PEPSI CO. 16
Currentstrategies used in Place (Distribution) by Co.
Placein marketing refers to the method used to get services and productsthrough various distribution channels to the ultimate product userwhere the customer buys the products or services(Kurtz, 2010).As such, “place” strategy ensures that the products reach thetargeted market through distribution and logistics (Kotler,Philip and Keller, 2012).Distribution channels and logistics are strategies used by businessenterprises to ensure that the products reach the targeted consumers(“Co Family”). There are different distribution channelsused by manufactures these ranges from single to multipledistribution channels (Adcock, AlHalborg and Ross, 2001 Kotler and Armstrong, 2011).). For instance, singledistribution channel may involve selling to the whole seller, orselling to multiple wholesalers, distributers and retailers.
Inorder to determine the best structure of distribution, importantaspects such as convenience to customers and customer servicestandard required are considered (Kotler and Armstrong, 2011). Otheraspects considered are cost efficiency, transaction value and thestructure of distribution channels used by competitors (Kotler,Keller and Burton, 2009). Place (distribution) is an essentialmarketing strategy that involves getting the right product, in theright quantity, place and at the right time to consumers (Kurtz,2010). co has three main distribution networks direct to the store(DSD), customer warehouse and through the third party distributionnetwork (“Co Family”). The distribution networks adopted by Co are based on customer needs, local trade characteristics andproduct characteristics. Distribution is an important aspect in thebeverage industry and many distributors are needed to match marketcompetition (Adcock, AlHalborg and Ross, 2001).
Directdistribution involves selling directly to the customers whileindirect distribution involves selling through distribution channels(Kotler and Armstrong, 2011). Co utilizes indirect distributionby involving the warehouse, retailers and customers. Indirectdistribution is regarded as effective for all parties (Kurtz,2010).In part, the manufacturer is able to focus on product development anddoes not have to worry about bulk distribution (Adcock, AlHalborg and Ross, 2001). Retailers on the other hand, focus on customers andfacilitate large scale logistics. Customers in the indirectdistribution are able to get higher expertise on product assistancefrom the manufacturer via retailers (Kotler and Armstrong, 2011).Indirect distribution has several advantages and allows forspecialization and division of labor in the product cycle (Adcock, AlHalborg and Ross, 2001).
Typesof intermediaries (retailers, wholesalers etc.)
co distribution involves the manufacture, wholesalers and theretailers. The current distribution statistics of Co. are broken as follows Gas stations and convenience stores: 12% market,Restaurants: 25% of the market, warehouse and club stores: 6% of themarket and Supermarkets and retail stores takes up 57% of themarket. In summary, ’s main intermediaries are wholesaledistributors, grocery stores, convenience stores, mass merchandisers,membership stores, foodservice distributers and authorizedindependent bottlers.
DirectStore Delivery (DSD)
Co utilizes the DSD strategy to deliver products directly to retailstores. The direct store delivery enables Co to market itsproducts with maximum visibility (Kotler, Keller and Burton, 2009).The DSD is more suitable for products that need restocking often andare sensitive to marketing and promotion dynamics (Kotler andArmstrong, 2011). Direct store delivery (DSD) is an essential methodof distribution and selling large variety of products (Kotler,Philip and Keller, 2012).DSD is a business process through which manufactures distribute andsell goods directly to point of sale (PoS) or point of consumption(PoC) (Kotler and Armstrong, 2011).
DSDincludes other market related services such as information gatheringand merchandising (Adcock, AlHalborg and Ross, 2001). As a distribution method, the DSD approach bypassesthe retailers and the wholesalers (Kotler,Philip and Keller, 2012). As such, through DSD Co does not send goods through anyindependent distributer such as the wholesalers or retailers(“Co Family”). DSD is an important aspect in the food andbeverage distribution industry as it helps to minimize the number ofdays products stay in the distribution channel (Adcock, AlHalborg and Ross, 2001). In addition, by utilizing the DSD method Couse full track load that allows it to bypass distribution centersthereby attaining economic sense (Kurtz,2010).However, the DSD method is not effective in distributing moreproducts as it is the case with centralized distribution.
Customerwarehousing is a relatively expensive distribution method that isideal for perishable and fragile products (Kotler and Armstrong,2011). The customer warehouse method has low turnover and goods arenot purchased impulsively. In order to aggressively market itsproduct Co delivers its products from to customer warehousesand retail stores (“Co Family”). This method of distributionis considered less costly and ensures that clients get quality andfresh products in time (Adcock, AlHalborg and Ross, 2001).
Co uses the third party distributer networks to distribute itsbeverage products to business, schools, stadiums and restaurants.This third party distribution method is mainly done throughindependent bottlers (“Co Family”). In this case, salespersonnel are also involved in distributing products through thirdparty. The third party distributers provide large distributionchannels (Kotler,Philip and Keller, 2012).Restaurants, Schools, Airlines and Supermarkets and gas stations arethe main third party distributers of Co. (“Co Family”).
Maindistribution activities used (physical distribution, transportation,storage, etc.)
Themain activities involved in the distribution channel adopted by Co are the physical distribution and transportation. The mainlogistical operations involve distributing syrup to bottlers anddistributing cans and bottles to retail outlets (“Co Family”). Co does not encourage storage of products in the distributionchannel. The distribution channel adopted by serves to reducetime and enhance uniformity and quality of products (Kotler,Philip and Keller, 2012).
Inaddition, the direct approach used by Co helps to reduce costsespecially by involving the third parties. For instance, hashired “Penske Logistics” to offer transport solution andwarehouse management services. In other cases, Co. uses the i2transport optimization system software to monitor the distribution ofproducts during transportation (“Co Family”). This enables to make necessary changes in schedules and routes (Kotler,Philip and Keller, 2012).This allows to maintain more than 99.1 % accuracy in itsdistribution and cost-efficiency approach (Kurtz,2010).
Furthermore, has centralized its transportation to single location. In this, employs the six sigma quality processes order optimization,load configuration, lower shipping costs and delivering productsthrough quick routes. Another aspect is that Co has severaldistribution centers and trucks than ensures timely dispatch, fullcapacity utilization and quicker inventory replenishment (“CoFamily”). The distribution approach used by creates fourtypes of utility time, place, possession and form. Time utilityrefers to making the products available to clients when needed. Placeutility is achieved by using extensive distribution centers that arecloser to clients. Form utility is achieved by making the productssuit individual customer needs (Adcock, AlHalborg and Ross, 2001).
Typeof market exposure used by (intensive, selective or exclusive)
uses intensive market exposure method through heavy investments inproduct marketing (“Co Family”). The beverage industry facesstiff competition from various players such as Coca-Cola. As such, has an aggressive and intensive marketing approach thatinvolves a marketing mix to reach diverse markets. Every year, invest heavily on product promotions, advertising and marketingplans. In this marketing, distribution and sales strategy, donot exclude any location or region in its product marketing. has global market coverage just like Coca-Cola (“Co Family”).
Customerservice level desired by target market
has scaled its distribution networks through the customer warehouse,DSD and food services vending networks to reach more customers. Inaddition, direct distribution approach ensures that theproducts reach customers in good quality, in time and form (Adcock,Al Halborg and Ross, 2001). The distribution system used is specificdepending on customers’ needs, local trade practices and productcharacteristics (Kurtz, 2010). In its recent business strategy, Co is focused on building and extending its snack portfolio to servethe needs. The strategy is to create products that reflect the localculture and global demands for convenient nutrition (“CoFamily”).
Positiveand negative things the has done
has diverse products unlike its main competitor Coca-Cola. Diversityin products and efficient distribution channels makes acompetitive beverage distributer. In particular, ’s directstore delivery approach allows the firm to maintain close contactwith customers and thus it is able to gather market feedbacks(“Co Family”). The effective distribution strategy of directdistribution ensures that saves vast resources while providingclients with time, place, form and possession utility (Kotler,Philip and Keller, 2012).However, has been ineffective in creating effectiverelationships with bottler distributers and this makes it marketingand distribution ineffective (Adcock, Al Halborg and Ross, 2001).
Inaddition, brand is weaker compared to Coca-Cola and this isattributed to several things such as weak advertisement and brandpromotion, poor pricing strategy and ineffective global distributionsystem (Adcock, AlHalborg and Ross, 2001). Although Co has more varieties compared toCoca-Cola, has lower global consumption share compared toCoca-Cola. Furthermore, Co. group companies operateindependently and this affects the distribution channel. needsan integrated operation system that will streamline distributionoperations (Kurtz,2010).
promotes its products through personal selling, advertising and salespromotion. In sales and advertising promotion, print and electronicMedias are used (“Co Family”). All these promotion methodsare designed in a promotional mix that serves to increase sales,enhance product acceptance, positioning, create brand equity andenhance corporate image (Kurtz,2010).
Mediumused in sales promotion and advertising
Differentapproaches are used by Co in their product promotions. Theseinclude internet advertisement, endorsements, through special eventsor personal advertisement by the business. uses magazine andnewspaper advertise becomes to create more product and priceawareness. Print media such as magazines serves as reminderadvertisements and this ensures that the company’s brand imageremains competitive in the market (Kotler,Philip and Keller, 2012).Other adverts are conveyed through online (“Co Family”).
also uses outdoor advertisements in physical environments likeconcerts, trade shows and festivals. The rationale is to catch thetrends in the society by inviting singers, models, actors and actressto promote products this helps to promote product brands awarenessand loyalty among the customers (Kotler and Armstrong, 2011).Furthermore, by sponsoring the pop industry and sport activities, promotes its products to the right target that consist of youngpeople (Kurtz,2010).
Sportsand films are popular among the young people and advertisementthrough these channels helps to entrench brand to millions offans thereby increasing brand recognition (“Co Family”). Inaddition, this outdoor product promotion offers excellentopportunities for interaction with customers (Kotler and Armstrong,2011). This allows customers to buy product samples or ask relevantinformation regarding the product (Adcock, Al Halborg and Ross,2001). In some cases, hires promotional models or brandambassadors to promote their product or services and this improve itsproduct brand awareness on the targeted markets (Kotler& Kevin 2009).
has direct advertising approaches that involve personal interactionswith clients through the social media. Establishing social mediainteractions through promotion enhances brand loyalty among customers(Adcock, Al Halborg and Ross, 2001). In addition, promotionalactivities through social media create a viral advertisement in whichgreat attention is enhanced as people share information (Kotler,Philip and Keller, 2012).In the modern age, social media is one of the most influentialmarketing tools as information is shared across wide range ofaudience (Kotler and Armstrong, 2011). Other Medias such as printmedia, electronic, radio and televisions are used for heavy promotionespecially when is conducting sales promotions, brand awarenessand distributions (Goldstein,2005).
Currentpromotion objectives for each type of promotion
has four production promotion strategies personal selling,advertising, sales promotion and electronic product promotion. Thethree main objectives of this promotion are to present products tothe targeted markets, increase demand among the target market andcreating brand identity (Adcock, Al Halborg and Ross, 2001).Advertisement through printed media such as magazines and newspapersare done in existing target markets like US, Canada and Europe. Theobjective of print advertisements is to enhance brand loyalty toexisting customers (Kurtz,2010).
Directselling through online interactions is aimed at facilitatingpersonalized sales promotion and motivates new and existing customersto buy products. In addition, sports and music sponsors areaimed at reaching wider customers especially the youth. Thisobjective is also achieved through social media and electronicadvertising (Kurtz, 2010). Outdoor sales promotions also helps inenhancing more brand awareness and increasing sales volume toexisting markets (Kotler and Armstrong, 2011). However, sports andevents sponsorship serves as platforms for brand awareness to newmarkets.
Approachused to promote product (push or pull approach)
Co utilizes the “push” and “pull” strategy in promoting itsproducts (“Co Family”). The push strategy is used bycreating consumer demand through the distribution channels (Kurtz,2010). has established strong ties with its wholesalers, distributersand retailers as part of creating product value to consumers. Infact, the distribution channel used by is a form of ‘push’promotion strategy that helps in creating quality, time and placeutility. One of the main aspects of ‘push’ promotion strategy isselling directly to consumers (“Co Family”).
Thenature of distribution network is more direct and bypassesother distribution channels. This gives more contactopportunities with consumers and thereby enhancing its promotionthrough coupons, discounts and after sales services. Although Co. also spends heavily on advertisement for consumer promotion, theamount spent in advertisements is less compared to its competitorCoca-Cola. Therefore, has a low ‘pull’ promotion strategy prefers direct distribution, lower prices and product diversityas its main promotion strategy (Kotler,Philip and Keller, 2012).
Actualmessage used in advertising campaigns
advertisements target the youth and young adults. However, changes its advertisement message depending on the target audienceall messages are created to reflect the interest of the targetedgroup (“Co Family”). Advert messages in advertisementpromotions include brand image is cool, hip promotions to attractyoung people. In these promotions, the advert messages are lively andcreative (Kotler and Armstrong, 2011). For instance, in 2006 to 2007 used “why you Doggin’ me”, 2008 “something foreveryone,” 2012, “where there is there is music,” and in2013 “live for now.” In 2015, has adopted new catchy advertphrases such as “lip smacking,” and “we will rock you.”
Critiquethe current promotion and place strategies
Thecurrent distribution strategy adopted by Co. is effective inensuring that the products are closer to clients. Howver, the placestrategies used by are insufficient and in effective. One isthat by undertaking most distribution activities, may incurmore extra operational costs (Kotler, Philip and Keller, 2012). engages in more direct distribution than indirect and this is notcost effective (“Co Family”). In addition, the distributionmethod used by lacks centralized approach (Adcock, Al Halborgand Ross, 2001). would gain economic advantage by centralizingdistribution to cover wider areas that may be uncovered through itsdirect distribution strategy. For instance, relies on directstore delivery and distribution through authorized bottlers thisapproach is flawed and disorganized.
Analternative way is involving more distributors especially one’sthat focus on remote areas or smaller businesses (Adcock, Al Halborgand Ross, 2001). Co. uses three main distribution methodsdirect store delivery, consumer warehouses and the vending servicesor third party distributers. In this case, is able to reachmore customers (Kurtz, 2010). However, the distribution channeladopted by does not consider potential outlets such as collegecanteens and individuals living in rural areas. Most of Co.distributions take place in urban areas leading to the unavailabilityof products in rural areas. This explains why Coca-Cola, main competitor has wider coverage by targeting small outlets inrural areas. In addition, distribution is not centralized andeach company affiliated to group has its own independentdistribution channels. The overall effect is that, lack ofcentralized distribution makes it hard for Co. to cover widerareas evenly.
Thepromotion strategy adopted by Co is relatively effectiveespecially the ‘push’ promotion strategy (Kotler and Armstrong,2011). distribution ensures that the firm has a closer contactwith its customers and thus are able to engage customers in directpromotion personal selling. has also fared well with its printand electronic media advertisements. However, has notstrengthened its brand image across the globe (Kotler,Keller and Burton, 2009).In fact, residents in Asia, Africa and Latin America may wonder what products looks like. One aspect that has led to poor brandimage is lack of wider global distribution (Kurtz, 2010). distribution and advertisement are more concentrated in US, Europeand the Caribbean. In order to enforce its brand image, need toenlarge its distribution, increase advertisement and sales promotions(Kurtz,2010).
Inaddition, adverts and promotion are focused more on youngpeople and this limits the firm’s market share (Kotler,Keller and Burton, 2009).Another negative aspect of promotion is lack of understandingon the cultural aspects of the targeted groups. On several occasions Co. has suffered from backlash due to its advertisementmessage. For instance in 2013, Co. had to issue an apologyafter posting Christiano Ronaldo as voodoo in one of its productmarketing campaign. In 2011, suffered from another bout ofcriticism for equating the Diet slogan “skinny” tobeautiful women. In these cases, Co. has greatly undermined itsbrand image. Lastly, pictorial adverts are less captivating andin most cases the pictorial images lack catchy message.
Centralize distribution channels
Itis imperative that Co. centralizes its distribution operationsin order to improve its coverage (Kotler and Armstrong, 2011).According toKurtz (2010), agood distribution is one that is centralized and focused on creatinglocation, quality and time utility. Co. allows independentdistribution agencies and this may create overlaps in some areasleaving out other areas. For instance, direct store delivery onlyfocuses on specific locations and these stores do not distribute products beyond their business locations. Similarly, thirdparty distributers such as the bottlers have their uniquedistribution channel (Kurtz, 2010). This makes distributionmethod unorganized and one that lacks strategy.
Accordingto Kotler and Armstrong (2011), centralized distribution enhancesintensive distribution products are stocked in most outlets (Adcock,AlHalborg and Ross, 2001). By using independent distributers distributionmethod may lead to selective and exclusive distribution hence theneed for centralized distribution (Kotler,Keller and Burton, 2009).Another aspect related to centralized distribution is increasingdistribution centers to local and rural areas (Adcock, Al Halborg andRoss, 2001). These problems would be eliminated through centralizeddistribution (Kotler and Armstrong, 2011). The overall beneficiariesof this recommendation of centralized distribution are Companyand its customers. would benefit from economies of scalearising from centralized and well managed distribution methods. Thiswould improve sales volume by increased customer coverage (Kurtz,2010). Customers would benefit by accessing products in closelocations.
Understand the cultural language in advert promotions to targeted markets
Thisrecommendation relates to promotion strategies. is aglobal beverage company and its marketing and promotion strategiesshield be reflected through sensitivity to international culture(Kotler,Keller and Burton, 2009).On numerous occasions has made promotional blunders throughmarket messages that do not reflect the target market culturalinterpretation (Adcock, Al Halborg and Ross, 2001). Promotion marketmessages that elicit criticism are harmful for company’s overallimage (Kotler,Philip and Keller, 2012).For instance, several criticisms were raised after introducedthe cliché “skinny” for the Diet coke. Another example ofeffective marketing message that captures the targeted market cultureis the ‘ man’ message made by local Japanese.
Kotler& Kevin (2009) argues that a good promotion is that whichintegrates the cultural aspects in the promotion message. Byimproving cultural language used in advertisements, would gainmore from brand and customer loyalty. The perception of wouldsignificantly improve as clients identify with the advertisementlanguage and content used.
Target more groups rather than young people and Invest more in advertisement
Thisrecommendation relates to promotion strategies used by . Co. should refrain from conservative advertisement (Kurtz, 2010). adverts are ‘cold’ compared to Coca-Cola adverts. It isimportant for to invest more in adverts especially throughspecial institutions rather than focusing on electronic and printMedias (Kotler, Keller and Burton, 2009). In addition, shouldnot target only the young people through its adverts but use moreadverts that capture the old people (Kotler, Keller and Burton,2009).
Kotler& Kevin (2009)observes that a good promotion plan should strive to achievemarketing objectives set by the organization and that is coveringlarger markets. Kotler, Keller and Burton, (2009), the goal ofmarketing is to enlarge organizations customer base and marketingstrategies should focus on all population segments. As such, should have a good promotion plan should have real measurableobjectives that targets all people old and young. Thisrecommendation is important for as it would help it enlarge itstarget market rather than focusing on specific groups such as theyoung people (Kurtz, 2010). Existing and potential customers are themain consumers of advertisements and companies should be sensitivewhen designing advertisement (Goldstein, 2005). For instance, ratherthan using catchy advert messages targeted to young people, cangain more by including old people’s interests.
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