PepsiCo

marketi
ng
channe
l
Executi
ve
summa
ry
Purpose of this project is study marketing
channel Pepsi .Pepsi International is a world
renowned brand. It is a very well organized
multinational company. They produce, one of
best carbonated drinks .As we audited the
Pepsi marketing channel we find Pepsi cola a
three level channel .Pepsi marketing channel is
supported by channel flows which are
performed by Pepsi channel members with
their specific proportional, weightage, potential
with cost as well. we find that Pepsi cola
strictly follow the exclusivity to sell their
products with intensive distribution providing
the channel members attractive packages
.Although they have a big edge in their
assortment variety and sale but gaps are
both on demand and supply side .In service out
puts end user is not satisfied with Pepsi cola
black drink .As
supply side is concerned
PepsiCo incurred high cost on physical
possession by giving distribution against old
distributor .Pepsi dont have direct negotiation
with members due to which conflict are arises
like on retailers end they make deal with Pepsi
to exclusive sale but cheat them to sell other
drinks in Pepsi freezers .Conflict with old
distributors in sharing areas are also there.
Suggestions are always there to remove gaps

Group
members :
Amir
roll#03,
Zeeshan
roll#9
Tayyaba
roll#02
Khorum
roll#16
Sajjid
imran
roll#21
M.Adnan
roll#20

History of the PepsiCo

. Pepsi is a USA based public company whose stocks are available in New York.
Mountain Dew, acquired by Pepsi-Cola in 1964, switches its advertising and package graphics
room hillbillies to action-oriented scenes.
The third Mountain Dew slogan appeared in 1973 "Put A Little Yahoo in Your Life."
PepsiCo acquired Pizza Hut, Inc. Pizza Hut was founded in 1958 by Dan and Frank Carney.
Taco Bell is was acquired by Pepsi. Taco Bell was established in the mid 1960s by Glen Bell.
PepsiCo purchased Kentucky Fried Chicken, the leader in the quick service chicken market.
KFC was founded by Colonel Harland Sanders. Colonel Sanders began franchising the company
in 1952. KFC was spun off along with Pizza Hut and Taco Bell businesses as Tricon Global
Restaurants, Inc. in 1997.
PepsiCo purchases Seven-Up International, the third largest franchise soft drink operation
outside the United States

INTRODUCTION TO THE COMPANY

Pepsi International is a world renowned brand. It is a very well
organized multinational company, which operates almost all over the
world. They produce, one of best carbonated drinks in the world. Pepsi
is a symbol of hygiene, quality and service, all over the world. Pepsi is
producing Cola for more than 100 years and it has dominated the
world market for a long time. Its head office is in New York.

MISSION STATEMENT
"To be the world's premier consumer Products Company focused on
convenient foods 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 STATEMENT
"To be the world's best beverage company". Being the best
means providing outstanding quality, service, cleanliness and value, so
that their every customer is contented and happy with their products."
"To increase the value of their shareholder's INVESTMENT through
sales growth, cost control and wise investment of resources."

PEPSI PAKISTAN

The market in Pakistan is surely dominated by Pepsi. It has proves itself

to be the No.1 soft drink in Pakistan. Now days Pepsi is recognized as
Pakistanis National drink. In 1971, first plant of Pepsi was constructed
in Multan, and from their after Pepsi is going higher and higher. Pepsi is
the choice soft drink of every one. It is consumed by all age groups
because of its distinctive taste. Compared with other Cola in the
market, it is a bit sweeter and it contributes greatly to its liking by all.
Consumer's survey results explain the same outcome and Pepsi has
been declared as the most wanted soft drink of Pakistan.

FOUNDERS OF THE COMPANY

The company was initially owned by late Nawab Saddiq Hussain
Qureshi & family till 1989. The Pepsi International franchise declared
the management incompetent, thus, the company was handed over to
a new set of personnel. The factory set up was reorganized &
reestablished with expansion in various sectors. The Pepsi International
did this by offering it to Mr. Jehangir Tareen, who formed up his new
team. Mr. Jehangir Tareen is Nephew of General (late) Akhtar
AbdurRehman.

COMPANY PROFILE
Board of Directors:
Akbar Akhta Khan(Chairman)
Mr.Haroon Akhtar Khan(ChiefExecutive)
Mr.Gazi Akhtar Khan
Mrs.Rasheeda Begum
Mrs.Mudina Akbar Khar
Mr.Saifullah Khan Paracha
Mr.Saeed ullah Khan Paracha

Company Secretary
Mr.Amjad Jhanzeb Khan
Bankers
Allied Bank of Pakistan Ltd.
Citibank N.A.
MCB
NDFC
2

The Bank of Punjab

UBL

Legal Advisor
Cornehus, Lane & Mufti,
Nawa-i-Waqat Building,
4-Shahrah-e-Fatima Jinnah, LHR.

Auditor
Taseer Hadi Khalid & Co.
Chartered Accountants.

Mill
Kanjawani, Tehsil Samundri, District Faisalabad.

REGISTERED OFFICE
31 N,
Gulberg II,
Lahore,
Pakistan.
UAN: 111-724-725 Web Site: http://www.Pepsico.com

Distribution Structure of PepsiCo

Pepsi distribute their product by using a three level channel

1.
2.
3.
4.
5.

MANUFACTURE
DISTRIBUTOR
WHOLESALLER
RETAILER
END USER
This is the distributer network of the Pepsi co the company has using a three level channel in
which the product has been reached to the end user .the company has this channel about a 30years
old . first the company use this channel to provide the product their customer The customer also
buy the product to their near whole sale point and distributer directly there are whole seller and
distributer in the city to sale the product. The distributer is used because a to compete a large part
of the market and increase their sale level

Intensity of the channel

Pepsi co used the intensive distribution the has mind to provide the product all area of the city for this
purpose the company should be used a large number of the distributer to provide their product .
The area has any type you should be find the Pepsi co every retails shape . the company should provide
the freezer to the shopkeeper to sale their product . there is also a condition in this the shopkeeper
should not sale any other company product .
the Pepsi co also used the selective distribution in which only the Pepsi co sale
like the k f c has sale only the Pepsi co not any other drink .and the Pepsi should provide the only the
bottle to the k f c not mickdonal
the company has try to cover all area of the city for this purpose the company used the distributer to sale
their product the company bear a extra cost to increase their sale level the company the company target
the youngster to increase the sale of the company the company reach the every colleges and university to
target the customer

Member of Pepsi co channel

There are five member in Pepsi co channel is given below

Manufacture
He is the person who provides raw materials to the producers or sellers. Suppliers form an
important link in the company's overall customer value delivery system. They provide the
resources needed by the company to produce its goods and services. PepsiCo International
provides raw materials to Pepsi franchises in Pakistan. Supplier problems can seriously affect
marketing. Marketing managers must watch supply availability i.e. supply shortages or delays,
labor strikes and other events can cost sales in the short run and damage customer satisfaction in
the long run. The company should monitor the price trends of their key inputs. Rising supply
costs may force price increases that can harm the company's sales volume

2.WHOLESALLER
The manufacture provide the Pepsi co to distributor to sale them. The distributor appoint the wholesaler
the product the Pepsi co whole seller sell the Pepsi by two way
1 the wholesaller sell the Pepsi co direct to the retailer. In this way wholesaler earn more profit
because he has not share their profit another person and not bear any other cost
2 The second way to sell the Pepsi co through the distributer
In this way they increase the sale level but their commission should be reduced and their cost increase

3 Distributer
The distributer is appointed by the company the distributor is distribute the Pepsi coto different area
The Pepsi co distributer is appointed by the company and the whole seller all the control is in the hand of
the company.The distributer vehicle is provided by the company. The company received the installment to
the whole seller and when the installment is complete the vehicle is the whole seller .

4 Retailer
There retailer sell the Pepsi to the end user they get their profit to sale the Pepsi
The retailer get the Pepsi by two way
The retailer buy directly to the whole seller and. the distributer also provide the Pepsi co to the retailer
The retailer is the main member of the channel who sell the Pepsi to the end user and earn profit.

5 End user
The channel is work because Pepsi co is reach to end user all the channel activity is done because the end
user if he satisfied then sale level increase otherwise not the company is try to provide Pepsi co all the
area at minimum cost because the end user is satisfied and purchase the Pepsi co

Allocation of channel function and flow

Physical possession
End
user

Ownership

produ
cer

Promotion
Negotiation
Financing
Risking
Ordering
Payment

Physical possession
The producer provide the physical possession to the distributor. In this segment Pepsi co has perform this
function.

distrib
u
er
wholesaler

Physical custody
The distributor has get the physical custody of the bottles .the distributor have pay all the cost of the
bottles and get the custody. The distributor have stock all the bottles in their warehouse and then send
the bottles to the retailer .

Carriage cost
The cost of the carriage is bear by the producer .all the carriage and duties is paid by the producer .the
loading and unloading cost is also bear by the producer. When the bottles reach to the distibutor then
they bear the storage and other cost of the bottles the publicity and other cost is bear by the company

Responsible for loss and damages

The producer is responsible for all the damages .if any bottle is brake and defect the distributor is return
to the producer .Any claim is made by the distributor the producer is accept and pay the damages.
Any accident a road accident and any other accident is happen the producer is responsible for this loss
and pay the damages to the whole seller

Ownership
Hold title When the distributor paid the cost of the bottles he got the title and possession of the bottles.
He got the title for the purpose of sale only. In Pepsi co Company all the cost is paid at the time if the
delivery no credit is make by the company. The company has made the business on the cash basis only.
the company is get the amount as the cash cheque and online payments system.

Have May or may not accept the return

The Pepsi co company have accept the return sent by the distributor if any defect and leakage in the bottle
the company is accept the return
If the demand is low and the supply is excess the company is also accept the return
The distributor is also accepting the return made by the retailer n whole seller.
6

retail
er

Promotion of Pepsi co company

All the promotion of the Pepsi co is mad by the company. the promotion make the company
Following way
Advertisement of Pepsi co
All the advertisement expenses bear by the company. The company is responsible to make advertisement
Through media
The Pepsi co makes advertisement through media like print and electronic media for the promotion
purpose. The purpose of is that to attract the customer. The advertisement is a big expense of the
company.
Display shelf space
For the promotion purpose the company has make flexes to promote their product the company also make
the wall chalking to display their product. To color the shop and vehicle is also a way to promote their
product.

Negotiation
The Pepsi co make the negotiation following way
Settlement of term deal
The Pepsi co make deal to their in term of price
At what price he offered the bottle to retailer and retailer next sell to the end user.
In this condition they also distribute the expenses of the channel and profit of the channel share by the
member.
Responsibility
The responsibility of the each member is also discussed in this term. Responsibility of loss and complete
their target is also discuss in this term.
The company is also negotiate the following term
Promotion
Quantities sold and offered
Delivery schedule

Finance
The flow of the cash has following way.
Producer pays the cash to the whole seller.
The dis distributor needs the van to distribute the bottle. The producer has purchase the van and provide
to distributor and get the possession of the van.
The distributor pays the installment to producer and when the installment is complete the he get the
right of the van.
distributor pays the cash to the producer
When the producer has enough cash for packing and bottling then the producer demand the cash to
distributor. he pay the cash as a advance and when the full amount is paid the advance is settlement in the
full amount. The producer is also get the cash to pay the other expenses of the whole company
Whole seller pays the cash to the distributer
The distributer received the cash to the distributor when he has need. He needs the cash for the purpose to
purchase the fuel of the van.
And also to pay the duty of the van and repair the.
Discount and commission
The discount and commission pay by the producer to distributor is also discuss
The distributor has paid the discount to retailer. The producer gives the permission to distributor to give
the discount to their retailer according to the term and condition

Risk
All the risk of the bottle is bear by the company
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The company bears the following risk

Damage,
spoilage
Obsolescence
If any risk happen the above the company is responsible to bear them
The company received the return bottle.
The company is also responsible if any accident happen in the way the company bear all the loss and the
damages to the distributor.

Ordering
The order is made by the distributor to the producer.
The Pepsi cause the direct ordering method. in this method the distributor directly made the order to the
producer and the producer is complete the order in time
The retailer and the wholesaler is not make the directly order to the producer.
The distributor is responsible to received the order of them and complete in time.

Payment
The payment is directly mad by the distributor to the producer
The Pepsi co company has use cash basis method. They not make any credit to distributor and the
company tells the distributor to not make any credit to their retailer.

Service output
channel system perform duties that reduce end users search, waiting time ,storage and other
cost .These benefits are called service output of the channel.
Bulk breaking
Spatial convenience
Waiting time
Product variety
Customer information

Bulk breaking of Pepsi co

The distributor purchase a bulk of Pepsi co to the producer and then make bulk breaking and sale the
bottles to the retailer and the consumer according to the requirement of them. The distributor sells the pet
and shall of the Pepsi co to their retailer and retailer sell to the consumer a single bottle. This enables the
consumer to purchase a single unit and a pet and the quantity whatever he wants to purchase.
The bulk breaking of Pepsi co increase the sale level of the Pepsi co. and the profit of the Pepsi co
Bulk breaking is beneficial for the Pepsi co because everyone buy the bottle according to his desire.

Spatial convenience
The Pepsi co provides the consumer spatial convenience. The company reduces the customer
transportation cost and the searching cost because the whole seller sent the distributer to all the target
area. The distributor sent the bulk to the retailer where the consumer easily buys the bottle. The Pepsi co
bottle available every retailer shop easily
The company also provide the spatial convenience to their retailer to provide them the freezer in which
they easily store the bottle and easily sell to their consumer

Customer information
Pepsi has now about their customer . the Pepsi aware about the requirement of their customer. The Pepsi
now about the target area. The purchasing power of the customer in a specific area. What the customer
demand. The Pepsi provide all the things

Waiting time
8

The waiting time of the Pepsi co is very low because the producer sent the bulk to the whole seller in term
as soon as possible.Whole seller sent every day his distributer to market to distribute the bottles.
The retailer easily purchases the stock. The retailer is not wait for the delivery. The stock of bottle is
always available to the retailer. he should be easily sell the stock.The stock is always available in retailer
shop the consumer is easily purchase the bottles .The low the waiting time and always availability of the
stock create the goodwill and also increase the sale level of the company.

VARIOUS

PRODUCTS

IN

PAKISTANI

MARKET

STING
PEPSI COLA,
MIRINDA,
TEEM,
7UP,
MOUNTAIN DEW,
DIET 7UP,
DIET PEPSI, LAYS, KURKURE, AQUAFINA, PEPSI TWIST AND TROPICANA JUICES

Assortment
The whole seller has large number of Pepsi co bottles. to sale retailer .The retailer has assort them
according to their need like 2.25 lite 1.50 liter 1.00 liter 0.50 liter 0.25 liter
The retailer has assort the bottle and sale to their customer .

Ability to meet target customer segments

It means that you divide the target market in to different groups.
Market consists of buyers and buyers differ in one or more ways. They
may differ in wants, resources, locations and buying practices. Through
market segmentation companies divide large, heterogeneous markets
into smaller segments that can be reached more efficiently and
effectively with products and services that match their unique needs.
Segmentation is done on basis of the previously mentioned external
factors and the following:
Behavioral Base
It is how people perceive a specific product, in short psychological
analysis of a product. Pepsi all over the world is recognized as a quality
drink and therefore people drink it without any hesitation whenever
they are thirsty or otherwise. So marketers of Pepsi have made it a
drink for all people and for diabetic people they introduced diet Pepsi.
Cognitive Base
It pushes and pulls the consumer. If the outlook of Pepsi bottle is
desirable and it attracts the consumer, he will buy it even if he isn't
thirsty.

GAP ANALASIS OF PEPSI CHANNEL

9

DEMAND SIDE
As we audited the Pepsi channel the service output level is performed in the following manners:
1. BULK BREAKING:
Pepsi is providing high bulk breaking. In their sevice output the
customer is getting the required quantities to use the Pepsi product , so there is no gap in the bulk
breaking.
2. SPATIAL CONVEINCE:
Spatial convince is good regarding the service outputs. Pepsi
providing the product in a proper way so that customers could get it from every where at any
time. The company is providing Freezers , Empty,, etc.
So there is no gap in spatial convince.
3. DELIVERY TIME:
Delivery time of Pepsi is very excellent that the retailer or other channel
member could get it easily. If the retailer feels shortage of stock he can call the distributor to get
the delivery on time. So there is no gap in delivery time.
4. CUSTOMER INFORMATION:
Customer information regarding the PEPSI product is good
but the customer is not satisfied due to the taste of the product PEPSI so it is neglected by the
customer. As we see the other products of PEPSI like as STING, DEW, MARINDA, 7UP, are
good in the taste of customer
Solution
Pepsi should focus on increase the taste of the black water because it is the mother brand of Pepsi
5. ASSORTMENT VARIETY:
Assortment
There is a proper assortment regarding the Pepsi.the customer can get the require quantity easily.
there is no gape in the assortment
VARIETY
Pepsi has a large variety. due to this the black water of Pepsi is neglected. a gape is created due
to decline the quality of the peeps
SOLUTION
The Pepsi should focus to increase the quality of the Pepsi to satisfied the customer.

GAP types regarding the service out put;

1. Bulk Breaking
SOS=SOD
2. Spatial Convince SOS=SOD
3. Delivery Time
SOS=SOD
4. Customer Info.
SOS>SOD
10

5. Assortment verity SOS>SOD

SUPPLY SIDE ANYLASIS OF PEPSI

1 .Changing the channel member not in proper way
During the audit of pepsico channel there are channel flows which are performed by channel
members
2. OWNERSHIP:
The Pepsi co. provides only license to distributor because if company provides
ownership then the copy of Pepsis original bottle will be prodused.so thats why company do not
allow the ownership to distributor.
3. NEGOTIATION:
PEPSI have not a good negotiation system for retailer . Due to the low
demand of Pepsi bottle the retailer donot kept the stock of black water, to solve this problem the
Pepsi company do not communicate with the retailer. So it is a gap.
Solution:
Pepsi should increase the worker force to communicate with the retailer.
4. FINANCING:
There is no problem in financing of Pepsi company because the Pepsi company
is a very famous and reliable company. The third party rely on the Pepsi company for financing.
So there is no gap in the financing.
5. RISKING:
As we audited the channel of Pepsi we found that the company provides complete
risking issuance. If there is any problem accurse during the transportation of stock like as
accident then company compensate the loss.
So there is no gap in the risking.
6. ORDERING:
There is no gap in the ordering because company properly maintains the orders of the
distributors.
7. PAYMENT:
During the audit of marketing channel of PEPSI we got the information that the
payment of order must be made before the delivery. If the ordered not made payment before the
delivery then the company do not made the delivery. So there is gap in payment.
Solution:
The company should give relaxation to the ordered for the payment.
CHANNEL CONFILICT
During the audit of Pepsi. We should find the following
conflict in the channel
Disturb the channel member
The Pepsi disturb the channel member. Due to this a conflict is created in the channel. Pepsi should
change area of the existing member and appoint the new channel member in this place. The new member
not works properly. The new member required sometimes to settle in the market and make worth in the
market.
SOLUTION

The Pepsi should not change the member of the channel. The old member has make a good
relation to their retailer. The old member now the behavior and worth of the retailer. He should
manage all the things properly. The new member not handles all the procedure.
Pirated bottles

11

The pirated bottles create a conflict. When the customer drinks the pirated bottles he claim the
retailer to the taste and flavor of the pepso. Retailer claims the whole seller. In this way the
whole channel member is disturb.
Solution
The Pepsi should make a proper check and balance to about the bottle. The company hire the
special person to check the quality and taste of the bottle
Suggestion for improvement
1by doing the audit of Pepsi we find that the Pepsi required no proper storage. As other
many compony required proper storage to store their product. The Pepsi bottle not store
properly. the whole seller not care about the safety of the product. They not care about the
weather. In a very hot weather the taste of the bottle is change. The taste is as the pirated
bottle. The customer is claim about the taste.
The pepsi can make the condition to their whole seller to store the bottles in a proper way.
The whole seller can care about the temperature. In a very hot weather the bottles store in
very proper way.
The company provides the freezer to their retailer. The retailer stores the bottles of the
other competitors. They not store the bottles of the Pepsi. In this way company sale
decrease.
The company makes a proper method of check and balance. The Pepsi whole seller and
distributer check their retailer. The retailer stores the bottles of the Pepsi. If they store the
bottles of the competitors the company makes a strong action against the retailer.
The company faces a serious problem about the quality of the black water Pepsi. It is a
mother brand of the company. The demand of the black water is decrease.
The company focuses on the quality of the black water Pepsi. Because it is mother brand
of the Pepsi. If the taste is better the sale should be increase.

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