The PepsiCo Distribution Channels Report

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Introduction

Marketing of any product is essential for it to gain fame in the market. It can be described as the process through which firms show out their products to the people in order for them to buy their products. Products that are not advertised to the people stay a for a long period of time and may even end up expiring. Marketing therefore can also be described as the process of trying to put sense to the consumers about the value of the product. It may also be in term of the services that are offered.

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It usually aims at knowing the customers needs and doing best to achieve customer satisfaction. These are usually done by the exchange products in the market that helps a firm to create a long term relationship with its consumers. It also entails the concept of consumer positioning. Customers are positioned according to their needs and wants. These makes it easier for an organization to produce what the customers wants.

A firm must also have a distribution channel for the goods and services to be sold with ease. The distribution channel ensures that the services offered and the goods sold are availed to the customers at their comfort zones. The channels also act as intermediaries between the consumers of the products and the producers. The agents can mix the products for them to make the work easier. The most essential thing in the distribution channel is the product. It is usually considered as an element of the marketing mix. If the customers are not satisfied with the products, then it is the intermediary who reports these back to the organization.

The product that is produced by a firm needs to be attractive for it to sell in the market. In the distribution channels, there are many conflicts that arise as a result of the intermediaries. These may be as a result of jealousness or one intermediary feels he / she is more superior to the others. The conflict may make the distributors not to achieve the objectives of the organization thereby leading to the failure of the firm. The brand of a product speaks a lot about the product. An attractive brand name will attract the consumers to use the products.

The PepsiCo is a firm that mostly deals in the processing and the distribution of juices and snacks. This research is about the PepsiCo and the overall organization structure. The study was based on both primary data and secondary data. The descriptive study determines and reports the way things are, research was guided by descriptive survey to establish the purpose of the report. The research was mainly a case study, which was geared towards finding a solution to a problem and identifying cause of an occurrence. Case studies provide detailed analysis of a situation to enable scholars arrive at a concise conclusion.

Concrete questioners were distributed throughout the company for response. They were filled and returned for the research. The purpose of this study therefore, is to describe the existing distribution channels of the PepsiCo by looking at the company’s structure, how the channels are allocated, their flows, and the members. The paper also looks at the ability of the company to satisfy its customer’s demands by providing adequate and sufficient services (Danqin & Tiaojun 2009).

Aim of the Study

The study aimed at describing the distribution channels of the PepsiCo by giving detailed information of the company’s formation, its members, and the structure of the company, how the channels are allocated, and flow of production distribution. The paper also looked at how the company is able to satisfy its customers’ demands by utilizing diverse services within the prerogative of the company.

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Objectives of the Study

The broad objective was to determine the effects of the distribution in relation to the distribution channels of the PepsiCo.

Specific objectives were as follows:

  1. To find out how the distribution channel contributes to the overall organizational performance.
  2. To establish the impact of the quality distribution performance on organizational performance.
  3. To determine how supplier order processing can affect organizational performance.
  4. To investigate the effects of the distribution channel on the organization performance.

Research Questions

The following questions were used in carrying out the research.

  1. Does the distribution channel have any contribution to the overall organizational performance?
  2. What impact distribution quality performances have on organizational performance?
  3. How can the different distribution channels affect customer satisfaction?
  4. What are the effects of suppliers to any distribution channel?

Significance of the Study

This study aimed at helping organizations have an effective distribution channel that do not only encompass risk mitigation or prevention of problems but also benefit from improved collaboration between the different distribution channels that could lead to better coordination and enable the company better meet the company’s business objective. In addition, the company can help the organizations benefit from increased efficiency and productivity for the organization as it interacts with other distribution channels (Russell & Stern 2006).

The study was also significance to PepsiCo to capitalize on these data as well as adopt new research methods to demonstrate to organization’s decision makers that good distributions lines performance management systems lead to increased efficiency in operations and productivity of the organization.

Finally, the study was of immense benefit to other researchers who will be conducting a relevant research study to use it for purposes of acquiring information, which will be vital for their research study.

Limitations of the Study

Limited time

This research was conducted for a period of four months, which was very limited for a complete research. This period of time was not sufficient to carry out the study comprehensively. As a result, the researchers had to create extra time out of the busy schedule to overcome the issue of time.

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Non response from respondents

In most cases it was not easy to get respondents who were willing to give information due to their busy schedule and fear of giving information despite assuring them that the information received from was to be confidential. Also, most organizations have their data kept in archives in that some information cannot be disclosed to outsiders so these led to inadequate information.

Financial constraints

When carrying out research study, researchers will encounter financial limitations in acquiring funds that would cater for expenses such as transportation to the field, stationary, and printing services not forgetting airtime for communication purposes.

Limited resource material

There was limited material for the research as the staffs of PepsiCo were not willing to disclose all the information about the company.

Definition of Terms

Merchandising – This practice entails selling of goods and services from retailer to customers. Goods and services are usually sold from retailer stores where goods are located ready for distribution.

Vendors – These are enterprises that contribute goods and services to the supply chain of an organization.

Distribution channel – These is the process by which an organization or firm uses the intermediaries to sell their products. The company may either have one or many intermediaries.

Background to the Study

Manufacturing and Service firms both in the past have been aware of the necessity of distribution and how it critically impacts on the performance and the competitiveness of the market at that time. In the recent competing market, it is essential that Companies benchmark and evaluate their system of distribution. These assignments are difficult since there is lack of the universal index that includes effective criteria’s for any nature of the business. Such organizations comprise of manufacturers of goods and selling and buying of goods and services.

In order to be successful in the competitive business environment of today, Companies cannot operate in isolation and only rely on its own performance. Successful Companies utilize resources available at their disposal and create healthy relationship with suppliers and integrating duties in the chains of distribution. No firm operates in isolation therefore; mutual coexistence with competitors and suppliers is paramount. This increases the need for supplier performance assessment: to the level of performance that is required by the buying firm.

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When describing the business environment of today, emphasis should no longer be put on competition between entire distribution channels. To be successful, companies cannot operate in isolation and only rely on its own performance; they are highly dependent on the performance of other actors in the distribution channel as well, not least the suppliers. The growing importance of the suppliers in a company’s supply chain increases the need for supplier performance assessment. Continuous distribution lines monitoring help companies assess whether the distribution manage to fulfill the sufficient level of performance that is required by the buying firm in their study, Schmitz found that distribution performance measurement appeared to be an important tool among food and beverage production manufacturers starts with a brief background to the topic of this research and its relevance in a broader context.

Properly placed distribution channel lines are primary ingredient in ensuring firms acquire business performance excellence. It is broadly used as a way to understand and enhance the performance of the larger enterprise. Companies try focus collectively on their main competencies and outsource more work. This enables the success of the company to purely rely on the strategic channels in the organization. Usually, the main objective of any distribution lines to an organization is to enhance the activities of the parties to the contract and the agreement at the service level.

Pepsi is made from mixing different recipe which needs expertise of pharmacists and industrialists. Conversely, Pepsi was initiated by scholar Caleb Bradham who inhabits Northern Carolina. In 1898, the recipe was referred to as Pepsi cola. The company has shown it can perform best and produces want the consumers will want to have. At one time the company failed to satisfy its customers need due to bankrupt.

When the Companies collaborated to form PepsiCo Inc, Frito Lay Company was situation in Delaware State with its headquarters in Manhattan in the New York. The headquarters of the company have since been relocated to the place where it is in 1970 at Purchase, in the New York. On March 1994, the company commenced steps geared towards placing manufacturing and expiry dates on products (Packaged facts 2013).

Literature Review

PepsiCo was formed in the year 1965. This was done with its merger with Frito-Lay Inc and the Pepsi-Cola company. The PepsiCo Inc is a leading producer of the food and beverage company’s. It is a multinational company with its headquarters in Purchase, New York. The company has most of its interests in the manufacturing of products and the distribution of food snacks, beverages, and other products. Since its formation, the company has expanded from the products of Pepsi to production of varieties of foods and brands of beverage. The greatest of the acquisitions took place in 1998 where Tropicana was absorbed and commenced working together with the Quaker Oats in 2001.

Profits of PepsiCo increased gradually at the start but increased immensely when company commanded higher market shares and retailed more than $1 billion. The company’s products have since been given across the country resulting to revenue of about$ 42.3 billion. Increase in expansion accrued to the high profit margins and this made the company be voted the second largest beverage and food stuffs distributor. Market for Pepsi products expanded in the North American continent due to high consumption and customer preference.

Like other organizations, the company also has a chief executive officer. The company employed over 290,000 workers worldwide as at the year 2011. PepsiCo was self sufficient so as to reduce cost and increase on revenues for instance; the company distrusted its own products and bottled its products. Some licensed companies within the region also engage in distribution and packaging of their products. The company was awarded SIC 2080 for the production of beverages. This is a certification that authorises the production of the juices.

Between the year 1971 and 1991, the company expanded through acquisitions besides its core focus of producing beverage brands and packed foods. The non-core lines businesses were greatly exhibited in 1997 while some were being sold and others being spanned off into Tricon Global Restaurants, which was a new company in operation. This company was later referred to as Yum! Brands Inc.

The company before owned other brands, which it later gave off so as to major on the core business of snack and lines of beverages. This was according to the report by the investment analysts in 1997. The brands that PepsiCo owned previously include the California Pizza Chicken, Pizza Hut, Hot n’ Now, Stolichnaya, Wilson Sporting , and the American Sporting Lines among others. Conclusions of divestments in 1997 enabled the large scale of acquisitions. Modification and expansion of products led to conversion of soft drinks and snack production to diverse brands of beverages and foods. The company then purchased the Tropicana products and the Orange juice Company. It then merged in 2001 with the Quaker Oats Company.

The company had plans to purchase more of other drinks processing industries for it to be effective. The companies include the Pepsi Americans and Pepsi bottling group. Constant acquisitions and mergers over time were finalized in 2010 when Pepsi was called Pepsi beverages. Nonetheless, in 2011, the company expanded and solely bought two third stakes in the Wimm-Bill-Dann foods company. This is a Russian company that deals with the production of milk, fruit juices, yoghurt, and dairy products. After purchasing the remaining shares the firm became the largest in the production of fruits and juices.

The company was restructured for marketing and most people lost their jobs. This may enable the company save about $1.3 billion by the year 2014. The primary competitor to the company is the Coca Cola Company. In 2005, PepsiCo was very influential and popular than Coca Cola Company and overtaken it in market value. This was the first time since both of the companies started to compete. This competition between the companies is healthy as it ensures the continued survival of the company. It also ensures that the firms provide good products and services to their consumers. This reflected the difference in product lines of the companies.

The company’s product mix as at 2012 consisted of 60 percent foods and 40 percent of beverages. By 2009, Pepsi products were diversified to accommodate high demand and customer preferences, which led to generation of approximately $100 billion annually. This was due to marketing of its products. The firm follows the marketing mix concept strictly as this usually ensures the success of any business.

Growth and development of PepsiCo widened its market globally. In 2010, the company had adopted four divisions to aid in the fast tracking of its supply and distribution of goods. For a company to survive in a market, it must usually have an upward trend. Conversely, the company gave consumer needs and requirements as a priority for instance, production of goods, which are healthy for consumers and does not interfere with the environment. This is defined in the company’s mission statement as the “Performance and Purpose”. The objective was to increase the variety and number of healthy food and beverage products that were availed to the customers, diversity facilitation and healthy lifestyles and employment of a reduction measure to the company’s lifestyle impact on the environment (Packaged facts 2013).

Theoretical Framework

The company connected sufficiently with the customers needs. The distribution channel strived to avail the products in the popular shopping centres of the customers. The marketing approach was based on the various distribution channels from the retailers through to wholesalers. This was through the management strategy that implemented the right network for the distribution with regards to the products nature. Due to market expansion, the demand for company products increased thus creating need for collaborating with retailers, franchise bottlers, and distributors of products. The company had also refrigerated machines to vend at different locations and workplaces. They serviced the right pack size at right price of product at the right time and place Vranica 2009).

Research Methodology

The study was based on both primary and secondary data. The descriptive study determines and reports the state of the company; research was guided by descriptive survey to establish the purpose of the report. A descriptive study was undertaken in the research process, which was guided by descriptive survey design to establish the relationship between variables especially impact of the distribution channel to the performance of PepsiCo. Guy defines descriptive research as a the way to data collection. These enhance the hypotheses testing as these gives the report to the study. Sikurani suggested that a descriptive study is carried out to ascertain and help to describe the characteristics to the variables of the study. The descriptive case study enables scholars acquire relevant information that aid in finding of solutions and knowing cause of events. Case studies not only give detailed information about a phenomenon but also guide the way research method can be followed with ease and precision.

This research is conduct in order to bestow the scholar relevant knowledge to evaluate and arrive at solution to obstacles. However, accurate results can only be arrived at by conducting research in tranquil and conducive environment where interviewers are appreciated and not perceived as investigators hired to fetch information from the community. The area of study mainly focused on the PepsiCo. Success of PepsiCo is attributed to effective and efficient channels of distribution that allows retailers receive the products within stipulated time frame. The company was convenient for the research because it was easy to get access to the information. This is because a company has been in good operation in the market since its inception. There was accessibility of the researchers hence no problems were incurred were carrying out the research.

A target population is a group of individuals, objects o items from, which samples are taken for study. The study was conducted in PepsiCo with different distribution channel. The research was in the various departments, which are many but a sample of the departments was researched on. This is a case study of the distribution channel of the PepsiCo.

To collect the study data, a series of questionnaires were developed and administered by having direct interviews with the respondents. Also, pilot questionnaires were adopted, which helped to approximately develop the entire information gathered. Interviewers used understood local languages of the respondents so as to collect correct data and accommodate those are illiterate in the society.

Validity refers to the conceptual and scientific soundness of a research study or investigation and the primary purpose of all forms of research is to produce valid conclusions. Any instrument used in research has to uphold validity. This means accurate, concrete and meaningful of the instrument. Validation of an instrument or scale, the success of scale in measuring what it is set to measure, so the difference in the individual scores can be taken as representing the two differences in what it purposes to measure characteristics under the study.

Valid questionnaire have direct questions, which are easy to understand and comprehend to avoid confusing the interviewee. To ensure the content validity of the questionnaires the operational definitions of the proposed research was developed after an intensive review of the relevant literature. Freaenekel posts that the instrument should be given to the individual who can be expected to vender an intelligent judgment about the adequacy of the instruments. The instrument is then amended according to the expert comments and recommendations before being administered. For the validation of the instruments the researcher consulted supervisors and experts. The aim was to determine whether the items were adequate in content and logically arranged.

This research referred to how consistent a research produce or an instrument is for instance, the degree of consistency demonstrated in a study. This research study ensured there is reliability in the study. To test reliability of instruments, the questionnaires were piloted using one of the user departments for example production and engineering. After about a week the questionnaires were re-administered to the same group. Conversely, questions should with simple questions, which do not concern respondent life. Questions with jargon are abolished to equip interviewees with understanding to reduce coercion and meddling of responses.

The data was then analyzed and the results corrected to determine the reliability and co efficient. Pearson product moment correlation® is most often used because of its precision with value of 0.5. Both reliability and validity should be high to be desirable.

Data analysis may be defined as a process of data collection and analysis of qualitative data that involves concurrent and sequential processes of data collection, data analysis, data verification, and interpretation of research findings. In most cases, it is usually the use of qualitative methods in a descriptive study. It involved theoretical method of data collection as elaborated by Tufte ER less figures, percentages and charts. The researchers used qualitative methods when coming up with data analysis. All completed instruments were assembled and information organized. Quantitative as already mentioned was analyzed using descriptive results, summarized, and presented (Vranica 2009).

Data Analysis

Pepsi products were distributed through retailers and direct sales to customers. After sale services encouraged selling volume, which attracted many customers than other competing firms. Usually the distribution needs depends on the customers needs, the characteristics of the products and the practices that are carried out locally. DSD systems of service delivery allowed distributors and franchise retailers collect the products from the store to reduce inefficiency. Bottling agents are given initiative to work in the name of the company in order to increase the products to retailers while in the same note reduce amount of snacks going bad.

It is the duty of the company managers and employees to ensure that amount of products produced match with market demand to reduce over stocking, which lead to realization of losses. Vehicles were bought to ensure products arrive at warehouses on time especially fragile and perishable goods that may go bad when exposed to bad weather. Consumers are advised to use products, which bear the brand name of the company to avoid consuming counterfeit products from fraudulent sellers. Market for Pepsi products consist of a wide array of consumers for example, school, institutions, restaurants, hotels, religious functions, and homesteads (Leo1999b).

Ethical Considerations

Every academic discipline and institution has specific requirements concerning ethical approach to any research or proposal. Researchers should also seek ethical approval from the institution before conducting any research. The procedures laid down are basically to protect the researchers based on international agreements and international laws. Researchers should consider the following while conducting a research; the respects for confidentiality, justice, social and cultural sensitivity like culture, gender, religion, age and the participants’ social class., avoid unnecessary deception, and respect for other persons

Information on the ethical procedures can be required from the institution. The researcher needs to find out the ethic bodies that he/ she will need to consult and ensure the correct process is followed. For this proposal all the institutions on health that the researcher will conduct a research from have a code of ethics. They need to understand before they start carrying out the work. They need to seek clarification from the relevant authorities. Going through an application of ethics is a better way of enabling the researcher to gather adequate knowledge throughout the research process. Individuals are usually secretive with the information unless they are assured of confidentiality. It is usually an offence for any researcher to give out the information that they have acquired from an organization without the permission of the organization. It may also lead to serious consequences (Leo1999a).

Conflicts

In any normal organizational setting, there are usually conflicts. The conflicts that arise may be as a result of;

  • The hybrid channel where the wholesalers have total control over their retailers.
  • The franchisees may be so rigid.

Recommendation

I would recommend that:

  • The company installs more vending machines for the direct distribution.
  • The company to finance operations of suppliers and distributors of its products.

Conclusion

In summary the PepsiCo is a food and beverage company that has grown to expand in the market since its inception. It produced products that are regarded to grow well in the market. The company’s revenue increased rendering it to be voted the second largest in America.

PepsiCo is determined to keep consumer trusts by providing healthy products that go hand-in-hand with consumer tastes and preferences. This is defined in the company’s mission statement as the “Performance and Purpose”. The objective was to increase the variety and number of healthy food and beverage products that were availed to the customers, diversity facilitation, healthy lifestyles, and the employment of a reduction measure to the company’s lifestyle impact on the environment. Visions and missions of Pepsi are guided by objectives which ensure that activities are conducted with order and sequence to avoid misunderstanding and deviation from prescribed norms.

The distribution channel is most suitable for restocked products and often responds to merchandising and promotion in stores. Pepsi products are stored in the company warehouses and retailer stores depending on proximity to potential customers. The less expensive systems work at best for the products that are perishable and less fragile, turnover that is low and most likely less impulse purchases’

The information collected should be confidential. The researcher should seek for permission to the relevant authorities before conducting any research. More so, reconnaissance should be conducted in order to familiarize researchers with the environment and make precise budgets to avoid complications. A firm that follows the rules of the marketing mix are assured of success both in the short and long run.

Reference List

Danqin, Y & Tiaojun, X 2009, ‘Pricing, service level and lot size decisions of a supply chain with risk-averse retailers: implications to practitioners’, Production Planning & Control, vol.20, no.4, pp. 320 – 331.

Leo, PD1999a, ‘David Soda Water Factory’, British Food Journal, vol.101, no.5/6, pp.456-462.

Leo, PD 1999b, ‘Tajik-American Pepsi’, British Food Journal, vol. 101, no.5/6, pp. 461-468.

Packaged facts 2013, Energy Drinks and Shots: U.S. Market Trends, Web.

Russell, C & , Stern, B 2006, ‘Consumers, Characters, And Products: A Balance Model Of Sitcom Product Placement Effects’, Journal of Advertising, vol.35, no.1, pp. 7 -21.

Vranica, S 2009, ‘Companies cheer Tiger Woods’s return — PepsiCo, GE, LVMH among those seeking boost from comeback’, The Wall Street Journal Asia February, p. 16.

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IvyPanda. 2021. "The PepsiCo Distribution Channels." July 21, 2021. https://ivypanda.com/essays/the-pepsico-distribution-channels/.

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IvyPanda. "The PepsiCo Distribution Channels." July 21, 2021. https://ivypanda.com/essays/the-pepsico-distribution-channels/.

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