Introduction
This paper is a report presentation of problems encountered by different members of a distribution channel. Snowball sampling will be utilized for the purpose of obtaining information about the players in the marketing field. The sampling technique simply uses the present subjects as leads to the future subjects.
The data to be collected therefore will be detailed information from manufactures through to wholesalers and finally retailers. The report will cover on problems faced as goods find its way to the final consumer. A local manufacturing company will be investigated for the efficiency of its distribution channels and the possibility of problems related with them.
Distribution of PepsiCo products
Distribution channels represent a major actor in the marketing mix. Other elements of the marketing mix include: product, promotion and pricing strategy. Pepsico with other players in the distribution channel contributes in an effort of availing the soft drink to the final consumer (Dent, 23).
The intermediaries are the wholesalers and the retailers who pass the product to the final consumer. Each member of the distribution channel has specific needs which the producer must consider while manufacturing such product and service. It is therefore critical to manage efficiently the supply chain in order to realize maximum profits. Supply chain management represents an act of directing a product through an interconnected channel to the final consumer (Stern, 20).
The distribution flow chart for PepsiCo products can be illustrated in form of the following diagram
So as to analyze effectively the problems faced by different members in the distribution channel, snowball sampling technique was used to arrive at the subjects to approach for information. In the study of PepsiCo, respective managers in sales and marketing, and logistics acted as the source of information which necessitated the above diagram
Manufacturing channel of distribution
For the purpose of this research, sales and marketing manager was critically interviewed for the problems faced by the PepsiCo as a member in the distribution channel. PepsiCo deals with a variety of worlds leading beverages and snack foods and scores among the top companies.
The channel employed by PepsiCo in distributing its products include: supermarkets/ retail stores, restaurants, convenience stores and others (Mentzer, 25). Advertisements are frequently used to market the soft drink to the final consumers. Most of the television adverts propagate the effectiveness of the drink during a hot weather. This forms part of the distribution channel for the consumer goods.
The company was careful in adopting an allocation system according to the requirements and preferences of the global customers. Models adopted by PepsiCo to distribute products are: direct store delivery, broker warehouse distribution, and vending food service systems (Simchi-Levi, 54). There are other approaches to shaping up distribution channels. Giving incentives in form of subsidized price can help in motivating members in a distribution channel.
In consideration of the fact that products of PepsiCo are internationally oriented, then the process of identifying a middle person to handle the product is difficult. Information sourced from the company’s sales and marketing manager details that financial base of the channels is a determining factor whether the magnitude of the products can be sustained.
Productivity of the company can also describe the ability of a distribution channel in executing its mandate. If the management is stable and capable in producing a product, then the distribution channel would be stable thus guaranteeing a long term service (Mentzer, 25). It is extremely difficult for the company to predict the nature and reputation of middle men thus leading to doubting the efficiency of a distribution channel.
In an international setting, competitor’s activities are critical since they block access to distribution channels in the foreign nation. This can happen in the following ways: trade associations present in some countries have the ability of closing channels which could have been used to market Pepsi product. Political restriction like ban of fast foods and conventional marketing partners affects adversely distribution channels (Simchi-Levi, 54). Some of the products like coca cola have taken roots in some nations thus blocking foreign products.
So as to motivate channel members, promotional program must be built by the manufacturing company. The promotion strategy has the effect of creating high level interest in the manufacture’s products. On the contrary the cost of the product goes up to cover up on the expenses used in manufacturing a product. High prices of PepsiCo products are not competitive in the international arena.
The distance covered in international market is such long thus making the distribution channel slow. However, the problem can be overcome by PepsiCo’s own distribution system under its control. It is also important to note that PepsiCo has a well established local distribution channels which acts as a substitute in case the international market fails.
Another problem facing PepsiCo as a member of distribution channel is termination of relationships when middlemen fail to execute responsibility. In an international setting, relationships might be difficult to conclude owing to legal operation in countries of operation. An example in Norway a manufacture must possess evidence of negligence on part of the channel member (Mentzer, 25). Where sufficient prove is given, a channel member must be reimbursed for instituting customer contact.
Broker warehouse distribution
This channel acts as a link between the manufacturer and the distributor in the chain link. After the goods are manufactured, they are kept in Go Global logistics as they await further distribution countrywide. The warehouse is strategically located across the United States to so as to cover most of the parts of the country.
The logistic company offers both long term and short term storage of PepsiCo products. As discussed with logistic manager, Go Global logistic can manage supply chain from the factory to the doors of the customer (Mentzer, 25). Although the services are varied, their cost is high. This overflows to the price of the product.
Supermarket/ retail store
After completing the discussion with logistic manager of Go Global logistics, it was relevant to follow the channel of the product down to the supermarket. This is stage where the product meets the buyer at the point of need. The manager of one of the prosperous supermarket offered a supplement of information about the problems faced as a channel member of PepsiCo’s products.
In recognition of the fact that a variety of products exist in the supermarket, it is difficult to promote one product and leave other complementary products. Supermarkets make their profits from increased sales of all goods in the supermarket. There is also a problem of placing the product at the best point of sales where the customer can easily recognize it.
United States government has been more concerned with the increasing number of obese children. Campaigns against consumption of such foods have been on the rise. This factor ultimately acts against those who want to purchase the product. Strategic market analysts have a view that supermarkets provide manufactures with wider distribution compared with any other channel (Dent, 23). However, with knowledge explosion consumer trust in functional foods that assures of general or digestive health advantages.
For this reason, products on the distribution channel have a great impact on customer. While the participants in the industry want their products to be displayed all over the shelves in the supermarkets, there is need to build on the confidence so that consumers can purchase the goods from the shelves. It is also important to consider giving high level customer care so that products of the company can find market and in the long run increase the profits.
Conclusion
This paper presented a snowball sample of: sales and marketing manager, logistic manager, and supervisor to study the problems faced by different players in the distribution channel. The manufacturing channel of distribution, through to warehouses, retailers and finally consumers are members in the channel.
As discussed in the paper, various problems are faced by the members in a channel and if success is to be registered, then each participant show responsibility for their decisions. The retail management and vending foods services systems were also part of the channel members. Among the problems discussed are: international competition cost of promotion along the channel and government policies.
Works Cited
Dent, Julian. Distribution Channels: Understanding and Managing Channels to Market. London: Kogan Page, 2008. P23.
Mentzer, Jerry, et al. Defining Supply Chain Management, in: Journal of Business Logistics, Vol. 22, No. 2, 2001, pp. 1–25.
Simchi-Levi, David, et al. Designing and Managing the Supply Chain. New York: McGraw Hill, 2007.P.54.
Stern, Louis, et al. ‘Marketing Channels’. New Jersey: Prentice-Hall, 2006.P.20.