PEPSI The History Of Pepsi

Pepsi was originally named "Brad's Drink", after its creator, Caleb Bradham, a pharmacist in

New Bern, North Carolina. It was created in the summer of 1893 and was later renamed

Pepsi Cola in 1898, possibly due the digestive enzyme pepsin and kola nuts used in the

recipe. Bradham sought to create a fountain drink that was delicious and would aid in

digestion and boost energy

In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore into a rented

warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold

in six-ounce bottles, and sales increased to 19,848 gallons. In 1926, Pepsi received its first

logo redesign since the original design of 1905. In 1929, the logo was changed again. In

1929, automobile race pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads as

"A bully drink...refreshing, invigorating, a fine bracer before a race".

In 1931, the Pepsi-Cola Company went bankrupt during the Great Depression- in large part

due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of

World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight

years later, the company went bankrupt again. Pepsi's assets were then purchased by

Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with retail stores that

contained soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke

refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-

Cola syrup formula.

INTRODUCTION OF PEPSI

Pepsi is one of the most well known brands in the world today available in over 160 countries.

The company has an extremely positive outlook for India. This reflects that India holds a central

position in Pepsi's corporate strategy. India is a key market for Pepsi co, and at the same time the

company has added value to Indian agriculture and industry. PepsiCo entered India in 1989 and

is concentrating in three focus areas - Soft drink concentrate, snack foods and vegetable and

food processing. Faced with the existing policy framework at the time, the company entered the

Indian market through a joint venture with Volta’s and Punjab Agro Industries. With the

introduction of the liberalization policies since 1991, Pepsi took complete control of its operations.

The government has approved more than US$ 400 million worth of investments of which over

US$ 330 million have already flown in. One of PepsiCo's key strategies was to develop a

completely local management team. Pepsi has 19 company owned factories while their Indian

bottling partners own 21. The company has set up 8 Greenfield sites in backward regions of

different states. PepsiCo intends to expand its operations and is planning an investment of

approximately US$ 150 million in the next two-three years.

Vision:

"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

Mission:

Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce 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.

2.2 ORGANISATION STRUCTURE

Finance & Accounts Manager

Finance & Accounts Manager

Administration of Recruitment

Administration of Recruitment

AccountantAccountant

Managing DirectorManaging Director

Director of ExecutivesDirector of Executives

Sales & Marketing Department

Sales & Marketing Department

Sales ManagerSales Manager

Area Sales ManagerArea Sales Manager

Fountain PepsiFountain Pepsi Bottles Soft DrinkBottles Soft Drink

Fountain ManagerFountain Manager AccountantAccountant

102 Distributors 102 Distributors Sales ExecutivesSales Executives

Production Department

Production Department

Factory Manager Accounts

Factory Manager Accounts

ShippingShipping

Production Manager

Production Manager

Production Engineer

Production Engineer

QualityQuality

ControlControl

Chemists Chemists Chemists Chemists

ProductionProduction

PROCESS ANALYSIS

Internal Analysis:

The internal analysis is a comprehensive evaluation of the internal environment's potential strengths and weaknesses. Factors should be evaluated across the organization in areas such as:

Company culture Company image Organizational structure Key staff Access to natural resources Position on the experience curve Operational efficiency Operational capacity Brand awareness Market share Financial resources Exclusive contracts Patents and trade secrets

The SWOT analysis summarizes the internal factors of the firm as a list of strengths and weaknesses.

External Analysis:

An opportunity is the chance to introduce a new product or service that can generate superior returns. Opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. Changes in the external environment may be related to:

Customers Competitors Market trends Suppliers Partners Social changes New technology Economic environment Political and regulatory environment

The last four items in the above list are macro-environmental variables, and are addressed in a PEST analysis. The SWOT analysis summarizes the external environmental factors as a list of opportunities and threats.

Product Design & Process Selection

Product design – the process of defining all of the companies product characteristics

Product design must support product manufacturability (the ease with which a product can be made)

Product design defines a product’s characteristics of:

appearance,

materials,

dimensions,

tolerances, and

performance standards.

Process Selection – the development of the process necessary to produce the designed product.

PRODUCT DESIGN

QUALITY #1 --PRODUCT DESIGN: Pepsi Cola scores big on product design. The label of the Pepsi Cola bottle is much more colorful and attractive then the label on the Coca Cola bottles. Product design is important because it really grabs your attention. If the product has a poor design you are less likely to reach for it on the shelf for an impulse buy. For the label, Pepsi Cola scores a five out of five stars.

QUALITY #2 --FIZZ: Pepsi Cola has more fizz then Coca Cola. Both drinks have a lot of fizz. The Pepsi Cola drink seems to hold its fizz longer then Coca Cola. That might be why hospitals give flat Coca Cola to patients instead of flat Pepsi Cola. Most people really do not like to drink flat soda; unless of course they are sick! For the amount of fizz and how long the fizz lasts, Pepsi Cola scores a five out of five stars.

QUALITY #3 -ICE CREAM FOUNTAIN DRINKS: But how well do these drinks do for making ice cream drinks. The Pepsi Cola seems to stick to the ice cream making little

flavor chunks on the side. The Coca Cola just hovers around the ice cream. Now for a smooth fountain drink with ice cream you do not want the chunking of the ice cream on the sides. Ewwww. It just totally destroys the texture of the ice cream. For ice cream fountain drinks quality Coca Cola receives five stars out of five stars.

QUALITY #4 - BOTTLE SHAPE DESIGN: What about bottle shape design? If you put a Pepsi Cola bottle next to a Coca Cola bottle the shape design is virtually the same. You could remove the labels off of both bottles. Next, sit the bottles side by side. It would a real challenge to tell which bottle was from Pepsi Cola and which bottle was from Coca Cola. For bottle shape design, Pepsi Cola and Coca Cola both get five stars out of five stars.

The steps involved in the production process are:- First the fork lift supplies the empty bottles which are collected from the

distributions.

Then depalletising is done i.e. separating cases filled or empty bottles from the

wooden planks.

Uncasing is done by separating empty bottles from the cases/carats.

Empty bottles are then fed into the bottle washer where stream with some

chemical is used for washing.

Washed bottles are then send to the filler where premix (Composed of syrup,

treated water bulk CO2) is filled in it.

The whole concentrated is chilled with glycol before filling and then crowning is

done.

The filled bottles are passed through inkjet coder for printing price and date.

Then again the filled bottles are send for final light inspection and from there they

are collected on a table.

Lastly the filled bottles are arranged in the crates (casing) and then palletizing is

done for storing it in the warehouse.

PRODUCT MANUFACTURED

The product manufactured by “Lumbini Beverages Pvt. Ltd. are very limited

ranges as it is not independent to diversity its products. It is a unit of Pepsi food Pvt. Ltd.

which supplies concentrates for drinks. They are:-

Products Quantity Colour Flavour

Pepsi

Mirinda

Mirinda

Mirinda

7 Up

Mountain Dew

Slice

Lehar soda

Pet

Pet

Can

Aquafina

(Mineral

Water)

300 ml, 200ml

300 ml, 200ml

300 ml, 200ml

300 ml, 200ml

300 ml, 200ml

300 ml, 200ml

300 ml

300 ml

1.5 lt.

2 lt.

330 ml

1 lt.

Brunt sugar

Sun-set

Tetrazine

Tetrazine

Colorless

Colorless

Sunset

Tetrazine

Brunt sugar

Brunt sugar

Brunt sugar

Colorless

Cola

Orange

Lime

Mango

Lemon

Lemon

Mango

Lemon

Cola

Cola

Cola

White

Supply Chain of Pepsi

The objective of every supply chain should be to maximize the overall value generated. The value of a supply chain generates is the difference between what the final product is worth to the customer and the costs the supply chain incurs in filling the customer’s request. (Chopra, Meindl 2006)

Supply Chain Strategy or Design:

During this phase a company decides how to structure the supply chain over the next several years. The company makes long term decisions in regards to location and capacities of production and warehousing facilities, the products to be manufactured or stored at various locations, the modes of transportation to be made, information systems and so on. The supply chain design is very expensive to alter on short notice and supports the company’s strategic objectives. In order to ensure a good supply chain strategy, Haidri Beverages plans two years in advance. It has several contracts with manufacturers, and receives raw material on a convenient basis. The company also decides where production plants are to be placed. Haidri has production plants at Peshawar and Islamabad. The production process is 65% automated. The company has to provide and manage transport for the delivery of products as well as the arrangement of third party services for the procurement of products. The shipping department handles orders and the transport department decides the vehicles for safe delivery.

Material planning and sourcing is carried out as well. Sources of supply of raw material both local and foreign are identified and terms and conditions are negotiated. Capacity planning is also done at this stage. Sales forecasting and production planning depends upon the capacity of the organization with respect to:

1. Production (180,000 converted 250 ML crates per day).

2. Storage: Raw and packing (80,000 Sq Ft)

3. Storage: Finished goods (120,000 Sq Ft)

Haidri has a procurement budget of Rs 2.9 billion. Approved suppliers cannot go beyond this budget. The supplier is audited by the most cost efficient quality control department. Distributors are also decided by the company, keeping in mind past performances. The company has increased its distribution capacity from one to six filling lines during the last few years lending it a competitive edge over Coca Cola.

Supply Chain Planning

As the above configurations have been set, planning must be done within the above stated constraints. The goal of planning is to maximize the supply chain surplus. Planning establishes parameters within which a supply chain will function over a period of time. Companies start the planning phase with a forecast for the coming year of demand. Pepsi carries out sales forecasting for local demand as well as for export purposes to countries such as Afghanistan. The annual sales target is conveyed to the supply chain department of Haidri Beverages. Planning is carried out on a monthly, weekly and daily basis at Haidri.

Supply Chain Operation:

Company makes decision regarding individual customer orders. The goal of supply chain operations is to handle incoming customer orders in the best possible manner. During this phase, firms allocate inventory or production to individual orders, set a date that an order is to be filled, generate pick lists at a warehouse, allocate to shipping, set delivery and so on. There is less uncertainty about demand. At Haidri, the production, sales and supply chain departments get together to decide the inventory usually on a weekly basis.

Process views of a supply chain:

The processes in a supply chain are divided into a series of cycles each performed at the interface between two successive stages of a supply chain.

Cycle View of Supply Chain: There are five stages in a supply chain (Supplier Manufacturer Distributor Retailer Customer) and four supply chain process cycles (customer order, replenishment, manufacturing, procurement cycle).

Figure 1

Push/Pull View of Supply Chain:

With push process execution is initiated in anticipation to a customer order. Pepsi has a seasonal demand. Just in time concept is applicable in non-seasonal period and not applicable in seasonal period. All processes that are part of the procurement cycle, manufacturing cycle, replenishment cycle, and customer order cycle are push processes.

Pepsi Sales order and processing: The Shipping Manager receives sales order from Sales Team, distributors through telephone, fax & email one day before dispatch. The sales are made to base distributors on advance payment against orders then shipping manager plans according to the demand of distributors on daily basis.

Competitive and Supply Chain Strategies

Figure 2

There are three major sustainable advantages that give PepsiCo a competitive edge as they operate in the global marketplace:

CustomerRetailerDistributorManufacturerSupplier

1. Big, muscular brands,

2. Proven ability to innovate and create differentiated products and

3. Powerful go-to-market systems.

PepsiCo's overall mission is to increase the value of shareholder's investment. They do this through sales growth, cost controls and wise investment of resources. They believe their commercial success depends upon offering quality and value to their consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to their investors while adhering to the highest standards of integrity. A customer while purchasing a bottle of Pepsi will consider product quality, price and availability of the product. Thus, Pepsi in Pakistan particularly focuses its competitive strategy as to producing sufficient variety, reasonable prices, and the availability of the product.

Marketing and Sales Strategies:

PepsiCo has developed the national marketing, promotion and advertising programs that support its many brands and brand image; oversees the quality of the products; develops new products and packaging, and coordinates selling efforts (PepsiCo 2000 Annual Report).

Supply Chain Strategy

Step 1 : The Customer and Supply Chain Uncertainty

a) Identifying customer needs:

Haidri needs to understand the customer needs for each targeted segment and the uncertainty the supply chain faces in satisfying these needs. As Haidri deals with beverages, which are a fast moving consumer good, it knows the requirements of consumers. Pepsi is considered as a drink which is refreshing during summer, and taken regularly during winter, with demand hiking around festivals such as Eid and occasions such as weddings. Haidri caters to both cities and rural areas. It understands the needs of both. As demand for beverages is seasonal, the quantity of product needed for each lot is taken care of with past demand in mind. Consumers generally require a small response time, high service level, reasonable price and some variety (for example health conscious people favor diet versions of sodas).

b) Demand uncertainty and implied demand uncertainty:

Demand for Pepsi varies by product. For example there is a greater demand for “Pepsi” as compared to “Mirinda Apple,” which is new. Hence, Pepsi has a low demand uncertainty as compared to “Mirinda Apple.” The product “Pepsi” is approaching its maturity stage in the PLC whereas “Mirinda Apple” is in the introductory stage.

Pepsi’s implied demand uncertainty varies with the product type as well as the customer needs. Due to decreased lead time (the customer may purchase its competitor’s product if Pepsi is not available at that time), need for greater variety and higher level of service, implied demand uncertainty increases. This is true for cities where unmet demand by Pepsi is met by Coca Cola, Amrat Cola and other such competitors.

Supply uncertainty is also affected by new products. New products have higher supply uncertainty.

c) Uncertainty for the capability of the supply chain:

After determining the demand uncertainty it is important to take a look at the uncertainty resulting form the supply chain. “Pepsi” is not a new product and its market is going towards maturation. The company does not have many difficulties in delivering a product and has a fixed delivery schedule (on daily basis). “Pepsi” hence has a predictable supply and somewhat uncertain demand depending on market conditions.

Figure 3

Step 2: Understanding the Supply Chain Capabilities

Figure 4

The efficiency and responsiveness varies according to the consumer needs, implied demand uncertainty, product type and market segments. In remote areas the company focuses on being somewhat efficient as other modes of transportation could turn the product to be highly expensive. According to the company it does not deal with distributors who do not have 20 to 25 vehicles, therefore as the company has focus on cost reduction, uses slow and inexpensive modes of transportation, the demand is certain, and uses economies of scale in production, the product Pepsi is more inclined towards

HighlyEfficient

HighlyResponsive

SomewhatEfficient

SomewhatResponsive

In towns PEPSI in cities

Predictable supply and demand

Predictable supply & uncertain demand or uncertain supply & predictable

Highly uncertain supply & demand

PEPSI

being somewhat efficient. In cities, the company focuses its attention on being highly responsive as Pepsi has to meet short lead time, meet a high service level, handle a large variety of products and respond to wide ranges of quantity demanded especially at the retail stage.

Step 3: Achieving the Strategic Fit

Making one stage more responsive allows the other stage to focus on being more efficient. The Pepsi supply chain assign different roles to its different stages, the company has to decide either to transfer the responsiveness to the manufacture stage or to the retailer stage. While discussing the Pepsi’s supply capability it is seen that Pepsi tends to be more responsive in the cities and a bit less in towns. Therefore, transferring the responsiveness to the retailer and distributor, allowing them to face the higher implied demand uncertainty. This in return allows the manufacturer and supplier to be more efficient. At the same time, multiple beverage types contribute to a broader product portfolio causing Haidri to adjust its strategies accordingly; tailoring the supply chain to best meet the needs of each beverage demand.

Expanding Strategic Scope of Pepsi:

In Pepsi the agile inter-company scope of strategic fit is essential because the competitive playing field has shifted from company-versus-company to supply chain-versus-supply chain. Strategic scope must cover all boxes, at least at the supply chain end. The agile inter-company scope of strategic fit requires the company to evaluate every action in the context of the entire supply chain. As competition increases, Pepsi is expanding their strategic scope as they are increasing their product line by adding “Pepsi Max,” “Mountain Dew” and “Mirinda Apple” to their beverage line.

Distribution Channels

Direct distribution:

o Delivery of post mix cylinders & handling of key accounts: The key accounts are different wholesalers, restaurants and hotels like Pizza Hut, KFC, Metro which serve as a place for key sale. These are known as national key accounts and are very important in terms of competition.

o Export Parties

Indirect distribution:

o Through Base market distributors

o Through Outstation distributors

Before delivering the product some certain guiding principles are followed for the assessment of distributor’s capability by Haidri:

Applicant must have 20 to 25 vehicles (depending on the area).

Applicant must have 20,000 cases of empty bottles.

Applicant must deposit Rs.1, 000,000 as a security.

Haidri uses light and heavy vehicles for safe delivery of goods to the distributors for timely delivery. It follows the just in time concept which is applicable in Non-seasonal period and not applicable in the seasonal period.

Review and Revise Distribution:

This is usually done through taking over key revenue areas. If the distributor does not achieve its sales target, the distribution is taken back and an addition of new distributor is done. Therefore Pepsi’s supply is low supply uncertainty. Some of its supply source capabilities are:

Less breakdowns

High quality

Flexible supply capacity

Mature production process

Checking and Inventory Control Gain control over your inventory with a Cargoscan™ dimensioning system. Re-dimensioning and weighing incoming and outgoing goods from your warehouse will help you discover irregularities from your supplier and customer. Identify damages before shipment, verify picked orders, and more. our inventory control systems automatically collect dimensions, weight and ID of all of objects, giving you full stock control at all stages of the supply chain.

J-I-T Is Key to Manufacturers' Success

When it comes to delivering high-cost, perishable products to manufacturing sites, just-in-time (JIT) remains one of the most cost-effective supply chain solutions. And when a JIT process is in place, on-time delivery is not an option-it's an absolute necessity.

Distribution Strategy

CONCLUSION

The project was a great experience for me in order to study the

marketing aspects in the world. It was a great opportunity for me to do the

project work in the end of the course because till now we learned the theory

regarding the marketing and the marketing related concepts, but now we got

the chance to implement that theoretical knowledge to do the project and got

the practical experience in the marketing field. Through this study I learned a

lot that how to approach a customer or any other people and how to explain

our view to them.

Soft drink industry is a vast growing industry when compared to many

other industries. This industry is a place where two major players are there in

the world. Pepsi Company is one of them. Doing my project in Pepsi is a great

experience as it gave me lot of opportunity and scope to understand the

soft drink industry and its marketing structure and distribution channels.

Lot of valuable information regarding the company and also the

retailers, has been collected from the survey, which helped me clearly to

understand the real problems faced by the marketers to distribute and also

make retailers to sell the company’s products in the market. I understood

how difficult to do the marketing in the present scenario to get success in the

marketing field. From the analysis of the data collected from the retailers the

investigator got some important findings regarding the company and the

industry. For those findings some of the suggestions made to the company

were really applicable for the growth and benefit for the company in order to

increase its market share and to become the market leader in the soft drink

industry, because a large number of competitors craving for the same

market. I got appreciation for the suggestion to the Company.

Thus, finally it can say that the Company needs a lot of improved

distribution channel management activities along with various promotional

strategies for the customers to get the top position in the soft drink industry. I

wish the company to achieve its objectives achieved soon.