Channel of Distribution of Pepsi Products
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A Project Report On
“A Brief study on Effectiveness of Channel of Distribution of Pepsi Products”
Title Chapter 1. Introduction to the Study ? Objective of the Study ? Importance and relevance of the Study ? Scope of the Study ? Methodology used in the study ? Limitation of the study Chapter 2. Introduction of the Soft Drinks in India ? History of Soft Drinks in India ? History of Pepsi ? Production Process ? Product Manufactured and Main Consumer Chapter 3. Organizational Structure ? History and Organizational Structure of Lumbini Beverages Pvt. Ltd. Hajipur Chapter 4. Chapter 5. Chapter 6. Chapter 7. A Theoretical frame work of Channel of distribution Channel of distribution of Lumbini Beverages Pvt. Ltd. Performance of Patna Conclusion and Suggestions
INTRODUCTION TO THE STUDY
? Objective Of The Study ? Importance And Relevance Of The Study ? Scope Of The Study ? Methodology Used In The Study ? Limitation Of The Study
INTRODUCTION TO THE STUDY
When Mr. Rajeev Gandhi came into the power as Prime Minister of India, then it was expected the liberalization of Indian economy. This was the expectation of his modern concept regarding every walk of life. When Pepsi has appealed on our collective consciousness of few years ago to be more exact in April 1989. When it set up operation for beverages snack foods and export business. The establishment of Multinational Company Pepsi was supposing to prediction in present Indian business scenario. Despite love for ones own motherhood and traditional concept of Indian people it was assumed that it is very hard to make and create taste and preference about soft drinks but despite of having so many confusion, no one was able to assume such a wide acceptance and it was PepsiCo. Who could be able to penetrate in Indian soil and it was the Pepsi that has got not only a place in Indian hospitality, but also taken place of traditional sharbat of lemon and sugar. And needless to say “Generation next has become the slogan of the day.” The first managing director was Mr. Ramesh Vanagal but present is Mr. P.M. Sinha in India. During these years beverages begin an exclusively franchise operating beverages now has five company owned bottling operation (COBO) the business expects to grow three times faster than the industry growth rate 1995 and its vision is to become INDIA’S BEST CONSUMER PRODUCT COMPANY in all aspect. The snacks business has seen some major success and going for leadership too. Pepsi is a leader in the snacks food business. The division plans to introduction wide range of snakes in to Indian market in the next three years. The restaurant business has also come Kentucky Fried Chicken (KFC) has opened its first outlet at Bangalore Pizza but it also expected to open restaurants shortly city wise. Whole of the operations of Pepsi in India has made a rapid change in Indian life style, which is resulting in fast food life. Pepsi is a world leader in restaurant & soft drink whether it is in London or in Ludhiyana, America or Ahamedabad, Berlin or Bombay, Paris or Patna, Manchester or Madras. 4
Pepsi company has pumped in Rs. 300 crores ($ 95 million) as fresh capital and has recently received permission from the foreign investment board in Rs. 300 crores ($95 million) more. The investment phase will continue and could add unto Rs. 700 crores over the next three years. The figure is not cast in stone if volume exceeds according to expectation. They will increase capital expenditure. Apart from these things there is an expression which can not verify easily that is Pepsi has made qualitative gains. The foremost is its image from being perennially seen as a loosing company it’s now got the image of being a winner. This major turn around is not small achievement considering that since it was established in 1989 taking the hard ship route prior to liberalization and weighed down by export commitments. Pepsi has won more battles than it has lost. In April 1993 Voltas and Punjab Argo’s stakes were bought over converting Pepsi foods from a three way joint venture to be a fully owned subsidiary week bottlers who did not have the financial capacities were given massive support in the form in interest free loans to upgrade their operating capacity . But the strategy which has proved to be winner was the position, Pepsi decided to take in Company Owned Bottling Operation (COBO). For this another subsidiary PepsiCo. India holding was set up as an investment vehicle, capitalized 95 million dollar. Within a year 1994 Pepsi has bought over 5 bottlers including dukes in Mumbai, which was running in Maharastra which has been bought over from Voltas high speed imported lines with a speed of 600 bottles per minute was installed in Delhi. Pepsi has a strong franchisee in the Jaipuria’s of Pearl drinks. Pepsi is setting up a new plant at Jaipur.
OBJECTIVE OF THE STUDY
Management is a course which teaches the student to get the work done properly from different available sources viz. man, machine, material, money etc. So there can be a satisfaction from the organization side and the workers side who play a significant role in achieving success. So far the fulfillment or the management course, it gives emphasis to project work and students learn how to plan in practical terms rather in terms of theory only. Student tends to develop analytical and problem solving skill. We necessary become motivated and competitive, in fact all the learning that goes on for the two year term become so much the part of our thinking that we developed a well all rounded personality. The following are the objectives and purpose of the studyi) For the fulfillment as of Master by of the business Shekhawati administration institute of (MBA)programme ii) realized
management sikar. (AICTE approved) To care and contact with the working of an organization and to see the different types of marketing activities. The main emphasis is on the distribution Channel aspect of the organization. iii) Whatever the subject taught in the class room of MBA course that is completely theoretical. So during the training period we compare how the marketing research (sales) activities (practical) of our organization with the theories. iv) Find the depth and width of distribution channel adopted by Lumbini Beverages Pvt. Ltd. Hajipur and compare them with those followed by competitors. v) To ascertain the consumer brand perception of cold drinks with respect to price, product, quantity and advertising.
IMPORTANCE AND RELEVANCE OF THE STUDY
Cold drinks were started with the idea of quenching the thirst of the persons traveling. It was also felt that reliable good water was not available everywhere. So people would really on their packed bottle and with this idea its makers made these drinks available mostly, at those places where water was not available i.e. on highways and long distance trains. But slowly and slowly with its beautiful taste these become very popular and now they are available not only in the market and street corners, but also people have started keeping it in their house. The credit of popularizing the soft drink goes to Coca Cola. This was the drink which is liked by all ladies, gents and children. Now day’s soft drinks are quenching thirst looks more often; they are taken due to habits. Gold Sport is considered as the first branded soft drinks, established 53 years ago before all empowering Coca Cola faced competitions and its euphoric image built up in the western countries helped it get ready clientele and clamor. Parle Export Pvt. Ltd. is regarded as the first Indian Company introducing Limca a leman drink complementary to it this has also introduced Cola Pepone which was withdrawn in the face of tough competition from Coca Cola. When Coca Cola bid a Farwell in 1977, Indian market was open for various new forward publishing different brands in the markets. Parle people introduced their Cola, Thums Up with a mighty saying “Happy days are here again” as if happy days went away with Coca Cola. Pure drinks of Delhi also without lasing much introduced pure drinks were producing and marketing Coca Cola earlier Campa Cola with Campa orange and Campa lemon. Modern Bakeries entered the market with Double Cola Seven, Mohan Makings with Merry & Plkup and McDowell with Thrill, Rush and Sprint. This is Indian market where there was no competition and high voltage advertising was on each one was trying their best to become number one company with ‘A’ class product in the field of Soft Drink business. Now after a long gap government of India had given permission 7
to Coca Cola, which joined with Parle to do business in India. They are trying their best to regain prestige which it had before. The much rival of Parle is Pepsi an American concern. It started business on the Indian soil just a few years ago. Today, it has occupied 62% shares of Soft Drinks market in India. Now Pepsi is going all out to prove that they are the best. But now due to some factors competition among them has become stiffen. So in this way the important activities have increased.
SCOPE OF THE STUDY
The main scope of this study is to ascertain the effectiveness of channel of distribution and various methods to increase the sales volume of the concern. The methods include regular information to the buyers creating a brand position in the market and taking measures to make the brand remain in its position. One of the important aspects of this study is also to increase the market segment for the product.
METHODOLOGY USED IN THE STUDY
“Marketing Research is the systematic designing, collection, analysis, and reporting of data and finding relevant to a specific marketing situation facing the company.” The present study of Soft drinks markets in all over Patna is based on survey methods. In survey methods, there are two types of survey. One is Census Method and another is Sampling Method. In this sample survey methods I have taken only a small part of the whole and data collected from the small part are made applicable to the whole i.e. I have taken Patna and some adjacent area of Patna like Danapur, Patna City etc. Within the time limit, I tried my best to select the sample representative of the whole group. During my training, I maintained different chart for different routes during my dealer survey. I have collected data from the distributor of Patna. Data Sources Primary data collection involved distributors, retailers and consumers Research Approaches Research Instrument Sampling Plan Sampling Unit Sampling size Sampling procedure Contact Method : : 02 : : Distributors 350 Purposive Selection Personal Interview Retailers 1100 Consumers : : Survey Interview Schedule
In interview schedule I used multiple choice question and ranking system questions.
LIMITATION OF THE STUDY
As I was asked to carry on my vocational training I found the following limitations during my training period. So I could not collect all information regarding my topic. i) ii) Shortage of time factor was one of the biggest constraints. Most stress was given on the primary data as it was difficult to collect secondary data from the organization and distribution since it is difficult to ascertain the authenticity of their statements. iii) All the observation and recommendation will be made on the feed back obtained from survey.
INTRODUCTION TO THE SOFT DRINK IN INDIA
? History Of The Soft Drink In India ? History Of Pepsi ? Production Process ? Product Manufacturing And Main Consumers
HISTORY OF THE SOFT DRINK IN INDIA
Christopher Columbus as a traveler of world found a lot of new things which was not in the eye of the world community which is now in our history but now if any one does travel to whole part of world to get one thing in some form that is Pepsi. Travel to any corner of the globe you are sure to spot a label splashed in blazing blue, red and white becoming you to some “Sugared water”. This dark coloured drink WillyMilly has today become nothing but spot of an international anthem with young and old, rich and poor wants for a sip and saying “Yeh Dil Mange More.” Gold Spot is considered as the first branded soft drink established 53 years ago before all empowering Coca Cola entered the country to dominate the scene. It faced no competition and its euphoric imaged built up in the western countries helped it to get ready clientele and glamour. Parle Export Pvt. Ltd. is regarded as the first Indian company introducing Limca, a lemon drink complimentary to there well established Gold Spot in 1970 which got moderate success. However, before this, he had also introduced Cola Pepino which was withdrawn in face of tough competition from Coca Cola. When Coca Cola bid farewell in 1977, Indian market was open for various cold drinks several companies came forward publishing the different brands in the market. Parle people introduced their Cola Thumps Up with a mighty bang saying “Happy days are here again” as if happy days went away with Coca Cola.. Pure drinks of Delhi also without losing much time introduced pure drinks were producing and marketing Coca Cola earlier Campa Cola along with Campa orange and Campa lemon. Modern Bakeries entered in the market with the Double Seven. Moharn meakings with Merry Pikup and McDowell with Thrill, Rush and Sprint in Indian market where there was no competition previously. A cut throat competition and heavy advertising was on. Each one was trying their best to become the number one company with ‘A’ class product in the field of soft drink business in India. Now after a long gape the govt. of India has given permission to the Coca Cola to start their business in India. Coca Cola has joined hands with Parle to the business on the Indian soil. They are trying best to regain its prestige which it has before. 13
The much rival of Parle is Pepsi an American concern. It started business the occupied nearly 50% share of soft drinks market in India. Now, Pepsi is going all out to prove that they are the best.
HISTORY OF PEPSI
PepsiCo is a USA based company having its head quarters at New York with the net worth of $30-40 million. The average sales of the company are approx 90 million bottles per month. Pepsi made it first international move in Russia in 1959. During the Khrushchev era, within 32 years Pepsi emerged as the biggest competitor for Coca Cola. Pepsi is available in 155 countries. In any soft drink, on the globe Pepsi food is one of the largest soft drink companies in the world with its headquarters in New York. It was invented by Pharmacist Culab D. Baradham in 1898 to cure the disease “Dyspepsia”. It is from this word that its name was related to Pepsi. Soon it entered the American market as soft drink, which at that time mostly dominated by Coca Cola, but soon Pepsi able to dominate the Cola market, and there after it never looked back. Pepsi and Coca Cola are engaged in ferocious cola war that has taken the whole world by storm. Pepsi entered the Indian soft drink in Kanpur in 1988 and began its production in May 1990 and soon it was giving the local contenders run for their money in soft drink market. It comes out with dazzling marketing innovation that rocked the cola market, like selling the product through function Pepsi outlets. Its advertisement agency was “Hindustan Thomson Association” (HTA). Its advertisement budget for 1995-1996 was valued at Rs. 24 crores which is likely to be increased manifold in coming years. Pepsi food is one of the largest and best foreign investments in India. Till today it has invested Rs. 500 crores in India to develop the local market. Pepsi has distributed exclusive franchises in India to bottle its total product. There are 28 bottling plant of Pepsi in India. Some are directly controlled by Pepsi and rest is under various franchisees. Pepsi stands 51st position among the fortune 500 companies of the world. Its total capital is approx $3000 crores and total sales annually is worth $37 crores. Its total profit in the year 1996-97 was worth Rs. 458 crores approx. The total number of employees engaged in the business is 45.25 lakhs globally.
In April 1997 the Pepsi cola international decided that Steel City Beverage will cover south Bihar (now Muzaffarpur) only. In this accordance Pepsi cola international decided to open another bottling plant at Hajipur named Lumbini Beverages Pvt. Ltd. Hajipur which will distribute Pepsi product in whole Bihar. Ananda Marketing as a marketing division of Lumbini Beverages Pvt. Ltd. Hajipur started functioning in April 1997; Managing Director of Lumbini Beverages Pvt. Ltd. Hajipur is Mr. Charan Khelani. The director of this organization Mr. Ravi Khelani and Mr. Manoj Khelani
The process of manufacture of Aerated water (soft drink) like Pepsi brand product is divided into mainly five parts such as 1. Water Treatment 2. Syrup Making 3. Bottle Washing 4. Filling 5. Testing of Product
(1) Water Treatment: - Water treatment is very essential in soft drinks plants as
the nature and quality of water varies from place to place. To set uniform and standard water the process of treatment is carried on. The water taken out from bore well by the help of motor pump and pipe line are collected in storage tank where is pre chlorinated by chlorinators and by the help of pipe lines comes to treatment tank called coagulation tank where to this water solutions of different strength of bleaching powder, ferrous sulphate, hydrated lime are added through dosing pump to reduce alkalinity, hardness, kill the bacteria .The chemical are mixed by mechanical stripper and then the suspend mattress settle down as sludge and clear water passes to retention tank. From this tank, the water passes through sand filter containing fine sand and pebbles and carbon filter containing granular carbon and finely through water polisher, micron filter, and UV lamp to ensure clear and sanitary water for use. Further water used in bottle washer and boiler need softening .for this purpose ,the water from storage tank ,after passing through two filter beds contain fine sand and granular carbon respectively comes to pass through bad resin were it is softened .this soft water is essential to use in and bottle washer to reduce scale formation inside the machines.
(2) Syrup Making:- For syrup making of particular brand, calculate quantity of
sugar water activated carbon and high flow super cell known as filter aid taken in to sugar to enter steam and also filled by a motor with agitator. Sugar syrup called raw-syrup is prepared by dissolving the sugar with continuous stirring and heating by steam supplied by fired boiler. This hot syrup by the help of pump is filtered through a filter press attached with a series of quality filter paper to separate out carbon particles. Clear hot syrup by the help of SS pipe lines passes through water P.H.E. for cooling and the then another P.H.E. circulated by glycol for further cooling. The chilled syrup comes to a mixing tank to use calculating of sugar quantity by Brix Hydrometer, concentrate added and mix thoroughly by a mechanical Stirrer fitted to the tank. This syrup is now finished syrup ready for use. The concentrate mainly, the liquid part are kept in a cold store, the temperature of finished syrup is also maintained by air-conditioner. All the containers used for syrup making are cleaned and sanitized by Soda-Bi-Crab, strong chlorine solution and hot caustic soda solution.
(3) Bottle Washing: Bottle washing is an important part in soft drink plant. The
empty durable and returnable bottle used are returned from market in plastic carats are fed to a bottle washing machine (washer). The machine has double end system with circular chain to carry the bottles. Caustic soda Tri-Sodium Phosphate, Sodium Glausonate is adding to the caustic by the supplied. The Caustic tank filled in with water heated by steam supplied by the boiler. The empty bottles enter to the hot Caustic tank in one end and after being cleaned by hot Caustic solution and finally washed with water through spray jets fitted are discharged in other end. The washed bottle proper inspections are SU 319 and SU 853 used for conveyor cleaned and smooth running of chain carrying bottles. SU 260 and SU 773 is used for bottle cleaning, shining, and mold removing.
(4) Filling: - Finished syrup and treated water lime are commixed to a dosing pump
which mixes syrup and water with ratio of 1:5 and the syrup mixed with water enters to carbonator tank to mix CO2 gas, which is preserved in cylinder for use. The cylinders are connected through CO2 manifold to tank to use requisite quantity of gas. To control CO2 pressure and temperature of liquid; we used recording control (Taylor). The syrup passed through a P.H.E. which is called itself by circulation of chilled glycol supplied chilling F-22 gas used. The syrup being chilled easily mixed with CO2 gas and enters to filter for bottling. The filter is connected with filling valves and lift cylinders. The lift cylinder functions by pressure of air supplied by an air composer. The syrup is known as beverage in this stage is filled in the cleaned bottles which are durable in nature and returnable by buyer filling machine (filter) by a counter pressure of carbon dioxide gas. After beverage filled in bottle it goes to the crowner where with the help of crown crocks the bottles are sealed (crowned) to project the carbonation, flavor, outside contamination and spoilage. The finished products are coded by a coding machine and inspected properly by inspection light while passing through the conveyor where finished product are accumulated enters to carat washer machine and it is washed moves through the conveyor where finished product are accumulated. Then the products are kept in plastic carats which are durable in nature and returnable by buyer, put on palates and sent to shipping for shipment. The entire container in contact with syrup are properly cleaned and sanitized by Soda-BiCarbonate, hot water, caustic soda solution and strong chlorine does.
(5) Testing of product:- Finally the finished syrup during bottle is tested in
laboratory to meet the parameters and also to get a standard and quality products to maintain the standard and information and uniformity in products the sugar contents and carbonation in the bottle are checked in regular intervals by Brixhydrometers, Refrectometer and pressure gauge. The dead weight tested is used to calculate pressure gauge to know the correct pressure. TA & Ph are tested by digital Ph meter. Electronic digital balanced is used to weight chemical to conduct 19
test in lab. The purity of CO2 is checked by CO2 purity tester. The chlorine comparators. The microbiology test of the product and water used in syrup making and production are also done to ensure that the product is free from any bacteriological contamination. To conduct the micro test hot sterilizer incubator, autoclave, pads filter membranes, media are produced and used. The Diesel generator is operated in case of electricity failure for smooth operation of the plant. To drawn electricity for the State Electricity Board the transformer is used. The steps involved in the production process are:? First the fork lift supplies the empty bottles which are collected from the distributions. ? Then depalletising is done i.e. separating cases filled or empty bottles from the wooden planks. ? Uncasing is done by separating empty bottles from the cases/carats. ? Empty bottles are then fed into the bottle washer where stream with some chemical is used for washing. ? Washed bottles are then send to the filler where premix (Composed of syrup, treated water bulk CO2) is filled in it. ? The whole concentrated is chilled with glycol before filling and then crowning is done. ? The filled bottles are passed through inkjet coder for printing price and date. ? Then again the filled bottles are send for final light inspection and from there they are collected on a table. ? Lastly the filled bottles are arranged in the crates (casing) and then palletizing is done for storing it in the warehouse. PREPARATION OF SYRUP Treated water + Sugar = Flavour
The product manufactured by “Lumbini Beverages Pvt. Ltd. are very limited ranges as it is not independent to diversity its products. It is a unit of Pepsi food Pvt. Ltd. which supplies concentrates for drinks. They are:Products Pepsi Mirinda Mirinda Mirinda 7 Up Mountain Dew Slice Lehar soda Pet Pet Can Aquafina (Mineral Water) Quantity 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml, 200ml 300 ml 300 ml 1.5 lt. 2 lt. 330 ml 1 lt. Colour Brunt sugar Sun-set Tetrazine Tetrazine Colorless Colorless Sunset Tetrazine Brunt sugar Brunt sugar Brunt sugar Colorless Flavour Cola Orange Lime Mango Lemon Lemon Mango Lemon Cola Cola Cola White
The main consumers of these products naturally are youth. Besides the direct consumer it is also used for the some purpose of providing it to the mass by hoteliers, restaurant owners and various other soft drink peddlers. These products are the choice of the new generation. Thus it can be said that it is a product of mass consumption.
? History and Organizational Structure of Lumbini Beverages Pvt. Ltd. Hajipur
HISTORY AND ORGANIZATIONAL STRUCTURE OF LUMBINI BEVERAGES PVT. LTD. HAJIPUR
History of Lumbini Beverages Pvt. Ltd. Steel City beverages Pvt. Ltd. is situated at Adityapur Kandra Road in Jamshedpur. “Rushabh Marketing Pvt. Ltd.” is the marketing division of Steel City beverages. Steel City beverages Pvt. Ltd. is a mother unit and its whole marketing activities are done through Rushabh Marketing Pvt. Ltd. Steel City beverages is one of the Pepsi foods Bottling plants in the country and one of the three in Eastern India. The other two Calcutta and Guwahati. But from 01-04-1997 “Pepsi Foods Ltd. India” determines to open another bottling plant which is situated at Hajipur namely “Lumbini Beverages Pvt. Ltd.” It is only for North Bihar. Steel City beverages Pvt. Ltd. was established by Late Mr. Dharam Chand Kamani in the month of June 1967. The machineries of its main plant were imported in 1968 and production started in March 1969. Before the establishment of Steel City beverages Pvt. Ltd. Coca Cola was not much popular among people of Bihar state as pure soft drink. Because at that time the bottles of Coca Cola was supplied by the outsiders who were unable to make Coca Cola popular in Bihar. So after considering the needs and desires of people Mr. Dharma Chand Kamani brought in Bihar. With this effort Coca Cola become popular among the people of Bihar. But in 1977 due to the sudden change I the policies of the Government the import license for the concentrate of Coca Cola was stopped. So Steel City beverages Pvt. Ltd. had to walk over to Indian Concentrate Companies. They were modem food industries supplied concentrate of double seven and non ice cream soda. In 1983 the company introduced a cola drink “THRILL” of Mc-Dowell & Co. Ltd. in the place of Double seven and triangular and in the very next year two soft drink “RUSH” an orange flavoured and “SPRINT” as lemon flavoured of Mc-Dowell & Co. Ltd were introduced.
Before some months “Ananda Marketing Pvt. Ltd. was the marketing division of Lumbini Beverages Pvt. Ltd. But at this time, Lumbini Beverages Pvt. Ltd. is doing marketing with its own name. Thus it can be seen that Lumbini Beverages Pvt. Ltd. has made tremendous move towards the introduction and development of soft drinks industries on the whole, and North Bihar in particular. It has made production of perfect hygiene and standard Soft Drink as main objective.
ORGANIZATIONAL STRUCTURE OF LUMBINI BEVERAGES PVT. LTD.
An ideal organizational structure facilities management and the operation of the enterprise and it help the organization in achieving its goal. In a simple term in various parts or component are interrelated or interconnected and this way it is the established pattern or relationship among various function of the organization in the established manner. The managing director holds the top position. At present, the managing director of Lumbini Beverages Pvt. Ltd. is Mr. Charan Khilani. But the overall policies regarding management decisions and all executives function or performance look after by the day to day decision and general administration as well as management. The MD has given the power of attorney and authority to director Mr. Ravi Khilani. Mr. Ravi Khilani who is well advised by the MD. The director Mr. Ravi Khilani looks after all functional departments that sales production, account, personnel and purchase. Though the manager all the functional departments has specially designated as head of personnel department. Every department has to report directly to the managing director and is responsible to his only for working in spite of this all departments is under the control of the director Mr. Ravi Khilani. Because he is the Chief Executive of the company cited earlier. The overall organizational structure can be shown as:
OVERALL ORGANIZATIONAL STRUCTURE OF LUMBINI BEVERAGES PVT. LTD., HAJIPUR BOARD OF DIRECTOR MANAGING DIRECTOR CEO
FINANCE MANAGER A/C ASSISTANT A/C CLERK ASSISTANT
PLANT MANAGER SHIFT ENGINEER WORKER / OPERATOR
P.A.M. SHIPPING COORDINATOR
H.R. MANAGER H.R. EXECUTIVE H.R. CLERK ASSIS.
SENIOR TECHNICIAN TECHNICIAN
The marketing manager is in charge of all marketing activities i.e. sales promotion, publicity and advertisement, marketing study and shipping. But the main function of the marketing is to exercise the control over the channel of distribution. The marketing manager is assisted by sales executives, city sales executives and rural sales executives and sales executive of shipping department as follows:-
HEAD OF SALES
CITY SALES EXECUTIVES
A THEORETICAL FRAME WORK OF CHANNEL OF DISTRIBUTION
A THEORETICAL FRAME WORK OF CHANNEL OF DISTRIBUTION
“Marketing channels are sets of interdependent organization involved in the process of making a product or service available for use or consumption.” The main objective of the marketing process is to distribute the products to the actual users. This function involves a number of sub-functions to be performed by a producer or manufacturer. These two functions are most important first, the creation of demand is made through the process of advertising and sales promotion activities. On the other hand the distribution through the channels of distribution. The decision relating to the channel of distribution is a very important decision from the firm point of view because the selected channels affect considerable other marketing decision. Such decisions are of long term nature and exercise their impact on the cost structure of the firm also. By channel distribution mean the intermediaries or the process through which the goods products are transferred from the producer to the ultimate users. Now a day any of the producers possibly do not sell their goods directly to the final users. There are a lot of intermediaries between producers and consumer, bearing a variety of name performing various kinds of function. Some intermediaries like wholesalers and retailers buy and resale taking the bill. They are known as merchant middle men and other are brokers, representative sales agent who seeks or search for customers and negotiate on the behalf of the producer but do not take of goods. These are called as middlemen. The manufacturer and its distributive outlets share common objective to sell the manufactured products at a profit. No doubt its objective differs with the marketing circumstance. Even though many variation of specific objective fits into some categories. These are as follows:? To built distribution network loyalty ? To stimulate distribution ? To develop managerial efficiency in distribution organization ? To identify the source of supply for the product line at the final buyers level
The channel of distribution is a structure which organized and presents a choice among alternative channels of distribution of the different marketing situations faced by retailers, whole sellers and producers with in the structure. It may be considered as a series of function which must be performed in order to make producers efficiency. To bearing maximum profits of all institutions concerned a channel of distribution should be treated as a unit of total system of action. The activities of the manufacturer need to be coordinated with these middlemen used in the distribution of given product. The important of middlemen in channel of distributional can be over emphasized. It is that who1. Collects concentrates the output of various producers, 2. Subdivides these into lot desired by the customers gathers various items together in the assortment wanted and 3. Disperses the assortment to consumer industrial buyers. The role of middlemen that of specialist in concentration equalization and dispersion besides he side in the creation of the time from and procession utilities.
DECISION MAKING FOR CHANNEL OF DISTRIBUTION
The marketing executive must undertake to following steps in order to establish the channel of distribution for a company. 1. He/She must understand the retail and wholesales market and type of middlemen available in both. 2. He/She must understand the various conflicts which continually exist between and within the channel. 3. He/She must select the general channel to be used keeping in mind the goals of the company marketing programme and the job to be done by distribution system. 4. He/She must take decision regarding be intensity of the distribution (i.e. the number of middlemen) to be used each level and each market. 5. He/She must select the specific firms which will handle his product and then manage the day to day working relationship with them. 6. He/She must determine the methods and the procedure in firms (i.e. use of the transportation and warehouse facilities and services in firms making programme) in the physical distribution of the product. Types of Marketing Channels 1. Direct marketing channel : A marketing channel that has no intermediaries level 2. Indirect marketing channel : Channels containing one or more intermediaries
Customer Marketing Channels
Channel 1. Channel 2. Channel 3. Channel 4. Manufacturer………………………………………………..…Consumer Manufacturer……………Retailer……………………………Consumer Manufacturer……...Wholesaler………….Retailer…………Consumer Manufacture…….Wholesaler……Jobber……Retailer…….Consumer 32
Distribution channel do not stand still. New wholesaling and retailing institution emerge and new channel system evolves. There are four types of marketing channels. 1. Conventional Distribution Channel A Channel consist one or more independent wholesaler and retailers. Each is a separate business seeking to maximize its own profits even if this goal reduces profit for the system as a whole. No. of channel members has complete or substantial control over the other members. 2. Vertical Marketing Channel This is most recent marketing channel. A distribution channel system as producers, wholesaler and retailers act as unified systems. One channel member, the channel captain owns the others or franchises them or has so much power that they all cooperate. The channel captain can be the producer, the wholesaler or the retailer. 3. Horizontal Marketing Channel A distribution channel system in which two or more unrelated companies put together resources or programmes to exploit an emerging marketing opportunity. 4. Multi Channel Marketing In the past, many companies sold to single market through a single channel. Multi channel marketing occurs when a single firm uses two or more marketing channels to reach one or more customer segments.
Includes all the activities involved in selling goods or services directly to final consumers for personal non-business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. Retailers are the last but not the least in the marketing channel through whom the eventual transfer of ownership of goods take place. The use of retailer boils down to their superior efficiency in making goods widely available and accessible to target markets. In most of the cases the retailers performs the important functions mentioned as under. 1. Information 2. Promotion 3. Negotiation 4. Ordering 5. Financing 6. Risk Taking 7. Physical Possession 8. Payment 9. Title The major types of retailer are as following:1. Specialty Store: - They sell narrow product line with deep assortment. 2. Departmental stores: - They sell several product line with each line operated as separate department managed by specialist buyers or merchandisers. 3. Super market: - They are relatively large, low cost, low margin, high volume self service operation designed to serve total needs for food, laundry and household maintenance product. 4. Convenience Store: - These are relatively small store located near residential areas, open long hours, seven days a week and carrying an united lines of high turn over convenience products at slightly higher prices.
5. Discount Store: - These sell standard merchandise at lower prices with lower margins and higher volumes. 6. Off price Retailers: - These sell the merchandise which are bought at less than regular wholesale prices and sold as less than retail. These may be of three types mentioned as under: a) Factory orders b) Independent off price retailers c) Warehouse clubs ( Wholesale clubs )
CHANNEL OF DISTRIBUTION OF LUMBINI BEVERAGES PVT. LTD.
Channel of Distribution of Lumbini Beverages Pvt. Ltd. Hajipur, in Patna
To make its products available at the right places at the right time in the market, the sales department of the company pays major attention on controlling the channels of distribution. Single type of markets channel is maintained by the company right from its pioneering stage. The nature of the channel is as follows:Company Distributors Dealers Different Outlet Owners Consumers At first the soft drinks supplied to the distributors directly. Retailers or owners of any outlet can not take the delivery from company. They have to take the products from their respective or nearest distributor. There are about 50 distributors and innumerable number of retail outlets operating with the company in its entire market areas which contains total Bihar. In all the important places of entire territory this company has its distributors. These distributors selected on the basis of assurance given by them regarding the minimum sales which they have to maintain annually. The selection is also done on the basis of the financial position and reputation of distributor in the market. As for example in appointing a distributor first engaged in soft drink business second priority is given to those people who are in cigarette selling business. Depending upon the market, each distributor in the initial stage has to deposit some security money. 37
The retailers are selected by the distributor fixed criteria for the selection or appointment or retailers from the side of the distributor. Any one like Panwala, Cigarettewala or any other shopkeeper can have the stall for the sale of soft drinks and they are called retailers or outlet owners. They have to give assurance to the concerning distributor for better sale and at the time of taking delivery they have to deposit the security i.e. the charges if the empty bottles with specified retailers purchasing price. The charges if the empty bottles with specified retailers purchasing price. The distributor at first has to seek the permission of sales department for the number of cases of soft drinks required by them. After getting the proper authority from sales department paying the requisite amount either cash or demand draft.
Every company has to store its finished goods until they sold. A strong facility is necessary because production and consumption cycles rarely match. Warehousing is not a simply storing activity but a package of services that enables the smooth running of the industry. The stores must be in constant touch with the use department in order to provide uninterrupted services to the manufacture and its decision since working capital is locked up in the warehousing stores in equal to money. The stores functions can be organized in the following manner:a) To receive raw material components equipments etc. b) To meet the demand of use department by issuing the order c) Accounting the transaction properly. d) Minimizing obsolescence surplus and scrap by right identification and using correct preservation method. The company supply finished products frequently to different distributors as per the demand. Every distributor keeps a minimum stock of different products of the product line so that the uninterrupted supply could not affect. In the industrial sector service of optimization where boils down to any exercise of optimization where limited available resources are to be distributed equitably. The problem arises from the material that are in stock the form of capital cost, storage loss, pilferage obsolescence, insurance, handling, documentation etc. Services level that can be maintained and hence the concept stores in money should be understood by every body in the organization.
(1) by “Lumbini Beverages Pvt. Ltd.” itself some are followed according to the standing instruction of “Pepsi Foods Pvt. Ltd. So far as the process of branding and packaging is concerned the “Lumbini Beverages Pvt. Ltd.” Along with the authorized bottle in India adopt the same pattern.
Branding and Packaging
Out of the total market activities some are directly performed and controlled
Wholesaling includes all the activities involved in selling goods or services to those who buy for resale or business use. Manufactures use wholesalers because wholesalers can perform function better and more cost effectively than the manufacture can. These functions are not limited to selling and promoting, buying and assortment building bulk barking, warehousing, transporting financial risk bearing dissemination of marketing information and provision of management services and consulting. Like retailers wholesaler must decide on target market, product assortment and services promotion and place. The most successful wholesalers are those who adopt their services to meet and target customer’s needs, recognizing that existing to add value to the channel.
Retailing includes all the activities involved in selling goods or services directly to find consumer for their personal non-business use. A retailer or retail store is any enterprise which sales volume comes primarily form retailing. All marketer retailers must prepare marketing plans that include decision on target market. So the marketing channels can be viewed as a set of interdependent organization with high potential for conflict. Then why would any business chosen to become part of channel system.
Transportation is life blood of business management and commerce. The purchase office’s job in incomplete until and unless he ensures that the material is shipped from the vendor’s premises located in different areas to his organization. Purchasing the transportation is a key element in his job particularly in the context of the transportation cost. In deciding to transporting models shippers can choose from private contract and common carriers. Transport decisions must consider the complex trade off between various transportation mode and their implications for other distribution elements such as warehousing and inventory.
DISTRIBUTION OF PEPSI
Here there are four systems of distribution channels. Channel 1. Channel 2. Channel 3. Channel 4. Manufacturer…………………………………………………Consumer Manufacturer……………Retailer…………………………..Consumer Manufacturer………Wholesaler………….Retailer…………Consumer Manufacture…….Wholesaler……Jobber……Retailer……..Consumer
Channel of distribution of Lumbini Beverages Pvt. Ltd. By Lorry or Truck Distributor Dealers of customer
PERFORMANCE OF PATNA
Patna has a significant role for Pepsi, in products are supplied by “Lumbini Beverages Pvt. Ltd., Hajipur.’ There are more than eight hundred including exclusive and nonexclusive outlets of Pepsi in proper Patna. The highest sale of this year __________ cases was in the month of May and total sale of this year was……………..cases so far. Hierarchy is also necessary to understand the capacity of Patna town. HIERARCHY OF PATNA Distributor Consumer Executive Sales Man Accountant Vehicle Loader and Unloader
STUDY ON PRODUCTS
Product line is a group of product, that are closely related because they satisfy a class of needs or used together or sole to the same customer groups or marketed through the same types of outlets or fall within given price range. Lumbini Beverages Pvt. Ltd., has the following product line:
Name Pepsi Mirinda Mirinda Slice 7’Up Dew Lehar Soda
Colour Brunti Sunset Tetrazine Sunset Colourless Colourless Tetrazine
Flavour Cola Orange Lemon Mango Lime Lime Lemon
PRICE SHEET OUTLET RATE
FLAVOUR PEPSI COLA PEPSI COLA PEPSI COLA PEPSI COLA MIRINDA ORANGE MIRINDA ORANGE MIRINDA ORANGE MIRINDA ORANGE MIRINDA LEMON MIRINDA LEMON 7UP 7UP 7UP 7UP MOUNTAIN DEW MOUNTAIN DEW MOUNTAIN DEW SLICE SLICE SLICE MY CAN PEPSI DIAT SLICE TETRAPACK LEHER SODA LEHER SODA PACK SIZE 200 ML 300 ML 600 ML 2000 ML 200 ML 300 ML 600 ML 2000 ML 200 ML 600 ML 200 ML 300 ML 600 ML 2000 ML 200 ML 600 ML 2000 ML 250 ML 500 ML 1200 ML 250 ML 330 ML 200 ML 300 ML 600 ML PCS RATE 24 24 24 9 24 24 24 9 24 24 24 24 24 9 24 24 9 24 24 12 24 24 30 24 24 168 214 454 459 168 214 454 459 168 214 168 214 454 459 168 454 459 214 498 532 330 564 285 214 454
RATE 192 240 480 495 192 240 480 495 192 240 192 240 480 495 192 480 495 240 552 576 360 600 360 240 480 PER PCS RATE 8 10 20 55 8 10 20 55 8 10 8 10 20 55 8 20 55 10 23 48 15 25 12 10 20
PER PCS RATE 7 9 19 51 7 9 19 51 7 9 7 9 19 51 7 19 51 9 21 44 14 23.5 10 9 19
STUDY ON RETAILERS
Retail Shop type I. Monopoly Retail Shop II. Mix Shop : : The shop selling only one company’s Products The shop selling many company’s Products
The retailers can build a great deal of goodwill for the firm. The marketing strength depends on the strengths of retail dealers. Research has conduct survey on different types of outlet like bakeries, cold drink parlor, Booth and general stores etc. According to his survey, the major reasons for selling Pepsi products are: (1) (2) (3) (4) (5) (6) (7) Brand Image Customer Demand Profit Margin Advertisement Good Quality Sales Promotion for Retailers Sales Promotion for Consumers 18% 20% 05% 30% 10% 07% 10%
Pepsi products are most popular brand but Coke products are very dear brand of consumers due to advertisement. After the collection of different views from consumer which includes, servicemen, students, and businessman and observing the sale of Pepsi products. The research has calculated the preference consumption of different Pepsi products by the people of PATNA
Brand Preference of Consumers Flavour Cola Orange Lemon Lime Mango % Consumption 49% 16% 12% 07% 17%
15% 17% Cola Orange Lem on Lim e Mango 7% 12% 7 Up 16%
STUDYING THE MARKET POTENTIAL
The market potential is an estimate of the maximum possible sales opportunities present in a particular market segment and open to all sellers of a good and service or during a stated future period. A market potential indicates how much of a particular product can be sold to a particular market segment. Market potential can be determined by measuring the sales in different areas. The data has collected from 100 outlets, which are situated in different areas of Patna. According to that, the per day sale of Pepsi Products is 154 carats and the per day sale of sale of Coke Products is 148 crates. Per Day Sales in Crate of Products
Coca Cola 48% Pepsi 52%
Pepsi Coca Cola
Conclusion and Suggestions
Conclusion and Suggestion
In the earlier chapters of this report on various aspects of soft drinks industry with particular reference to establishment of ‘’Lumbini Beverages Pvt. Ltd.’’ Its organizational structure and channel of Distribution Lumbini Beverage Pvt. Ltd. etc have been studied Present chapter is an attempt to summaries the whole report and present a view suggestion. From the data analysis and survey conducted by me, I arrived at the following conclusions:Pepsi has the entire flavor i.e. Cola, Leman, Orange, Mango in the market and its market share is comparatively more than Coke. The majority of the retailers deal in all brands of Pepsi and Coca-Cola. One of the major drawbacks of Pepsi products is that all the flavors do not reach at each and every retail outlets but competitors products do reach that is why competitor enters in to Pepsi exclusive outlets . The major problem faced by the distributor is the shortage of supply particularly pets. Distributor functions just as order takes; they should contribute me and communicate to the retailers. It should be checked that whether our products is reaching to the outlets timely and regularly or not. Although the Visi-cooler, Sign board/Display rack and Glass strength provided by Pepsi are more than Coke but still there are number of retailers, who are either not having these or others have provided them . There is irregular in the supply of Visi-cooler, some retailers, which sell more are not provided Visi-cooler which some retailers, which sell less, are provided visi-cooler. Some of the Visi-cooler provided by Pepsi is not functioning properly, complaints regularly, are entertained after a long time. Most of the retailers are in need of board but not provided by the Pepsi Company. Most of the retailer’s especially small retailers have complained that the sales man does not inform about any sales promotional scheme. The big retailers of Pepsi do not maintain the purity in the Visi-cooler and dictate their own terms and conditions. .
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Lumbini Beverages Pvt. Ltd. should introduce some change in its marketing function and advertising to market more rational. The following factors to be worthy of consideration:1. A complain Register should be provided by the company to every distributor in every route so that, retailers/customers can write their problems. The complain register should be checked by consumer executive and depot in charge at time to time. 2. A clear notification should be given to teach distributor and each route agent to give cash memo (with printed number) and maintain route card for every transaction. 3. Proper care should be given the company’s employees at the time of scheme close. Signature of scheme receiving on the cash memo should be taken and it should be also maintained in route card. Claim of scheme should be passed after the deeply stud y of above three points i.e. difference between opening stock and closing, signature of scheme receiving on the cash memo and sells maintained in the route card. 4. Some retailers keep other companies products in the Pepsi’s fridge, while is provided by the company. To check additional scheme be given in every month, in the peak seasons After the checking of Pepsi’s Fridge (3or 4 times in every month ) if It is found that retailer does not keep other companies products in the Pepsi’s Pepsi fridge the claim of scheme should be passed . Thus we can improve/increase its sell and employee’s activities. 5. There is no electricity problem in the whole area of Patna. For chilled soft drink, ice box which is compulsory and dredge both should be provided by the company. 6. The numbers of outlets are too much. So it is required to short the route and extra vehicles/tricycles provide in this route. 7. Facilities provided by the company should be increased. Facilities requirements should be fulfilled in all the rural and urban area properly after deeply study for various aspects or retailers by the help of company employee and depot incharge. 8. Number of tricycle can be installed at various place like public during the peal hours i.e. evening and busy roads and chowks near the town`s commercial
centers. Care should be taken to install these tricycles under a shady tree where providing relief from h eat to the prospective customers as well as the vendor. 9. All these tricycles targeted the tired and thirsty consumer or the road and other place, care should be taken that soft drinks in the ice box are always chilled and ice readily available. 10. The vendors must be taught to be polite to the consumers. 11. The vendors can also be provided with uniform by the company in order to give them visibility. 12. An appropriate name should be given to these tricycles and properly advertisement thus giving them some sort of identity. 13. In winters, as the sales from these tricycles may be very low because of seasonal factors Beverages Pvt. Ltd. should think of introducing such packs Beaver its various brands of beverages . 14. It is vital take for “Lumbini Beverages Pvt. Ltd. that maintain the performance of Pepsi in future therefore performance of soft drink was very good in this year in comparison of coke. 15. Now a day with the introduction of tetra packs such as fruity, Tree Top etc. So Lumbini Beverages Pvt. Ltd. should think of introducing such packs of its various brands of beverages. 16. Lumbini beverages Pvt. Ltd. should be provided it’s the rural area also. 17. Coke is the only competitor of Pepsi. So we should try to keep every information about Coke i.e. prices scheme, policy etc. always it will help in Decision making. At last only this can be said that these suggestions are mot totally but even partially can be used by the Lumbini Beverages Pvt. Ltd. it would be pleasure for me and is certain that if these are carried out by management , it will helpful in establishing the Lumbini Beverages Pvt. Ltd. on a more stronger footing.
Name: - ………………………………………………………………………………….. Address: - ……………………………………………………………………………….. …………………………………………………………………....................... Contact No: - …………………………………………………………………………… (1) Monthly sales (in Rs.) (a) Less than 5000 (c) 10,000 to 15,000 (2) (a) 0 - 50 carets (c) 100 to 150 carets (3) Which type of outlet? (a) General Store (c) Betel Shop (4) (a) Pepsi Cola (c) Mirinda (L) (e) Slice (5) demands? (Rank them) (a) Pepsi (c) Others (6) Do you know about all flavours pack (size) and respective wholesale price Pepsi soft drinks. (a) Yes (7) (a) 0 - 50 carets (c) 100 to 150 carets (8) (a) Very Good (c) Bad (b) No (b) 50 to 100 carets (d) 150 to 200 carets (b) Good (d) Worse 54 Which company’s soft drink is demanded most? (b) Coca Cola (b) Grocery (d) Sweet Shop (b) Mirinda (O) (d) 7’Up (f) Mountain Dew (b) Between 5000 to 10,000 (d) Above 15,000 (b) 50 to 100 carets (d) 150 to 200 carets
Number of carets sold per month of soft drinks.
Which brands of soft drinks are available in the outlet?
When a customer comes to your shop which brand of soft drinks does he/she
What is the position delivery of Pepsi products?
What is the frequency of the visit of Pepsi executive? (a) Daily (c) Weekly (10) Which factors affect the sale most? (a) Advertisement (c) Presence (e) Price (11) (a) Pepsi (c) Both (12) (a) Highly satisfactory (c) Less satisfactory (13) (14) (15) etc. (a) Yes (b) Scheme (d) Taste (f) Others (b) Coca Cola (d) Own (b) satisfactory (d) Not satisfactory (b) No (b) Alternate Day (d) Fortnightly
Which company Visi-Cooler do you have?
What is the position of maintenance work of refrigerator done by Pepsi Company?
Have you been provided with sign board/display rack by Coke Company? Have you any type of dissatisfaction regarding the product. It yes then why? ……………………………………………………………………………… Please give any suggestion for improvement regarding distribution, brand, bottling ………………………………………………………………………………
………………………………………………………………………………... ……………………………………………………………………………………… (16) What is your opinion about Pepsi products? …………………………………………………………………………………… …………………………………………………………………………………… Thank You Place:-…………………… Date:- …………………… Surveyed by
Multinational Company Pepsi
, export business
, Mr. Rajeev Gandhi
, snack foods
, beverages snack foods
Description: When Mr. Rajeev Gandhi came into the power as Prime Minister of India, then it was expected the liberalization of Indian economy. This was the expectation of his modern concept regarding every walk of life. When Pepsi has appealed on our collective consciousness of few years ago to be more exact in April 1989. When it set up operation for beverages snack foods and export business. The establishment of Multinational Company Pepsi was supposing to prediction in present Indian business scenario.