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

Managing Director

Finance & Accounts Administration of

Manager Recruitment

Director of Executives
Accountant

Sales & Marketing Production

Department Department

Sales Manager

Factory Manager Production

Accounts Manager
Area Sales Manager

Shipping Production
Engineer

Fountain Pepsi Bottles Soft Drink

Quality

Control

Fountain Manager Accountant

Chemists

Sales Executives 102 Distributors Production

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 300 ml, 200ml Brunt sugar Cola
Mirinda 300 ml, 200ml Sun-set Orange
Mirinda 300 ml, 200ml Tetrazine Lime
Mirinda 300 ml, 200ml Tetrazine Mango
7 Up 300 ml, 200ml Colorless Lemon
Mountain Dew 300 ml, 200ml Colorless Lemon
Slice 300 ml Sunset Mango
Lehar soda 300 ml Tetrazine Lemon
Pet 1.5 lt. Brunt sugar Cola
Pet 2 lt. Brunt sugar Cola
Can 330 ml Brunt sugar Cola
Aquafina 1 lt. Colorless White
(Mineral
Water)
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).

Supplier Manufacturer Distributor Retailer Customer

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:
 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.
Predictable
Predictable supply &
supply and uncertain Highly
demand demand or uncertain
uncertain supply supply &
& predictable demand

Figure 3
PEPSI

Step 2: Understanding the Supply Chain Capabilities

Highly Somewhat Somewhat Highly

Efficient Efficient Responsive Responsive

In towns PEPSI in cities

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 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.