Visakha Diary Sample1

CHAPTER-1

1

INTRODUCTION

Beverage industry is one of the fast growing industries in India .it can be divided into two sections sections i.e. i.e. carbonat carbonated ed and non-carb non-carbonat onated. ed. The carbonat carbonated ed drinks drinks that can be further  further  classified into cola, lemon orange, mango and apple segments.

Marketing includes all the activities like promotion, distribution, advertising etc. To fulfill all the the segme segment ntss of consum consumers ers.. Marke Marketi ting ng is also also to conve convert rt socia sociall needs needs into into profi profita table ble opportunities. opportunities. So this topic provides all the essentials essentials to theoretical theoretical knowledge knowledge with practical practical knowledge knowledge and to inculcate inculcate the efficiency. efficiency. It is also requirement requirement for the company to improve their service and product quality for achieving their ultimate goal.

As far as the soft drink market is concerned, it is facing the cut throat Competition because of the availability of a large number of indirect as well as direct Competitors. Single company offers the soft drink to the market in different taste and flavors. In this industry entire range of flavors are produced by other competitors also. More often it  becomes  becomes impossible to differentiate differentiate between the same flavors of two different different brands, when served served in plane plane contai containe ner, r, range range also. also. All All these these facto factors rs toget together her make make the the situa situati tion on complicated. Besides both corresponding brands have the similar price.

2

INTRODUCTION

Beverage industry is one of the fast growing industries in India .it can be divided into two sections sections i.e. i.e. carbonat carbonated ed and non-carb non-carbonat onated. ed. The carbonat carbonated ed drinks drinks that can be further  further  classified into cola, lemon orange, mango and apple segments.

Marketing includes all the activities like promotion, distribution, advertising etc. To fulfill all the the segme segment ntss of consum consumers ers.. Marke Marketi ting ng is also also to conve convert rt socia sociall needs needs into into profi profita table ble opportunities. opportunities. So this topic provides all the essentials essentials to theoretical theoretical knowledge knowledge with practical practical knowledge knowledge and to inculcate inculcate the efficiency. efficiency. It is also requirement requirement for the company to improve their service and product quality for achieving their ultimate goal.

As far as the soft drink market is concerned, it is facing the cut throat Competition because of the availability of a large number of indirect as well as direct Competitors. Single company offers the soft drink to the market in different taste and flavors. In this industry entire range of flavors are produced by other competitors also. More often it  becomes  becomes impossible to differentiate differentiate between the same flavors of two different different brands, when served served in plane plane contai containe ner, r, range range also. also. All All these these facto factors rs toget together her make make the the situa situati tion on complicated. Besides both corresponding brands have the similar price.

2

NEED FOR THE STUDY:

The significance and need of choosing “Promotion of soft drinks – Role of Modern Retail outle outlets” ts” is to study study the import importanc ancee of Prom Promoti otiona onall acti activit vitie iess as it is the the key factor factor in determining budgeted sales figures for the company for future and then comparing the Promotional activities with its competitor and also to study the outlets, promoting Pepsi  products  products in over the area covered in, Visakhapatnam. Visakhapatnam. To evaluate the role of Modern Retail outlets outlets in promotin promoting g soft drinks by studyin studying g the custome customerr satisfac satisfactio tion n on the retailer retailerss  promotional  promotional activities activities of Pepsi products and finally to find out the ways to enhance the sales of Pepsi.

3

OBJECTIVES OF THE STUDY 

To know the merchandising of Pepsi in the Modern Retail outlets.



To know the Promotional activities such as sales promotion, advertising, etc…



To find the effectiveness of various Promotional activities.



To know the strategy of Pepsi and its Competitors regarding the Promotional activities.



To identify the consumers opinion towards the Promotional activities of the Modern Retail outlets on the Pepsi products. 

To evaluate the market potential of Pepsi products.

4

METHODOLOGY: The information for the study has been obtained from two sources namely.  

Primary Data Secondary Data

Primary data: The data for study has been collected with the help of a questionnaire targeting the customers who are step in the Retail outlets regarding the promotional activities of the retailer on soft drinks and the questionnaire consists of several questions, which give the necessary data.

Secondary Data: Some secondary data required for the study is obtained from the Pepsi company records,  journals, magazines and websites. It means the data is already available.

5

LIMITATIONS OF THE STUDY The following are the limitations of the study: •

As the sample is small in number it is difficult to analyze the overall opinion of the customers on the Promotional activities on soft drink products.

•

As the study is limited to the few Modern Retail outlets undertaken for the study it may not be accurate to generalize the opinion of the customers who are using the soft drinks.

•

The study is only limited for the period of 2 months it is not possible to study the total opinions and the collection of preferences given by the customers.

•

Unavailability of some information due to lack of awareness of customers.

•

The study of soft drink industry which is known to be seasonally fluctuating one,  present study does not take into account seasonal fluctuations and the results may not suit for all the seasons.

6

CHAPTER-2

7

INDUSTRY PROFILE Indian Soft drink Industry For a number of years the main competition in the non - alcoholic sector was the battle  between Coke and Pepsi for the cola market. But as the customer preferences and concerns started to change, the industry's giants have begun relying on new product flavors and looking to noncarbonated beverages for growth. Globally, the market size of this industry has  been changing. Soft drink consumption has a market share of 46.8% within the non-alcoholic drink industry. Data monitor (2005) also found that the total market value of soft drinks reached $307.2 billion in 2004 with a market value forecast of $367.1 billion in 2009. The modern soft drink industry started in 1886, when Dr. John S. Pemberton invented "Coca Cola" in Atlanta, Georgia. This was followed by the invention of "Pepsi cola" in 1898 by Caleb Bradham. In India the two major player Coca cola and Pepsi made their entries in 1977 but then the market was not that much friendly to the foreign companies. More over the   political situation was also not conducive for the foreign companies. But later on the situation post reforms began to look up for these two giants. In 1990 Pepsi-Cola went on sale in India for the first time in 28 years after a six-year battle to sell the US soft drink in India. In 1997, to ensure fast re-entry, Coca Cola paid $40 million to buy the biggest Indian softdrink brands, including ThumsUp, from a family-owned business. In recent years the soft drink industry in India has been hit by the concerns over health and environmental aspects. The soft drinks industry continued on its path to recovery from the low growth seen between 2005 and 2006, with higher volume growth in 2008 than that seen in 2007. The mature sectors of bottled water, fruit/vegetable juice and carbonates saw a dynamic year, with companies refreshing their products’ brand image and packaging to attract new consumers. Emerging product categories, such as energy drinks and reconstituted 100% juice, saw high double-digit growth rates, as companies increased their products’ penetration in India. Offtrade volume growth was slightly higher than on-trade volume growth, as convenient on-thego packaging, company sponsored chillers in kiranas and attractive supermarket displays fuelled off-trade sales across the market.

Companies reposition their brands and update product portfolios 8

With the industry back on the upward growth curve, companies refreshed their brands by introducing new and more premium packaging designs, pack sizes and communication campaigns. In 2008, bottled water was especially dynamic, with all the major national brands following the cue of Bisleri’s rebranding in late 2007. Carbonates and juice drinks were also reinvigorated with new pack sizes that targeted on-the-go consumption by young adults. With “naturally healthy” becoming a key focus for consumers and manufacturers, fruit/vegetable drinks companies focused their efforts on highlighting their products’ fresh fruit content and health attributes. Companies put in motion plans to extend their product  portfolios to emerging categories such as 100% juice, energy drinks and flavored water.

Domestic players thrive The multinationals Coca-Cola India and PepsiCo India Holdings saw their off-trade value shares of soft drinks in India decline over the review period, as other national and regional  players updated their brand portfolios and increased the penetration of their brands in India. Bottled water players, such as Parle Bisleri and Dhariwal Industries, were particularly successful in expanding their consumer base through a concerted effort to increase their  manufacturing capacity and move to newer regions within India. Dabur India and Parle Agro  benefited from their first mover advantage in being present in high-growth emerging product categories, such as 100% juice and other non-cola carbonates.

Modern retailing thrives alongside kiranas With companies increasing their spend on below-the-line marketing activities, the ubiquitous kiranas were the beneficiaries of efforts such as branded glass door refrigerators, regional language banners and displays, and the roll-out of on-the-go packaging for carbonates and  juice drinks. Supermarkets, which are still something of a novelty in many small cities, continued to attract a combination of regular grocery shoppers and young impulse buyers. Bundling and discount promotions for fruit/vegetable juice and concentrates drove product sampling in supermarkets. Emerging categories, such as energy drinks and RTD tea, received a boost from impulse buyers in supermarkets, while attractive displays and imported   products in up market shopping centers introduced consumers to new products, such as sports drinks and flavored water.

9

Double-digit growth expected With rising consumer affluence and companies tailoring their product designs and marketing specifically to target the young adult population group, the trend of robust double-digit annual volume growth is expected to continue over the forecast period. The foray of leading national players into emerging categories, such as energy drinks and 100% juice will help sustain high growth rates in the future.

10

Corporate Profile PepsiCo in India “In everything we do, we strive for honesty, fairness and integrity”

PepsiCo India is striding ahead rapidly towards enabling the global vision to be the world's  premier consumer products company focused on convenience foods and beverages. PepsiCo India seeks to produce healthy financial rewards for investors as it provide opportunities of  growth and enrichment to its employees, business partners and the communities in which it operates. 

It has more than 42 bottling plants in India, of which 13 are company owned

and 29 franchisee owned. 

3 State-of-the-art food plants in Punjab, Maharashtra and West Bengal

Establishment

PepsiCo established its business operations in India in 1989 and has grown to become one of  the country’s leading food and beverage companies. One of the largest multinational investors in the country, PepsiCo has established a business which aims to serve the long term dynamic needs of consumers in India. Investment

PepsiCo India and its partners have invested more than USD1 billion since the company was established in the country. Employment

PepsiCo India provides direct and indirect employment to 150,000 people including suppliers and distributors.

PepsiCo Boilerplate PepsiCo offers the world’s largest portfolio of billion-dollar food and beverage brands, including 18 different product lines each generating more than $1 billion in annual retail sales. Our main businesses – Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade – also make hundreds of other nourishing, tasty foods and drinks that bring joy to our consumers in 11

over 200 countries. With more than $43 billion in 2008 revenues, PepsiCo employs 285,000  people who are united by our unique commitment to sustainable growth, called Performance with Purpose. By dedicating ourselves to offering a broad array of choices for healthy, convenient and fun nourishment, reducing our environmental impact, and fostering a diverse and inclusive workplace culture, PepsiCo balances strong financial returns with giving back  to our communities worldwide.

Brand Facts PepsiCo nourishes consumers with a range of products from tasty treats to healthy eats that deliver enjoyment, nutrition, convenience as well as affordability The group has built an expansive beverage and foods business. To support its operations, PepsiCo has 42 bottling plants in India, of which 13 are company owned and 29 are franchisee owned. In addition to this, PepsiCo’s Frito Lay division has 3 state-of-the-art  plants. PepsiCo’s business is based on its sustainability vision of making tomorrow better  than today. PepsiCo’s commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers.

Beverages

PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP,  Nimbooz, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks Gatorade, Tropicana100% fruit juices, and juice based drinks – Tropicana Nectars, Tropicana Twister and Slice. Local brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range of brands.

Foods

12

PepsiCo’s food division, Frito-Lay, is the leader in the branded salty snack market and all Frito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips; Cheetos extruded snacks, Uncle Chips and traditional snacks under the Kurkure and Lehar    brands. The company’s high fiber breakfast cereal, Quaker Oats, and low fat and roasted snack options enhance the healthful choices available to consumers. Frito Lay’s core   products, Lay’s, Kurkure, Uncle Chips and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary nutritional labeling on their packets.

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

Vision "To build India’s leading total beverage company, delighting consumers by best meeting their everyday beverage needs, and stakeholders, by delivering performance with purpose, through our talented people."

PepsiCo Sustainability Vision "PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today”

‘Tomorrow is better than Today’ 

Core Values and Principles 13

Organizational Values

Our commitment is to deliver sustained growth, through empowered people, acting with responsibility and building trust.

Commitment

Values reflect our aspirations - the kind of company we want PepsiCo to be. We express our  values in the form of a commitment. Sustained Growth

Sustained Growth is fundamental to motivating and measuring our success. Our quest for  sustained growth stimulates innovation, places a value on results, and helps us understand whether today's actions will contribute to our future. It is about growth of people and company performance. It prioritizes making a difference and getting things done. Empowered People

Empowered People means we have the freedom to act and think in ways that we feel will get the job done, while being consistent with the processes that ensure proper governance and  being mindful of the rest of the company's needs. Responsibility & Trust

Responsibility and Trust form the foundation for healthy growth. It's about earning the confidence that other people place in us as individuals and as a company. Our responsibility means we take personal and corporate ownership for all we do, to be good stewards of the resources entrusted to us. We build trust between ourselves and others by walking the talk  and being committed to succeeding together.

Shareholders

14

PepsiCo (symbol: PEP) shares are traded principally on the New York Stock Exchange in the United States. The company is also listed on the Chicago and Swiss stock exchanges. PepsiCo has consistently paid cash dividends since the corporation was founded.

Corporate Citizenship At PepsiCo, we believe that as a corporate citizen, we have a responsibility to contribute to the quality of life in our communities. This philosophy

is

expressed

in

our 

sustainability vision which states: “PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic -- creating a better  tomorrow than

today.” Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value   by making PepsiCo a trulysustainable company.

PepsiCo Headquarters PepsiCo World Headquarters is located in Purchase, New York, approximately 45 minutes from

New York City. The

seven-building headquarters complex

was designed

  by Edward Durrell Stone, one of America's foremost architects. The building occupies 10

acres of a 144-acre complex that includes the Donald M. Kendall Sculpture Gardens, a worldacclaimed sculpture collection in a garden setting. The collection of works is focused on major twentieth century art, and features works by masters such as Auguste Rodin, Henri Laurens, Henry Moore, Alexander Calder, Alberto Giacometti, Arnaldo Pomodoro and Claes Oldenberg. world

famous garden

planner,

Russell

The

gardens

Page,

and

originally have

been

were

designed

extended

by

by

the

François

Goffinet. The grounds are open to the public, and a visitor's booth is in Operation during the spring

and summer.

15

Logos and Slogans

1898

Brad's Drink  

1903

Exhilarating, Invigorating, Aids Digestion

1906

Original Pure Food Drink  

1908

Delicious and Healthful

1915

For All Thirsts - Pepsi: Cola

1919

Pepsi: Cola - It makes you Scintillate

1920

Drink Pepsi: Cola - It Will Satisfy You

1928

Peps You Up!

1929

Here's Health!

1932

Sparkling, Delicious

1933

It's the Best Cola Drink Double

1934

Refreshing and Healthful

1938

Join the Swing to Pepsi

1939

Twice as Much for a Nickel

1943

Bigger Drink, Better Taste

1947

It's a Great American Custom

1949

Why Take Less When Pepsi's Best?

16

PEPSI-COLA IN INDIAN SCENARIO Since the entry of Pepsi-Cola to India in 1989, the soft drink industry has under gone a Radical change. When Pepsi-Cola entered, Parle was the leader with the Thums-up being its flagship  brand. Other products offering by Parle included Limca & Goldspot, another upcoming player

in

the market was, the erstwhile bottler of Coca-Cola, “  pure drinks”  . Its offering includes

Campa- Cola, Campa-Lemon & Campa-Orange. With the re-entry of Coca-Cola in the Indian market, Pepsi-Cola had to go in for more aggressive marketing to sustain its market share. The chronology of the initial phase of the Cola wars in India was:

•

1977: Parle launched Thums-up and pure drinks launched Coca-Cola.

•

1998: In September, final approval for the Pepsi Foods Ltd. Project granted by the

“Cabinet Committee”  on economic affairs of the “Rajeev Gandhi Govt.” 

•

•

1990: In March, “Pepsi-Cola and 7-up” launched markets in north India 1990: In May, The government cleared the Pepsi-Cola project again but with a

change In brand name to “ Lehar Pepsi”, simultaneously it rejects the Coca-Cola application

“Citra”  from the Parle, stable hited the market. •

1991: Pepsi-Cola extended its soft drinks business and reached at national scale.

Pepsi-Cola launched its product in Delhi and Bombay. •

1992: In January, Brito foods application is cleared by the FIPB. Pepsi-Cola and Parle start

initial negotiation for a strategic alliance but took break off after a while. •

1993: Pepsi-Cola launched “Slice and Teem”  captured about 25-30% of the soft drink 

market in about 2 years. •

1994: Pepsi bought “Dukes & Sones”.

•

1995: Pepsi-Cola lunched cans, having capacity of 330ml in various flavors

•

1996: Pepsi-Cola domestic and international operations combined into a Pepsi-Cola

Company. International

and

domestic

operations

combined

into

called “Frito-lay Company”. •

1997: Pepsi-Cola brought “Mirinda Orange” opposite to “Fanta”. 17

one business unit

•

1998: Pepsi-Cola launched “Mirinda Lemon”  opposite to “Limca”.

•

1999: Pepsi-Cola launched “ Diet Pepsi”  in can and 1.5 Lit. “PET” bottle for health

conscious people. •

2001: Pepsi-Cola launched Slice in “Tetra”  Pack.

•

2003: Pepsi-Cola launched “Pepsi Blue”  to get the favor of world cup season.

•

2005: Pepsi-Cola launched Mirinda in “Straw Berry” flavor to get the favor of movie

Batman. •

2005: Pepsi-Cola launched 7-up as “7-up ice”.

Pepsi-Cola launched “Mountain Dew” to be more competitive with Coca-Cola

• 2009: Bangalore, March 9 PepsiCo India has launched its

Packaged nimbu paani ‘Nimbooz by 7Up.

PEPSI-COLA PHRASES

The Pepsi-Cola marketing phrase has also changed many times 1909-1939:

Delicious and Healthful

1939-1950:

Twice As Much For A Nickel Too

1950-1963:

The Light Refreshment

1953-1961:

Be Sociable

1961-1963:

Now It's Pepsi for Those Who Think Young

1963-1967:

Come Alive! You're In the Pepsi Generation

1967-1969:

Taste That Beats the Others Cold

1969-1973:

You've Got A Lot to Live, Pepsi's Got A Lot to Give

1973-1975:

Join the Pepsi People Feeling' Free

1975-1978:

Have a Pepsi Day

1978-1981:

Catch That Pepsi Spirit

1981-1982:

Pepsi's Got Your Taste For Life!

1983-1983:

Pepsi Now! 18

1984-1990:

official about it

1990-1994:

Yeh dil mange more (Pepsi India)

1995-2004:

My Pepsi my world

2004-2007:

Pepsi, the Choice of a New Generation

2007-now:

Yeh pyas hai badi

19

PEPSI – BRANDS AND PACK PROFILE



GLASS BOTTLES



DISPOSABLE CANS



PET JARS

20

The Soft Drink Bottling Industry

Over 1,500 U.S. patents were filed for a cork, cap, or lid for the carbonated drink bottle tops during the early days of the bottling industry. Carbonated drink bottles are under a lot of pressure from the gas. Inventors were trying to find the best way to prevent the carbon dioxide or bubbles from escaping. In 1892, the "Crown Cork Bottle Seal" was patented by William Painter, a Baltimore machine shop operator. It was the first very successful method of keeping the bubbles in the bottle. Automatic Production of Glass Bottles

In 1899, the first patent was issued for a glass-blowing machine for the automatic   production of glass bottles. Earlier glass bottles had all been hand-blown. Four years later, the new bottle-blowing machine was in operation. It was first operated by the inventor, Michael Owens, an employee of Libby Glass Company. Within a few years, glass bottle production increased from 1,500 bottles a day to 57,000 bottles a day.   Ninety

years

after

the

invention

of

what

becomes

one

of

the

most

favored drinks globally in 1988. Pepsi entered India flanged with heavy resources and riding the winds of change of a newly opened economy. First, Pepsi has only franchise unit. Pepsi gave his concentrate to small factory and they make beverage.

In 1988, Pepsi set up its offices in India. In this company Pepsi Operates as PEPSI Foods Pepsi Co. India Holdings and Pepsi India marketing. The mission was to change the tastes and life style of a common Indian, who identified soft drinks and beverages as a few available cold drinks, squashes and concentrates. When it came to a refreshing drink conservative consumers would back to traditional nimboo  pani, jaljeeram lassi etc. Although India has a per capita consumption as low as 3 per person as compared to 400 in USm India has one of the largest number of potential consumers in a world with a population of an Arab, Every Indian guzzles 27 bottles of soft drink every year, an increase of one bottle per capita consumption would mean stating 900 bottles extra. India soft drink is of worth RS. 1800 crores with annual growth at the rate of20% to 25%. All the activities of Pepsi Foods Pepsi Co, India Holdings and Pepsi India Marketing Company are controlled by business Unit (BU) located at GURGAON. 21

This

BU

is

divided into various marketing units (MU's). All except the North and Market Units have common borders with states comprising them. The

market

units

demarcate

the

areas,

which

are

"Coboised" i.e. have

Company owned bottling operations (COBO). In these units there are company owned   bottling plants while in other areas the operations are run by a franchisee these areas are referred to as

Franchisee Owned Bottling Operations (FOBO'S) and some and in

some others Joint Venture operate. COBO - In the COBO, the company has total control of the decisions and implementations

undertaken, but for this the company has to invest its own money. FOBO - The FOBO’S are independent to take their own marketing and

Operational decisions with no major interference form the company. The FOBO's are supplied the concentrate from the company and they have to run the show, thereafter. Pepsi maintains ownership of the trademarks and is primarily responsible for  ownership in a local bottling operation. This helps Pepsi maintain strong trademark on the other party's resource and expertise. The PCI workflow concentrates on Selling, Making and Delivering Pepsi- Cola. Pepsi -Cola is a company with a "Low margin, high volume business" Pepsi Co. deals in the carbonated Soft Drinks (CSD's) Market. CSD's fall in two categories-Cola and flavors. Coals concentrate on Pepsi whereas flavors deal with orange

and Lemon. In India the flavors are Mirinda Orange and Lime. Slice is a

fruit Juice concentrate based Drink. Starting out in 1989, with that name of "Lehar Pepsi", the company has grown leaps and  bounds ever since with competition increasing with reentry of coke a few years ago. Thanks to an early lead and a better understanding of the market, India remains amounts the handful of markets worldwide where Pepsi is ahead of its archival Coke. Despite being the global Pepsi has build its success on meeting out the Indian customer's needs. Pepsi has made its brand synchronize with localized events and traditions. Pepsi maintained its top of mind awareness with roadside signage and reminders. The partner type relationship with bottles, FOBOs as well as COBOs cover most of the company adequacy. One of the strongest weapons in Pepsi's armory is the flexibility it has

empowered

its

  people with. Ht Pepsi every employee, may be a manager of a salesman, have an authority to take whatever steps he or she feels will make the consumers aware of the brand 22

and increase its consumption.

Thus

Pepsi

believed

in

establishing

and

nurturing

creditability of the salesman and making the joint commitment to grow business in accounts, all these factors together led to a high froth in the Indian market and constantly increasing market share. Product wise comparison of Pepsi with competitor Coca-Cola Pepsi

Coke, Thumps Up

Mirinda ( orange+lemon+apple)

Fanta(orange),Limca

Slice

Maaja

7UP

Sprite

Mountain dew Diet Pepsi Aquafina (mineral water)

Kinley(soda) Diet Coke Kinley (mineral water)

THE RKJ GROUP It can be said with absolute certainty that the RKJ Group has carved out a special niche for  itself. Their services touch different aspects of commercial and civilian domains like those of  Bottling, Food Chain and Education. Headed by Mr. R. K. Jaipuria , the group as on today can lay claim to expertise and leadership in the fields of education, food and beverages.

Franchisee (pearl Bottling Pvt.Ltd.,) Often new flavors are to be added to the product line of cool drinks

to

 prevent a competitor. To establish a relation with retailers it is desirable to sell more than one flavor of cool drinks. To decrease the security seasonal products are added to the resources available so as to lessen its risks. Pepsi has given the franchise of Visakhapatnam region to Pearl Beverages which belongs to Pearl Group with Head quarters at Delhi and Mr. C.K. Jaipuria as the chairman and the Managing Director of the group. Pepsi Foods Ltd., declared Krishna Mohan Beverages and Constructions as franchise, in 1992.Last year it was changed to Pearl Beverages was taken by the Pearl Group. Campa-cola Soft Drinks has originally owned the premises since 1980 at Madhurawada. After the insolvency of campacola, KMBC purchased the premises in1990 in the auction by APSFC. Initially, it used to   produce McDowell’s soda and Bagpiper soda. It produced these drinks under franchise agreements but company could not exist in the market due to stiff competition from pearl 23

 products.

Description and Launch of products Brand name Pepsi Mirinda 7 Up Mirinda Lime Soda

Flavor

Date

Cola Orange Clear Lemon Cloudy Lemon Soda

April-1992 April-1992 April-1992

 

April-1992 April-1992

Pepsi market share: Pepsi

: 47%

Coca-cola : 53%

Pepsi foods (Pvt.) Ltd Pepsi cola was in India from 1956 to 1961. It left this country, as its products were not found acceptable to the Indian market. Pepsi foods Ltd. Joint venture between Pepsi Co. international of US(which is holding 40% of the equity)and Tata concerns Voltas and the Punjab Ago industries Corporation (each of which have as round 25% of the equity),has 25%of its output reserved for beverages with a 50% export commitment fo9r fruit and vegetable

products. According to Pepsi officials the project guarantees that for every

American dollar the company takes out of India, it will bring five back. They started concentrated factory in Punjab. This company named as Pepsi Foods Ltd.

Pepsi Co. international’s direct investments in India so far amounts to Rs.165 corer. Two thirds of this however has gone into food processing. Pepsi foods are exporting fruits and vegetables to UK etc. The Pepsi’s foods processing unit directly supervised 1,200 hectors under  tomato cultivation covering 183 villages and 319 farmers. The company’s technical inputs enabled the farmer to achieve a yield of 35 to 50 tones a hector against the average of was 24

after discontinuing teems.

PRODUCT PROFILE Indian Beverages industry’s size is Rs. 8000 Crores and it is dominated by two player’s viz. Pepsi & Coke only. This high profile industry has lot of potential for growth as per capita consumption in India is 8 bottles a year as compared to 20 bottles in Sri Lanka, 14 in Pakistan, while 12 bottles a person in Nepal.

The RKJ group is India's leading supplier of retailer brand Carbonated and Non-Carbonated soft drinks, with beverage manufacturing facilities in India and Nepal. Its experience in the  beverage industry dates back to the sixties when it had the first franchise at Agra.

The group manufactures and markets carbonated and Non-Carbonated Soft Drinks and Mineral Water under Pepsi brand. The various flavors and sub-brands are Pepsi, Mirinda Orange , Mirinda Lemon, Mountain Dew, and 7UP, Slice Mango, Evervess Soda and Aquafina.

It has the license to supply beverages in the territories of Western U.P., part of M.P., half of  Haryana, whole of Rajasthan, Goa, 3 districts of Maharashtra, 9 districts of Karnataka and whole of Nepal. The group has in total 18 bottling plants in India & Nepal and is responsible for producing and marketing 44% of Pepsi requirement in India.

In order to later to this increasing demand, new bottling plants are being set up at alwer, kosi, Jodhpur, Kathmandu and goa to produce400-600 bottles per minute, which would mainly cater to northern markets of India. And in future, they will also be used to manufacture fruits mince-based soft drinks like Slice and Mangola.

INGREDIENTS OF SOFT DRINK: 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. Pepsi-Cola products contain natural flavors, including extracts of the kola nut ND 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. 25

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 a product. 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, Mountain Dew, Slice and Aquafina.

Ascorbic

Acid

,Aspartame,Blue1,Brominated

Vegetable

Oil

(BVO)

,

Caffeine,Caramel,Citric Acid, Gum Arabic, High Fructose Corn Syrup, Natural Flavorings,

Phosphoric

Acid,Potassium,Quillaia,Red

40,Sodium,Sugar,Total

Carbohydrates,Yellow5 The Pepsi Co. is known for the development and introduction of world-class brands &  products. Their portfolio is organized into three core business, which consists of snacks, Beverages and Restaurants. Pepsi products are constantly changing themselves to develop new products. They encourage consumer to explore their wide range of brands.

Main objectives:

The

objectives

of

the

company

set

out

in

memorandum

of

association

franchise agreements are as follows: 

To manufacturing soft drinks by concentrating supplied by Pepsi Foods.



To market and advertise within specified areas for Pepsi products.



To sell soft drinks at fixed prices.

ORGANIZATION STRUCTURE CHAIRMAN

MARKET UNIT MANAGER 

26

and

UNIT MANAGER 

GENERAL MGR.

TERRITORY DEVP MANAGER 

PRODUCTION MGR

AREA DEV. Co ORDINATOR 

QUALITY CONTROL MANAGER

TRANSPORT MGR

MARKETING EXECUTIVE

CUSTOMER EXECUTIVE SALESMAN

.

Financial structure: To start and operate business, any company has to invest its capital in fixed assets and floating assets and also in meeting the daily requirements of the company. However, depending on the nature of business and product being offered by the company, the ratio of  investment of capital in fixed and floating assets differ.

Working Capital: It

means

capital

required

for

daily

management

of

the

company

ex.

Wages, salaries, canteen expenses and transportation expenses etc.Plant layout: the machine and equipment have been imported from Germany, which are arranged in the plant according to the sequence of operation. All the operations are carried on a continuous movement. The reasons for choosing the product layout are: 1. There is continuous supply of material. 2. The brands are all standardized products. 3. The demand for the product brands is reasonable stable. 4. The volume of production is adequate for the reasonable utilization of equipment. Since the company follows continuous operation movement, the cost of material handling goes low. The total floor space required by the machine is less than other types of  27

 plant layouts.

Plant Capacity: The company installed latest up to date automatic plant conforming to plant layout. The installed production capacity is 400 bottles per minutes i.e. 24,000 bottles per day. The  plant also is having 100 bottles per 1-leter line. During off-season the plant runs one shift. The company has to produce enough bottles of soft drinks at a speed to keep in space with the disappearance of soft drinks form shelves of the retailer.

Production Schedule: The production schedule is fixed by taking into consideration. 

The present or current market demands.



The availability of empty bottles.



The inventory position filled bottles of different flavors.

The production schedule for each brand is fixed daily, filling the bottles of each branded flavors. This has an advantage in manufacturing the branded product is one at a time.

Quality control Pearl Beverages Pvt. Ltd. takes great care to maintain the quality control of the  products in their factory. The Bottles are visually examined for impurities continuously, as the bottles move out. Samples are checked every ten minutes of production time by the chemist for its quality and hygiene condition. The chemical analysis is also made for flavors, gas content and sugar percentages. The appearance, smell and taste of the products are also checked. If any defects are noticed, the production is suspended and the correcting 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, agency of the company also lifts sample form the market at the random for quality checkup at any time 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 floor and wet patches are cleaned with bleaching powder or some other solution. The standards of hygiene maintained inside the production shops are commendable.

Organization Structure and management: 28

The word organization has two common meanings. The meaning signifies an institution or function as group and the second meaning refers to the process of organizing the way of work which is arranged and allocated among members often organization so that the goal of the organization can be achieved efficiently. The organizing involves balancing the companies. Needs both for stability on one hand and change on the other hand, an organization structure means adopting a change or it can be a source of resistance to

change. There are mainly five elements of organization structure. 

Specialization of activities.



Standardization of activities.



Coordination of activities.



Centralization and decentralization of deviation making.



Size of the work unit.

The M.D, Mr. Ruchirans Jaipuria is the head of the organization and administration. The company is managed by able director, and is assisted by a team of well-qualified & experience senior management personnel.

Indra K. Nooyi {Chairman and CEO} Biography Indra Nooyi is Chairman and Chief Executive Officer of PepsiCo. Mrs. Nooyi leads one of the world’s largest convenient food and beverage companies, with 2008 annual revenues of more than $43 billion. The company’s products are sold in approximately 200 countries, and it employs more than 198,000 people worldwide. Its principal businesses include Frito-Lay snacks, Pepsi-Cola beverages; Gatorade sports drinks, Tropicana juices and Quaker foods. In total, the PepsiCo portfolio includes 18 brands that generate $1 billion or  more each in annual retail sales.

Mrs. Nooyi is the chief architect of PepsiCo’s multi-year growth strategy, Performance with Purpose, which is focused on generating robust financial returns from designing  products for and finding sustainable ways to give back to communities the company serves. 29

Performance with Purpose is premised on offering food and beverages that provide responsible nourishment, minimizing impact on the environment and creating a diverse and inclusive culture that attracts, develops and retains the most talented people. In keeping with this growth strategy, PepsiCo is proud to be listed on the Dow Jones North America Sustainability Index and Dow Jones World Sustainability Index. Mrs. Nooyi was named President and CEO on October 1, 2006 and assumed the role of Chairman on May 2, 2007. She has directed the company's global strategy for more than a decade and led PepsiCo's restructuring, including the divestiture of its restaurants into the successful YUM! Brands, Inc.; the spin-off and public offering of company-owned bottling operations into anchor bottler Pepsi Bottling Group (PBG); the acquisition of Tropicana and the merger with Quaker Oats that brought the vital Quaker and Gatorade businesses to PepsiCo.

Prior to becoming CEO, Mrs. Nooyi served as President and Chief Financial Officer   beginning in 2001, when she was also named to PepsiCo's board of directors. In this position, she was responsible for PepsiCo’s corporate functions, including finance, strategy, business  process optimization, corporate platforms and innovation, procurement, investor relations and information technology

2008 Milestones

•

PepsiCo Foundation announces two major new grants to Water Partners and Safe Water Network programs to provide access to safe water and sanitation in developing countries

•

PepsiCo Again Named to the Dow Jones Sustainability Index

•

PepsiCo Agrees to Buy Bulgaria's Leading Nuts and Seeds Company

•

PepsiCo Announces Initiatives with the Earth Institute and H2O Africa to Drive Sustainable Water Practices

•

Forbes Names PepsiCo among Its Best Big Companies

•

PepsiCo India Commissions First Remote Wind Turbine to Generate Renewable, Clean Energy

•

CRO Names PepsiCo to Top 25 100 Best Corporate Citizens 2008

•

PepsiCo to Buy Russian Juice Leader, Lebedyansky 30

•

Employees Lead Effort to Make Chicago Plaza First LEED-Certified PepsiCo Headquarters

•

Gatorade Launches Gatorade Tiger with Comprehensive Integrated Marketing Campaign

•

PepsiCo Honored with 2008 Energy Star Partner of the Year Award

•

UK Vitamin Water Brand- V Water Acquired by PepsiCo

•

Quaker Plant in Cedar Rapids Closes and Reopens Facility Due to Flooding to Protect Employees

•

PepsiCo Foodservice and Naked Juice Expand Starbucks Presence

•

Gatorade Sports Science Institute Gathers World's Leading Researchers on Protein  Nutrition

•

PepsiCo International's China Foods Wins "China's Top Leaders 2008" Award

•

Wall Street Journal Article Recognizes PepsiCo for Leadership in Employment of People with Different Abilities

•

PepsiCo and Frito-Lay Join Smart Way in Commitment to Reduce Greenhouse Gas Emissions

•

PepsiCo Beats Coke in Race to Launch New Natural Sweetener (Stevia)

•

PepsiCo France Recognized as "Great Place to Work" by Institute Survey

•

PepsiCo Commits to Reducing Acryalmide Levels in Potato Chip Products and Restructured Potato Snacks in California

•

Subway Names PepsiCo "Vendor of the Year" for Sustainability Leadership

•

Tazo Tea Joins Pepsi Lipton Partnership

PepsiCo India’s commitment to Performance with Purpose

Performance with Purpose articulates PepsiCo India's belief that its businesses are intrinsically connected to the community and world that surrounds it. Performance with Purpose

is

about

delivering

more

than financial performance, it’s about staying

committed to continuously giving back to the community and helping enrich society. 31

To deliver on this commitment, PepsiCo continues to build on its strong foundation of  achievements and scale up its initiatives while focusing on the following 4 critical areas that are linked to its business and where it can have the most impact. Replenishing water

PepsiCo India continues to replenish water and aims to achieve positive water balance by 2009, which means it, is committed to saving and recharging more water than it uses in its beverage plants.

Waste to Wealth

PepsiCo India continues to convert Waste to Wealth, to make cities cleaner. This award winning initiative has established Zero Solid Waste centers that benefit more than 2, 00,000 community members throughout the country

Partnership with Farmers

PepsiCo

India’s

Agri-partnerships

with

farmers help

more

than

15,000 farmers

across the country earn more...

Healthy Kids

PepsiCo India stays committed to the health and well-being of kids. It will continue   provide

children with

encouraging

active

a

diverse, healthful

lifestyle

by

and

expanding

especially for school going children. 32

its

fun portfolio, while

to

simultaneously

Get Active programme for kids,

33

LOCATIONS OF BOTTLING PLANTS OF PEPSI IN INDIA

34

ADVERTISING & PUBLICITY Pepsi Co. is one of the biggest and spenders in India. It is also one of  the biggest global ad spenders. It has long a list of endorsers from pop star Ricky martin to file stars Shahrukh Khan, Amitabh Bacchan etc. & Cricket stars

Sachin

Tendulkar,

V.V.S

Laxman,

Harbhajan Singh etc. Hindustan Thompsom Associates, the big gets advertising agency of  India has the account of Pepsi Co. is known for its board cast advertising but it alsospends a lot in non board cast advertising i.e. hoarding, banners, posters stickers, specialties, hangar, dealer board, glow signboards, wall painting and news paper. The expenses on this type of  advertising are made at territory or unit level

35

PEPSI COLA INTERNATIONAL SRATEGY Focus on Business growth 

Target core brands



Satisfy Market Priorities

Pepsi's Global Strategy

When the "You're in the Pepsi Generation" advertising campaign launched in 1963, it may have been the first time a   brand was marketed primarily with an association to its consumers' aspirational attitudes. A decidedly youth-oriented strategy, the campaign hoped to hook young Baby Boomers while they were still young. In 1984 Pepsi

launched

another long-running campaign, "The Choice of a New Generation," and in 1997

they debuted the "GeneratioNext" concept. The newest campaign slogan, introduced this year, is "More Happy," which

definitely

coincides with one concrete example of "more" in the packaging of Pepsi products today—more designs. Many more. At least 35 distinct design ideas will grace the packaging of Pepsi's cans and bottles this year alone, and this design strategy may continue

indefinitely. Though not "generational" in word, the campaign certainly has a youth-oriented feel with package designs, advertising, and websites that are fun and playful. PepsiCo worked closely with Peter Arnell and Arnell Group, based in New York City, to devise a comprehensive new strategy that would connect with Pepsi's core consumers. Arnell reinvented the Pepsi package as a meaningful and appealing communications tool for the

latest generation of youth that are not overwhelmed by media, music, or digital distractions.

Thinking globally 36

The Pepsi can designs roll out one at a time, but the two-liter Pepsi Bottles will have three or  four designs out at any given time.Mike Doyle, creative director at Arnell Group, explains that there was a great depth of exploration and research that was conducted before even  beginning to formulate a new Pepsi packaging strategy. PepsiCo and Arnell Group traveled extensively

to

emerging

markets

to

find

key

consumer product drivers for youth

cultures and to learn how the Pepsi brand was perceived in different countries.

They found, somewhat surprisingly, that there were very few differences around the world in how consumers felt about Pepsi's fun, Effervescent brand image. "The brand equity is

really consistent," says James Miller,

marketing

director,

Pepsi-Cola North America. They also Found many consistencies in youth cultures around

the

world

in

how Today’s youth is preoccupied with newness, discovery, and

  personalization of their possessions. Miller describes the design campaign's goal as "sustainable discovery," where the consumer audience is constantly intrigued and engaged. Designers at Arnell Group created the dozens of new and vibrant Designs with only a handful of blue and gray shades. Each design tells a Story of sorts and each can design has a unique website address on the Side of the can. The first one on the "Your Pepsi" can allows web users to Design a digital billboard that will appear in Times Square, and one coming Shortly will allow users to mix their own music online. "We redefined packaging as media in the marketplace for Pepsi," Says Doyle. "It speaks to youth in their language." Doyle believes that the Designs succeed  because they are able to capture the audience's mind Space. "The designs are reflecting back  to the culture instead of talking to The culture or imposing on it."

The Indian retail industry

37

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.

Growth According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India retail industry is the most promising emerging market for investment. In 2007, the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%. It is also expected to reach 22% by 2010. According to a report by Northbride Capita, the India retail industry is expected to grow to US$ 700 billion by 2010. By the same time, the organized sector will be 20% of the total market share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of total retail market.

Retail formats in India

Hyper marts/supermarkets: large self-servicing outlets offering products from a variety of  categories. •

Mom-and-pop stores: they are family owned business catering to small sections; they

are individually handled retail outlets and have a personal touch. •

Departmental stores: are general retail merchandisers offering quality products and

services. •

Convenience stores: are located in residential areas with slightly higher prices goods

due to the convenience offered. •

Shopping malls: the biggest form of retail in India, malls offers customers a mix of all

types of products and services including entertainment and food under a single roof. •

E-trailers: are retailers providing online buying and selling of products and services. 38

•

Discount stores: these are factory outlets that give discount on the MRP.

•

Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine.

•

Category killers: small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. This is also known as Multi Brand Outlets or MBO's.

•

Specialty stores: are retail chains dealing in specific categories and provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World is a couple of  examples.

Challenges facing Indian retail industry •

The tax structure in India favors small retail business

•

Lack of adequate infrastructure facilities

•

High cost of real estate

•

Dissimilarity in consumer groups

•

Restrictions in Foreign Direct Investment

•

Shortage of retail study options

•

Shortage of trained manpower 

•

Low retail management skill

The Future The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer  spending has also gone up and is also expected to go up further in the future. In the last four  year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%.

Modern trade: 39

ALONGSIDE the multitude flocking to empty their wallets in any shopping mall, supermarket or hypermarket, there is another queue of people lining up. Marketers of every hue and color — banks, credit card companies, cars, airlines, you name it — are trying to grab the opportunity to interact closely with their target audience. Be it co-branding activities with retailers, the selling of wall space within outlets, signages, end-of-aisle spaces, carry  bags, trolleys or even in-store TV — modern trade is acting as the medium for brands to connect directly with consumers. FMCG companies find it easier to manage sales at the point-of-purchase because of effective inventory management systems that characterize the modern format. “It is easier for a company to introduce a new product through a large retail chain having national presence. It can give the initial visibility support that can translate into sales “The other advantage is — for companies, it is easier to push premium products through modern retail as against the regular kirana store,” In a fragmented retail environment as in India, it is important for FMCG companies to focus on point-of-purchase and get consumer insights to evolve a retail approach. “Modern retail format allows that space for on-ground promotion and other initiatives, which help in consumer, connect. Further, it allows the company to collect consumer insights and data to measure its success At present, modern retail initiative contributes about 4.5 per cent to its overall sales. The company conducted a customer preference study as part of its strategy to strengthen sales in the organized retail channel and is enhancing its customer-centric capabilities such as supply chain management, in-store execution, category expertise, and joint buiness planning. Modern trade also allows more space and provides an established route to launch new  products The consumer who enters a modern retail store is more exposed to the choice of products. Thus, he can make a choice of buying a bigger pack that lasts a month in place of a smaller  one that he would pick on other days.” Modern trade accounts for about 5-10 per cent of urban sales for FMCG companies and this can go up to 25 per cent for southern markets, where the channel has a stronger presence. 40

The industry expects contribution from modern trade to double in the coming few years.

41

CHAPTER-3

42

THEORITICAL FRAMEWORK  Introduction to Soft Drinks: Soft drink market size for FY00 was around 270mn cases (6480mn bottles). The market witnessed 5- 6% growth in the early‘90s. Presently the market growth has growth rate of 78% per annum compared to 22% growth rate in the previous year. The market size for FY01 is expected to be 7000mn 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 of 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 had 6.5lakh outlets across 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 7.5Lakh by FY01.

43

Types of soft drinks 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.

The soft drink industry is so profitable An industry analysis through Porter’s Five Forces reveals that market forces are favorable for    profitability. Defining the industry both concentrates producers (CP) and bottlers are  profitable. These two parts of the Industries are extremely interdependent, sharing costs in   procurement, production, marketing and distribution. Many of their functions overlap; for  instance, CPs does some bottling, and bottlers conduct many promotional activities. The industry is already vertically integrated to some extent. They also deal with similar suppliers and buyers. Entry into the industry would involve developing operations in either or both disciplines. Beverage substitutes would threaten both CPs and their associated bottlers. Because of operational overlap and similarities in their market environment, we can include  both CPs and bottlers in our definition of the soft drink industry. In 1993, CPs earned 29%   pretax profits on their sales, while bottlers earned 9% profits on their sales, for a total industry profitability of 14% (Exhibit 1). This industry as a whole generates positive economic profits.

Rivalry: Revenues are extremely concentrated in this industry, with Coke and Pepsi, together with their associated bottlers, commanding 73% of the case market in 1994. Adding in the next tier of soft drink companies, the top six controlled 89% of the market. In fact, one could characterize the soft drink market as an oligopoly, or even a duopoly between Coke and 44

Pepsi, resulting in positive economic profits. To be sure, there was tough competition  between Coke and Pepsi for market share, and this occasionally hampered profitability. For example, price wars resulted in weak brand loyalty and eroded margins for both companies in the 1980s. The Pepsi Challenge, meanwhile, affected market share without hampering per case profitability, as Pepsi was able to compete on attributes other than price.

Substitutes: Through the early 1960s, soft drinks were synonymous with “colas” in the mind of  consumers. Over time, however, other beverages, from bottled water to teas, became more  popular, especially in the 1980s and 1990s. Coke and Pepsi responded by expanding their  offerings, through alliances (e.g. Coke and Nestea), acquisitions (e.g. Coke and Minute Maid), and internal product innovation (e.g. Pepsi creating Orange Slice), capturing the value of increasingly popular substitutes internally. Proliferation in the number of brands did threaten the profitability of bottlers through 1986, as they more frequent line set-ups, increased capital investment, and development of special management skills for more complex manufacturing operations and distribution. Bottlers were able to overcome these operational challenges through consolidation to achieve economies of scale. Overall, because of the CPs efforts in diversification, however, substitutes became less of a threat.

Power of Suppliers: The inputs for Coke and Pepsi’s products were primarily sugar and packaging. Sugar could  be purchased from many sources on the open market, and if sugar became too expensive, the firms could easily switch to corn syrup, as they did in the early 1980s. So the suppliers of  nutritive sweeteners did not have much bargaining power against Coke, Pepsi, and their   bottlers. NutraSweet, meanwhile, had recently come off patent in 1992, and the soft drink  industry gained another supplier, Holland Sweetener, which reduced Searle’s bargaining   power and lowering the price of aspartame. With an abundant supply of inexpensive aluminum in the early 1990s and several can companies competing for contracts with  bottlers, can suppliers had very little supplier power. Furthermore, Coke and Pepsi effectively further reduced the supplier of can makers by negotiating on behalf of their bottlers, thereby reducing the number of major contracts available to two. With more than two companies 45

vying for these contracts, Coke and Pepsi were able to negotiate extremely favorable agreements. In the plastic bottle business, again there were more suppliers than major  contracts, so direct negotiation by the CPs was again effective at reducing supplier power.

Power of buyers: The soft drink industry sold to consumers through five principal channels food stores, convenience and gas, fountain, vending, and mass merchandisers (primary part of “Other” in “Cola Wars…” case). Supermarkets, the principal customer for soft drink makers, were a highly fragmented industry. The stores counted on soft drinks to generate consumer traffic, so they needed Coke and Pepsi products. But due to their tremendous degree of fragmentation (the biggest chain made up 6% of food retail sales, and the largest chains controlled up to 25% of a region), these stores did not have much bargaining power. Their only power was control over premium shelf space, which could be allocated to Coke or Pepsi products. This  power did give them some control over soft drink profitability. Furthermore, consumers expected to pay less through this channel, so prices were lower, resulting in somewhat lower   profitability. National mass merchandising chains such as Wal-Mart, on the other hand, had much more bargaining power. While these stores did carry both Coke and Pepsi products, they could negotiate more effectively due to their scale and the magnitude of their contracts. For this reason, the mass merchandiser channel was relatively less profitable for soft drink  makers. The least profitable channel for soft drinks, however, was fountain sales. Profitability at these locations was so abysmal for Coke and Pepsi that they considered this channel “paid sampling.” This was because buyers at major fast food chains only needed to stock the  products of one manufacturer, so they could negotiate for optimal pricing. Coke and Pepsi found these channels important, however, as an avenue to build brand recognition and loyalty, so they invested in the fountain equipment and cups that were used to serve their   products at these outlets. As a result, while Coke and Pepsi gained only 5% margins, fast food chains made 75% gross margin on fountain drinks. Vending, meanwhile, was the most  profitable channel for the soft drink industry. Essentially there were no buyers to bargain with at these locations, where Coke and Pepsi bottlers could sell directly to consumers through machines owned by bottlers. Property owners were paid a sales commission on Coke and Pepsi products sold through machines on their property, so their incentives were properly

46

aligned with those of the soft drink makers, and prices remained high. The customer in this case was the consumer, who was generally limited on thirst quenching alternatives. The final channel to consider is convenience stores and gas stations. If Mobil or SevenEleven were to negotiate on behalf of its stations, it would be able to exert significant buyer   power in transactions with Coke and Pepsi. Apparently, though, this was not the nature of the relationship between soft drink producers and this channel, where bottlers’ profits were relatively high, at $0.40 per case, in 1993. With this high profitability, it seems likely that Coke and Pepsi bottlers negotiated directly with convenience store and gas station owners. So the only buyers with dominant power were fast food outlets. Although these outlets captured most of the soft drink profitability in their channel, they accounted for less than 20% of total soft drink sales. Barriers to Entry:

It would be nearly impossible for either a new CP or a new bottler to enter the industry. New CPs would need to overcome the tremendous marketing muscle and market presence of  Coke, Pepsi, and a few others, who had established brand names that were as much as a century old. Through their DSD practices, these companies had intimate relationships with their retail channels and would be able to defend their positions effectively through discounting or other tactics. So, although the CP industry is not very capital intensive, other   barriers would prevent entry. Entering bottling, meanwhile, would require substantial capital investment, which would deter entry. Further complicating entry into this market, existing  bottlers had exclusive territories in which to distribute their products. Regulatory approval of  intrabrand exclusive territories, via the Soft Drink Interbrand Competition Act of 1980, ratified this strategy, making it impossible for new bottlers to get started in any region where an existing bottler operated, which included every significant market in the US. In conclusion, an industry analysis by Porter’s Five Forces reveals that the soft drink industry in 1994 was favorable for positive economic profitability, as evidenced in companies’ financial outcomes.

MARKETING MANAGEMENT

47

Marketing is an activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large- American Marketing Association.

Other Definitions: 

Meeting the needs in a profitable manner.



Marketing is about understanding customers and finding ways to provide products or  services which customers demand.



Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

Marketing Concept:

Marketing concept and orientation 

It is a fundamental idea of marketing that organizations survive and prosper through meeting the needs and wants of customers. This important perspective is commonly known as the marketing concept.



The marketing concept is about matching a company's capabilities with customer 

wants. This matching process takes place in what is called the marketing environment.

Nature and Scope of Marketing:

Marketing is a total integrated system developed by a marketer to approach the target market. It involves several activities right from product design to distribution palnning.The entire system needs to be customer oriented and market driven. It should be able to differentiate marketing with selling which focuses entirely on sales volume. Marketing insists that a firm needs to develop wants satisfying products and services on the basis of  research. Marketing intermediaries ( dealers, distributors, retailers, agents etc.,) consultancy and research agencies, govt regulatory authorities, environmental groups and consumer unions  play a vital role in marketing process. Marketing Activities: 48

–

– – – – – – Risk taking

Buying Selling Transporting Storing Financing Researching

Marketing Mix:The major marketing management decisions can be classified in one of  the following 4 categories Product Price • Place • Promotion • These variables are known as the marketing mix or the 4 p’s of marketing.they are the •

variables that marketing managers can control in order to best satisfy customers in the target market. Product: The product is the physical product or service offered to the consumer. In the case

of physical products, it also refers to any service or conveniences that are part of the offering. Product decisions include aspects such as function, appearance, packaging, service, warranty etc. Price: Pricing decisions should take into account profit margins and the probable pricing

response of competitors. Pricing includes not only the lit price, bur also discounts, financing, and other positions such as leasing. Place: Place decisions are those associated with channels of distribution that serve as the

means for getting the product to the target customers. The distribution system performs transactional, logistical, and facilating functions. Promotion: Promotion decisions are those related to communicating and selling to potential

consumers. Since the costs can be large in proportion to the product price, a break even analysis should be performed when making promotion decisions. It is useful to know the value of a customer in order to determine whether additional customers are worth the cost of  acquiring them.

49

Promotion is one of the four elements of marketing mix (product, price, promotion, distribution). It is the communication link between sellers and buyers for the purpose of  influencing informing, or persuading a potential buyer's purchasing decision.[1] The following are two types of Promotion: Above the line promotion: Promotion in the media (e.g. TV, radio, newspapers,

•

Internet, Mobile Phones, and, historically, illustrated songs) in which the advertiser pays an advertising agency to place the ad •

Below the line promotion: All other promotion. Much of this is intended to be subtle enough for the consumer  to be unaware that promotion is taking place. E.g. sponsorship,   product placement, endorsements, sales promotion, merchandising, direct mail, personal selling, public relations, trade shows

The specification of five elements creates a  promotional mix or promotional plan. These elements are personal selling, advertising, sales promotion, direct marketing, and publicity.[2] A promotional mix specifies how much attention to pay to each of the five subcategories, and how much money to budget for each. A promotional plan can have a wide range of  objectives, including: sales increases, new product acceptance, creation of   brand equity,  positioning, competitive retaliations, or creation of a corporate image. Fundamentally, however there are three basic objectives of promotion. These are: 1.) To present information to consumers as well as others 2.)To increase demand 3.)To differentiate a product.[3] The term "promotion" is usually an "in" expression used internally by the marketing company, but not normally to the public or the market - phrases like "special offer" are more common. An example of a fully integrated, long-term, large-scale promotion are My Coke Rewards and Pepsi Stuff . There are seven main aspects of a promotional mix These are: •

 Advertising  - Any paid presentation and promotion of ideas, goods, or services by an

identified sponsor.   Examples: Print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, motion pictures, Web pages, banner ads, and emails.

50

•

 Personal Selling  - A process of helping and persuading one or more prospects to

  purchase a good or service or to act on any idea through the use of an oral  presentation.   Examples: Sales presentations, sales meetings, sales training and  incentive programs for intermediary salespeople, samples, and telemarketing. Can be  face-to-face or via telephone. •

 Sales promotion - Media and non-media marketing communication are employed for 

a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples: Coupons, sweepstakes, contests,  product samples, rebates, tie-ins, self-liquidating premiums, trade shows, trade-ins, and exhibitions. •

  Public relations - Paid intimate stimulation of supply for a product, service, or 

 business unit by planting significant news about it or a favorable presentation of it in the media.   Examples: Newspaper and magazine articles/reports, TVs and radio  presentations, charitable contributions, speeches, issue advertising, and seminars. •

Corporate image - The Image of an organization is a crucial point in marketing. If the

reputation of a company is bad, consumers are less willing to buy a product from this company as they would have been, if the company had a good image. •

 Direct Marketing is often listed as a the fifth part of the marketing mix

•

 Exhibitions - are try-outs. You make your product, and let potential buyers try the

 product, this way, you know directly what people see in your product. The downside, your competitor can see exactly what you are doing.

Sales promotion is one of the four aspects of   promotional mix. (The other three parts of  the promotional mix are advertising, personal selling, and publicity/ public relations.) Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include: •

•

contests  point of purchase displays

•

rebate (marketing)

•

free travel, such as free flights

51

Sales promotions can be directed at either the customer , sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions. Some sale promotions, particularly ones with unusual methods, are considered

gimmick by many.

Consumer sales promotion techniques •

Price deal: A temporary reduction in the price, such as happy hour 

•

Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards. Two famous examples are Pepsi Stuff and AAdvantage.

•

Cents-off deal: Offers a brand at a lower price. Price reduction may be a percentage marked on the package.

•

Price-pack deal: The packaging offers a consumer a certain percentage more of the  product for the same price (for example, 25 percent extra).

•

Coupons: coupons have become a standard mechanism for sales promotions.

•

Loss leader : the price of a popular product is temporarily reduced in order to stimulate other profitable sales

•

Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for  delivery.

•

On-shelf couponing: Coupons are present at the shelf where the product is available.

•

Checkout dispensers: On checkout the customer is given a coupon based on products  purchased.

•

On-line couponing: Coupons are available on line. Consumers print them out and take them to the store.

•

Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption.

•

Online interactive promotion game: Consumers play an interactive game associated with the promoted product. See an example of the Interactive Internet Ad for tomato ketchup.

•

Rebates: Consumers are offered money back if the receipt and barcode are mailed to the producer.

•

Contests/sweepstakes/games: The consumer is automatically entered into the event by  purchasing the product. 52

•

Point-of-sale displays:o

Aisle interrupter: A sign that juts into the aisle from the shelf.

o

Dangler: A sign that sways when a consumer walks by it.

o

Dump bin: A bin full of products dumped inside.

o

Glorifier: A small stage that elevates a product above other products.

o

Wobbler: A sign that jiggles.

o

Lipstick Board: A board on which messages are written in crayon.

o

o

•

 Necker: A coupon placed on the 'neck' of a bottle. YES unit: "your extra salesperson" is a pull-out fact sheet.

Kids eat free specials: Offers a discount on the total dining bill by offering 1 free kids meal with each regular meal purchased.

Trade sales promotion techniques •

Trade allowances: short term incentive offered to induce a retailer to stock up on a  product.

•

Dealer loader: An incentive given to induce a retailer to purchase and display a  product.

•

Trade contest: A contest to reward retailers that sell the most product.

•

Point-of-purchase displays: Extra sales tools given to retailers to boost sales.

•

Training programs: dealer employees are trained in selling the product.

•

Push money: also known as "spiffs". An extra commission paid to retail employees to  push products.

Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function .

Joint promotions : Joint promotions is another new trend. Two or more firms from different industries,  but with shared markets and values, join together and conduct sales promotion programmes. It helps to save promotional expenses for every partner. For example Pepsi with Nivea product and Pepsi with Kurkure .

53

MARKETING COMMUCATIONS – AN OVER VIEW: MEANING AND IMPORTANCE OF MARKETING COMMUNICATIONS: Marketing depends heavily on an effective communication flow between the company and the consumer. Manufacturing a product and making it available on the market is only a part of the company’s job. It is equally important , or perhaps more important , to make it known to the consumer that the product is available in the market. In a competitive market , where several firms are striving to win over consumers , it is not enough if just the availability is made known. It is essential to propagate the distinctive features of the product. The process does not end here either. The firm should also get feedback on how the consumers accept its products and interprets its messages. Traditionally , marketing men have been of the point of view that the ‘promotion mix’ consisting of personal selling , advertising, sales promotion and publicity, is the only instrument available for communicating with the consumer. Today, beside entities promotion mix , other entities like product, price and the channel are also viewed as components of marketing commucations. In other words the four P’s of  marketing are considered as components of teh communications mix of the firm. The firm attempts to communicate with the consumer through the quality products , attractive   packages , written messages, pictures , symbols, attractive show rooms and efficient salesmen. When the various stimuli emanating from these sources are received and interpreted by the consumer , marketing communication takes place. It also encompasses the feedback from the consumer on how the total offering of the company is received by him.

Definition of marketing commucations: Marketing commucations can be defined as the endeavour of presenting a set of messages to a target market through multiple cues and media, with the intention of creating a favourable response form the market fornthe companys total product offering  providing for market feedback for improving and modifying the offeri ng.

54

and simultaneously

This means that the firm is sender of market messages and also a receiver of market responses. In its role as as sender of messages, the firm communicates with the market not only through promotional stimuli but also through product, price and place/point of sale. The Marketing Commucation Mix: •

Product communicates

•

Price communicates

•

Place(point of sale) communicates

•

Promotion communicates: o

Advertising communicates

o

Personal selling communicates

o

Sales promotion communicates

o

Publicity communicates

Marketing communication through product cues: The product is carrier of certain messages , let us call them product messages. The product conveys certain meanings through its colour , its shape and size , its physical fetures, its  package , its label and its brand name. A product is no longer viewed as a mere non – living object whether it is a bath soap or tooth  paste, a toy or an after shave lotion, a bottle of soft drink, it is not viewed by the consumer as a mere object.

The Product Personality as a Whole communicates: The product personality is constituted of several elements such as, The physical features, the material, the size, shape, design, the finish, etc. The package, its colour, size, design and labelling. The brand name/company name. 55

Physical Features of the Product Communicates: To begin with the product communicates through its physical features, its material, its sign, colour, shape, odour, and finish all convey something to the buyer . pink colour, oval shape,  jasmine scent , silky feel, pocket size, feathery touch---they are all product feature with communicative and persuasive value.

The colours on the Package communicate: Colour has great communicative significance. There are exciting colours , there are dull colours , there soothing colours and there are inviting colours. There are colours evoking appetite and colours inviting sleep. There are colours associated with prosperity and colours associated with love and romance. There is the colour of war and aggression, and the colour  of peace. There are colours associated with festivals and colours associated with mourning. Race affects colour preferences. Climate affects them. Level of education and literacy affects them. Religion too affects them.

Package design: Just like the colour of the package, its size , shape and design too have a communicative role. A good package design is eye catching and is not a strain for the consumer who looks at it and examines it. A bad package design can harm the total product message . the product might be a quality product , but it may suffer in the market if the package design does not succeed in evoking a favourable initial response. Package design and colour have to blend rhythmically to make the communication effective. Pictures , labels and other illustrations on the package increase its communicative value.

The Brand Name communicates Brand name as a component of the total product has great communication value. No woman asks for just facial make up; she asks for Ponds , or lakme, or l’oreal. A good brand name should be able to suggest to the buyer , what type of product it is and what distinctiveness it claims. Quite often the brand names are supported by slogans , which can be easily remembered ; together, they gain great reminder value.

56

In Indian market, lifebuoy, lux,vimal, close up, pepsi, coke are examples of brand names that have succeeded remarkably in their communicative role.

The company name communicates; In addition to the brand name , firms also use the company name for marketing communication. For example , most products of the house of Tatas, carry the suffix – ‘A Tata Product’, ‘ A Pepsi co Product’. Such communication has a special utility when a new  product/brand is introduced by the company. In short , the Product sends out Multi Pronged Messages: The product seen by the consumer is the sum total of the various product messages - the colour, the shape, thenfeel, the design , the odour, etc., of the product; the colour, the size , the lettering, the labels and the pictures on the package, the brand name/company name and the slogans. For the consumer, these are all symbols and all of them mean something to him. This meaning should positive.

PLACE(MODERN RETAIL OUTLETS) AS A COMPONENT IN MARKETING COMMUNICATIONS: The Store Image: Just like a product projecting its image, the store also projects an image of its own through various factors, such as location, external looks, displays and point of sales promotion, sales men, the extent of merchandise it carries , the extra services it offers , its policy on price, its reputation in the lociality, the type of customers who are patronise it, etc. In addition to these  physical features, the sales personnel in the store also play an important role in marketing communications. Well trained and well mannered salesmen add to the store image.

Store level Merchandising : Often, it is merchandising at the store level, including display and service, that speeds up the movement of products from the store counter to the shopper’s basket. A consumer who normally goes to a retail store to buy his usual brand , may switch over to competing brand seeing the product on display. In todays highly competitive market, many companies see to it 57

that the store as whole becomes a display unit, attracting unit, attracting high consumer  traffic.

Store , a Powerful communication instrument: The retail store is a power ful instrument through which a marketer can communicate with his  prospects. The store impact is very important for image – led products and brands.

Store choice linked to store image: The choice of a store by a consumer depends to large extent on what the store communicates to him. Store choice is the result of the process where by the consumer compares the characteristics of the given store, as communicated through the store image, with his evaluative criteria of a good store. He works out four steps in his mind before making the store choice: formulating the criteria, identify the charecteristics of the given store; compare the two and decide whether the store is acceptable or not.

PROMOTIONAL ACTIVITIES IN MODERN RETAIL OUTLETS: Merchandising /Display: Proper merchandising and display at the store level promotes sales; it promotes the consumer  to switch over to the displayed brand ignoring exisiting brand loyalties; it persuades him to  buy ‘now’ rather than later; ad nit makes him buy more than originally intended quantity. All these are essentially sales promotional functions. While advertising can only make a consumer aware of the product or generate a desire for it. Merchandising/display often motivates a consumer to buy a product instantly. Point of purchase(POP) displays are one of  the mose widely used sale s promotional tools. With proliferation of brands , innovative displays have become a prerequicite for success. In the store , brands compete with each other for consumer’s attention. Merchandise presentation is a complex activity best learned on the retail floor.a number of a  basic components of merchandise presentation and their potential impact on store image and sales, including fixture type and selection and certain techniques and methods of on-shelf  merchandising.

58

PRESENTATION TECHNIQUES: Some specific presentation techniques are: 1)

Idea-Oriented Presentation: Some retailers successfully use an idea-oriented

 presentation – a method of presenting merchandise based on a specific idea of the image of  the store. Women’s fashions for instance are often displayed to present an overall image or  idea. Also, furniture is a combined in room setting to give customers an idea how it would look in their homes.Induvidual items are grouped to show customers how the items could be used and

combined.This

approach encourages the

customers

to make

multiple

complementary purchases. 2)

Style/Item Presentation:Probably the most common technique of organising stock is

 by style or item. Discount stores, grocery stores, hardware stores, and drug stores employ this method for nearlyevery category of merchandise. Also, many appearl retailers use this technique. When customers look for a particular type of merchandise, such as sweaters, they expect to find all items in the same location. Arranging items by size is a common method of organizing many types of  merchandise, from nuts and bolts to apparel. Since the customer usually knows the desire size, it’s easy to locate items organized in this manner. 3)

Color Presentation: A bold merchandise technique is by color.For instance , in

winter months women’s apparel stores may display all white cruisewear together to let customers know that store is “the place” to purchase clothing for their winter vacation. 4)

Price Lining: Organizing merchandise in price categories, or price lining.The

strategy helps customers easily find merchandise at the peice they wish to pay. 5)

Vertical Merchandising: Another common way of organising merchandise is

vertical merchandising. Here merchandise is presented vertically using walls and high gandolos. Customers shop much as they read a newspaper – from left to right , going down each column , and top to bottom. Stores can effectively organise merchandise to follow the eye’s natural movement. 6)

Tonnage Merchandising: As the name implies , tonnage merchandising is a display

technique in which large quantities of merchandise are displayed together. Customers have

59

come to equate tonnage with low price , following the retail adage “stock it high and let it fly”.Tonnage merchandising is therefore used to enhance and reinforce a store ‘s price image. 7)

Frontage Presentation: Often, it is possible to create effective displays and

efficiently store items at the same time . But it’s important to show as much of the merchandise as possible .one solution to this dilemma is the frontal presentation , a method of  displaying merchandise in ehich the retailer exposes as much of the product as possible to catchthe customer’s eye. Book manufactures, for instance, make great efforts to create eyecatching covers.

Display enhances counter pull: Display at the point of purchase can be rightly described as a clincher in the marketing process. When awareness and interest has been created in the consumer’s mind through advertising and nother promotional measures , a good display in the store can help to clinch a sale. Displays are also effective in inducing brand switching.in other words good display can lead to impulse buying and brand switching. A good displays is the surest way to attract the consumers.

It pulls the consumer to the counter . infact, displays have their 

origins in the age - old saying that “goods well displayed are half sold”. Display can be of various types- window display, wall display, counter display, aerial display, or floor display, depending on where it is fixed. Display materials to constitute a large spectrum, like posters, danglers, stickers, mobile wobblers, steamers, balloons, etc. To enhance the display effect, manufacturers use several gadgets and approaches. Illuminated designs, motion displays, sky writings, etc., add to the display effect. Some companies organize display units locate them at vantage points within the store to attract store traffic. Skillfully designed and strategically located display units can enhance the sales appeal. More and more firms are going in for innovative displays to give their brands visibility in today’s crowded shop shelves.

Pepsi Cool Zone: Pepsi, for instance, set up “cool zones” in outlets to create a visual effect. These zones house Pepsi display racks next to its visicoolers, both stocking the entire Pepsi range in a preset format- the products horizontally, at eye level, and in different sizes down the racks with 60

selling price on. Companies are also using the technique of mass display. Within the limited space available in the retail store, big stocks of a given brand are artistically arranged to gain attention. Customized racks are also being used for display effect. Now the Pepsi has launches a SPACE CLUB ’06 on this regard. Pepsi space club’06 is a trade promotion which is internal affair between the company and its trade

Promotional activities in Retail outlets: Promotional activities involves any paid non – personal communication activity, other  advertising which offers an incentive to induce a desired result from potential customers, trade intermediaries, or the sales force.

This is some times referred by the term sales

incentive. Sales campaign will add calue to the product because the incentives will generally not accompany the product but will typically be offered as a mail drops or as coupons to be cut from newspapers. For example , free samples or money-off vouchers and offers are frequently used in sales  promotion campaigns for brands or companies which need to improve demand at certain  periods. Objectives of Promotional activities: 1) Stop and Shop: customers who are just passing by, with no intention of purchasing,

would be encouraged to enter the store. The promotional activity may be such that it does not directly hint at a purchase, but just a free trial. For example , free hairstyling done using a hair gel sold by the store. 2) Shop and Buy: once the customers have been persuaded to enter the store, they have

to be convinced to purchase by presenting the merchandie in such a manner that the customer feels a desire to buy, for example , the store could offer a money –off  voucher with the soft drink bottle. 3) Buy Bigger: the promotional activity aims to persuade the customers to buy in a

greater quantity of buy other products in addition. For example, customers who buy a   bigger pack may be entitled to enter into contest or they can get a free gift or  customers who purchase merchandise more tha a specified amount would get similar   benefits. 61

4) Repeat purchase: The final objective is to encourage customers to return again and

again to the store. This is achieved by instilling loyalty among the customers through  previous purchases.

PERCEPTION Perception is the process by which we select, organize and interpret information inputs to create a meaningful picture of the world. In marketing, perceptions are important than the reality, as it is perceptions that will affect consumers, actual behavior. People can emerge with different perceptions of the same object  because of three perceptual processes: selective distortion and selective retention. 1. SELECTIVE ATTENTION:-

Attention is the allocation of processing capacity to some stimulus. Voluntary attention is something purposeful: involuntary attention is grab bed by someone or something. Selective attention means that marketers must work hard to attract consumers notice. The real challenge is to explain which stimuli people will notice. 2. SELECTIVE DISTORTION:-

Even noticed stimuli do not always come across in the way the senders intended. Selective distortion is the tendency to interpret information in a way that fits our perceptions. Consumers will often distract information to be consistent with prior brand and product  beliefs and expectations. 3. SELECTIVE RETENTION:-

Most of us don’t remember much of the information to which we re-exposed, but we do retain information that supports our attitudes and beliefs. BecauseOf selective retention, we are likely to remember good points about a product we liked and forget good points about competing products.

SUBLIMAL PERCEPTION:The selective perception mechanisms require consumers active engagement and though. A topic that has fascinated arm chair marketers for ages is sublimal perception.

62

They argue that marketers marketers embed covert, sublimal sublimal messages in ads or packaging. packaging. Consumers are not consciously aware of them yet they affect behavior. Although it’s clear that mental  processes include many subtle sub conscious affects, no evidence supports the notion that marketers. Can systematically control consumers at that level, especially in terms of changing moderately important or strongly held beliefs.

DEFINITION:“Perception is the process of selection, organizing and interpreting or attaching meaning to

events happening in environment.” “Perception is a mental process. Perception is basically a cognitive or thinking process and an individual’s activities, emotions, feelings etc.” “Perception being an intellectual and cognitive process will be subjective in nature.”

PERCEPTION AND MARKETING STRATEGIES:CONSUMER PERCEPTION:Perception is defined as the process by which an individual selects, organizes and interprets stimuli into a meaningful and coherent picture of the world. It can be described as “how we see the world around us”. Two individuals may be exposed to the same stimuli under the same apparent conditions, but how each person recognizes,selects,organizes and interprets these stimuli is a highly individual process based on each person’s own needs, values and expectations. The influence that each of these variables has on the perceptual processes and its relevance to marketing will explore. The perception –related ethical issues include blurring the distinction between advertising and the informational or entertainment content of print or electronic media, the increase in  product placements and branded advertising to combat the avoidance by consumers of T.V. commercials, using the physical environment and stimulus factors to increase consumption and portraying socially and desirable stereotypes in advertising.

63

Marketing strategy consists of directing the 4 P’s on the target market

Product, Price, Promotion, Place

 Target Market

When we talk of perception and marketing strategy, we direct the 4P”s for proper exposure, attention, interpretation at action. Product:- Its brand name, style, packing and other features should all be such that a proper 

image or meaning is perceived by the individual. Price:- Decides the value of goods. A high or a low price maybe perceived in different ways.

Some may think of a high price as a good quality product from a big company or a  prestigious product and brand. Promotion:- The selection of the media is important and it should be correlated with the

audience on is trying trying to reach. We can have different different media for rural and urban areas. areas. We may also use different media for younger people, as compared to elder people. Media for man, woman, high income or low income groups may also be different. The advertisements must capture attention and convey meaning. Retail shops shops are well well decorat decorated. ed. Interio Interiorr designin designing g and arrange arrangemen ments ts of  Distribution:- Retail  product displays. Point of purchase displays. displays. A visible shelf, lighted with proper background attracts the customer. A successful advertisement must accomplish 4 basic tasks. 1. EXPOSURE:-

It must be exposed to reach the consumer. 2. ATTENTION:-

Should be able to attract the customer and make him interested in the product. 3. INTERPRETATION:-

The meaning attached should be consistent with the projected meaning. 4. MEMORY:64

Must be stored in the memory so that retrieval is possible. Elements in the perceptual perceptual process: •

Sensation

•

Absolute threshold

•

Differential threshold

1.

Sensation:

Sensation may be desired as an immediate direct response of a physical sensory organ. 2.

Absolute th threshold:

The point at which an individual senses a difference between “something and nothing is referred to as the absolute threshold “for a particular stimulus. 3.

Differential threshold:

The monomial difference that can be noticeable between two similar stimuli is known as the differential threshold.

65

CHAPTER-4

66

1. How often you consume soft drinks? RESPONDENTS

S.NO.

OPTIONS

A

Regularly

14

26

22

B

occasionally

20

10

9

C

seasonally

16

14

19

Big Bazaar

More

Spencer’s

Data Interpretation: From the above figure by considering all the consumers as a whole we can observe that 41% of consumers consume soft drinks regularly, 33% consume seasonally and 26% consume occasionally. 2. Regularly consumed soft drinks? 67

S.NO.

OPTIONS

A B C D E F G H I  J K  L M N O P Q

Pepsi Mirinda Orange Mirinda Lemon Slice 7up Diet Pepsi Tropicona twister Mountain dew Nimbooz Coca Cola Fanta Thumps up Sprite Limca Minute maid maaza Diet coke

RESPONDENTS Big Bazaar More Spencer’s 30 21 26 32 39 29 0 0 0 24 17 22 36 19 27 2 1 3 12 13 16 0 0 0 23 18 14 5 15 22 5 3 2 39 43 37 37 29 21 20 15 13 25 21 19 31 33 29 2 0 5

68

Data Interpretation: From the above figure by considering all the consumers as a whole we can observe that 47% of consumers are consuming Pepsi products where as 53% are consuming Coke products.

3. Why do you prefer? 69

RESPONDENTS S.NO.

OPTIONS

Big Bazaar

More

Spencer’s

A

Taste

32

28

28

B

Offers

13

18

15

C

Ads & Promotions

5

4

7

Data Interpretation: From the above figure by considering all the consumers as a whole we can observe that 58% of consumers prefer soft drinks on the basis of Taste and 31% of consumers  prefer soft drinks on the basis of Soft drink Offers, while 11% of consumers are considering Ads & Promotions while consuming the soft drinks. 4. Where do you like to buy soft drinks?

S.NO. A

OPTIONS pan shops

RESPONDENTS Big Bazaar More Spencer’s 13 6 3 70

B C D

convenient stores departmental stores Modern retail stores

7 4 26

8 3 33

13 7 27

Data Interpretation: From the above figure by considering all the consumers as a whole we can observe that 57% of consumers like to buy soft drinks in Modern Retail Stores such as Big bazaar, More, Spencer’s, etc..., 18% of consumers like to buy in convenient store 14% in pan shops and 11% in departmental stores. 5. How frequently you visit the store? S.No.

Options

A B

Once in a week Twice in a week

RESPONDENTS Big Bazaar More 24 12 15 13 71

Spencer’s 17 21

C D

Every fortnight Once in a month

2 9

10 15

3 9

Data Interpretation: From the above figure by considering all the consumers as a whole we can observe that 35% of consumers visit the store once in a week and 33% of consumers visit twice in a week, 22% visits once in a month and 10% every fort night.

6. Which pack do you like to take away home?

S.NO. A B

OPTIONS 600ml 1lt.

RESPONDENTS Big Bazaar More 11 9 3 6 72

Spencer’s 12 2

C D E

1.2 lt 1.5 lt 2 lt

2 12 22

5 11 19

3 9 24

Data Interpretation: From the above figure by considering all the consumers as a whole we can observe that 44% of consumers likes to take 2 lt. bottles , 21% of consumers likes to take 1.5 lt and 600ml bottles, 7% of consumers likes to take 1.2 lt and 1lt. bottles while consuming the soft drinks. 7. Which brands of Pepsi are available at available at stores? S.NO.

OPTIONS

A B C D E

Pepsi Mirinda Orange Mirinda Lemon Slice 7up

RESPONDENTS Big Bazaar More Spencer’s 50 50 50 37 50 50 0 0 0 50 50 50 50 50 50 73

F G H I

Diet Pepsi Tropicona Twister Mountain Dew Nimbooz

0 50 0 50

0 33 0 50

0 50 0 50

Dta interpretation: It is well observed that there are no stock availability of 3 brands as shown in figure.

8. Advertisements on soft drinks within the store premises RESPONDENTS S.NO.

OPTIONS Big Bazaar

More

Spencer’s

A

Dissatisfies

5

17

3

B

Moderate

3

17

6

C

Satisfied

42

16

41

74

Data Interpretation: From the above figure by considering all the consumers as a whole we can observe that 66% of consumers are satisfied with the Advertisements on soft drinks within the store  premises, 17% of consumers are dissatisfied and moderately satisfied each while consuming the soft drinks. 9. Does the location of soft drinks in the store are eye catchable? RESPONDENTS S.NO.

OPTIONS Big Bazaar

More

Spencer’s

A

Yes

44

26

46

B

No

6

24

4

75

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 77% of consumers say that location of soft drinks in the store are eye catchable, where as 23% of consumers say no while consuming the soft drinks.

10. Which brands promotional displays are more attractive?

S.NO.

OPTIONS

A B

RESPONDENTS Big Bazaar

More

Spencer’s

Pepsi

21

9

26

Coke

29

41

24

76

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that coke promotional displays are more attractive as compared to Pepsi while consuming the soft drinks.

11. Whether the displays in Retail outlets are giving full information about Soft drink  offers?

S.NO.

OPTIONS

A B

RESPONDENTS Big Bazaar

More

Spencer’s

Yes

42

14

41

No

2

28

0

77

C

Can't say

6

8

9

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 65% of consumers says that displays in Retail outlets are giving full information about Soft drink offers and 20% of consumers say no and 15% say can’t say while consuming the soft drinks. 12. Which offers do you like to go for?

S.NO. A B C

OPTIONS Combo packs Price offs Free bees

RESPONDENTS Big Bazaar More Spencer’s 31 28 30 12 9 8 7 13 12

78

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 60% of consumers say they would like to combo offer, 19% says they like to go for price off and 21% for free bees while consuming the soft drinks.

13. Do you find any joint promotions on Pepsi products? S.NO.

OPTIONS

A B

RESPONDENTS Big Bazaar

More

Spencer’s

Yes

13

0

32

No

37

50

18

79

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 55% of consumers say they haven’t found any joint promotions, whereas 45% says they found some joint promotions while consuming the soft drinks.

14. Maintenance of Pepsi brands in the racks at the outlet?

S.NO.

OPTIONS

A B

RESPONDENTS Big Bazaar

More

Spencer’s

Poor

2

0

0

Average

10

10

7

80

C

Good

38

40

43

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 81% of consumers says that Maintenance of Pepsi brands in the racks at the outlet are good, whereas 18% says no and 1% says can’t say while consuming the soft drinks. 15. How often the soft drinks are replaced in the racks? RESPONDENTS S.NO.

OPTIONS Big Bazaar

More

Spencer’s

A

Immediately

42

48

43

B

Delayed

8

2

7

81

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 87% of consumers say that Pepsi brands in the racks are immediately replaced, whereas 12% says they are delayed and 1% says advancely replaced say while consuming the soft drinks. 16. Whether promotional products are available differently at special location in retail outlets? RESPONDENTS S.NO.

OPTIONS Big Bazaar

More

Spencer’s

A

Yes

47

29

48

B

No

3

21

2

82

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 83% of consumers says that promotional products are available differently at special location in retail outlets, whereas 17% says no while consuming the soft drinks. 17. Do you feel that given promotional offers/displays can cause the customer to switch over to another brand?

S.NO.

OPTIONS

A

RESPONDENTS Big Bazaar

More

Spencer’s

Yes

29

30

20

B

No

10

11

11

C

Can't say

11

9

10

83

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 56% of consumers feel that given promotional offers/displays can cause the customer to switch over to another brand, whereas 23% says no and 21% say they can’t say while consuming the soft drinks. 18. Sales person in the outlet interact with customers and educating them regarding  promotional offers?

S.NO.

OPTIONS

A

RESPONDENTS Big Bazaar

More

Spencer’s

Strongly agree

12

0

10

B

Agree

20

33

20

C

Disagree

18

17

19

D

Strongly disagree

0

0

1

84

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 48% of consumers agree that Sales person in the outlet interact with customers and educating them regarding promotional offers, whereas 36% disagree, 15% consumers strongly agree and 1% strongly disagree while consuming the soft drinks. 19. The promotional activities of the retailer regarding Pepsi?

S.NO.

OPTIONS

A

RESPONDENTS Big Bazaar

More

Spencer’s

Dissatisfied

11

11

29

B

Moderately satisfied

12

10

11

C

Satisfied

27

29

10

85

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 44% of consumers are satisfied with promotional activities of the retailer  regarding Pepsi, whereas 34% are dissatisfied and 22% are moderately satisfied while consuming the soft drinks. 20. Please rate your your satisfaction satisfaction level of Pepsi products products Ratings 1 2 3 4 5

Big Bazaar 0 0 34 11 5

RESPONDENTS More 1 3 39 5 2

86

Spencer’s 0 2 42 5 1

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 77% of rate Pepsi as 3, whereas 14% gives 4th , 5% gives 5 ,3% gives 1 and 1% gives 1 (5 as higher and 1 as lower) while consuming the soft drinks.

21. Any suggestions suggestions for Pepsi Pepsi to improve improve in

S.NO. A B C D

OPTIONS Taste Offers Ads & Promotions Launching New products 87

RESPONDENTS Big Bazaar More Spencer’s 26 22 31 8 11 6 11 15 9 5 2 4

Data interpretation: From the above figure by considering all the consumers as a whole we can observe that 46% of consumer wants the taste to be changed, whereas whereas 24% suggests concentrating concentrating on ads promotions, 21% suggests to make more offers, and 9% suggests to launch a new  product while consuming the soft drinks.

88

CHAPTER-5

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SUMMARY Soft drinks are playing the vital role in the market and the companies are also getting the good profits on these products. The soft drinks industry has originated in 1772. Now these drinks spread all over the world and the millions of bottles is consumed every day. Now this  business is a global one and the companies are facing high competition in this business and they are changing their  strategies according to the situations. Pearl Beverages Pvt. Ltd. Takes a great care to maintain quality control of products in their 

factory. The bottles are visually examined for impurities continuously, as the   bottles

move

out. Samples are checked every ten minutes of production time by the

chemist for its quality and hygienic condition. The chemical analysis is also flavours, gas contain and sugar percentage. The appearance, smell and taste of the production are suspended and the correcting measures are taken also as to sent right the bottling process. The main objective of the study is to find out the Effectiveness of Promotional activities of the Pepsi in Modern Trade(Retail Outlets – Big Bazaar, More,Spencers) in Visakhapatnam. Consulting

almost all the customers in these three modern retail outlets, by considering their response with a structured questionnaire, done the study. The data has been collected, interpreted and analysed with the help of the graphical representation. The analysis reveals the consumers perception on effectiveness of promotional activitieson Pepsi in Retail Outlets along with the position of competitors. Most of the consumers preferred soft drinks because

of better taste and to quench out their thrust. But now days, due to the changing food habits consumers have started adding the soft drinks in their food habits. The total sales of the soft drinks the Pepsi’s share is good but when compared with the Coke it is less. Finally it can be concluded that the industry needs lot of improvement in Promotional activities with

various promotional strategies for the customers. I wish the company got its objectives achieved.

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FINDINGS 1) Most of the consumers prefer soft drinks because of better taste and to quench out

their thirst , but now a days , be to the changing food habits consumer have started adding the soft drinks in their food habits. 2) The demand for the fruit based soft drinks is go on increasing and they occupied the top selling drinks position. 3) There is less number of Pepsi freezers in modern retail outlets compared to its competitors. 4) The market share of Pepsi is less than coke in Vizag, it has to improve to capture the market. 5) Merchandising in the retail outlets is not arranged in a proper manner. 6) Promotional activities taken by the Pepsi Company is good as per the Customer’s opinion. 7) Advertisements for every drink are given individually, because of that the consumers are not aware of the total drinks offered by the company and the expenses will more for the company.

91

SUGGESTIONS

The study was totally based on the customer’s perception on promotional activities on Pepsi in the 3 retail outlets as we know that these 3 modern retail outlets are the major stores in Visakhapatnam. 1. Pepsi product itself has no complaint in its quality from the consumer, but

it has to improve in merchandise display techniques which could attract more number of customers in the competitive market as to make more improvement in sales. 2. Pepsi is providing good offers as compared to its competitors but that should be distinct to others by size, shape and design. 3. Clear information of quantity and price should be highlighted on the display cards of retail outlets. 4. Most of the customers are willing to go with 1.5 Lt. bottles rather than 2Lts. So Pepsi must concentrate on 1.5 Lt bottles 5. Designing of PET bottle packages should be attractive, stylish and solid as this is one of the main factors of customers selection. 6.

Promotional activities on TIN’s should be increased.

7. As per the customers opinion production and availability of Mountain dew should be increased , as this is a big asset for Pepsi it should concentrate on it. 8. Pepsi should concentrate on promotional activities on Mirinda. 9. Consumption of black drink customers are more as our competitors have

two alternatives as we are lagging with only 1, so there is need of  launching a new product competing with ThumsUp.

92

CONCLUSION The project was a great experience for me in order to study the marketing aspects. It was a great opportunity for me to express what I have studied. This industry is a place where two major players are there in the world. This Pepsi Company gave me lot of opportunity and scope to understand the soft drink industry and its marketing structure and promotional strategies. Lot of valuable information regarding the promotional activities on Pepsi, which helped me clearly to understand the customer’s perception in the market, has been collected from the survey

in the Modern trade . I understood

how

difficult

to

do

the

marketing in the present scenario. The suggestions made to the company were really applicable for the growth and benefit for the company in order to increase its market share and to become the market leader in the soft drink industry, because a large number of  competitors craving for the same market. Thus,

finally

it

can

be

said

that

the

industry needs a lot of management activities to done along with various promotional strategies for the customers. I wish the company to achieve its objectives achieved soon.

93