performance throughout your operation. Reward quality and safety, boost productivity and forecast with better precision.

Labor Scheduling OptimizationAutomate workforce planning and scheduling to lower unit labor costs, maximize skill sets, and increase customer service and productivity.

Billing ManagementAssign and manage charges for virtually any warehouse event for a full understanding of your costs and profits. Track activities by unit or client.

Supplier EnablementExtend powerful supply chain capabilities to your suppliers, and automate communications and record-keepingall online. Hub ManagementGive hubs and 3PL providers instant visibility of orders, shipments and inventory. Streamline transport and inventory by managing partnerto-partner shipping.

When Mr. Rajeev Gandhi came into the power as Prime Minister of India, then it was expected the liberalization of Indian economy. This was the expectation of his modern concept regarding every walk of life. When Pepsi has appealed on our collective consciousness of few years ago to be more exact in April 1989. When it set up operation for beverages snack foods and export business. The establishment of Multinational Company Pepsi was supposing to prediction in present Indian business scenario. Despite love for ones own motherhood and traditional concept of Indian people it was assumed that it is very hard to make and create taste and preference about soft drinks but despite of having so many confusion, no one was able to assume such a wide acceptance and it was PepsiCo. Who could be able to penetrate in Indian soil and it was the 12

Pepsi that has got not only a place in Indian hospitality, but also taken place of traditional sharbat of lemon and sugar. And needless to say Generation next has become the slogan of the day. The first managing director was Mr. Ramesh Vanagal but present is Mr. P.M. Sinha in India. During these years beverages begin an exclusively franchise operating beverages now has five company owned bottling operation (COBO) the business expects to grow three times faster than the industry growth rate 1995 and its vision is to become INDIAS BEST CONSUMER PRODUCT COMPANY in all aspect. The snacks business has seen some major success and going for leadership too. Pepsi is a leader in the snacks food business. The division plans to introduction wide range of snakes in to Indian market in the next three years. The restaurant business has also come Kentucky Fried Chicken (KFC) has opened its first outlet at Bangalore Pizza but it also expected to open restaurants shortly city wise. Whole of the operations of Pepsi in India has made a rapid change in Indian life style, which is resulting in fast food life. Pepsi is a world leader in restaurant & soft drink whether it is in London or in Ludhiyana, America or Ahmedabad, Berlin or Bombay, Paris or Hyderabad, Manchester or Madras. Pepsi company has pumped in Rs. 300 crores ($ 95 million) as fresh capital and has recently received permission from the foreign investment board in Rs. 300 crores ($95 million) more. The investment phase will continue and could add unto Rs. 700 crores over the next three years. The figure is not cast in stone if volume exceeds according to expectation. They will increase capital expenditure. Apart from these things there is an expression which can not verify easily that is Pepsi has made qualitative gains. The foremost is its image from being perennially seen as a losing company its now got the image of being a winner. This major turnaround is not small achievement considering that since it was established in 1989 taking the hard ship route prior to liberalization and weighed down by export commitments? Pepsi has won more battles than it has lost. In April 1993 Voltas and Punjab Argos stakes were bought over converting Pepsi foods from a three way joint venture to be a fully owned subsidiary week bottlers who did not have the financial capacities were given massive support in the form in interest 13

free loans to upgrade their operating capacity . But the strategy which has proved to be winner was the position, Pepsi decided to take in Company Owned Bottling Operation (COBO). For this another subsidiary PepsiCo. India holding was set up as an investment vehicle, capitalized 95 million dollar. Within a year 1994 Pepsi has bought over 5 bottlers including dukes in Mumbai, which was running in Maharastra which has been bought over from Voltas high speed imported lines with a speed of 600 bottles per minute was installed in Delhi. Pepsi has a strong franchisee in the Jaipurias of Pearl drinks. Pepsi is setting up a new plant at Jaipur.

14

OBJECTIVE OF THE STUDY

The following are the objectives and purpose of the study

To Study various distribution activities of the organization The main emphasis is on the distribution Channel aspect of the organization. To find the depth and width of distribution channel adopted by company and compare them with those followed by Competitors.

To ascertain the consumer brand perception of cold drinks with respect to price, product, quantity and advertising among distributors, retailers and competitors.

15

RATIONALE OF THE STUDY

Cold drinks were started with the idea of quenching the thirst of the persons traveling. It was also felt that reliable good water was not available everywhere. So people would really on their packed bottle and with this idea its makers made these drinks available mostly, at those places where water was not available i.e. on highways and long distance trains. But slowly and slowly with its beautiful taste these become very popular and now they are available not only in the market and street corners, but also people have started keeping it in their house. The credit of popularizing the soft drink goes to Coca Cola. This was the drink which is liked by all ladies, gents and children. Now days soft drinks are quenching thirst looks more often; they are taken due to habits. Gold Sport is considered as the first branded soft drinks, established 53 years ago before all empowering Coca Cola faced competitions and its euphoric image built up in the western countries helped it get ready clientele and clamor. Parle Export Pvt. Ltd. Is regarded as the first Indian Company introducing Limca a lemon drink complementary to it this has also introduced Cola Peptone which was withdrawn in the face of tough competition from Coca Cola. When Coca Cola bid a Farwell in 1977, Indian market was open for various new forward publishing different brands in the markets. Parle people introduced their Cola, Thums Up with a mighty saying Happy days are here again as if happy days went away with Coca Cola. Pure drinks of Delhi also without lasing much introduced pure drinks were producing and marketing Coca Cola earlier Campa Cola with Campa orange and Campa lemon. Modern Bakeries entered the market with Double Cola Seven, Mohan Makings with Merry & Plkup and McDowell with Thrill, Rush and Sprint. This is Indian market where there was no competition and high voltage advertising was on each one was trying their best to become number one company with A class product in the field of Soft Drink 16

business. Now after a long gap government of India had given permission to Coca Cola, which joined with Parle to do business in India. They are trying their best to regain prestige which it had before. The much rival of Parle is Pepsi an American concern. It started business on the Indian soil just a few years ago. Today, it has occupied 62% shares of Soft Drinks market in India. Now Pepsi is going all out to prove that they are the best. But now due to some factors competition among them has become stiffen. So in this way the important activities have increased. It has become necessary to study the Effectiveness of distribution activities of the organization. SCOPE FOR THE STUDY The main scope of this study is to ascertain the effectiveness of channel 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.

METHODOLOGY USED IN THE STUDY Marketing Research is the systematic designing, collection, analysis, and reporting of Data and finding relevant to a specific marketing situation facing the company. The present study of Soft drinks markets in Hyderabad is based on survey methods. In survey methods, there are two types of survey. One is Census Method and another is Sampling Method. Within the time limit, I tried my best to select the sample representative of the whole group. During my training, I maintained different chart for different routes during my dealer survey. I have collected data from the distributor of Hyderabad.

Data Sources 17

Primary data: Primary data collection involves distributors, retailers and consumers Secondary data: Collection of data through journals, books and company reports: Research Instrument: Questionnaire Sampling Plan Sampling Unit : Distributors Retailers Consumers Sampling size: Number of distributors: 02(Approximately); Number of Retailers; 300

(approximately) Number of Consumers: 1000 (approximately) Sampling procedure: Random Selection Contact Method: Personal Interview In interview schedule I used multiple choice question and ranking system Questions. Data Analysis: Different charts, graphs and statistical tools such as Chi-square are to be used in analyzing the data.

18

LIMITATION OF THE STUDY

The following are the Limitations 1. Shortage of time factor was one of the biggest constraints. 2. Most stress was given on the primary data as it was difficult to collect secondary data from the organization and distribution since it is difficult to ascertain the authenticity of their statements. 3. All the observation and recommendation will be made on the feedback Obtained from survey.

SCOPE FOR FURTHER RESEARCH: The distribution channels form important part of operations. It is necessary to make the channel more effective for the purpose of getting better revenue and retain customer loyalty. Hence it becomes necessary to research on the effectiveness of the operations of distributions and finds means to satisfy the customers and there is no shortage of supply. Distribution forms important part of operations Management so it is necessary to study the flow of products reaching the distributors, retailers and customers.

19

CHAPTER-2
INTRODUCTION TO THE SOFT DRINK IN INDIA
History Of The Soft Drink In India History Of Pepsi Production Process Product Manufacturing And Main Consumers

20

HISTORY OF THE SOFT DRINK IN INDIA

Christopher Columbus as a traveler of world found a lot of new things which was not in the eye of the world community which is now in our history but now if any one does travel to whole part of world to get one thing in some form that is Pepsi. Travel to any corner of the globe you are sure to spot a label splashed in blazing blue, red and white becoming you to some Sugared water. This dark coloured drink WillyMilly has today become nothing but spot of an international anthem with young and old, rich and poor wants for a sip and saying Yeh Dil Mange More. Gold Spot is considered as the first branded soft drink established 53 years ago before all empowering Coca Cola entered the country to dominate the scene. It faced no competition and its euphoric imaged built up in the western countries helped it to get ready clientele and glamour. Parle Export Pvt. Ltd. is regarded as the first Indian company introducing Limca, a lemon drink complimentary to there well established Gold Spot in 1970 which got moderate success. However, before this, he had also introduced Cola Pepino which was withdrawn in face of tough competition from Coca Cola. When Coca Cola bid farewell in 1977, Indian market was open for various cold drinks several companies came forward publishing the different brands in the market. Parle people introduced their Cola Thumps Up with a mighty bang saying Happy days are here again as if happy days went away with Coca Cola.. Pure drinks of Delhi also without losing much time introduced pure drinks were producing and marketing Coca Cola earlier Campa Cola along with Campa orange and Campa lemon. Modern Bakeries entered in the market with the Double Seven. Moharn meakings with Merry Pikup and McDowell with Thrill, Rush and Sprint in Indian market where there was no competition previously. A cut throat competition and heavy advertising was on. Each one was trying their best to become the number one company with A class product in the field of soft drink business in India. Now after a long gape the govt. of India has given permission to the Coca Cola to start their business in India. Coca Cola has joined hands with Parle to the business on the Indian soil. They are trying best to regain its prestige which it has before.

21

The much rival of Parle is Pepsi an American concern. It started business the occupied nearly 50% share of soft drinks market in India. Now, Pepsi is going all out to prove that they are the best.

22

HISTORY OF PEPSI
PepsiCo is a USA based company having its head quarters at New York with the net worth of $30-40 million. The average sales of the company are approx 90 million bottles per month. Pepsi made it first international move in Russia in 1959. During the Khrushchev era, within 32 years Pepsi emerged as the biggest competitor for Coca Cola. Pepsi is available in 155 countries. In any soft drink, on the globe Pepsi food is one of the largest soft drink companies in the world with its headquarters in New York. It was invented by Pharmacist Culab D. Baradham in 1898 to cure the disease Dyspepsia. It is from this word that its name was related to Pepsi. Soon it entered the American market as soft drink, which at that time mostly dominated by Coca Cola, but soon Pepsi able to dominate the Cola market, and there after it never looked back. Pepsi and Coca Cola are engaged in ferocious cola war that has taken the whole world by storm. Pepsi entered the Indian soft drink in Kanpur in 1988 and began its production in May 1990 and soon it was giving the local contenders run for their money in soft drink market. It comes out with dazzling marketing innovation that rocked the cola market, like selling the product through function Pepsi outlets. Its advertisement agency was Hindustan Thomson Association (HTA). Its advertisement budget for 1995-1996 was valued at Rs. 24 crores which is likely to be increased manifold in coming years. Pepsi food is one of the largest and best foreign investments in India. Till today it has invested Rs. 500 crores in India to develop the local market. Pepsi has distributed exclusive franchises in India to bottle its total product. There are 28 bottling plant of Pepsi in India. Some are directly controlled by Pepsi and rest is under various franchisees. Pepsi stands 51st position among the fortune 500 companies of the world. Its total capital is approx $3000 crores and total sales annually is worth $37 crores. Its total profit in the year 1996-97 was worth Rs. 458 crores approx. The total number of employees engaged in the business is 45.25 lakhs globally.

23

PRODUCTION PROCESS
The process of manufacture of Aerated water (soft drink) like Pepsi brand product is divided into mainly five parts such as 1. Water Treatment 2. Syrup Making 3. Bottle Washing 4. Filling 5. Testing of Product

(1) Water Treatment: - Water treatment is very essential in soft drinks plants as
the nature and quality of water varies from place to place. To set uniform and standard water the process of treatment is carried on. The water taken out from bore well by the help of motor pump and pipe line are collected in storage tank where is pre chlorinated by chlorinators and by the help of pipe lines comes to treatment tank called coagulation tank where to this water solutions of different strength of bleaching powder, ferrous sulphate, hydrated lime are added through dosing pump to reduce alkalinity, hardness, kill the bacteria .The chemical are mixed by mechanical stripper and then the suspend mattress settle down as sludge and clear water passes to retention tank. From this tank, the water passes through sand filter containing fine sand and pebbles and carbon filter containing granular carbon and finely through water polisher, micron filter, and UV lamp to ensure clear and sanitary water for use. Further water used in bottle washer and boiler need softening .for this purpose ,the water from storage tank ,after passing through two filter beds contain fine sand and granular carbon respectively comes to pass through bad resin were it is softened .this soft water is essential to use in and bottle washer to reduce scale formation inside the machines.

24

(2) Syrup Making:- For syrup making of particular brand, calculate quantity of
sugar water activated carbon and high flow super cell known as filter aid taken in to sugar to enter steam and also filled by a motor with agitator. Sugar syrup called raw-syrup is prepared by dissolving the sugar with continuous stirring and heating by steam supplied by fired boiler. This hot syrup by the help of pump is filtered through a filter press attached with a series of quality filter paper to separate out carbon particles. Clear hot syrup by the help of SS pipe lines passes through water P.H.E. for cooling and the then another P.H.E. circulated by glycol for further cooling. The chilled syrup comes to a mixing tank to use calculating of sugar quantity by Brix Hydrometer, concentrate added and mix thoroughly by a mechanical Stirrer fitted to the tank. This syrup is now finished syrup ready for use. The concentrate mainly, the liquid part are kept in a cold store, the temperature of finished syrup is also maintained by air-conditioner. All the containers used for syrup making are cleaned and sanitized by Soda-Bi-Crab, strong chlorine solution and hot caustic soda solution.

(3) Bottle Washing: Bottle washing is an important part in soft drink plant. The
empty durable and returnable bottle used are returned from market in plastic carats are fed to a bottle washing machine (washer). The machine has double end system with circular chain to carry the bottles. Caustic soda Tri-Sodium Phosphate, Sodium Glausonate is adding to the caustic by the supplied. The Caustic tank filled in with water heated by steam supplied by the boiler. The empty bottles enter to the hot Caustic tank in one end and after being cleaned by hot Caustic solution and finally washed with water through spray jets fitted are discharged in other end. The washed bottle proper inspections are SU 319 and SU 853 used for conveyor cleaned and smooth running of chain carrying bottles. SU 260 and SU 773 is used for bottle cleaning, shining, and mold removing.

25

(4) Filling: - Finished syrup and treated water lime are commixed to a dosing pump
which mixes syrup and water with ratio of 1:5 and the syrup mixed with water enters to carbonator tank to mix CO2 gas, which is preserved in cylinder for use. The cylinders are connected through CO2 manifold to tank to use requisite quantity of gas. To control CO2 pressure and temperature of liquid; we used recording control (Taylor). The syrup passed through a P.H.E. which is called itself by circulation of chilled glycol supplied chilling F-22 gas used. The syrup being chilled easily mixed with CO2 gas and enters to filter for bottling. The filter is connected with filling valves and lift cylinders. The lift cylinder functions by pressure of air supplied by an air composer. The syrup is known as beverage in this stage is filled in the cleaned bottles which are durable in nature and returnable by buyer filling machine (filter) by a counter pressure of carbon dioxide gas. After beverage filled in bottle it goes to the crowner where with the help of crown crocks the bottles are sealed (crowned) to project the carbonation, flavor, outside contamination and spoilage. The finished products are coded by a coding machine and inspected properly by inspection light while passing through the conveyor where finished product are accumulated enters to carat washer machine and it is washed moves through the conveyor where finished product are accumulated. Then the products are kept in plastic carats which are durable in nature and returnable by buyer, put on palates and sent to shipping for shipment. The entire container in contact with syrup are properly cleaned and sanitized by Soda-BiCarbonate, hot water, caustic soda solution and strong chlorine does.

(5) Testing of product:- Finally the finished syrup during bottle is tested in
laboratory to meet the parameters and also to get a standard and quality products to maintain the standard and information and uniformity in products the sugar contents and carbonation in the bottle are checked in regular intervals by Brixhydrometers, Refrectometer and pressure gauge. The dead weight tested is used to calculate pressure gauge to know the correct pressure. TA & Ph are tested by digital Ph meter. Electronic digital balanced is used to weight chemical to conduct test in lab. The purity of CO2 is checked by CO2 purity tester. The chlorine 26

comparators. The microbiology test of the product and water used in syrup making and production are also done to ensure that the product is free from any bacteriological contamination. To conduct the micro test hot sterilizer incubator, autoclave, pads filter membranes, media are produced and used. The Diesel generator is operated in case of electricity failure for smooth operation of the plant. To drawn electricity for the State Electricity Board the transformer is used. The steps involved in the production process are: First the fork lift supplies the empty bottles which are collected from the distributions. Then depalletising is done i.e. separating cases filled or empty bottles from the wooden planks. Uncasing is done by separating empty bottles from the cases/carats. Empty bottles are then fed into the bottle washer where stream with some chemical is used for washing. Washed bottles are then send to the filler where premix (Composed of syrup, treated water bulk CO2) is filled in it. The whole concentrated is chilled with glycol before filling and then crowning is done. The filled bottles are passed through inkjet coder for printing price and date. Then again the filled bottles are send for final light inspection and from there they are collected on a table. Lastly the filled bottles are arranged in the crates (casing) and then palletizing is done for storing it in the warehouse. PREPARATION OF SYRUP Treated water + Sugar = Flavour

27

PRODUCT MANUFACTURED
Products Pepsi Mirinda Mirinda Mirinda 7 Up Mountain Dew Slice Lehar soda Pet Pet Can Aquafina (Mineral Water) Quantity 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml 300 ml 1.5 lt. 2 lt. 330 ml 1 lt. Colour Brunt sugar Sun-set Tetrazine Tetrazine Colorless Colorless Sunset Tetrazine Brunt sugar Brunt sugar Brunt sugar Colorless Flavour Cola Orange Lime Mango Lemon Lemon Mango Lemon Cola Cola Cola White

CONSUMERS
The main consumers of these products naturally are youth. Besides the direct consumer it is also used for the some purpose of providing it to the mass by hoteliers, restaurant owners and various other soft drink peddlers. These products are the choice of the new generation. Thus it can be said that it is a product of mass consumption.

28

CHAPTER 3

LITERATURE REVIEW

29

A THEORETICAL FRAME WORK OF CHANNEL OF DISTRIBUTION

Marketing channels are sets of interdependent organization involved in the process of making a product or service available for use or consumption. The main objective of the marketing process is to distribute the products to the actual users. This function involves a number of sub-functions to be performed by a producer or manufacturer. These two functions are most important first, the creation of demand is made through the process of advertising and sales promotion activities. On the other hand the distribution through the channels of distribution. The decision relating to the channel of distribution is a very important decision from the firm point of view because the selected channels affect considerable other marketing decision. Such decisions are of long term nature and exercise their impact on the cost structure of the firm also. By channel distribution mean the intermediaries or the process through which the goods products are transferred from the producer to the ultimate users. Now a day any of the producers possibly do not sell their goods directly to the final users. There are a lot of intermediaries between producers and consumer, bearing a variety of name performing various kinds of function. Some intermediaries like wholesalers and retailers buy and resale taking the bill. They are known as merchant middle men and other are brokers, representative sales agent who seeks or search for customers and negotiate on the behalf of the producer but do not take of goods. These are called as middlemen. The manufacturer and its distributive outlets share common objective to sell the manufactured products at a profit. No doubt its objective differs with the marketing circumstance. Even though many variation of specific objective fits into some categories. These are as follows: To built distribution network loyalty To stimulate distribution To develop managerial efficiency in distribution organization To identify the source of supply for the product line at the final buyers level

30

The channel of distribution is a structure which organized and presents a choice among alternative channels of distribution of the different marketing situations faced by retailers, whole sellers and producers within the structure. It may be considered as a series of function which must be performed in order to make producers efficiency. To bearing maximum profits of all institutions concerned a channel of distribution should be treated as a unit of total system of action. The activities of the manufacturer need to be coordinated with these middlemen used in the distribution of given product. The important of middlemen in channel of distributional can be over emphasized. It is that who1. Collects concentrates the output of various producers, 2. Subdivides these into lot desired by the customers gathers various items together in the assortment wanted and 3. Disperses the assortment to consumer industrial buyers. The role of middlemen that of specialist in concentration equalization and dispersion besides he side in the creation of the time from and procession utilities.

31

DECISION MAKING FOR CHANNEL OF DISTRIBUTION

The marketing executive must undertake to following steps in order to establish the channel of distribution for a company. 1. He/She must understand the retail and wholesale market and type of middlemen available in both. 2. He/She must understand the various conflicts which continually exist between and within the channel. 3. He/She must select the general channel to be used keeping in mind the goals of the company marketing programme and the job to be done by distribution system. 4. He/She must take decision regarding be intensity of the distribution (i.e. the number of middlemen) to be used each level and each market. 5. He/She must select the specific firms which will handle his product and then manage the day to day working relationship with them. 6. He/She must determine the methods and the procedure in firms (i.e. use of the transportation and warehouse facilities and services in firms making programme) in the physical distribution of the product. Types of Marketing Channels 1. Direct marketing channel : A marketing channel that has no intermediaries level 2. Indirect marketing channel : Channels containing one or more intermediaries

Customer Marketing Channels

Channel 1. Channel 2. Channel 3. Channel 4. Manufacturer..Consumer ManufacturerRetailerConsumer Manufacturer...Wholesaler.RetailerConsumer Manufacture.WholesalerJobberRetailer.Consumer 32

CHANNEL DYNAMICS
Distribution channel do not stand still. New wholesaling and retailing institution emerge and new channel system evolves. There are four types of marketing channels. 1. Conventional Distribution Channel A Channel consist one or more independent wholesaler and retailers. Each is a separate business seeking to maximize its own profits even if this goal reduces profit for the system as a whole. No. of channel members has complete or substantial control over the other members. 2. Vertical Marketing Channel This is most recent marketing channel. A distribution channel system as producers, wholesaler and retailers act as unified systems. One channel member, the channel captain owns the others or franchises them or has so much power that they all cooperate. The channel captain can be the producer, the wholesaler or the retailer. 3. Horizontal Marketing Channel A distribution channel system in which two or more unrelated companies put together resources or programmes to exploit an emerging marketing opportunity. 4. Multi Channel Marketing In the past, many companies sold to single market through a single channel. Multi channel marketing occurs when a single firm uses two or more marketing channels to reach one or more customer segments.

33

RETAILING
Includes all the activities involved in selling goods or services directly to final consumers for personal non-business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. Retailers are the last but not the least in the marketing channel through whom the eventual transfer of ownership of goods take place. The use of retailer boils down to their superior efficiency in making goods widely available and accessible to target markets. In most of the cases the retailers performs the important functions mentioned as under. 1. Information 2. Promotion 3. Negotiation 4. Ordering 5. Financing 6. Risk Taking 7. Physical Possession 8. Payment 9. Title The major types of retailer are as following:1. Specialty Store: - They sell narrow product line with deep assortment. 2. Departmental stores: - They sell several product line with each line operated as separate department managed by specialist buyers or merchandisers. 3. Super market: - They are relatively large, low cost, low margin, high volume self service operation designed to serve total needs for food, laundry and household maintenance product. 4. Convenience Store: - These are relatively small store located near residential areas, open long hours, seven days a week and carrying an united lines of high turnover convenience products at slightly higher prices.

34

5. Discount Store: - These sell standard merchandise at lower prices with lower margins and higher volumes. 6. Off price Retailers: - These sell the merchandise which are bought at less than regular wholesale prices and sold as less than retail. These may be of three types mentioned as under: a) Factory orders b) Independent off price retailers c) Warehouse clubs ( Wholesale clubs )

Channel Conflict
Channel members may disagree on the best methods to attain goals. Inevitable when individual short run goals are not compatible. Can occur between firms at the same level, or between firms at different levels. Want to maximize profits and autonomy. Channel members belong to different channel systems, creating potential conflicts. Producers may try to circumvent intermediaries.

Selection of Distribution Channels

Should determine what the final buyer wants and determine the best way to reach them. Marketing Oriented!! Determined by: 1. Organizational Goals, Objectives (same day delivery), resources and capabilities. Companies with wide product mixes can sell more directly to the retailers, have more promotional skills etc. (P&G) 2. Market Characteristics, Geography, greater distance use more intermediaries, market density, clustering, market size etc., industrial vs. consumer, Buyer Behavior, Where?/How?/ May need creativity , L'Eggs 3. Product Attributes, IE Need to provide a service. Perishability-short channels, storage requirements, space, fashion, size (reduce handling), complexity, standard. 4. Environmental Forces, IE Competition, Technology

35

Need to determine the # of Intermediaries Determine the channel width, intensity of distribution, the products market exposure.

Intensive Distribution:
All available outlets are chosen for maximum exposure (within reason)....THAT A CONSUMER WOULD PURCHASE THAT TYPE OF PRODUCT. Timex sells through 45,000 drug stores and thousands of other stores. Used for convenience products, especially when sales have a direct relationship to availability. Availability more important than the nature of the outlet. Gas station vs convenience store Convenience products have a high replacement rate and require no servicing. P&G rely on intensive distribution. Good for consumer package goods. PLACE UTILITY Manufacturer promotional support.

Selective Distribution:
Only some available outlets (usually geographic) are chosen. Typically shopping products. Buyers prefer to spend time searching. Customer service important. Selective distribution motivates retail support. Producers have more control. Retailer promotional support.

Exclusive Distribution:
One outlet in a relatively large area. Products purchased infrequently, last a long time and require service. Used as an incentive to sellers. No one to undercut them. (Place Utility) Allows for the highest control. Easier to get retailers to carry a complete inventory and to provide service and 36

repair facilities. May be used to introduce new products, then change when market is more competitive (Move from introduction to the growth stage of the product life cycle.

37

Chapter 4
DATA ANALYSIS and INTERPRETATION

38

STUDY ON PRODUCTS
Product line is a group of product, that are closely related because they satisfy a class of needs or used together or sole to the same customer groups or marketed through the same types of outlets or fall within given price range.

Name Pepsi Mirinda Mirinda Slice 7Up Dew Lehar Soda

Colour Brunti Sunset Tetrazine Sunset Colourless Colourless Tetrazine

Flavour Cola Orange Lemon Mango Lime Lime Lemon

39

PRICE SHEET OUTLET RATE

FLAVOUR PEPSI COLA PEPSI COLA PEPSI COLA PEPSI COLA MIRINDA ORANGE MIRINDA ORANGE MIRINDA ORANGE MIRINDA ORANGE MIRINDA LEMON MIRINDA LEMON 7UP 7UP 7UP 7UP MOUNTAIN DEW MOUNTAIN DEW MOUNTAIN DEW SLICE SLICE SLICE MY CAN PEPSI DIAT SLICE TETRAPACK LEHER SODA LEHER SODA PACK SIZE 200 ML 300 ML 600 ML 2000 ML 200 ML 300 ML 600 ML 2000 ML 200 ML 600 ML 200 ML 300 ML 600 ML 2000 ML 200 ML 600 ML 2000 ML 250 ML 500 ML 1200 ML 250 ML 330 ML 200 ML 300 ML 600 ML PCS RATE 24 24 24 9 24 24 24 9 24 24 24 24 24 9 24 24 9 24 24 12 24 24 30 24 24 168 214 454 459 168 214 454 459 168 214 168 214 454 459 168 454 459 214 498 532 330 564 285 214 454
40

C.RATE
RATE 192 240 480 495 192 240 480 495 192 240 192 240 480 495 192 480 495 240 552 576 360 600 360 240 480 PER PCS RATE 8 10 20 55 8 10 20 55 8 10 8 10 20 55 8 20 55 10 23 48 15 25 12 10 20

PER PCS RATE 7 9 19 51 7 9 19 51 7 9 7 9 19 51 7 19 51 9 21 44 14 23.5 10 9 19

STUDY ON RETAILERS
Retail Shop type I. Monopoly Retail Shop II. Mix Shop : : The shop selling only one companys Products The shop selling many companys Products

The retailers can build a great deal of goodwill for the firm. The marketing strength depends on the strengths of retail dealers. Research has conduct survey on different types of outlet like bakeries, cold drink parlor, Booth and general stores etc. According to his survey, the major reasons for selling Pepsi products are: (1) (2) (3) (4) (5) (6) (7) Brand Image Customer Demand Profit Margin Advertisement Good Quality Sales Promotion for Retailers Sales Promotion for Consumers 18% 20% 05% 30% 10% 07% 10%

41

BRAND PREFRENCE
Pepsi products are most popular brand but Coke products are very dear brand of consumers due to advertisement. After the collection of different views from consumer which includes, servicemen, students, and businessman and observing the sale of Pepsi products. The research has calculated the preference consumption of different Pepsi products by the people of Hyderabad.

Brand Preference of Consumers Flavour Cola Orange Lemon Lime Mango % Consumption 49% 16% 12% 07% 17%

15% 17% Cola Orange Lem on Lim e Mango 7% 12% 7 Up 16%

49%

42

STUDYING THE MARKET POTENTIAL

The 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 and service or during a stated future period. A market potential indicates how much of a particular product can be sold to a particular market segment. Market potential can be determined by measuring the sales in different areas. The data has collected from 300 outlets, which are situated in different areas of Hyderabad. According to that, the per day sale of Pepsi Products is 154 carats and the per day sale of sale of Coke Products is 148 crates. Per Day Sales in Crate of Products

Coca Cola 48% Pepsi 52%

Pepsi Coca Cola

43

Chapter 7.

Conclusion and Suggestions

44

Conclusion and Suggestion

From the data analysis and survey conducted by me, I arrived at the following conclusions:Pepsi has the entire flavor i.e. Cola, Lemon, Orange, Mango in the market and its market share is comparatively more than Coke. The majority of the retailers deal in all brands of Pepsi and Coca-Cola. One of the major drawbacks of Pepsi products is that all the flavors do not reach at each and every retail outlets but competitors products do reach that is why competitor enters in to Pepsi exclusive outlets . The major problem faced by the distributor is the shortage of supply particularly pets. Distributor functions just as order takes; they should contribute me and communicate to the retailers. It should be checked that whether our products is reaching to the outlets timely and regularly or not. Although the Visi-cooler, Sign board/Display rack and Glass strength provided by Pepsi are more than Coke but still there are number of retailers, who are either not having these or others have provided them . There is irregular in the supply of Visi-cooler, some retailers, which sell more are not provided Visi-cooler which some retailers, which sell less, are provided visi-cooler. Some of the Visi-cooler provided by Pepsi is not functioning properly, complaints regularly, are entertained after a long time. Most of the retailers are in need of board but not provided by the Pepsi Company. Most of the retailers especially small retailers have complained that the sales man does not inform about any sales promotional scheme. The big retailers of Pepsi do not maintain the purity in the Visi-cooler and dictate their own terms and conditions. .

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

45

Suggestions
1. A complain Register should be provided by the company to every distributor in every route so that, retailers/customers can write their problems. The complain register should be checked by consumer executive and depot in charge at time to time. 2. A clear notification should be given to teach distributor and each route agent to give cash memo (with printed number) and maintain route card for every transaction. 3. Proper care should be given the companys employees at the time of scheme close. Signature of scheme receiving on the cash memo should be taken and it should be also maintained in route card. Claim of scheme should be passed after the deeply stud y of above three points i.e. difference between opening stock and closing, signature of scheme receiving on the cash memo and sells maintained in the route card. 4. Some retailers keep other companies products in the Pepsis fridge, while is provided by the company. To check additional scheme be given in every month, in the peak seasons After the checking of Pepsis Fridge (3or 4 times in every month ) if It is found that retailer does not keep other companies products in the Pepsis Pepsi fridge the claim of scheme should be passed . Thus we can improve/increase its sell and employees activities. 5. There is no electricity problem in the whole area of Hyderabad. For chilled soft drink, ice box which is compulsory and dredge both should be provided by the company. 6. The numbers of outlets are too much. So it is required to short the route and extra vehicles/tricycles provide in this route. 7. Facilities provided by the company should be increased. Facilities requirements should be fulfilled in all the rural and urban area properly after deeply study for various aspects or retailers by the help of company employee and depot in charge. 8. Number of tricycle can be installed at various place like public during the peak hours i.e. evening and busy roads and chowks near the town`s commercial

Centers. Care should be taken to install these tricycles under a shady tree where providing relief from h eat to the prospective customers as well as the vendor. 46

9. All these tricycles targeted the tired and thirsty consumer or the road and other place, care should be taken that soft drinks in the ice box are always chilled and ice readily available. 10. The vendors must be taught to be polite to the consumers. 11. The vendors can also be provided with uniform by the company in order to give them visibility. 12. An appropriate name should be given to these tricycles and properly advertisement thus giving them some sort of identity. 13. In winters, as the sales from these tricycles may be very low because of seasonal factors retailers should think of introducing such packs Beaver its various brands of beverages . 14. It is vital take for Retailers to maintain the performance of Pepsi in future therefore performance of soft drink was very good in this year in comparison of coke. 15. Now a day with the introduction of tetra packs such as fruity, Tree Top etc. So Retailers should think of introducing such packs of its various brands of beverages. 16. Retailers should be provided its the rural area also. 17. Coke is the only competitor of Pepsi. So we should try to keep every information about Coke i.e. prices scheme, policy etc. always it will help in Decision making. At last only this can be said that these suggestions are not totally but even partially can be used by the Retailer. it would be pleasure for me and is certain that if these are carried out by management, it will helpful in establishing the retailers on a more stronger footing.

47

BIBLIOGRAPHY

48

Books:
Mohanty, R.P and Deshmukh, S.G, 2005,. Supply Chain Management Theory and practices, Biztantra. Altekar, V. Rahul, 2005, Supply Chain Management, PHI.
Levy & Weitz, 2005, Retailing, TMH

Websites: www.pespsico.com www.wikipedia.org

49

APPENDIX

50

QUESTIONNAIRE
Name: - .. Address: - .. ....................... Contact No: - (1) Monthly sales (in Rs.) (a) Less than 5000 (c) 10,000 to 15,000 (2) (a) 0 - 50 carets (c) 100 to 150 carets (3) Which type of outlet? (a) General Store (c) Betel Shop (4) (a) Pepsi Cola (c) Mirinda (L) (e) Slice (5) demands? (Rank them) (a) Pepsi (c) Others (b) Coca Cola (b) Grocery (d) Sweet Shop (b) Mirinda (O) (d) 7Up (f) Mountain Dew (b) Between 5000 to 10,000 (d) Above 15,000 (b) 50 to 100 carets (d) 150 to 200 carets

Number of carets sold per month of soft drinks.

Which brands of soft drinks are available in the outlet?

When a customer comes to your shop which brand of soft drinks does he/she

51

(6)

Do you know about all flavours pack (size) and respective wholesale price Pepsi soft drinks. (a) Yes (b) No (b) 50 to 100 carets (d) 150 to 200 carets (b) Good (d) Worse (b) Alternate Day (d) Fortnightly (b) Scheme (d) Taste (f) Others (b) Coca Cola (d) Own (b) satisfactory (d) Not satisfactory (b) No

(7)

Which companys soft drink is demanded most? (a) 0 - 50 carets (c) 100 to 150 carets

(8)

What is the position delivery of Pepsi products? (a) Very Good (c) Bad

(9)

What is the frequency of the visit of Pepsi executive? (a) Daily (c) Weekly (10) Which factors affect the sale most? (a) Advertisement (c) Presence (e) Price (11) (a) Pepsi (c) Both (12) (a) Highly satisfactory (c) Less satisfactory (13) (14) (15) etc. (a) Yes

Which company Visi-Cooler do you have?

What is the position of maintenance work of refrigerator done by Pepsi Company?

Have you been provided with sign board/display rack by Coke Company? Have you any type of dissatisfaction regarding the product. It yes then why? Please give any suggestion for improvement regarding distribution, brand, bottling

... (16) What is your opinion about Pepsi products? 52

 Thank You Place:- Date:- Surveyed by

53

54