Académique Documents
Professionnel Documents
Culture Documents
Report on
Exploring the Distribution Channel: Coca Cola
Submitted to:
Mr. Baktiar Rana
Course Instructor
Marketing Channel Management (MKT 403)
Submitted by:
Group: 2
Sudipto Chakraborty- 1979
Kaiser Mahmud - 1983
Md. Jashim Uddin- 2157
Shajedul Islam- 2264
Md. Ashraful Alam- 2296
Acknowledgement
iv
Table of Content
Content
Executive Summary
Page
vii
1.1 Introduction
1.2 Objectives
10
1.3 Methodology
10
11
11
12
13
14
15
16
3.1 Coca-Cola
17
17
18
Bangladesh
3.4 Legal Entity of the Company
18
19
20
in Bangladesh
4.1 Distributors of Coca-Cola in Bangladesh
21
21
22
25
Transport
26
27
28
28
Customers
4.8 Channel Flows
29
31
32
Channel of Coca-Cola
5.1 Channel Conflict in Coca-Cola
33
33
34
35
36
36
36
37
38
6.1 Recommendations
39
6.2 Conclusion
41
Bibliography
42
Executive Summary
Soft Drinks Industry like other developing and developed countries is getting much popularity in
Bangladesh. The number of firms operating in this industry is getting increased. The market is
also increasing in a greater portion. Today most of the people in both urban and rural areas are
taking soft drinks in a large amount. Coca Cola is one of the largest soft drinks suppliers in
Bangladesh. Though they are not Bangladeshi company, they are in the leading position
comparing with others in this industry. Behind of their achieving the leading position, there are
some points which are giving them the number one position. A very strong distribution channel
system is one of the reasons behind of their success. They entered in this country through Abdul
Monem Limited which bottles the coke. After achieving the success & due to having a very
strong distribution channel system, now they are building their own bottling plant in our country.
Our aim is to discuss about the distribution system of Coca-cola in Bangladesh. A distribution
channel is a set of practices or activities necessary to transfer the ownership of goods, and to
move goods from the point of production to the point of consumption and as such which
consists of all the institutions and all the marketing activities in the marketing process. CocaCola has their distribution channel. This company has a generally channel behavior of vertical
marketing system that all the manufacture. Manufacturer, wholesaler, retailer, customer is the
channel members of Coca-Cola. But by the company they also use three types of channel. Those
are: (i.) Zero level Channel, (ii.) One level Channel,(iii.) Two level Channel. They have divided
the whole country into 4 zones & there more than 1500 sales persons are working. Manufacturer
virtually holds all the powers of channel system. They always try to supply product according to
supply output demanded by customers. Though they are the largest soft drinks company, there
are some conflicting areas among channel members such as- between customer & retailer,
between supplier & manufacturer & so on. Moreover, there is less chance of creating alternative
or breakdown of channel system due to technological advancements. Though they are the market
leader, their closest competitor Pepsi has some advantages comparing with them like in pricing,
product varieties & so on. To make the distributors happy they need to do survey, keep an eye on
the distributors want, making joint sells, creating distributors council, increasing sales
commission & so on. Satisfied distributors can ensure their success in the market.
vii
CHAPTER-1
INTRODUCTORY PART
1.1 Introduction:
Soft Drinks Industry like other developing and developed countries is getting much popularity in
Bangladesh. The number of firms operating in this industry is getting increased. The market is
also increasing in a greater portion. Today most of the people in both urban and rural areas are
taking soft drinks in a large amount.
To capture this market many global brands are competing with local brands now. However the
local brands (Mojo and Pran) are much successful even if the global brands (Coca Cola, Pepsi)
are present.
Our soft drinks industry follows some innovative, strong and continuous improving production
and marketing techniques. Although quality is not the prime concern of our people, they mainly
prefer cost effective soft drinks. The local companies are competing with global brands on the
basis of lower cost. They are capturing the urban markets by offering some innovative marketing
plan and offer. In rural areas they are very strong in distribution strategy and price effectiveness.
Our local brands understand the psychology of our people more than the global brands. Thats
why they are showing much more effectiveness in this sector. Besides, local brands are using
technology based production plant with mass production and order to stock basis. Skilled and
lower paid manpower, and innovative marketing projects are also the factors that are associated
with success of these firms acting in this industry.
Coca Cola is one of the largest soft drinks suppliers in Bangladesh. Though they are not
Bangladeshi company, they are in the leading position comparing with others in this industry.
Behind of their achieving the leading position, there are some points which are giving them the
number one position. A very strong distribution channel system is one of the reasons behind of
their success. They entered in this country through Abdul Monem Limited which bottles the
coke. After achieving the success & due to having a very strong distribution channel system,
now they are building their own bottling plant in our country.
9
1.2 Objectives:
General objectives:
This study intends to explore the total distribution channels that are used by Coca
Cola in Bangladesh.
Specific objectives:
1. To find out the different distribution channels used by Coca Cola.
2. To find out whether they are using any alternative distribution channel or not.
3. To find out if there exist any channel conflict in distribution channel.
4. To Channel flows performed by the channel participants. Identify which flow involves
the significant costs.
5. To find out strengths & weakness of Coca Cola in distribution system comparing with the
closest competitors.
1.3 Methodology:
The mode of methodology selected for this research is qualitative data analysis.
Qualitative Analysis:
The sample data gathered in qualitative research are analyzed and categorized into patterns as the
primary basis for organizing and drawing results for the report. Qualitative research for this
report involved three methods for gathering information:
Direct observation
in depth interviews and
analysis of documents and materials.
The key methods to be used for data collection are the analysis of documents and materials and
Depth Interview.
10
Limitations:
The extent and limit of the report were constricted due to some of the following considerations:
The time allocated for the report was limited which constricted the extent of this report.
The beverage industry of Bangladesh is not well documented, so no strict facts and figures
were found from the enterprise respondents or any other secondary sources.
11
CHAPTER-2
LITERATURE REVIEW
There may be a lot of channel members in different organizations. It depends on how effectively
the firm thinks to reduce cost & availability of product to the customers in a shortest possible
time as well. A general overview of a distribution channel is given below:
13
Provides for increased sales volume, wider consumer recognition, and considerable
impulse purchasing.
Low price, low margin, and small order sizes often result.
Contains some of the strengths and weaknesses of the other two strategies.
It is up to the channel manager to evaluate these alternatives with respect to some use of
criteria.
14
Company factors, environmental trends, reputation of the reseller, experience of reseller are just
a few examples when selecting the type of intermediaries and channels.
15
CHAPTER-3
OVERVIEW OF COCA-COLA
3.1 Coca-Cola:
Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines
throughout the world. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is
often referred to simply as Coke. Originally intended as a patent medicine when it was invented
in the late 19th century by John Pemberton, Coca-Cola was bought out by businessman Asa
Griggs Candler, whose marketing tactics led Coke to its dominance of the world soft-drink
market throughout the 20th century.
The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout
the world. The bottlers, who hold territorially exclusive contracts with the company, produce
finished product in cans and bottles from the concentrate in combination with filtered water and
sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and
vending machines.
The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke brand
name. The most common of these is Diet Coke, with others including Caffeine-Free Coca-Cola,
Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, Coca-Cola Vanilla, and special
versions with lemon, lime or coffee. In 2013, Coke products could be found in over 200
countries worldwide, with consumers downing more than 1.8 billion company beverage servings
each day.
In the 1960s the company decided to expand with new flavors- Fanta, Sprite and Fresca, In
addition it acquired the Minute Maid Company, adding an entirely new line of business juices to
the company. The 1980s was a time of much change and innovation at the company by the
introduction of Diet Coke, which become the top law-calorie drinks in the world. The company's
presence worldwide was growing rapidly and year after year Coca Cola found a home in more
and more places in the world. As for today, Coca Cola has grown to be the world's most
ubiquitous brand, with more than 1.8 billion beverage servings sold each day.
18
19
Chapter-4
Distribution Channel of Coca-cola in
Bangladesh
reach the consumers door-step even to the remote places to uphold the motto ALWAYS
COCA-COLA. Abdul Monem Limited is strived to be a good neighbor, consistently shaping its
business decision to improve the quality of life in the communities in which the company do the
business. Its a special thing to have billons of friends around the world and the company never
forgets it.
The bottling plants of AML for bottling Coca Cola are located in Dhaka, Comilla and
Chittagong. However, at present, the operation of Dhaka plant is suspended and the total bottling
operation is constricted to the other two plants. The details of the Chittagong and Comilla plant
are given below :
Chittagong- Comilla
Site :Area 10 Acres- 6 Acres
Year of operation :1997 -1987
Line: KHS Germany
(PLC Controlled-Fully Automated): H&K / KHS Germany
Capacity: 600 BPM- 450 BPM
6.5 Mill. cases/Yr- 4.5 Mill. cases/Yr
Packages 250 ml, 1000 ml 175 ml, 250 ml, 1000 ml
Capability Plastic- cases
Fill height detector
22
(ii.)
(iii.)
23
Dhaka,
(ii.)
Chittagong,
(iii.)
Rajshahi and
(iv.)
Khulna.
In each of these zones two zonal distributors are selected. They can also be mentioned as
wholesalers. Coca-Cola supplies their soft drinks these distributors by their own transportation
service. It can be mentioned here that for transportation purpose they have 30 trucks. Retailers of
each separate zone contact with the zonal distributor and ask them to supply according to their
demand. To be a distributor of PepsiCo Limited an individual or organization must have some
criteria that given bellow
(i.)
The person or company must have experience or to relate with dealership business.
(ii.)
(iii.)
(iv.)
(v.)
25
Zonal distributors sometime appoint more distributors on a locality basis such as in Dhaka and
Chittagong. These distributors supply the product according to the retailers demand. Mostly this
transportation is done by the distributors own vehicles such as van, pickup etc. they visit each
retailers shop usually twice a week. But in case of summer season suppliers can provide the
product even seven days a week based on sales of the retailers.
Coca-Cola applies some motivation system to motivate their distributors. These includes if the
distributors makes a good regular goods order and sale exceeds above target then Pepsi gives
financial rewards to them and also some cases of goods are given free to them. But if there is any
mismanagement there is also some punishment for the distributors such as if distributors fail to
make minimum target of order or a least target of sale then Pepsi cancels their distributorship.
Company to Distributor
26
Coke distributes their products to the distributors by using their own trucks. Company bears the
cost up to this part of the distribution process.
In Bangladesh, Tabani Beverage Company and Abdul Monem Ltd (Beverage Section) are the
main two-bottler companies. They bottle the soft drinks and distribute it through the whole
country. Tabani Beverage Company only bottles the Return & Glass bottle (RGB) for
distributing in Dhaka City and the Rajshahi zone. Abdul Monem Ltd (Beverage Section) covers
the Dhaka City and the rest of the country by Return & Glass Bottle (RGB) and PET Bottle.
Sales Force:
The sales forces under the Abdul Monem Ltd (Beverage Section) and Tabani Beverage
Company contribute in the sales of the country. The activities of sales forces are the main thing
of a company to increase their sales volume. The sales force under Abdul Monem Ltd (Beverage
Section) and Tabani Beverage Company play an important role in selling and distributing the
Coca-Cola product.
27
Distributor to Consumers:
Distributors use their vehicles to distribute the products. The distributors, in this stage have to
bear all the cost.
Deposit System:
The distributors have to deposit 1, 00,000 Tk. to become a distributor and have their own 3 to 4
vehicles, which have the red the logo on it.
The distributors have to buy certain amount of bottles or crates and often they have to buy only
liquid for the company. Deposits to the retailer are that the retailers have to pay for the bottles.
Credit Facility
The Coca-Cola Company usually does not give any credit facilities but sometimes these facilities
depend upon the distributors.
1. Bulk-breaking:
Consumers need the availability of Coca-Cola in every retailer shop as its a very famous
name in soft drinks industry.
2. Product information:
Consumers need to know the name of ingredients of the product & also other features
from the retailers
3. Tagging:
While purchasing any product of Coca-Cola, consumers want to see the price, date of
expire, date of manufacture & some other information in the upper portion of bottle
provided by manufacturer.
4. Fair price of product:
Customers are also very much concern regarding the price of Coca-Cola comparing with
other soft drinks.
5. Innovation & customization:
Customers always expect some new innovations &customization of the product from the
manufacturer of Coca-Cola.
6. Promotional Activities:
Customers are also very much concern regarding the promotional campaign offered by
the manufacturers & distributors.
Market Flow
Physical Possession
Ownership
Promotion
Negotiation
Financing
Risking
Ordering
Payment
Collection
Each & every flow is very much important for Coca-Cola. However, among the upper flows,
Coca-Cola has to incur a very significant cost in physical possession & promotion cost. As
Abdul Monem Ltd & Tabani Beverage Ltd are the bottlers distributor of Coca-Cola in
Bangladesh, they have to use a huge investment in case of distribution. They use both
independent & own channel members in case of product distribution. Thats why they have to
incur a significant amount of money for physical possession & promotion of the product.
31
Chapter 5
Others Regarding Distribution Channel
Of Coca-Cola
Every year in some specific times the demand of Coca-Cola may increase due to some
marketing policies or some natural phenomenon. At that time a conflict arises between
retailers, manufacturers & suppliers due to excess pressure of product demand. This
creates conflict between channel members.
33
Hence Coca-Cola is a big company, so its number of channel members is very high. As a
result there are a lot of conflicts seen among the channel members. Each & every channel
members want to have the best position in the channel system. So, it creates problem
among the channel members & thus conflicts arise.
3. Communication Difficulties:
Lack of motivation is another thing which creates channel conflict among the channel
members. The distributors of Coca-Cola get only 4% to 6% commissions from the
manufacturers which seems to be very less to the channel members & for that reason
some of them have lost their motivation on selling the product.
2. Coercive Power:
Coercive power is just opposite of reward power. Coca-cola do not use this kind of power
but they stop giving commission on sales if the targeted goals are not achieved by the
channel members.
3. Legitimate Power:
By the power of hierarchy system in the distribution channel of Coca-Cola, each & every
channel member is bound to its upper channel members.
4. Referent Power:
Coca-Cola uses some of their strong & leading channel members as their referent group
which has a good performance. They influence the other channel members work.
35
5. Expert Power:
Coca-Cola uses some distributors which are much experienced in case of distributing
products to influence the other members.
Though no record for merger was found in the history of AML, the entrance of AML in beverage
industry was the result of a huge acquisition of cotemporary scenario. Till 1982, the authorized
bottler of Coca Cola for Bangladesh was entitled to K. Rahman & Company. AML took over its
bottling operation by acquiring the plant of the K. Rahman & Company in Chittagong in 1982. It
has set up two more bottling plants, one in Dhaka and other in Comilla, till then.
The price of 500 ml Pepsi is 30 taka whereas the price of coca-cola is 38taka. Here,
Pepsi is providing the product in fewer prices than coca-cola.
37
CHAPTER-6
RECOMMENDATIONS & CONCLUSION
6.1 Recommendations:
After studying the overall distribution channel of Coca-cola, we have some specific
recommendations for the company. They are-
39
40
6.2 Conclusion:
Coca-Cola is one of the largest soft drinks providers in Bangladesh. Their distribution system is
very strong. For that reason, they are having the first position in the soft drinks industry of
Bangladesh. As they are doing business in our country by Abdul Monem Ltd & Tabani Bavarage
Company, they should also provide them good facilities. Moreover, these two franchisees,
especially Abdul Monem Ltd is doing a very good business through a strong distribution
channel. However, to hold the market share, they should keep their eyes always in channel
members as the success of business is much more dependent on them. By motivating the channel
members in proper ways they can assure the best performance by the retailers & the other
channel members. Overall, Coca-cola is doing well at present with their distribution channel in
our country.
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Bibliography:
1. www.coca-cola.com.bd
2. www.edupedia.educarnival.com/the-current-market-scenario-of-beverage-industryin-bangladesh/#Pepsi_in_Bangladesh
3. www.lawyersnjurists.com/
4. Rosenbloom B., Marketing Channels A Management View, 7 th Edition, Thomson
south-western, 2007.
5. Anne T. Coughlan, Erin Anderson, Louis W. Stern, & Adel I. El-Ansary, Marketing
Channels, 7th Edition, Prentice-Hall, Inc. (ATC).
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