Pepsico is one of the leading beverage company in the world which is today available in more than 160 countries with its headquaters in New york, holding a largest share of 28% in the U.S beverage market with an annual revenue of more than $25.11billion with a growth of 6.8%(Rohatgi, 2013).Pepsi has used several marketing mix strategies such as 4ps strategy and accesed various distributional channels to achieve this remarkable progress. However, the most important and the crucial strategy that contributed to the success was the utilization of distribution channels in a lucrative way.
In the following video we can understand what are the marketing mix strategies and the 4p’s
So now the question arises what is the ditribution channels used?
Distribution channels is a very important tool for logistics and supply chain management which helps to supply good from one business to another. Moreover, it is a chain of organizations or go-betweens through which a decent or administration goes until it achieves the end purchaser. It incorporates of wholesalers, retailers, merchants and even the retailer itself. In general, pepsi’s distribution channels also includes various strategies namely retail distribution, online marketing and franchised partner.
- Retail distribution: It is an activity of getting goods from a nearest store which is accesible to the public, these distributors includes grocery stores, medical stores and son on where a consumer can walk in at any time.
- Online marketing: Now a consumer can order a bottle of pepsi by just a push of a button which inevitably saves time.
- Franchised partner: Mirinda, Lays chips, Slice, Aquafina and so forth are all the franchise partners of Pepsi which increases its revenue after every sale of its franchised products. (Kanju, 2013).
The following video will enlighten us about how the distribution channels work in a Pepsi store at Warrenton, Virginia.
What are the distribution model of pepsi?
- Direct distribution sytem
- Indirect distribution sytem
Direct distribution: Pepsi uses its direct distribution system to deliver its goods to the end consumers these distributors are namely KFC, Pizza hut.(Kanju, 2013)
Indirect distribution: The products are been passed through a lot of intemediaries for instance in this case the product has to go through manufactures to wholesalers to retailers and finally to the consumer. (Kanju, 2013).
The figure below will amplify on the how the the distribution model in pepsico works.
The design channel used by Pepsico..how it works?
Push and pull strategy allows the movement of goods from producers to manufactures.(Harrison 2003). Pull strategy refers to a technique where incentives are given to the consumers in order to pull products through the channel. Push strategy refers to a technique where incentives are offered to the distributors or producers in order to push the products through the channel.
Push strategy: This company has done a fair job with push marketing strategy, where they have created a website on facebook and twitter accounts, while no pop up screens or marketing promotions comes up while you are accesing your home page. Such tie ups with social media helps the company to hold the clients and increase the sales.
Pull strategy: Pepsis target audience ranges from 18 to 35yrs (Derriken, 2013) so therefore the company uses young and vibrant colours to attract the audience. As far as pull strategy goes they have advertised about their products in almost every sites, promotional hoardings or posters can be found in almost every public places. In addition to this, pepsi gives bulk discounts furthermore attracting the consumers. According to integrating marketing communication agencies, a pull strategy motivates the customers to actively seek out a specific product. (Boundless, 2013).
Vending machine is another aspect of distribution channel. It is mainly considered as an SST(self service technology)channel. Where the buyers have to just insert the appropiate amount and ends up having a can in no time. The sales growth depends upon where the machines is kept(Greewald, 2007). Henceforth, we find these machines near schools, colleges, sports stadium and son on.
Finally, from a birds eye view, based on the example mentioned above, we can infuse that a company can achieve remarkable growth if the company follows an appropriate distribution channel. A continous improvement in distribution channels can yield high profits and inevitably results in a better supply chain.
Name: Justin Jacob
student id: 216034001
Greenwald, J. (2007). How pepsi picked a warehouse site.
Harrison(2003) push and pull strategy.
Kanju, (2013). Pepsi distribution system. [online] Slideshare.net. Available at: http://www.slideshare.net/umarkanju/pepsi-distribution-system
Push and Pull Strategies. (2016). Boundless. [online] Available at: https://www.boundless.com/marketing/integrated-marketing-communication/selecting-the-promotion-mix-for-a-particular-product/push-and-pull-strategies.
Pepsi, T. (2013). The Main Products and Target Audience of Pepsi. [online] Durriken.blogspot.com. Available at: http://durriken.blogspot.com/2013/05/the-main-products-and-target-audience.
Rohatgi, (2013). Pepsico distribution. [online] Slideshare.net.Available at: http://www.slideshare.net/sarthakrohatgi/pepsico-distribution