Soft drink industry is one of the profitable industries in the FMCG sector. The Indian soft drink market is very wide and big to control India as India has all types of natural seasons and different locations with different culture. Soft drink Industry is low-margin industry but volume is the key to success in this industry. So as a part of our practical study, we chosen soft drink industry for our MRP-1 study, which give us ample knowledge about the environment in which industry is working. But to get in to the shoes of the company, it is essential to study all the aspects i. . all the function departments of the organization. In order to get the pioneering inspiration, as a student of Business Management, We got the opportunity to understand and experience management tactics in practical environment of PEPSICO INDIA HOLDINGS PRIVATE LIMITED. This Project works gave us the experience of practical study in its fullest sense which plays very vital role for solving many problems related to business field today. This project work is a reflection of our observation of the data and information we have gathered from the organization.
We have tried our best to study the various functions of the organization and thereafter have analyzed and presented this data in a systematic way. ACKNOLEDGEMENT At onset we would like to express sincere thanks and deep gratitude to Ms. Pallavi Bhatt, Asst Manager, Human Resource. PepsiCo India Holdings Pvt. Ltd for giving us an opportunity to carry over a comprehensive project in their esteemed organization. It has helped us a lot to consolidate our conceptual learning regarding the subject manner of scanning the function departments of an organization in real life situation. We would also like to convey our heart full thanks to Mr.
Rajesh Nair (Asst. Manager Market Development), Ms. Dipti Vaishnav (TDM), Mr. Kiran Acharya (Asst. Manager Product Availability), Mr. Salvin Durai (Manager Manufacturing), Mr. Rajesh Shah (Accounts Executive), Ms. Purnima Dongre (Quality control Executive) and Mr. Samir Shah (Shift In- charge) for guiding us consistently and for sharing a valuable experience and expert knowledge on the respective functional areas. We take this opportunity to thank our director Dr. Hitesh Ruparel and all the faculty members who had given their valuable guidance and motivation to pursue the project.
We express our humble feelings to all those who have helped us in one-way or the other. Date: 19-04-04Gajendran Naidu (16) Place: Ahmedabad. Paras Pandya (20) Tapan Shah (49) INDEX Preface Acknowledgement SECTION I Chapter 1 Research Methodology Chapter 2Macro Analysis Of Indian Soft Drink Industry 1. Introduction of Indian Soft Drink Industry 2. Indian Market Scenario Of Soft Drink Industry 3. Indian Market Players Of Soft Drink Industry 4. Michael Porter’s Five Force Model 5. Opportunities and Threats Analysis of Soft Drink Industry SECTION IIMicro Analysis Of PepsiCo India Holding Pvt. Ltd.
Chapter 3 Company Profile Chapter 4 Production Department 1. Structure Of Production Department 2. Responsibilities and Objectives Of Production Manager 3. Products Of PepsiCo India Holding Pvt. Ltd. 4. General Production Process 5. Quality Control Chapter 5 Marketing Department 1. Structure Of Marketing Department 2. Job Description 3. Target Market & Segmentation 4. Packaging & Labeling 5. Distribution Policies Chapter 6 Logistic Department 1. Introduction to logistic department 2. Value Chain Model Chapter 7 Human Resource Department 1. Organization Structure 2. Recruitment & Selection 3.
Training & Development 4. Performance Appraisal 5. Salary & Wages Administration 6. Safety & Health Of Employee 7. Employee Benefits& Services Chapter 8 Finance Department 1. Structure Of Finance Department 2. Financial Analysis Of PepsiCo India Holding Pvt. Ltd. 3. Duo Pont chart Chapter 9 Department wise Observations & Strategies Chapter10 Evaluation Of PepsiCo India Holding Pvt. Ltd. With respect to Generic Competitors Strategies Model Chapter 11 Key Success Factors Of the Organization Chapter 12 SWOT Analysis Of PepsiCo India Holding Pvt. Ltd Chapter 13 Observed & Suggested Strategies
Bibliography RESEACH METHODOLOGY Research Objective: ? To get the overall idea regarding industrial environment. ? To study the functional areas of the organization. ? To study the managerial implication and strengths, weaknesses, opportunities and threats of the organization. Research Design: Primary Research: ? Research Tool: Non disguised open-ended Self Administered Questionnaire ? Research Method: Stratified Convenience based Interview. ? Data Type: Primary data and Secondary data ? Sample Source: Executives and Managers of respective functional areas of the organization. Sample Size: There are 18 executives and 6 managers out of which we interviewed 5 executives and 6 managers. Secondary Research: ? Secondary Data source: Websites: www. pepsi. com, www. indiainfoline. com Magazines & Journals: Indian Journal of Marketing, May 2003 Business Standard June 5, 2003 2. 1 Introduction Of Soft Drink Industry The Indian soft drink market is very wide and big to control as India has all types of natural seasons and different locations have different culture.
The Northern parts is cold, where as in south the heat is out of control and people are in more need of soft drinks like PEPSI and COCA-COLA. The market share of any soft drink varies from location to location and season to season. Domestic firms in India, which once enjoyed the benefit of sheltered markets, are increasingly facing competition from global giants in the 1990s. Sheltered markets had once allowed Indian entrepreneurs to develop strong brands that have held their own against the onslaught of the MNCs. Some domestic firms have chosen the strategy of tie-ups with the MNCs. Others have tried to meet the competition head on.
Whatever route Indian firms take to deal with competition from MNCs, it is imperative for them to keep track of global strategies of these firms. Often the strategies undertaken at the local level are only part of the global strategies, because it is difficult for any firm to allow significant differences in approach in different markets. A MNC is never a loosely held holding company, where units can pursue their own strategies without reference to any central vision. After Coca-Cola made its exit from the Indian market in 1977, there was a vacuum in the soft drinks market, which was taken advantage of by Parle and Pure Drinks.
Parle launched Thums Up and gained a substantial and robust market share. After the second verities of the international Cola drinks, the market has witnessed a high-profile tussle between the global giants – Coca-Cola and PepsiCo. This tussle and the respective problems faced by the two firms in the Indian market are extremely instructive. PepsiCo gained a significant first-mover advantage through its ability to gain early access to the market. Coke, after a couple of abortive attempts, seemed to have made an entry under ideal conditions in the market.
Pepsi’s finesse and India seemed to be one of the rare markets where Pepsi was holding its own against Coke and consolidating its position. 2. 2 Indian Market Scenario DEMAND SUPPLY SCENARIO Production |Brand |98-99 |99-00 |00-01 | |Coke |56. 22 |59. 41 |55. 54 | |Thumsup |26. 22 |27. 98 |39 | |Fanta |17. 54 |12. |10. 44 | |Pepsi |74. 45 |76. 48 |75 | |Mirinda |19. 41 |21. 49 |23. 75 | |7 Up |6. 12 |2. 02 |1. 2 | Source: Indian Journal Of Marketing, May 2003 Sales: |Brands |1998-99 |1999-00 |2000-01 | |Coca-Cola |38. 15 |36. 7 |35. 05 | |Thumps Up |17. 8 |17. 13 |21. 46 | |Fanta |11. 9 |7. 72 |6. 59 | |Pepsi |21. 64 |25. 65 |25. 79 | |Mirinda |5. 64 |7. 21 |8. 18 | |7UP |1. 78 |0. 68 |0. 42 | |Others |3. 9 |5. 25 |2. 52 | Source: Indian Journal Of Marketing, May 2003 Demand-Supply for Cola Drink In 1998 to 2001, average demand for coca-cola was 36. 52% while supply was 57. 23%. While average demand for Pepsi was 24. 73% and supply was 75. 30%. While average demand for Thums Up was 18. 79% against the supply of 31. 40%. Demand-Supply for Non-Cola Drink In 1998 to 2001, average demand for Fanta was 8. 73% while supply was 13. 40%. While average demand for Mirinda was 6. 99% while supply was 21. 25% and average demand of 7up was 0. 6% while supply was 3. 13%. Consumption The market preference is highly regional based. While cola drinks have main markets in metro cities and northern states of UP, Punjab, Haryana etc. Orange flavored drinks are popular in southern states. Sodas too are sold largely in southern states besides sale through bars. Western markets have preference towards mango-flavored drinks. Diet coke presently constitutes just 0. 7% of the total carbonated beverage market. 91% of the total consumption of soft drinks in the country is by lower, lower middle and upper middle class people.
Per capita consumption in India is among the lowest in the world at 6 bottles per annum compared to 80 bottles in Thailand and 800 bottles in USA. Delhi market has highest per capita consumption in the country with 50 bottles per annum. (India Info line Sector Report, 2002). SEGMENTATION OF SOFT DRINK MARKET Cola Drinks The cola drinks segment stood for a total of Rs. 1100 Crore by value in the year 2001 which is 61% – 62% of the total carbonated soft drinks market by volume. Non-Cola Drinks The non-cola segment of carbonated drinks sector stood for the total of Rs. 00crore by value in the year of 2001, which is 38% of the total carbonated soft drinks market. Non-cola segment comprises different flavors and drinks of different brands available in the soft drink market; these drinks are available as orange, lime, mango, and ginger etc. Another factor for the study of soft drink market is the study of Cola a-c Non-Cola segments of soft drink industry is to carefully watch the different segments of soft drink industry. Initially researcher has study the two segments of soft drink market and that are Cola market and Non-Cola market.
The non-cola segment of soft drink market holds the share of 38%, which is further divided, into the main for different flavors orange, Cloudy Lime, Clear Lime and Mango. All these flavors are favorite among females of old age, as they don’t prefer the cola based drinks and the orange flavor top their choice. This is the reason why orange is on the top of the list of Market share in the non-cola drink segment of soft-drink market. Non-Cola share in the market: (in %) |Sr No. |Products/Flavour |Market share | |1 |Orange |44. % | |2 |Cloudy Lime |36. 8% | |3 |Clear Lime |10. 5% | |4 |Mango |7. 9 % | [pic] (Source: Indian Journal Of Marketing, May 2003) MARKET SIZE AND GROWTH Soft drink market size for financial year 2000 was around 270mn cases (6480mn bottles). The market, which was witnessing 5-6% growth in the early ’90s and even slower growth at around 2-3% in late 80s.
Presently the market growth has slowed down with growth rate of 7-8% per annum compared to 22% growth rate in the previous year. The market size for the Year 2001 was . 7000 million bottles. In the Asian market India stands at the 4th Rank in the rating from financial years 1996 to 2000. To maintain the 4th position in the Asian market India had to consume 207. 3 million cases in 1996, 207. 3 million cases in 1997, 252. 1 million cases in 1998, 269. 7 million cases in 1999 and finally 298. 5 million cases in the year of 2000. During these years of continuous market India had gained an annual growth of 9. % in the annual plan, which is more than double of the total Asian market growth of 4. 2%. Carbonated Soft drinks has grown to get the market of Rs. 2000 crore by value in the year 2001, which was a huge amount for any industry and it is also on the growing form. The market is growing day by day as the teenagers like soft drinks more than any other conventional drink. Researcher can further get a view of the cola and non-cola drinks available in the market, as in the soft drink industry there are different segmentations The market size for the Year 2001 was 7000 mn bottles, as per the figures in the below given table.
The market has grown 11. 0% in the financial year2000-2001 in comparison to the results of financial year 2001-2002. Market size and growth chart |Financial Year |Production |Growth rate (%) | |Production (Mn bottles j | | | |1988-1989 |1968 | |1989-1990 |2070 |5. 2% | |1990-1991 |2195 |6. % | |1991-1992 |2490 |13. 4% | |1992-1993 |2800 |12. 4% | |1993-1994 |3000 |7. 1% | |1994-1995 |3240 |8. 0% | |1995-1996 |4000 |23. 5% | |1996-1997 |4450 |11. % | |1997-1998 |4920 |9. 6% | |1998-1999 |5670 |15. 2% | |1999-2000 |6480 |14. 3% | |2000-2001 |7190 |11. 0% | Source: Indian Journal Of Marketing, May 2003. The growth rate of 22% till last year has got reduced due to high excise duty of 40% leading to higher price of the end product.
Such type of government policies makes the business down as this directly has an impact on the selling price of any product, which is not good for a healthy and matured market. Carbonated Soft Drink Market In India: According to government estimates soft drinks marketed in India were 6540 million bottles in March 2001. The market growth rate, which was around 2-3% in ’80s, increased to 5-6% in the early ’90s and is presently 7-8% per annum. Most of the sales of soft drinks take place during summers while just 5-6% of total sales take place in winters.
In summers the high season lasts for 70-75 days, which contributes more than 50% of the total yearly sales. In terms of regional distribution cola drinks have main markets in metro cities and northern states of UP, Punjab, Haryana etc. Orange flavored drinks and sodas are popular in southern states. Western markets have preference towards mango-flavored drinks. |Decade |Growth rate | |80’s |2-3% | |90’s |5-6% | |00’s |7-8% | pic] The two global majors PepsiCo and Coca-Cola Co. dominate the soft drink market in India. Coca-Cola, which had winded up its India operations during the introduction of the FERA regime, re-entered India 16 years later in 1993. Coca-Cola bought local brands-Thumps Up, Limca and Gold Spot from Parle Beverages and soft drink brands Crush, Canada Dry and Sport Cola from Cadbury Schweppes in early 1999. Pepsi started a couple of years before Coca Cola in 1991 has bought over Mumbai based Duke’s range of soft drink brands.
There are conflicting figures about their market share. The soft drinks segment, dominated by MNCs, accounted for Rs. 6,247 crore in sales in 2000. Thums Up, the brand taken over by Coca-Cola, is estimated at Rs 1,350 crore, bigger than Coca-Cola itself in India. Thums Up and Limca, two key brands that Coke acquired from Parle, account for no less than Rs 1,950 crore in sales for Coke. The Coca Cola Company in India has Rs 3,757 crore of sales of soft drinks, while PepsiCo’s three main brands have sales of Rs 2,490 crore. (Source: Economic Times presentation) Brand name |Market share in percent (ORG figures) |Market share in percent (IMRB figures) | |Pepsi |41 |49 | |Coca-cola |57 |48 | |Others |2 |3 | [pic] [pic] Source: Indian Journal Of Marketing, May 2003
The main players in the carbonated soft drinks are having a good market shares in the Indian market. By the survey conducted by the two companies IMRB and ORG the renowned survey companies of the soft drink market. The market share given by them is based on the preference and the choice of consumers in the market. The share given by the IMRB is that, that Pepsi is having the share 49% of the total market requirement and the Coca-Cola is having the share of 48% of the market requirement. Whereas the ORG is pointed out the shares held by Pepsi is 41% of holding and the coca-cola is aving the share of 57% of the total market requirement. Brand-wise growth rate: |Brand |Growth % | |Coca-cola |9. 44 | |Pepsi |17. 00 | |Thumps-up |26. 75 | |Mirinda |55. 08 | |Fanta |-2. 15 | |7 up |-2. 92 | |All other brands |52. 06 | pic] Source: Indian Journal Of Marketing, May 2003. While analyzing figures for 3-Year Annual Growth, we found that Coca-cola has made a growth of 9. 44%, where as Pepsi made 17. 00%, Thums Up 26. 75%, Mirinda 55. 08%, Fanta gone down by 2. 15%, 7Up gone down by 2. 92 % where as all Other brands made a striking growth of 52. 06%. These figures show that 7Up had a great setback in this Tri-year but Mirinda won over all other brands by making growth of 55. 08%. Market share of Mirinda indicates that Orange drinks are still in demand but Quality and promotion has failed for Fanta compared to Mirinda.
Being in the same flavour Fanta’s losses resulted into growth for Mirinda. For Clear drinks it was not a good deal, as 7Up recorded the maximum negative growth i. e. (-) 2. 92 % Cola market is very competitive as always. In this segment Thumps Up made victory over Coca-Cola & Pepsi and it looks that Cola flavor will remain the King of Soft Drinks. One should not forget the emergence of other brands, as they are knocking the doors of established brands and trying to attract the market. With the share in the market of a particular brand, we are going to analyze the share distribution on the basis of flavor. 2. 3 Indian Market Players
Coco-Cola India Ltd. and PepsiCo India Ltd. are the two major players of the Indian soft drink industry, where both are trying to lead the market by the means of market share, in the industry. Coca-Cola is on the top demand and Pepsi is its archrival. In the rural or interior parts of the country both companies are holding their monopoly in area. Where the companies are ruling the market in terms of sales figures. PepsiCo India Ltd. Pepsi is a multinational company and it is popularly known as Pepsi Co. International. It is a U. S. based company, but at present it is operating in 195 countries. Its turnover was $31. billion in 1996 and ranked Twenty First among fortune 500 U. S. companies. It has it’s own Bottling operations and has 28 bottlers approximately. It is a diversified company and it is operating successfully in soft drinks industry as well as in fast foods and restaurant business. There are several brands like Pepsi and Mirinda, which have market, share of 27. 1&7. 3% respectively and teem, 7 up and slice contribute 10. 8% collectively. Coca-Cola India Ltd. Coca cola is the only rival of Pepsi at the international level. As far as soft drinks market is concerned, Coca Cola is ahead of Pepsi. Coca Cola is also a U.
S. based company and at present it is operating in the same countries, where Pepsi is operating. Coca Cola’s turnover was $ 18. 5 billion in 1996 and ranked fifty-eighth among fortune 500 U. S. companies. Coca Cola has focused itself only on soft drinks market. It was coca-cola, which pioneered the soft drinks sector and from very beginning, it retain its No. 1 position. Coca Cola was born 11 years before Pepsi in 1887. Pepsi was established in 1898. Both have been selling thirst quenchers for 100 years that are now global brands. It has franchisee owned bottling operations. There are approximately 53 bottlers.
It has brands like coke, Thums Up, Fanta and Limca which contribute 10. 8%, 16. 8%, 5. 0% and 10% respectively and Gold Spot, Maza and others market share is 6. 5% collectively. By world standards, India’s per capita consumption of three servings is rock bottom, less even than our neighbors Pakistan and Bangladesh. If demand continues to increase annually at an average of 20%, then volumes could reach 1 billion cases within eight years. One case is equivalent to 24 bottles of 300 ml each. There are 360,000 retailers stocking soft drinks in India, where as in the Philippines with its population at 60 millions has 400,000 outlets.
Also, soft drinks, which retail at anywhere between Rs. 6 and Rs. 10, are expensive when measured against purchasing power. It takes an average Indian, 1. 5 hours of work to be able to buy a bottle; in other countries, the norm is five minutes. At present India’s soft drinks market is worth Rs. 1800 crore, which is growing at a fizzy 20% rate annually. Status of soft drink companies in Indian market | |Coca-cola |Pepsi Co. | |(Cola, Thums-up, fanta, maza, diet-coke) |(Cola, Mirinda & 7 up & other products) | |Turnover |Rs 792 bn |Rs 1260 bn | |Beverage Sales |Rs 720 bn |Rs 450 bn | |International Sales as % of total |70% |32% | |sales | | | |Package Variations |Bottle-200ml, 300 ml, 500ml, 1 litre, 1. 5 litre |Bottle-200ml, 300 ml, 500ml, 1 litre, 1. 5 litre | | |Cans-330ml Fountain Dispensers |Cans-330ml Fountain Dispensers | | | |(Market Share: 30% by volume) | |Investment in India |Rs 250 bn. |Rs 200 bn. | |New Investments |Rs 240 bn |Rs 300 bn |
Source: Indian Journal Of Marketing, May 2003. Flavor share in India In the Year 1998-99, Coke ruled the market again and growth gained by Coca-Cola was by 4. 15%, because of this growth Fanta suffered and lost 8. 59%. In this year Pepsi Cola segment recorded growth of 3. 08%. In this year Thums Up beat Fanta and became No. 3. In the Year 1999-2000, Pepsi Cola kept incrementing its share and made a growth of 4. 48% over the last year’s share. In the same year other brands did well and made a growth of 2. 16% over the last year. Again Coca-cola was crowned as the King of the soft drinks but dropped 1. 78%. In the Year 2000-2001, Pepsi Cola again geared its share and made a growth of 2. 6% over the last year’s share. In this year Mirinda has gone ahead of Fanta. Fanta made a growth of 0. 97%. Where as Coca-Cola saw a decrease of 1. 32% Urban-Rural share in Indian CSD market: [pic] (Source: Business standard June 5, 2003) Soft drinks giants Coca-Cola and Pepsi have signed on thousands of new retailers in a drive into rural India that has pushed up sales steeply. Coca-Cola has made its beverages available in 40,000 additional villages in the last three years. As a result, the rural areas now contribute 35 per cent of the company’s sales compared with 25 per cent in 2000. Sales volumes have jumped by over 125 per cent in some rural areas.
In order to service far-flung markets better, Coca-Cola has doubled the number of refrigerators in the market to 500,000 and added 5,000 new autos and light commercial vehicles to its fleet in the last one year. Pepsi has doubled distributors, cooling capacity and even the number of vehicles in rural areas. Thus, the contribution of rural areas to total sales has climbed from below 10 per cent to 10-15 per cent for Pepsi in the last couple of years. Pepsi has added more than 200 people to drive rural activation programs and ensure improved coverage and market penetration. The industry players believe that there is an untapped potential in the rural areas that will fuel quick growth in the coming years. Per capita soft drinks consumption in rural areas is only 2. 8 liters compared with 7. 4 liters nationally.
Growth in the soft drinks sector was almost stagnant two years ago but has now climbed to over 40 per cent. The growth rates have been achieved by a combination of aggressive marketing and new strategies. One powerful driver has been the 200 ml packs introduced to target rural areas. [pic] The overall market should hit 523,000 million liters by 2006. A continuing 5% growth rate for soft drinks compares favorably with at best 1% for hot drinks, 2% for milk and 3% for alcohol. (Source: Zenith International, 2002). 2. 4 Porter’s Five-Force Model 1. Rivalry among the competition: • Rivalry intensifies as competitors become more equal in size and capabilities.
In India only Pepsi and coke are the main two competitors they almost identical in terms of investment, turnover, market share etc. so we can say that the rivalry is more intensified. • Rivalry is usually stronger when demand for the product is growing slowly. Though soft drink being a seasonal product, due to the increased level of heat in almost 8-9 months in a year, the demand of soft drink has been stagnant for almost all the months in a year. Companies like Pepsi and Coke are using film stars and cricketers as brand ambassadors to position their brand in the mind of the customer. And film stars and cricketers are on the top of the mind to the consumers.
This is also one of the major reasons of increase in demand in last few years. • Rivalry is more intense when industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volumes. Pepsi and Coke are the major companies in Indian soft drink industry. The market share of them is almost equal. So they constantly want to eat each other’s pie for that they use price-cutting. Still there is a big rural market to be exploited in India. For this they are doing advertising specifically to attract a person from rural area. • Rivalry is stronger when customer’s costs to switch brand are low. The lower the cost of switching the easier it is for rival seller to raid another seller’s customers.
In soft drink industry the switching cost of customer is low because the prices of brand for both companies are same. So the rivalry is stronger. • Rivalry increases in proportion to then size of the payoffs from a successful strategic move. Over last few years both Pepsi and Coke have been ready to capture the moves of each other by following each other’s strategy point to point. For example, Coke focused on 200 ml bottle so customer saw more of Ash, Hrithik, and Aamir enticing the common people to drain down the small pack. • The rivalry tends to be more vigorous to get out of a business then to stay in and compete. Pepsi has invested Rs. 200 bn in India and they have 28 bottler plants and it is planning to invest Rs. 00 bn more. While coca-cola invested 250 bn and it have 53 bottlers and planning to invest Rs. 240 bn more. So it is very difficult for both of them to come out of this business. So the higher the exist barrier the stronger the incentive for existing rivals to remain and compete. 2. Threat of New Entrants: – Barriers to New Entry: – • Economy of Scale: The prices of Pepsi and coke are almost same. So for a new entrant to enter in the market and to achieve the economy of scale, it has either to enter on a large scale or to accept a cost disadvantage and lower profitability. If new entrants do the former, it can result in long-term overcapacity problems.
And if they do the later, the possibility of existing firms that they may bounce back aggressively with price cuts, increased advertisement and sales promotion. Either way potential entrant is discouraged by prospect of the lower profit. • Cost and Resource disadvantage independent of size: – Existing firms like Pepsi and Cock may have cost and resource advantages not available to potential entrants. This advantage can include partnership with best and cheapest suppliers; possessions of patterns, existing plants and have favorable location and lower borrowing cost. • Learning and Experience curve effects: – The prices of soft drink in India are almost small.
So for a new entrant to enter in the market, it is very difficult to come up with less prices because of lack of experience. But if the same situation occurs with either Pepsi or Cock it may be easier for them to compete with less price as they have experience. • Capital Requirement: – The most obvious capital requirements are associated with manufacturing plants and equipment, working capital to finance inventory, introductory advertising, sales promotion to establish customers and cash to cover loss. • Access to distribution channel: – Soft drink is an end user product. So a new competitor faces the barrier of adequate access to consumer because of wide distribution channel.
Wholesaler distributor may not ready to take a product that has lack of buyer recognition. Retailers have to be convinced to give a new brand adequate spaces because of existing producers are tied up with present distribution channels. To overcome these problem competitors have to give better margins to dealers and distributors. As a consequence profit of competitor is reduced. 3. Bargaining power of Customer: Soft drink is end users product. A consumer generally not buys soft drink in bulk rather he buys it in small quantity. Generally a buyer who purchase in bulk has his own influence on the industry players though following are the factors that decides the bargaining power of customer who purchase in small quantity. Bargaining power of consumer is more if consumer’s switching cost is low. In India there are mainly two big players in soft drink industry, which provides many brands of soft drink. Further, in present era of competition all the brands of soft drink from these two players are providing same quantity of soft drink at same price. The brand of soft drinks from one player that competing with brand of other competitor has low differentiation with each other e. g. Pepsi is in competition with Coca cola and Thums up. As a result it is very easy for customer to switch over from one brand to another. So in this case customer has strong bargaining power. If buyers are well informed with the seller’s product& price, the bargaining power is more. The more information the buyer has the more bargaining power he/she has. Many players of soft drink industry try to differentiate their brand on the basis of price differentiation. Further, in advertisement of particular soft drink they reveal the price for particular quantity of soft drink of particular brand. • Soft drink is such a product that a buyer generally cannot purchase in bulk. If any buyer that purchase any product from related seller frequently, a buyer can think over to go for backward integration but in case of soft drink industry it is not so. So this factor can reduce the bargaining power of consumer. If the number of buyer in the market is very low then in this case buyers have strong bargaining power on the sellers but in case of soft drink industry there are many buyers. Further as soft drink is by nature FMCG product that many buyers purchase frequently. This factor also reduces the bargaining power of the consumer. • In case of FMCG product it is not possible to repurchase the used product. Mostly many FMCG products are of perishable in nature. Typically buyers have bargaining power if it is possible to buy the product which is already used. But in case of soft drink as far as this factor is concern reduces the bargaining power of the consumers. When buyers have their own association and when they collectively purchase product through this association then it is possible that buyers possess bargaining power over the sellers. But in the case of FMCG product it is not so. As a result this factor also reduces the bargaining power of the consumer. 4. THREAT OF SUBSTITUTE GOODS: Following are the points, which we can consider for the threat of substitute goods: 1. Whether attractively price substitutes are available: The major substitute of soft drink is tea and coffee. The prices of tea and coffee in India are very less as compared to soft drink. So if a customer is price sensitive then he or she can switch over to tea from soft drink. So we can say that as far as price is concerned tea and coffee are the threat to soft drink as substitute goods in India. 2.
Whether buyers view the substitutes as being satisfactory in terms of quality, performance and other relevant attributes As far as basic function is concerned, soft drink is a cold drink while tea as well coffee is the hot drink. So a customer wants a cold drink will not switch over to hot drink easily. The other point to be considered is that soft drink is a seasonal product. At the time of summer the people prefer soft drink to hot drink. So in that case there is no threat to soft drink from its substitute tea or coffee. 3. Whether buyers can switch to substitute goods easily. As far as switching to substitute good is concerned, the loyal customer to either Pepsi or coke will not switch to coffee of tea very easily in the time of summer.
But in winter it is easy for a customer to switch over to tea or coffee, as they are hot drink. So it tea or coffee can be considered as threat to soft drink as far as this point is concerned. 5. BARGAINING POWER OF SUPPLIERS: – Suppliers have little or no bargaining power or leverage over rivals whenever items they provide are commodities available on the open market from numerous suppliers with ample capability to fill orders. In case of soft drink industry the main supplier is from Sugar industry. There are many small and big players in the sugar industry. The unorganized market plays a major role as well. So for a firm in soft drink industry to buy sugar from the market is very easy as the number of suppliers is more.
So the firm can easily bargain from supplier either in organized sector or in unorganized sector. So as far as bargaining power of suppliers is concerned it is not a major threat for the soft drink industry. 2. 5 OT Analysis Opportunities: • There is an immense opportunity in the rural market. As the strategy of low price has worked for the companies the market share of rural has increased. Companies like PepsiCo and coke has already acquired the rural share up to 15% and 35%. There is a chance to grow for these two MNCs by continuing the same strategy. • As the whole industry is governed by the major two company PepsiCo and coke there less chances for the unorganized and local brand to eat their market share.
So there is a lot of opportunity for the companies to grow without any interference. Moreover there are opportunity for any other company which works under same lines. • Country like India has a large domestic market, so the industry has a lot of opportunity to grow. As the growth of the industry should be twice that of country’s GDP so the industry has a chance to achieve the growth. • Due to urbanization, people have become more health conscious; company can extended their products to branches by introducing lemonade flavors and low calorie drinks i. e. diet coke and Pepsi. • Ability to grow because of rising demand in one or more market segment. As there are only two major companies in the industry, there is a competitive advantage of each of them to grab the market share of their rivals. Threats: • The major threats that can occur from the demographics are the ageing population of India. Consumers can even get health conscious and drink less sugar and more natural drinks. • In India, consumers can consider buying a soft drink as an occasional purchase. This would be bad news as there would be a small percentage of the market, which can purchase it. • There are major two MNCs operating in the Indian soft drink industry so there is neck-to-neck competition between them. As a result they have the same product characteristics, color and packing.
So there is continuous threat of unorganized market, which gives similar characteristics at lower prices. Under such situation differences are shown through different advertising images. • Increasing intensity of the competition among industry rivals may affect on profit margins. • As mentioned earlier, there are only two major companies in the industry it is likely for any other new potential competitors to enter. • There may be the loss of sales due to the substitute products. • The growing bargaining power of customers, because of low switching cost. COMPANY PROFILE History of PepsiCo Incorporation 1898: New Bern, N. C. , pharmacist Caleb Bradham renames “Brad’s Drink,” his carbonated fountain cola concoction, Pepsi-Cola. 902:Bradham applied to the state of North Carolina and to the U. S. Patent Office for a trademark on the name Pepsi-cola in 1902. He also issued ninety-seven shares of stock for his new company, and was ready to supply Pepsi to an eagerly awaiting world. 1906: Modified script logo is created along with the slogan, “The Original Pure Food Drink. ” By 1907, forty bottling plants were producing Pepsi-Cola, and 100,000 gallons of syrup were sold that year. The beginning of the second decade of the new century found Caleb Bradham producing syrup for 280 bottlers, and it seemed as though nothing could stop the growing popularity of this new soft drink. 1922: The Pepsi-Cola Company was insolvent. 923:The Craven Holding Corporation bought the Pepsi-Cola trademark and assets at auction for $30,000. The group purchased Pepsi-Cola as a holding action until a buyer could be found to actually put the business back into operation. That buyer turned out to be a Wall Street broker named Roy C. Megargel, who paid $35,000 to the Craven Holding Corporation. 1933: After giant candy company Loft, Inc. buys the company in 1931, Pepsi-Cola sells for 10 cents in a 12-ounce bottle instead of the standard six-ounce package size. The tagline “Refreshing & Healthful” is added to the Pepsi bottle logo. When the price of a “twelve full ounce” bottle is slashed to 5 cents, the tagline is dropped. 936: The new 12-ounce Pepsi bottle had created a two million dollar operating profit for Guth and his revitalized company. A prospectus issued by the company in 1936 outlining some of its accomplishments shows just how far Charles Guth had advanced the “Pepsi Generation” ? Pepsi being bottled in all 48 states, Cuba, Canada, and England. ? Five hundred million bottles of Pepsi were consumed in 1936. ? One billion bottles projected for consumption in 1937. ? Forty million pounds of sugar to be used in 1937. ? Pepsi now manufacturing all its crowns and cases. More than one million Pepsi cases to be made in 1937. ? Pepsi has become second largest soda beverage company in World. ? Stock not listed for exchange, and none is for sale. 940: New CEO Walter Mack adopts standardized embossed 12-oz. bottle, which debuts with the “Pepsi-Cola” label blown and baked into the glass. 1941: The Pepsi-Cola Company went public, and for the first time in its history, was listed on the New York Stock Exchange. To support the war effort, the Pepsi bottle crown colors change to red, white and blue. 1943: The logo incorporates a “bottle cap” look. The bottle cap logo includes the tag, “Bigger Drink, Better Taste. ” In 1958, the Pepsi swirl bottle bows with the “Be Sociable” advertising campaign. 1962: A “serrated” bottle cap logo debuts, accompanying the brand’s groundbreaking “Pepsi Generation” ad campaign. 965: The “Bottle Cap” look is replaced with two bulls-eye swish marks surrounding “Pepsi. ” 1973: The logo evolves into a boxed look with minor typeface changes occurring throughout the decade. 1991: To foster the earlier scripted logo’s sense of movement, “Pepsi,” now in italic capital typeface, is removed from a smaller blue and red Pepsi swirl and runs vertically up the package. 1998: In celebration of the company’s centennial, Pepsi unveils a new look – a three-dimensional globe against an ice blue background, which becomes a universal symbol for one Pepsi family – poised for innovation and world leadership as it enters the new millennium. Overview of the Organization
Pepsi is a multinational company and it is popularly known as Pepsi Co. International. It is a U. S. based company, but at present it is operating in 195 countries. Its turnover was $31. 6 billion in 1996 and ranked Twenty First among fortune 500 U. S. companies. It has it’s own Bottling operations and has 28 bottlers approximately. There are several brands like Pepsi and Mirinda, which have market, share of 27. 1&7. 3% respectively and teem, 7 up and slice contribute 10. 8% collectively. Pepsi have 6 corporate units in India. Out of which, Chambur and Mahul plant come under Mumbai units. Rest of Maharastra contains Roha and Aarugabad plant and Gujarat unit consist Naroda plant and Ghagadia plant.
Gujarat unit falls under west marketing unit (Bombay). In Naroda plant, there are six managers in unit, 18 executives in different department and 91 workers on company pay roll. Rests of the workers are on contract bases. Similarly in Ghagadia plant, there are 4 managers, 12 executives and 88 workers on company pay roll. Production Department Production is conversion of inputs such as raw material, labour etc. into final goods and services. Productions and Operations are more than planning controlling; it’s doing. Whether it is superior quality, speed- to – market, customization or low cost, excellence in production is critical to a firm’s success.
Production and Operations Managers design systems, ensure quality, produce products and deliver services. They solve problems, reengineer process, innovate and integrate. Quality is the biggest challenge Production Managers face. This is because the consumers were faced better buying opportunities and fears competition on the market. This resulted in the higher expectations for products and services. Consumers found that they could demand – and expect to receive – high – quality products that were reliable and priced affordably and competitively. In this new environment of increased competition globally, quality not only allows for product discrimination, but also has become a marketing weapon. 4. 1 Structure Of Production Department:
Production manager has to report to plant manager and plant manager has to report to unit manager. Production manager has to co ordinate with Q C manager, shipping coordinator and HR co coordinator. There are three-shift managers and one maintenance coordinator under him and maintenance coordinator has to take reporting from work net operator. 4. 2 Responsibility and Objective of Production Manager ? Production manager has to deal with shipping coordinator for glasses for production planning. ? Production manager have to coordinate with H. R. coordinator and Q. C. coordinator for manpower and syrup respectively. ? Production manager also coordinate with Purchase executive to ensure that raw material is available for production. The production manager is responsible to manufacture the required units. ? The production manager has to reduce the gap between demand and supply especially in the peak season. For that they are using Just In Time (JIT) approach. ? In case of annual shut down, production manager is responsible to maintain the stock prior to shutdown. 4. 3 Products of PEPSICO INDIA HOLDINGS PVT. LTD. Products of company should be such that it serves all the segment of the society. Company as a whole, manufactures cold drinks and food products. But in the Gujarat unit, it manufactures cold drinks such as: COLA BRAND:Pepsi NON-COLA BRANDS:Mirinda (Orange/Lemon) Teem Mountain Dew 7 Up Slice [pic] |[pic|Pepsi | | |] |Contains: Carbonated water, high fructose corn syrup and/or sugar, caramel color, phosphoric acid, | | | |caffeine, citric acid and natural flavors | | | |Calories | | | |100 | | | | | | | |Total Fat (g) | | | |0 | | | | | | | |Sodium (mg) | | | |25 | | | | | | | |Potassium (mg) | | | |10 | | | | | | |Total Carbohydrates (g) | | | |27 | | | | | | | |Sugars (g) | | | |27 | | | | | | | |Protein (g) | | | |0 | | | | | | | |Caffeine (mg) | | | |25 | | | | | [pic] Orange Slice | Contains: Carbonated water, high fructose corn syrup and/or sugar, citric acid, potassium citrate, | | |potassium benzoate (preserves freshness), gum arabic, malic acid, potassium sorbate (preserves | | |freshness), yellow 6, salt, ester gum, natural flavors, calcium disodium EDTA (to protect flavor) and brominated | | |vegetable oil | | | | | | |Calories |130 | | |Total Fats (g) |0 | | |Sodium (mg) |35 | | |Potassium (mg) |70 | | |Total Carbohydrates (g) 34 | | |Sugars (g) |33 | | |Protein (g) |0 | | |Caffeine (mg) |0 | [pic] Mountain Dew | | | | |Contains: Carbonated water, high fructose corn syrup and/or sugar, concentrated orange juice and other natural flavors, | | |citric acid, sodium benzoate (preserves freshness), caffeine, sodium citrate, gum arabic, yellow 5, erythorbic acid | | |(preserves freshness), calcium disodium EDTA (to protect flavor) and brominated vegetable oil | | | | | |Calories |110 | | |Total Fats (g) |0 | | |Sodium (mg) |50 | | |Potassium (mg) |0 | | |Total Carbohydrates (g) |31 | | |Sugars (g) |31 | | |Protein (g) |0 | | |Caffeine (mg) |37 | 4. 4 General Production Process: Stage 1: Uncaser Drive Machine In this stage glass bottles of brand, which is to be manufactured, are uncased i. e. empty bottles are placed on the conveyor belt and its automatically get lifted by the uncaser machine for further processing. There’s point known as uncaser checking point.
In this point, person checks empty bottles, whether they are broken or not. Broken bottle are removed manually. The person also checks top of the bottle where the crowning is done. Stage 2: Empty Inspection Through conveyor belt, the primary checked bottles are passed through this stage where a person checks for the foreign material – Gutkha packets, mud particles etc. If foreign materials are present, then they are removed manually. Stage 3: Bottle Washer This is crucial point for manufacturing. In this stage, bottles are washed thoroughly in bottle washer. In bottle washer, inspected bottles undergo 6 types of different washing processes viz.
Pre rinse – Bottle filled with water and rinse. Pre soaker –Bottle with water is shaked. Steam line –Hot water comes as spray with acid in to bottles. Pre wash – Here bottle-containing acid washed again with water. Hydro wash – Bottles are then washed with DM water. Final – Washed bottles are moved towards discharge point. Stage 4: Discharge Point After passing through the various stage of washing, washed bottles are moved towards pre inspection through this point. Stage 5: Preinspection For pre inspection, there two check points: Empty inspection & Bottom inspection. In empty inspection there are three persons who checks whether bottle washer cleans bottles properly.
Similarly in bottom inspection three person checks bottle from bottom whether it is clean properly from bottom or not. In both cases if bottles found unclean they are sent back through conveyor belt for manual washing. Stage 6: Filling System In this stage bottles through conveyor belt comes in filling system and filled with beverage and crowned. Syrup as mentioned earlier comes from syrup tank through pipe. This syrup is mixed with carbonated water in MOZOUNIER (tank) and through pipe passed in the filling system. Stage 7: Coding Machine After filling and crowing, with the help of coding machine bottles are marked with batch number, date of manufacture and price. Stage 8: Final Inspection
At this stage marked bottles come through conveyor belt and level of liquid in bottle is checked. In case of excess or less level, it is drained out. This point is also known as filled inspection. Stage 9: Caser Machine. From one side the washed case come from conveyer belt and from other side filled bottles are arrange in these cases through the caser machine. After that each case arrange on the pallet. After cases are arranged on the pallet, tag is issued on that pallet signifying it’s date of manufacturing, product and pallet number. Production Data: bottles contains 48 cases and for other then 200ml it contains 40 cases. Time keeping system:
Pepsi plant has shift wise working system for the plant workers. The securities also have 3 shifts working. The shift timings are: 1st shift 7:00 am to 3:30 pm 2nd shift3:30 pm to 12:00 pm 3rd shift12:00 pm to 7:00 am 4. 5 QUALITY CONTROL Quality control plays very critical role in maintaining products quality in companies so does for PepsiCo. This department not only checks the quality of product but also takes care for the sanitation of premises. It also takes up the job of pest control of the entire campus. Coming back to the product quality it holds the responsibility to render the best of it. This is done when the same product undergoes more than one stage of quality check.
At random 3 bottles are taken every 30 minutes to test the gas volume (G V) in it, which will represent the entire batch. The bottle is kept in the ideal condition at 40C temperature. Then it is shaken 20 times and with the help of ZAM NAGLE gas tester the gas volume is tested. Degaser machine will remove the gas from the filled bottle. The refractor magnetic stirrer will identify and maintain the salt level in the bottle. In order to maintain the standard quality of the crown, it is purchased centrally from Delhi. Product specifications for each product are strict and have to be followed. If product fails its’ specification, products are discarded.
Product specifications for company are as under: |Product |Gas Volume |Line Brix |Invertal Brix |Tritable Acidity | |Pepsi |3. 40-3. 80 |CD Brix |11. 10-11. 50 |10. 74-12. 36 | |Mirinda Orange |2-2. 40 |13. 30-13. 70 |14-14. 40 |24-28 | |Mirinda Lemon |3. 40-3. 80 |11. 20-11. 60 |11. 80-12. 20 |31-33 | |Mountain Dew |2. 30-2. 70 |11. 80-12. 20 |12. 46-12. 85 |18. 64-21. 1 | |7 Up |3. 50-3. 90 |12. 20-12. 60 |12. 80-13. 20 |22. 50-25. 50 | There are six reports, which department has to maintain in order get in lined with the quality as per the company norms. Line record There are certain standard, which the company maintains like fill height, this checked every four hours and its measurement is 57 mm + or – 3 mm. These details are noted down in line record. Bottle Washer Records In this record the detailed of washer is noted i. e. amount of caustic and other cleaning agents present or not. Bottle washer sanitation record
After every 24 hours tanks and jacks cleaned with water and its detail s are noted in this record. Equipments sanitation record Different equipment of the plant such as tank system, bottles lines syrup lines fillers system is cleaned and is recorded in books. Micro record In this report details regarding line sample, warehouse sample, market sample, syrup sample are noted. Both raw as well finished syrup are taken into consideration. Also incoming raw materials like raw sugar and crown are taken into account. After sanitation The final report regarding the entire details of all the records above is prepared. This includes all the checkpoints of quality control and sanitation of the premises. MARKETING DEPARTMENT
Marketing is typically seen as the task of creating, promoting and delivering goods and services to consumers and businesses. Just as logistics and production professionals are responsible for supply management, marketers are responsible for demand management. Marketing managers seek to influence the level, timing and composition of demand to meet the organizations’ objectives. Too many companies’ thinks that it is the marketing or sales department’s job to acquire and manage customers, but, in fact, marketing is the only factor in attracting and keeping customers. The best marketing department in the world can’t sell products that are poorly made or failed to meet a need.
The marketing department can be effective only in companies whose employees believe in superior customer value. Consumers are rational and estimate which offer will deliver the most value to them. Customers are value – maximisers, with in the bound of search cost and limited knowledge, mobility and income. They form expectations of value and act on it. Whether or not the offer lives up to the value expectation affect both satisfaction and repurchase probability. In PepsiCo India Holdings Pvt. Ltd, Marketing division work for generating sales. But it’s as individual, work as sales driven company. Marketing department’s main function is sales and it doing other activities to support their main function i. e. sales. 5. Structure of Sales and Marketing department: PepsiCo has flat organization structure. Customer Executive (C E) has to report to Territory Development Manager (TDM). TDM has to report to the unit head. There are seven executives under TDM and each one coordinate with their respective distributor. There are five TDM in Whole Gujarat. While in Marketing, ME report to MD Coordinator. MDM takes report from MD Coordinator and finally report to unit head. PepsiCo India Holdings Ltd has divided the Gujarat unit into five territories as: ? Ahmedabad ? North Gujarat ? Central Gujarat ? South Gujarat ? Saurastra 5. 2 Job description Territory Development Manager
Job objective: To secure maximum volume of sales through effective development and execution of sales and marketing programmes and policy for all products of the company. Again it is the responsibility of territory sales manager for maximum distribution coverage. Reporting relationship: To Unit Head- Mr. Nagesh Raajana. Responsibilities and Duties: Customer Executives Job Objective: To secure maximum volume of sales through effective development and execution of sales and marketing programmes and policy for all products of the company. Reporting Relationship: To Territory Development Manager: Ms Dipti Vaishnav. Duties and Responsibilities: Sales Force Size
PepsiCo India holding ltd do not have their own salesperson. Salespersons are on the distributor’s payroll, there are customer executive for each distributors who assist these salespeople and even train them. There are about 100 salespeople under all distributors. 5. 3 Target markets and Segmentation Segmentation is related to mass marketing. In mass marketing the seller engages in mass production, mass distribution, and mass promotion of one product for all buyer. To decide the target market the company recognizes two criteria viz. the segment’s overall attractiveness and the company’s objectives and resources. Here PepsiCo India Holdings Ltd.
Attempts to serve all customer groups with all the products they might need. Full Market Coverage M1 M2 M3 | | | | | | | | | | | | P1 P2 P3 P=Product M=Market Any organization can cover the whole market in two broad ways- undifferentiated marketing or differentiated marketing. PepsiCo India Holdings Ltd undergo undifferentiated marketing, here the company ignores segment differences and goes after the whole market with one offer. It design marketing program that will appeal to broadest number of buyers. It relies mass distribution and mass advertisement.
The company’s target market is a slum to five star hotels and from children to elderly people. As company uses full market coverage, so the company has concentrated on rural market. 5. 4 Product Policy Product policy generally serves as a guide for marketing product decisions. Product line: Product mix consists of various product lines. In offering the product, companies normally develop a basic platform and modules that can be added to meet different customer requirement. Product line of PepsiCo India Holding Ltd comprises of the following: ? Pepsi ? Mirinda (Orange/Lemon) ? Mountain Dew ? 7Up ? Teem ? Slice Branding Decisions: Branding is a major issue in product strategy.
Successful brand is a name, symbol, design or some combination, which identifies the “product” of some particular organisation as having sustainable competitive advantage. There are four strategies for branding: ? Individual Brand name for different product. ? Blanket family name for all the products ? Separate family name for all the products ? Company trade name combine with individual product names PepsiCo India Holding Pvt Ltd. uses two types of branding strategies viz. company trade combine with individual product name for cola product i. e. Pepsi and individual brand name for different product for non cola product i. e. slice, Mirinda, Mountain Dew, etc. Product P
