POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF BUSINESS ADMINISTRATION

Marketing Channels and Logistics: A Case Study of

Pepsi International

Prepared by:
Gualon, Carlo N.

Presented to:
Prof. Pearl Patriarca

May 2023
 I. STATEMENT OF THE PROBLEM

This study aims to determine how Pepsi International will escalate all the factors

that are affecting their profit in utilizing its resources through distribution management.

One of the major corporations in the food, snack, and beverage industry with a

global presence is PepsiCo, although they had difficulties trying to get into the Ukrainian

market. They used a distribution structure in which they exported their goods to

Ukrainian bottling businesses, who then sold them to independent distributors. This

strategy increased expenses for PepsiCo while also failing to reach all of the rural areas

where potential customers were located.

As a result of the high degree of interdependence between distributors and

management along the supply chain, PepsiCo lost control over its business practices,

and cultural differences also played a significant part in the problem.

In an effort to reduce losses, PepsiCo established its own distribution network in

collaboration with regional businesses in order to invest in bottling facilities in the nation,

increase their market share in other countries, regain control over the distribution

channels, and reach more customers.

The problem a corporation faces when its distribution strategy in the global

supply-chain management is poor is demonstrated by this case study of Pepsi.

The profitability of Pepsi is severely harmed by differences in demand and

supply, disputes between channel participants, environmental effects, and theft on the

way. Pepsi needs to reevaluate and adapt its supply-chain strategy in light of Coca-
Cola's entry into the market in order to address market issues and maintain its position

in the nation.

II. CONSIDERATION WHY YOU CONSIDERED THE PROBLEM

1) Gaps in Demand and Supply

a) Presence in the market and reliance on outsourced distribution.

b) Irregular quantities of supplies because customers satisfaction and quality of

customer service between rural and urban areas.

c) Variable income and their purchasing capability without considering the number

of populations between rural and urban areas.

2) Channel Conflict

a) Inferiority of Pepsi because of cultural difference between parties, and local

distributors and Pepsi Cola.

b) Commitment and dedication issues of the parties.

c) Relationship dependencies.

3) Environmental Impacts

a) Conflict in transit time due to infrastructure and careless of the distributors.

b) Weather condition during winter that caused concentrate to freeze.

c) Pepsi doesn’t have specialized vehicle and rely to the bottlers and the

distributors which also contributes to the problem.

4) Theft

a) Weak law enforcement and multinational companies operating in Ukraine are not

spared from this.

 b) They had to put security staff just to make sure that the concentrate will make it

to the bottlers.

III. AREA THAT BEST TO CONSIDER

Due to its supply chain's substantial reliance on local businesses, Pepsi Cola

International has had challenges that are primarily the result of ineffective and inefficient

performance. Installing its own plants in the nation, like Coca-Cola has done, is the

method that will enable it to overcome the obstacles. Instead of relying just on

outsourced distribution to enter the market, it must permanently enter, bring its formula

and processes. This tactic implies that all of the disputes and difficulties that Pepsi is

seeing in the Ukrainian market will be overcome. Conflicts in channels and gaps in

supply and demand are the two major issues that have the biggest impact on the

existing inefficiencies in distribution. Once the corporation makes the decision to enter

the market, environmental effects can be simply reduced. Later, this is covered in more

detail.

IV. POSSIBLE SOLUTIONS

1) Estimate the Distribution

a) Improvement of distribution to meet the demands and segmentation of the

market (rural and urban).

b) Rural consumers are aware of the development in the urban areas and they

aspire to consume brands to improve their standard of living.

 (e.g., Coca Cola has penetrated rural villages by installing its own

refrigeration system in stores to reach out consumers with cold drinks)

c) They have to communicate to the institutions and NGOs to help them

regarding with the development that will allow them to reach out rural areas.

2) Strengthen the Relationship

a) Build trust among the parties through different activities.

b) Sort out those who cannot fully commit.

c) Grant those show positive signs and dedications.

3) Communicate to NGOs

a) Improvement of the infrastructure and also transit routes to utilize time and

cost with the help of NGOs

b) Establish their own plant in various locations across Ukraine to reach out all

possible consumers both rural and urban.

c) Invest to specialized vehicle to secure the concentrate and void freezing it.

4) Reinforce protection

a) Inspect all the department to ensure the safety of the concentrate and

eliminate the channel that is most exposed to theft.

b) Build own plants inside Ukraine so the costs and the theft will decrease.

V. RECOMMENDATION

The assets of Pepsi International are its distribution networks, which will

undoubtedly aid the company in reaching its long-term objective of spreading its brand
throughout the entirety of Ukraine. To maintain a competitive edge in the market, Pepsi

must increase its research and supply-chain management spending. Coca-Cola is

Pepsi's main competitor, so it is important for them to keep an eye on it and analyze its

past behavior in order to gather information that would help their business grow quickly.

To improve the effectiveness of supply-chain management, Pepsi must include these

ideas and strategies into its marketing plan. Along with a leadership approach that

considers cultural barriers that are limiting its ability to reach all customers, it needs to

put a strong emphasis on cost effectiveness and market-based customer satisfaction.