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Distribution Channel of Pepsi Max

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    History

    PepsiCo entered India in 1989 and has grown to become the country’s largest-selling food and Beverage Company. PepsiCo India and its partners have invested more than USD1 billion since the company was established in the country. PepsiCo nourishes consumers with a range of products from treats to healthy eats that deliver joy as well as nutrition and always, good taste

    PepsiCo India’s expansive portfolio includes iconic refreshment beverages:

    • Pepsi, 7UP, Mirinda, and Mountain Dew, in addition to low-calorie options such as Diet Pepsi,
    • Hydrating and nutritional beverages such as Aquafina drinking water,
    • Isotonic sports drinks – Gatorade
    • Tropicana 100% fruit juices, and juice-based drinks – Tropicana Nectars, Tropicana Twister and Slice,
    • Non-carbonated beverage and a new innovation Nimbooz by 7UP.
    • Local brands – Lehar Evervess Soda, Dukes Lemonade, and Mangola add to the diverse range of brands.

    PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito Lay products are free of trans-fat, It manufactures Lay’s Potato Chips, Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands and the recently launched ‘Aliva’ savory crackers.  PepsiCo has 36 bottling plants in India, of which 13 are company-owned and 23 are franchisee-owned.PepsiCo India provides direct and indirect employment to 150,000 people including suppliers and distributors.

    Vision

    PepsiCo’s business is based on its sustainability vision of making tomorrow better than today.

    PepsiCo’s commitment to living by this vision every day is visible in its contribution to the country, consumers, and farmers. “Our Goal is to nourish consumers with a range of products that deliver great taste, convenience, and affordability from simple treats to healthy offerings. ”

    Product Profile- Pepsi Max

    Pepsi Max is a low-calorie, sugar-free cola, marketed by PepsiCo as an alternative to Pepsi and Diet Pepsi.  Pepsi Max debuted in the United Kingdom and Italy in April 1993. In October 2008, Pepsi announced they would be redesigning their logo and re-branding of Diet Pepsi.

    Pepsi Max uses all lower-case fonts for name brands and Diet Pepsi Max was re-branded as Pepsi Max. Pepsi Max was launched around august 2010 in India. Pepsi Max television advertisements have featured the taglines “Maximum taste, no sugar” and “Don’t worry, there’s no sugar. AS people in India are growing more calorie-conscious than they ever were. And the food and beverage industry is trying to get the most of it. PepsiCo India launched its global sugar-free cola brand, Pepsi Max, in India around August 2010. Pepsi max India is targeted more towards to the youth.

    The launch of this new low-calorie drink is to expand its reach to young adults in the age group of 25-35. It has been targeted to the urban areas because of negligible consumption in rural areas. Pepsi Max is available in a can & bottles, priced at Rs 15 & Rs 25. A 250 ml can at Rs 15. 330 ml can and 500 ml bottles at Rs 25. Initially, this was available in New Delhi and near-by places and was planned to roll out to other places.

    Objectives of Pepsi Max Distribution Channel

    Pepsi Co follows an intensive distribution strategy. To support their ubiquitous feature they want to place their product in as many outlets as possible.

    Their prime objectives are:

    • Increase market coverage( i. e. to reach more people at the same time)
    • Competing against Coca Cola and other local companies (because they had this new blend of flavor which was free from sugar and was not harmful and thus preferred by health-conscious people)
    • High availability (the distribution channel was so designed to make the product easily available to the customer)
    • Strong presence (the presence of Pepsi Max was visible with huge promotion programs and well-managed distribution channel)
    • Shorter delivery span (the lead time involved in the delivery of the order was small)
    • To built distribution network loyalty ( to maintain good relations with the channel members and motivate them as and when required)
    • To identify the source of supply for the product line at the final buyers level( work on the availability of the product through intensive distribution. )

    Distribution Channel of Pepsi Max

    Pepsi Max operates through the same distribution channel as of the general Pepsi. The distribution channel includes various intermediaries and logistics. It follows several levels of distribution i. e manufacturer, stockist, Distributor wholesaler/vendor, and the retailers. The logistics for the Distributors and bigger retailers are provided by the company whereas the smaller retailer is provided by the distributors through the company-owned vehicles. The company has a stockist for each particular zone and an Area sales executive for a particular area divided on the basis of territory. Retailers are categorized as General trade retailers and Modern trade retailers on the basis of sales and meeting of targets. Term of tenure (TOT)- The company has different terms of tenure for general trade and Modern trade retailers.

    The modern trade retailers get more credit period. Sales officer deals with the general trade retailers but the dealings of Modern trade retailers are done General manager sales level. Each channel member has to sign an agreement with the company before entering into business. This ensures the loyalty and quality of distribution channels. For proper effectiveness of distribution channels the company does regular area visits and evaluates the sales record, Product display, etc. of the retailers. This is the reason Pepsi has a good reputation and goodwill in the market. The company also helps in conflict resolution and settlements between the channel partners. If still there exists a conflict then the company changes the vendor for that particular retailer and switch to some other service provider.

    Profit Margin

    The price for each carton (which contains 24 bottles) of Pepsi max is Rs 318 for the distributors and Rs 330 for the retailers. The final price at which this 24 bottle carton is sold to the end customer is Rs. 360. Thus resulting in a profit of Rs 12 for the distributors, and for the retailers, it is Rs 30 per carton. The Profit also differs for the general trade retailer and Modern trade retailers, i. e. 15% is for the general trade retailers and 20% for the modern trade retailers. The company also gives a discount to the retailers on meeting targets like they provide some bonus stocks to the retailers at the same cost. This is a way of motivating them and letting them perform better. The MRP of the product changes from season to season due to change in the demand of the product, but the margin of the intermediaries does not change.

    REFERENCES:

    • http://pepsicoindia.co.in/company.aspx
    • http://www.livemint.com/2010/08/02205727/PepsiCo-launches-Pepsi-Max-in.html
    • http://profit.ndtv.com/news/show/pepsi-plans-to-launch-pepsi-max-in-india-32365

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