Rural Marketing Strategy of Pepsi Co.

CERTIFICATE

This is to certify that investigation described in this Course Project Report (CPR)
entitled
“” was carried out by Mr. JANAK A MOWALE Enrollment No.
GHRUS210000521 from Sem. First of School of Commerce & Management under the aegis
of G H Raisoni University , Saikheda under my supervision and guidance in partial
fulfillment of the requirement for the Degree of Master of Business Administration.

This work is own work of the candidate, complete in all respects and is
sufficiently high Standard to warrant its submission to the said degree. The
assistance and resources used for this work are duly acknowledgement.
 STUDENT DECLARATION

I here by declare that this Course Project Report

(CPR) titled “FACTORS INFLUENCING
ENTREPRENEURSHIP DEVELOPMENT- ECONOMIC &
NON-ECONOMIC” submitted by Mr. JANAK A MOWALE &
“GHRUS210000521” to School of Commerce & Management,
G H Raisoni University, Saikheda (M.P) is a bonafied work
undertaken by me and is not submitted to any other
university or institution for the award of any diploma / degree
/ certificate or published any time before.

Date:- Signature of Student

 Executive Summary
This report provides an analysis and evaluation of the
Marketing Strategy for Pepsi. Methods of analysis include
Market Segmentation, Market Targeting, and Market
Positioning of Pepsi. Into this analysis we have tried to
show how Pepsi segment their market basing on different
variables. Their target market which they serve. We also
discuss about Pepsi’s internal and external environment.
Their Position in the market and how do they
differentiate themselves to make a position in their
customer mind, their strategy of positioning in market
we tried to give a positioning statement of Pepsi and
ended the whole report with a conclusion and a
recommendation.
Market segment profiles have shown that the
majority of carbonated beverage drinkers are youth and
middle age people. Pepsi continually targets the Schools,
Colleges, Universities, restaurants, hotels, and fast food
Stores. For this they always spend huge amounts of
money to compete with Coca Cola in acquiring contracts
with universities to have sold representation of their
product distribution. Pepsi customers are mostly
teenagers and young adults between the ages of 14 to 29.
 Introduction

‘THANDA’ GOES RURAL In early 2002, Coca-Cola India (CCI) (Refer Exhibit I
for information about CCI) launched a new advertisement campaign featuring
leading bollywood actor – Aamir Khan. The advertisement with the tag line –
‘Thanda Matlab Coca-Cola4 ’ was targeted at rural and semi-urban consumers.
According to company sources, the idea was to position Coca-Cola as a generic brand
for cold drinks. The campaign was launched to support CCI’s rural marketing
initiatives. CCI began focusing on the rural market in the early 2000s in order to
increase volumes. This decision was not surprising, given the huge size of the
untapped rural market in India (Refer Exhibit II to learn about the rural market in
India). With flat sales in the urban areas, it was clear that CCI would have to shift its
focus to the rural market. Nantoo Banerjee, spokeswoman – CCI, said, “The real
market in India is in the rural areas. If you can crack it, there is tremendous
potential.”5 However, the poor rural infrastructure and consumption habits that are
very different from those of urban people were two major obstacles to cracking the
rural market for CCI. Because of the erratic power supply most grocers in rural areas
did not stock cold drinks. Also, people in rural areas had a preference for traditional
cold beverages such as ‘lassi’6 and lemon juice. Further, the price of the beverage
was also a major factor for the rural consumer. CCI’S RURAL MARKETING STRATEGY
CCI’s rural marketing strategy was based on three A’s – Availability, Affordability and
Acceptability. The first ‘A’ – Availability emphasized on the availability of the product
to the customer; the second ‘A’ - Affordability focused on product pricing, and third
‘A’- Acceptability focused on convincing the customer to buy the product. 1 Indian
arm of FMCG major Unilever. HLL was credited with pioneering rural market
initiatives in India with its Project Bharat (1988) and Project Shakti (2002). The
company boasts of the largest rural distribution network and presence in India. 2
Kripalani, Manjeet, Rural India, Have a Coke, BusinessWeek, May 27, 2002. 3 Guha
Ray, Shantanu, The Great Rural Bazaar, www.rediff.com, August 28, 1995. 4 Cool
drink means – Coca Cola. 5 Bailay, Rasul, Small Packets, Big Business, Far Eastern
Economic Review, January 23, 2003. 6 Lassi is a homemade drink made by blending
thick curd with sugar or salt.
 Availability Once CCI entered the rural market, it focused on strengthening
its distribution network there. It realized that the centralized distribution system
used by the company in the urban areas would not be suitable for rural areas. In the
centralized distribution system, the product was transported directly from the
bottling plants to retailers (Refer Figure I). However, CCI realized that this distribution
system would not work in rural markets, as taking stock directly from bottling plants
to retail stores would be very costly due to the long distances to be covered. The
company instead opted for a hub and spoke distribution system.
Affordability A survey conducted by CCI in 2001 revealed that 300 ml bottles
were not popular with rural and semi-urban residents where two persons often
shared a 300 ml bottle. It was also found that the price of Rs10/- per bottle was
considered too high by rural consumers. For these reasons, CCI decided to make
some changes in the size of its bottles and pricing to win over consumers in the rural
market. In 2002, CCI launched 200 ml bottles (Chota Coke)9 priced at Rs 5. CCI
announced that it would push the 200 ml bottles more in rural areas, as the rural
market was very price-sensitive. It was widely felt that the 200 ml bottles priced at
Rs. 5 would increase the rate of consumption in rural India. Reports put the annual
per capita consumption of bottled beverages in rural areas at one bottle as
compared to 6 bottles in urban areas. The 200 ml bottles priced at Rs. 5 would also
make CCI competitive against local brands in the unorganized sector. It was reported
that in the states of Rajasthan and Gujarat the local cola brands such as Choice and
Tikli cost only half the price offered by CCI, which gave them the advantage in
garnering the major market share before CCI came out with Chota Coke. CCI also
targeted the rural consumer aggressively in its marketing campaigns, which were
aimed at increasing awareness of its brands in rural areas.
Acceptability The initiatives of CCI in distribution and pricing were supported
by extensive marketing in the mass media as well as through outdoor advertising.
The company put up hoardings in villages and painted the name Coca Cola on the
compounds of the residences in the villages. Further, CCI also participated in the
weekly mandies10 by setting up temporary retail outlets, and also took part in the
annual haats11 and fairs - major sources of business activity and entertainment in
rural India. CCI also launched television commercials (TVCs) targeted at rural
consumers. In order to reach more rural consumers, CCI increased its ad-spend on
Doordarshan.12 The company ensured that all its rural marketing initiatives were
well-supported by TVCs. When CCI launched Chota Coke in 8 Apart from the rural
markets, CCI also began to focus on the home segment, by introducing – 1 litre, 1.5
and 2 litre PET bottles. 9 Small Coke 10 Weekly fairs where villagers gather and sell
their produce 11 Annual exhibitions, conducted during festival season. 12 State-
owned broadcaster in India. According to reports it reaches around 70 million
homes.
 Company Profile:

PepsiCo India is a food and beverage manufacturing company which mainly develops and
sells packaged food and beverage products in India.

 Gurgaon, Haryana, India
 Private
 www.pepsicoindia.co.in/
 168,323
Details
Edit Details Section

 Industries 

Food and Beverage

Food Processing

Manufacturing

Snack Food

 Headquarters Regions Asia-Pacific (APAC)

 Founded Date 1989

 Operating Status Active

 Legal Name PepsiCo, Inc.

 Company Type For Profit
  Contact Email [email protected]

 Phone Number +91 1800224020
PepsiCo India is a food and beverage manufacturing company which mainly develops and sells
packaged food and beverage products in India. The company is a subsidiary of PepsiCo Inc. The
company's brands in India include: Pepsi, Lay’s, Kurkure, Tropicana 100%, Gatorade and Quaker.

LITERATURE REVIEW
Several authors have researched PepsiCo Strategic Management and so, there is a wide-ranging
literature review on my research topic. The literature focuses on PepsiCo’s Strategic External Audit
that includes, STEEPLE Analysis, Porter’s 5 forces Model and SWOT Analysis. PepsiCo’s Strategic
External Audit presents a broad overview of PepsiCo’s Strategic Management.
Strategic External Audit
Steeple analysisSocial AnalysisPrevious studies have revealed that people’s healthier standard of
living promotes different consumption patterns. This can be a new opportunity or threat for Pepsi
Co.’s products. Pommer (2014), claims that Pepsi Co. should support more sporting events so as to
enlighten the society that it is concerned with the wellbeing of its customers. Pepsi Co. targets all age
groups when manufacturing its products (“PepsiCo”, 2018). Besides, Pepsi Co. considers education
level within its countries of operation for making its strategy as education directly impact marketing
and promotion. Sorrel (2016) maintains that Pepsi is very much committed to the wellbeing of
humanity and contributes to this cause by funding key health organizations both inside and outside the
US. According to an article by Rusu (2016) on techtimes.com, PepsiCo and Coca-Cola sponsored a
total of 96 national health institutions between 2011 and 2015 alone. Therefore, just like its
international competitor Coca-Cola, PepsiCo is concerned with the health and wellbeing of its
customers (Sifferlin, 2016). As a matter of fact, she claims that PepsiCo has been at the forefront of
Corporate Social Responsibility campaigns.Political and Legal analysisAccording to pepsico.com
(2018), PepsiCo operates in various countries across the world like the United States, Asian, European
and African countries. Therefore, David(2011) argues that the company should consider the labor and
legal forces of these countries. Meyer (2017) post on panmore.com maintains that PepsiCo together
with its competitors are all subject to legal regulations and requirements. Hence, PepsiCo has to create
a good policy as well as have a good in-house control of its operations and worker's incentives so as
to act in accordance with the law.
Objectives & Scope Of Study:
To compare the marketing strategies of Pepsi and Coke Company
To know and compare the merchandising of Pepsi and Coke in retail outlets
To identify the retailers opinion towards Pepsi products when compared to coke products
To offer some findings and suggestions to the company for the improvement for its performance
Research Methodology
Research in common parlance refers to a search for knowledge. Once can
also defineresearch as a scientific and systematic search for pertinent information on a specific topic.
Infact, research is an art of scientific
investigation. The Advanced Learner‘s Dictionary of Current English lays down the meaning of
research as ―a
careful investigation or inquiryespecially through search for new facts in any branch of knowledge
.‖ Redman and Morydefine research as a ―systemat
ized effort to gain new knowledge.
‖
Some people consider research as a movement, a movement from the known to the unknown. It is
actually a voyageof discovery. We all possess the vital instinct of inquisitiveness for, when the
unknownconfronts us, we wonder and our inquisitiveness makes us probe and attain full and
fuller understanding of the unknown. This inquisitiveness is the mother of all knowledge and
themethod, which man employs for obtaining the knowledge of whatever the unknown, can betermed
as research. Research is an academic activity and as such the term should be used in atechnical sense.
According to Clifford Woody research comprises defining and
redefining problems, formulating hypothesis or suggested solutions; collecting, organizing andevaluat
ing data; making deductions and reaching conclusions; and at last carefully testing theconclusions to
determine whether they fit the formulating hypothesis. D. Slesinger and M.
Stephenson in the Encyclopedia of Social Sciences define research as ―
the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or
verifyknowledge, whether that knowledge aids in construction of theory or in the practice of an
art.‖ Research is, thus, an original contribution to the
existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of
study, observation, comparison andexperiment. In short, the search for knowledge through objective
and systematic
methodof finding solution to a problem is research. The systematic approach concerninggeneralizatio
n and the formulation of a theory is also research. As such the
term ‗research‘
refers to the systematic method consisting of enunciating the problem, formulating ahypothesis,
collecting the facts or data, analyzing the facts and reaching certain conclusionseither in the form of
solutions(s) towards the concerned problem or in certain generalizationsfor some theoretical
formulation.
Analysis and Interpretation Of Data:

The only thing you can say with certainty about the Indian rural market right now
is that it is the best trading ground for both Indian and multinational corporations.
A burgeoning, untapped market estimated at nearly 150 million stretching
across the length and breadth of the Indian subcontinent.
The vision has long fascinated Indian organizations as well as MNCs. And now, the
dream is blazing brighter than ever as the Indian rural bazaar is displaying a
market trend towards consumerism, outpacing the urban market in its ever-
increasing demand for durable products like wrist-watches, fans, televisions, video
cassette recorders as also non-durables like nail polish, lipstick, ice-cream,
shampoo and mosquito repellants.

“It’s astounding… the rural market is now speaking the voice of the city. Our sales
have recorded a near hundred percent jump in the countryside during the last
year,” remarked Maruti Udyog Limited’s marketing director Jagdish Khattar.

It has been primarily attributed to a spurt in the purchasing capacity of farmers

now enjoying an increasing marketable surplus of farm produce. In addition, an
estimated induction of Rs 140 billion in the rural sector through the government’s
rural development schemes in the Seventh Plan and about Rs 300 billion in the
Eighth Plan is also believed to have significantly contributed to the rapid growth in
demand.
Statistics presented at the meet assessed the market size for nail polish at around Rs 270
million in rural areas as against only Rs 81 million in the cities. Similarly, the market for
lipsticks is worth around Rs 250 million in rural areas, compared to only Rs 131 million in
the urban segment. Face cream demand in villages estimated at about 1,099 tonnes far
outstrips that in the cities at about 426 tonnes, shampoo too has more potential in rural
bazaar (about 2,257 tonnes) than urban markets (about 718 tonnes). The rural market for
mosquito repellents is reckoned at around Rs 173 million against a mere Rs 79 million in
urban centers.

Findings