COLLEGE OF BUSINESS AND ECONOMICS

SCHOOL OF MANAGEMENT AND ACOUNTING

ASSESSMENT OF FACTORS AFFECTING

MARKETING PERFORMANCE OF PEPSI COLA:
THE CASE OF HAWASSA MILLENNIUM PEPSI
COLA PLANT

BY
DAWIT DENEKE FOSHEKE

A THESIS SUBMITTED TO THE SCHOOL OF GRADUATE

STUDIES OF HAWASSA UNIVERSITY IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF
BUSINESS ADMINISTRATION IN MARKETING MANAGEMENT

May, 2019
Hawassa, Ethiopia

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 COLLEGE OF BUSINESS AND ECONOMICS

SCHOOL OF MANAGEMENT AND ACOUNTING

ASSESSMENT OF FACTORS AFFECTING

MARKETING PERFORMANCE OF PEPSI COLA:
THE CASE OF HAWASSA MILLENNIUM PEPSI
COLA PLANT

BY
DAWIT DENEKE FOSHEKE /

________________________ _______________________ ____________

MAJOR ADVISOR SIGNATURE DATE
________________________ _________________________ ____________
CO-ADVISOR SIGNATURE DATE

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 DECLARATION
I hereby declare that the research thesis work entitled “ Assessment factors affecting
Marketing Performance of Pepsi Cola:Case study of Hawassa pepsi cola plant”
submitted to the School of Management and Accounting Hawassa University for the
award of the Degree of Master of Business Administration with specialization of
Marketing Management, is based on my original research work carried out by me,
myself, under the supervision and guidance of Melese Waktola (Ph.D.Candidate)
and Mrs. Almayehu Hailu (MA). This work has not been submitted earlier in full or
in a part thereof, for the award of other similar Degree, Diploma, Fellowship, or any
other similar titles to this or any other University or Institution.

Name: Dawit Deneke

Signature: ________________
Place: Hawassa-Ethiopia

Date: 23 May, 2019

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 HAWASSA UNIVERSITY SCHOOL OF GRADUATE
STUDIES
ADVISORS’ APPROVAL SHEET
We hereby certify that this thesis entitled “Assessment factors affecting Marketing
Performance of Pepsi Cola: Case study of Hawassa Pepsi cola plant” submitted to
the School of Management and Accounting, Hawassa University for the award of the
MBA Degree in Marketing Management is an authentic work done by Mr. Dawit
Deneke from January 2017 to May 2019 under our supervision and guidance. The
subject on which the thesis has been prepared is based on his original research work
and it has not been submitted earlier in full or a part thereof for the award of any of
Degree, Diploma or any other similar titles in this or any other University or
Institution.

Major Advisor

________________________________ ________________ ____________

Name Signature Date

Co-Advisor

________________________________ ________________ ____________

Name Signature Date

4
 HAWASSA UNIVERSITY SCHOOL OF GRADUATE
STUDIES
EXAMINERS’ APPROVAL SHEET
As members of the Board of Examiners of the final Master‟s degree open defense, we
certify that we have read and evaluated the thesis carried out by Dawit Deneke under
the title “Assessment factors affecting Marketing Performance of Pepsi Cola:Case
study of Hawassa pepsi cola plant”and recommend that it be accepted as fulfilling
the thesis requirement for the degree of MBA in Marketing Management.
__________________________ _________________ ____________
Name of the Chairperson Signature Date
__________________________ ________________ ____________
Name of Internal Examiner Signature Date

_________________________ ________________ ____________

Name of External Examiner Signature Date

________________________ ________________ ____________

Major Advisor Signature Date

________________________ ________________ ____________
Co-Advisor Signature Date

Final approval and acceptance of the thesis is contingent upon the submission of the
final copy of the thesis to the SGS through the Department/ School Graduate
Committee (DGC/ SGC) of the candidate‟s department/School.
Thesis approved by:
_________________________ ________________ ____________
SGC Signature Date

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 ACKNOWLEDGEMENT
After an intensive period of sixteen months, today is the day: writing this note of
thanks is the finishing touch on my thesis. It has been a period of intense learning for
me, not only in the scientific arena, but also on a personal level. Writing this thesis has
had a big impact on me. I would like to reflect on the people who have supported and
helped me so much throughout this period. First and for most I would like to render my
heartfelt thanks to God. I would like to thank my principal advisor Melese Waktola,
(Ph.D.candi.), for his wonderful and constrictive guidance and comment. He
supported me greatly and was always willing to help me. He defiantly provided me
with the tools that I needed to choose the right direction and successfully complete my
thesis.

I would like to thank my co-advisor Mrs. Alemayehu Haiku, (MA), for her
uncountable support and advise to complete my thesis.

In addition, I would also like to thank my parents for their wise counsel and
sympathetic ear. They were always there for me. Finally, I would like to express my
thanks and appreciation to Geletu Genemo, Gezahegn Getachew, and Habtamu
Gebre; they are my friends. We are not only able to support each other by deliberating
over our problems and findings, but also happily by talking about things.

Thank you very much, everyone!

Dawit Deneke

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 TABLE OF CONTENT

Acknowledgement ............................................................................................................i
Table Of Content ............................................................................................................ ii
List of Table .................................................................................................................... v
List of Figure ..................................................................................................................vi
DEDICATION ............................................................................................................. vii
ABSTRACT ................................................................................................................ viii
ACRONYMS .................................................................................................................ix
CHAPTER ONE .............................................................................................................. 1
1.1 Backgruand of the study ........................................................................................ 1
1.2 Statement of the Problem ....................................................................................... 3
1.3 Objectives of the Study .......................................................................................... 4
1.3.1 General Objective............................................................................................ 4
1.3.2 Specific Objectives.......................................................................................... 4
1.4 Research Questions ................................................................................................ 5
1.5 Significance of the study........................................................................................ 5
1.6 Scope of the Study ................................................................................................. 5
1.7 Limitations of the Study ........................................................................................ 6
1.8 Organization of the Study ...................................................................................... 6
CHAPTER TWO ............................................................................................................. 8
2. Review of Related Literature and Conceptual Framework ......................................... 8
2.1 Concept Definition ................................................................................................. 8
2.1.1 The Concept of Marketing .............................................................................. 8
2.1.2 The Concept of Performance .......................................................................... 9
2.1.3 The Concept of Marketing Performance ....................................................... 12
2.2 An Overview of Marketing Performance Related Studies .................................. 16
2.2.1 General Trend of Marketing Performance Measurement ............................. 16
2.2.2 Categorizing Marketing Performance Studies .............................................. 17
2.3 A Framework for Measuring Marketing Performance ........................................ 17
2.3.1 Marketing and Financial Performance .......................................................... 18

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 2.3.2 Business Performance Measurement ............................................................ 19
2.3.3 Marketing performance measurement........................................................... 19
2.4 Strategic Marketing.............................................................................................. 20
2.5 Marketing-Mix ..................................................................................................... 25
2.5.1 Marketing mix of Pepsico ............................................................................. 25
2.5.1.1 Product ....................................................................................................... 26
2.5.1.2 Price............................................................................................................ 26
2.5.1.3 Promotion ................................................................................................... 27
2.5.1.4 Place ........................................................................................................... 28
2.6 The Components of Marketing Mix .................................................................... 28
2.7 Nature of Competitive Conditions ....................................................................... 32
2.8 Setting Strategic Responses ................................................................................. 33
2.8.1 Retail Marketing Strategies ........................................................................... 33
2.8.2 Market Segmentation .................................................................................... 34
2.8.3 Product Strategy ............................................................................................ 35
2.8.4 Pricing Strategy ............................................................................................. 36
2.8.5 Distribution Strategy ..................................................................................... 37
2.8.6 Promotion Strategy........................................................................................ 38
2.9 The concept and Purpose of Advertising ............................................................. 40
2.10 The Concept of Sales ......................................................................................... 40
2.10.1 Parties Involved in Sales Promotion ........................................................... 42
2.10.2 Sales Promotion Methods ........................................................................... 44
2.10.3 Customers Oriented Promotion Methods .................................................... 44
2.11 The Relationship between Advertising and Sales.............................................. 48
2.12 Conceptual Framework ...................................................................................... 52
2.12.1 Operational Definition of Variables ............................................................ 52
CHAPTER THREE ....................................................................................................... 55
3. Research Methodology .............................................................................................. 55
3.1 Description of Hawassa Millennium Pepsi Cola Plant ........................................ 55
3.2 Study Design ........................................................................................................ 56
3.3 Sampling Procedure of the Study ........................................................................ 57
3.4 Methods of Data Collection ................................................................................. 58

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 3.5 Methods of Data Analysis.................................................................................... 59
3.6 Ethical Consideration ........................................................................................... 60
CHAPTER FOUR ......................................................................................................... 61
4. RESULTS AND DISCUSSION................................................................................ 61
4.2 Discussion ............................................................................................................ 77
4.2.1 Product .......................................................................................................... 77
4.2.2 Price............................................................................................................... 78
4.2.3 Place (distribution) ........................................................................................ 79
4.2.4 Promotion ...................................................................................................... 80
4.2.5 Demand condition ......................................................................................... 81
CHAPTER FIVE ........................................................................................................... 83
5. Summary, Conclusions And Recommendations ....................................................... 83
5.1 SUMMARY ......................................................................................................... 83
5.2. Conclusions......................................................................................................... 85
5.3 Recommendations ................................................................................................ 87
Bibliography .................................................................. Error! Bookmark not defined.
APPENDIX ................................................................................................................... 94

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 List of Table
Table 1.1 Market Share of Pepsi Products ...................................................................... 2
Table 4.2: Sex of the participants .................................................................................. 61
Table 4.3 Age of the participants .................................................................................. 61
Table4. 4 Education level of the participants ................................................................ 62
Table 4.5: Quality of Pepsi cola .................................................................................... 63
Table4. 6: Quality comparability with other soft drinks ............................................... 63
Table 4.7: Attractiveness of packaging ......................................................................... 64
Table 4.8: Features of Pepsi-cola packaging ................................................................. 65
Table 4..9: A habit of customers to continuing to Buying Pepsi-Cola .......................... 65
Table 4.10: Fairness level of Pepsi-Cola price .............................................................. 65
Table 4.11: Value of Pepsi-Cola compared with its price ............................................. 66
Table 4.12: Price comparability of Pepsi-Cola with other soft drinks ......................... 67
Table 4.13: Pepsi-Cola's price as an important decision source to buy ....................... 68
Table 4.14: Discount of Pepsi-Cola's price as a source for customer reaction.............. 69
Table 4.15: Response for the customer compliant ........................................................ 69
Table 4.16: The response quality of customer compliant.............................................. 70
Table 4.17: The response for customer's call ................................................................ 70
Table 4.18: The quality level of service delivery .......................................................... 71
Table 4.19: Pepsi-Cola's availability on the market ..................................................... 71
Table 4.20: Availability of Pepsi-Cola with other soft drinks....................................... 72
Table 4.21: Sources of Information .............................................................................. 72
Table 4.22: Promotional strategies ................................................................................ 73
Table 4.23: Attractiveness of Pepsi-Cola advert .......................................................... 73
Table 4.24: Customer handling of Hawassa Millennium Pepsi-Cola Industry ............. 74
Table 4.25: Branding of Pepsi-Cola .............................................................................. 74
Table 4.26: The frequency of customer habit of buying Pepsi cola ............................. 75
Table 4.27: The quantity customer buying .................................................................... 75
Table 4.28: Influential character of Pepsi-Cola on the customers................................. 76
Table 4.29: Customers interest to buy Pepsi-Cola ....................................................... 76
Table 4.30: The level of customers interest to buy Pepsi-Cola ..................................... 77

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 List of Figure
Figure 2.1.conceptual framework .................................................................................. 54
Figure 4.2 Age of the participant ................................................................................... 61
Figure 4.3. Education level of the participant ............................................................... 62

vi
 DEDICATION
This thesis work is dedicated to all my family, friends and people who seek to see my further
success.

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 ABSTRACT
Marketing performance mainly refers the performance of a firm which can be
measured through sales revenue, market share, profitability, competitive advantage,
customer satisfaction and loyalty. The study has followed a mixed approach, both
quantitative and qualitative, in dealing with the issues that have been investigated. To
this effect, primary as well as secondary sources of data have been used. Combination
of instruments has been applied to gather information for the study. structured
questionnaire has been used and a survey was conducted to generate quantifiable data
for the study. And also 249 samples were randomly selected and considered to this
end. As to the generation of qualitative information, interview was conducted with
selected members of the management of the company who have the knowledge and
experience in marketing the product. The information collected was organized and
analyzed using descriptive statistics as well as explanatory method of data analysis.
Based on the analysis, factors such as; pricing, customer preference, promotion
strategy, health issues, and pakaging affect the demand for Pepsi cola. Besides the
application of marketing mix of Pepsi cola in the overall marketing management of the
Hawassa Millennium Pepsi cola plant is not well underway. As a result, there existed
minor cases that need to be addressed in terms demand, availability and distribution of
the Pepsi cola.

Key words: marketing performance, marketing efficiency, marketing effectiveness,

marketing mix

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ACRONYMS
MOHA Mohamed Hussein Al-Amoudi

PEPSICO Pepsi Cola Company

HMPC Hawassa Millennium Pepsi Cola

ROI Return On Investment

“SWOT „‟ Strength, Weakness, Opportunity, And Threat

IMC Integrated Marketing Communication

4P‟S Product, Price, Promotion, And Place

ADS Advertising

MKT Marketing

MGT Management

SNNPR Southern Nations Nationalities And Peoples Regional State

AIBI American International Beverage Institute

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 CHAPTER ONE
1.Introduction
1.1Backgruand of the study
Now a day soft drinks are one of the most popular drinks, which are consumed on all
types of occasions. Their demand is increasing day by day due to changing climatic
conditions, liking for fast food and changing culture (www.softdrinks.com). It includes
all types of non-alcoholic, carbonated and flavored beverages. These artificially
sweetened drinks are available in different flavors, different sizes and in different
packages .

According to Girard (2005) the invention of Pepsi cola trace back to 1890‟s: in 1898 a
pharmacist called Caleb Bradham from New Bern, North Carolina came up with a cure
for dyspepsia. It was a curative drink called Pepsi cola and this is how the soft drink
Pepsi came under the category of soft drinks (Essays, 2013). So as to sell his product
Bradham came up with the idea of company in 1903 which was named as craven
holding company of craven country, North Carolina. In 1931 Charles G.Guth of the
loft company in New York City purchased Pepsi cola from the holding company
(Stodddard, 2013). In order to stay in the market Guth has decided to increase the size
of the bottles for unchanged price. Gradually, in 1965 the company merged with Frito-
Lay, Inc. to become PepsiCo, Inc. it is the company‟s name which is still known (ibid).

Besides, the first Pepsi cola company in Ethiopia was Nifas silk Pepsi Cola Company;
it was established in 1966 as a share company with an initial capital of 1 million birr.
In those days the capacity of the company was 20,000 bottles per hour. In 1986, the
plant was renovated and expanded to double its capacity using twin fillers with the
investment cost of 6,647,944.00 birr (Abenezer, 2007).

The company profile shows that Tekle Haymanot Pepsi Cola Company was also the
other Pepsi cola company to begin in Ethiopia. It was initially Saba Tej Share
Company later nationalized in 1975 replacing the old line and started producing Pepsi
cola team brands. Gonder Pepsi cola plant before nationalization was owned by private
companies. After nationalization the company begins to produce snap cola and orange.

1
Since this product was not demanded as expected, the Ethiopian beverage corporation
make new feasibility study on Pepsi cola products which got the blessing of the
government to erect 2 currently working plant in 1986. All plants were sold for Sheik
Mohamed Hussein Al-Amoudi in 1996 through BID tended by Ethiopian privatization
agency. According to the company profile, that is why the company is named MOHA
(Mohamed Hussein Al-Amoudi).

Hawassa Millennium Plant was also one of the company‟s biggest plants throughout
the country. It is located in the Southern Nations Nationalities and Peoples Region at
the southeast edge of Hawassa town. As the company profile entails, the foundation
was laid in 1999 E.C and the whole process of construction and machine assembly was
complete by 2007. The company which totally coasted 180,000,000 birr has a capacity
producing 36,000 bottles per hour (Abenezer, 2007).

Table 1. Market Share of Pepsi Products

Fiscal Pepsi Mirinda 7up M.Toni M.Appl P.Appl Total
year c e e
July2013 166333 3045791 13173 125912 651803 0 5618576
-2014 7 3
July2014 170863 2888437 14574 161454 607980 0 5512256
-2015 6 9
July2015 206977 3232696 19313 135618 457603 46126 6134956
-2016 5 8
July2016 227906 3443444 21407 135661 432465 158834 6663546
-2017 3 9
July2017 180424 2948042 20446 119912 354785 57149 5488601
-2018 8 5
Total 952505 1555841 88916 678557 250463 262109 2941793
9 0 4 6 5
Source: Annual Report of the company (2018)

In the past few years, MOHA Soft Drinks Industry in general Hawassa Millennium
Plant in particular showed tremendous increment in their production, sales, and

2
profitability due to reorganization of operations has been achieved. Also, productivity
has improved tremendously with major cost savings and has insured a regular supply
of high quality products. It has also succeeded in reaching new market areas across the
country. Accordingly, the company holds 52% of the market share in soft drinks
industry in the country (http://www.midroc-ethiopia.com.et/). With an expansion and
replacement of obsolete machinery, production capacity of the plants has increased
substantially. In addition, it has invested Birr 8 Million for the expansion of new
projects, Birr 153 million for refurbishment and replacement of existing plants and Birr
241 million for marketing, infrastructure, excluding advertisement and sponsorship
expenses (ibid).

However, numerous factors can affect the overall marketing performance (sales
volume, sales growth, and profit) of soft drinks in general Pepsi cola in particular.
While many of these factors are out of control of soft drink manufacturers, these
companies must understand and adapt to these factors to maintain their profit by
sustaining effective and efficient marketing. Thus, this study will try to identify factors
that influence the marketing performance (in terms of sales volume, sales growth, and
profit) of Pepsi cola product in Hawassa Millennium Plant.

1.2 Statement of the Problem

It is very interesting to note that any company in order to attain competitive advantage
compared to its competitors, it need to focus on improving its‟ market performance.
Companies today operate in a progressively volatile and challenging business
environment. These challenges are compelling companies to identify the best
marketing management strategies, to grow their investment, improve market share and
increase shareholders value (Varadarajan, 2010). Successful companies are well-
known not only by well-conceived marketing strategies or how the company will
compete, but also by their ability to execute the marketing strategy decision options
(Black and Boal, 1994). Appropriate and effectively executed marketing strategies are
required to productively guide the deployment of available resources via the
company‟s marketing capabilities in pursuit of desired goals (Varadarajan and Clark,
1994).

3
In order to satisfy the changing needs of customers, companies must first determines
their needs and that is where marketing strategy begins. For an organization to survive
in today‟s competitive market, it has to strategize in satisfying customers‟ needs more
effectively and efficiently using the right product, price, place and promotion
strategies. In support of this Clark (2000), discussed that the main purpose of any
organizations existence is to satisfy needs of its chosen target customers at a profit and
keep the business growing. As a result, there must be an effective marketing strategy in
place, without which the company will suffer the problem of low profit margin, low
returns on investment, low returns on assets and low market share (Clark, 2000).

Likely, Hawassa millennium plant Produces many product among which Pepsi Cola is
one. However the sales volume of Pepsi cola has sharply declined in recent years as
compared with other products of the company. For instance, dominant economic
factors, competitive sources of the same product, industry trends, and the industry‟s
key factors is believed to affect market size, growth rate and overall profitability of
Pepsi cola.
This problem is more magnificent in companies like Hawassa Millennium Plant. Since
Pepsi cola is a flagship (major) brand among the products in the product list of the
company, the management of the company has been more concerned about this
problem, and raised the issue in various meetings as to how to increase the sales
volume of the product. However, despite the efforts made so far the problem remained
unresolved and continues to affect the marketing performance of the company. The
purpose of this study is therefore; to assess factors that affect the marketing
performance of Pepsi cola in Hawassa Millennium Pepsi Cola Plant and come up with
a solution to alleviate the mentioned problem.

1.3 Objectives of the Study

1.3.1 General Objective
The major objective of this study is to assess the factors influencing marketing
performance of Pepsi cola in Hawassa city.

1.3.2 Specific Objectives

The study specifically aims:

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  To examine internal factors influencing marketing performance of Pepsi Cola

 To identify external factors affecting the marketing performance of Pepsi Cola

 To analyse the marketing mix elements affecting marketing performance of

Pepsi cola

 To determine the cause of demand failure for Pepsi cola

1.4 Research Questions

By conducting this study the researcher aims to answer the following questions.

 What are the internal factors influencing marketing performance of Pepsi Cola?

 What are the external factors affecting the marketing performance of Pepsi
Cola ?

 How marketing mix elements are contributing to or against marketing

performance of Pepsi cola?

 What are the causes for demand failure for Pepsi cola?

1.5 Significance of the study

The result this study is believed to have the following significances:
 It can help the management to realize the prominent factors that affect Pepsi
cola‟s market performance.
 The study will used by the management of the company to resolve the problem
of sales decline.
 It can also be a source of information for further studies.
 It enhances the research skill and knowledge of the researcher.
 Finally, it will contribute to company‟s effort made to sustain effectiveness and
efficiency of the market.

1.6 Scope of the Study

The focus of the study was be only on the current and burning common marketing
performance determinants of Pepsi cola product at Hawassa Pepsi cola factory. This is

5
because it was very difficult to manage marketing performance determinants of all
MOHA products within the limited period of time. The study was confined to assess
the factors that affect the marketing performance of Pepsi cola at Hawassa Pepsi cola
factory. The study was also delimited by the geographical locations of the plants.
There are plants of the company located in different regions of the country and as a
result not considered in this particular research. Therefore, the result from the study
does not reflect the reality in the country concerning the issue to be investigated.

1.7 Limitations of the Study

While conducting this study the researcher faced the following limitations will be
encountered:

 Lack of adequate time and budget to make deep and detailed investigation.
 The translation of data from source language (Amharic) to the target language
(English)
 A sample size which may limits the possibility of making generalizations to
other MOHA product at regional or national level.
 The researcher also faced limitations regarding the willingness of participants
to give information.

Furthermore, the issue raised in the study is believed not yet researched well in
Ethiopia, the researcher encountered difficulty in obtaining sufficient information to
understand what has been done so far in this regard and learn about the data collection
techniques and methods of data analysis employed in the previous researches. Also, it
was difficult to include the methods, findings and conclusions of earlier studies
undertaken domestically. In fact, these limitations affected the deep investigation of
the problem and also the quality of the study. As a result the researcher tried to work
thoroughly to solve these limitations.

1.8 Organization of the Study

This research paper is presented in different sequential chapters and follows like this
introduction, literature review and analysis and interpretation and recommendation:-

6
 The introduction section/chapter includes like background of the study,
statement of the problem, research questions. Objective of the study,
significance of the study delimitation of the study and research design
methodology organization of the study.
 The second chapter contains review of related literature to the
theoretical aspect of the study derived from different secondary
information and it is the base for the research.
 The third chapter is about methodology of the study.
 The fourth chapter is data analysis and interpretation is very important
research paper on this interpreted and analyzed depend on statistical
tools of research.
 The fifth chapter part contains conclusion summary and also
recommends about the research paper.

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 CHAPTER TWO
2. Review of Related Literature and Conceptual Framework
2.1 Concept Definition
2.1.1 The Concept of Marketing
The concept marketing can be defined and understood in different ways. There are
several views and definitions of marketing. While the most widely accepted definition
is that of The American Marketing association, the professional organization defined
marketing as “Market is an organizational function and a set of process for creating,
communicating value to customers and for managing customer relationships in ways
that benefit the organization and its stakeholders."

According to Dahl and Hammond (1997) the purpose of production, assembling,

storage, and transportation was consumption. All these steps from production to
ultimate consumption were included in the term marketing. For this reason, marketing
is a set of activities without which what is produced cannot reach the ultimate
consumer. Therefore, it might be said that the importance of these activities is the
study of marketing.

In support of this Kotler (2005) discussed that marketing is a societal process by which
individuals and groups obtain what they need and want through creating, offering, and
freely exchanging products and services of value with others. To him, to define a
marketing situation there should be two or are parties with potential interest, capable of
communicating with each other and each possessing things of value to the other. From
this definition it could be noted that marketing consists of a number of facilitating
activities. As a matter of fact marketing is much more comprehensive and aims at
maximizing the returns to the producer, at an affordable price to the consumer. It starts
with production and ends with the customer finally purchasing the product (ibid).

8
In addition Pyle, (1931) view marketing as the phase of business activity through
which human wants were satisfied by the exchange of goods or services for valuable
consideration usually money or its equivalent. Indeed marketing was all the activities
necessary to place tangible goods in the hands of the customer and includes only such
activities as would involve a charge in the form of the goods (Philips and Ducan,
1973). However, this definition is narrow in the sense that it excludes creation of place
and time utility and such efforts as to inform the prospective buyers to motivate them.

When marketing is viewed as a process of moving goods and transferring rights of

ownership with or without changes in the physical form of product, it involves several
functions relating production to consumption.

On the other hand for Abbot and Makeham (1979) marketing meant different things to
different people; to the housewife it meant shopping for food; to the farmer it means
the sale of his product; and to the fertilizer distributor it meant the selling to the farmer.
In short, marketing would include all the activities performed from the stage of
production to ultimate consumption. In other words it refers to functions of marketing
with assembling, warehousing, grading, barding, packing, labeling, distribution, selling
and servicing.

2.1.2 The Concept of Performance

The concept of performance, as it appears defined in the dictionaries of English, it is
the idea of outcome, achieved goal, quality, and less the economic aspects of
efficiency and effectiveness. This shows that the term performance was originally
taken from the mechanics and sports fields, in order to subsequently be used to
characterize the very good results also achieved in other fields. This means that
performance is obtained only by a limited number of entities, those who get the best
results.

Saying these, currently, there are a variety of definitions attributed to the concept of
performance due to its subjective nature. In the literature there are many articles or
studies that define the concept of performance closely related to environmental factors.
Noyé (2002) believes that the performance is achieving the goals that were given to
you in convergence of enterprise orientations. To him, it is not a mere finding of an

9
outcome, but rather it is the result of a comparison between the outcome and the
objective. Unlike other authors, he considers that this concept is actually a comparison
of the outcome and the objective. The author‟s definition is far from clear, as both
outcomes and objectives vary, most often, from one field of activity to another.

The concept also can be characterized as future-oriented, designed to reflect

particularities of each organization / individual and is based on a causal model linking
components and products (Lebas, 1995). The author defines a successful business as
one that will achieve the goals set by the management coalition, not necessarily one
that achieved them. Therefore, it is dependent as much of capability and future.

Performance is not an objective reality, waiting somewhere to be measured and

assessed, but a socially constructed reality that exists in people‟s minds, if it exists
somewhere (Whooley, 1996). According to the author, it may include: components,
products, consequences, impact and can also be linked to economy, efficiency,
effectiveness, cost effectiveness or equity.

In organizational level performance is a complex relationship involving seven criteria

that must be followed: effectiveness, efficiency, quality and productivity, quality of
work, innovation and profitability (Rolstadas, 1998). It is closely related to the
achievement of the criteria listed above, which can be regarded as performance
objectives. Accordingly, it cannot be established a precise definition of performance
because it is dependent on the seven criteria of performance, that cannot be clearly
defined.

These all efforts to define performance led Folan (2007) to highlight three priorities or
objectives of governance of performance. Firstly, the concept of performance should
be analyzed by each entity within the limits of the environment in which they decide to
operate. For example, a company‟s performance needs to be analyzed in the markets in
which it operates and not those that are not relevant to its operations. Secondly, it is
always linked to one or several objectives set by the entity whose performance is
analyzed. Therefore, a company measures its performance against objectives and
targets established and accepted internally rather than on those used by external bodies.
Thirdly, it is reduced to the relevant and recognizable features.

10
According to this theory, performance is influenced by the environment, the objectives
to be achieved and the relevant and recognizable features. The author uses several
definitions for the concept of performance as it should be analyzed and quantified from
several points of view.

Apart from these, Neely (2002) believes that performance should consider quantifying
the efficiency and effectiveness of actions. This quantification can be expressed both
qualitatively and quantitatively. According to this definition and other authors,
performance is closely related to efficiency and effectiveness.

On the other hand, it is argued that performance is something that a person leaves
behind and which exists outside the said purpose (Kane, 1996). To Kane, performance
is defined at the level of each individual within the organization or at organization
level. It is perceived as an understanding of the achieved results. The author
emphasizes the particular nature of the definition and the impossibility of outlining a
general definition. Therefore, we can speak of an accuracy of the definition at
particular level and an ambiguity of it at general level.

Bernadin (1995) also points out that it should be defined as the sum of the effects of
work, because they provide the strongest relationship with the organization‟s strategic
objectives, the customer‟s satisfaction and the economic contributions. As the author
says, performance must take into account both inputs (the effort put in) and outputs
(the result of the effort put in). This definition equates performance with the ʺsum of
the effects of workʺ.

A more comprehensive definition of performance is given by Brumbach (1988), which

refers to both behavior and results. According to this definition performance means
both behaviors and results. Behaviors are emanating from the performer and turn the
performance of an abstract concept into a concrete action. Not being just tools of
obtaining some results, behaviors are by themselves outcomes the product of the
physical and cerebral exercise submitted for the execution of tasks and can be judged
apart from results (ibid). Thus, the author defines performance closely related to
behavior and outcomes.

11
When we talk about the performance of teams and individuals, we must take into
account both inputs (behavior) and outputs (results). According to Hartle (1995), this is
the ʺMixed modelʺ of performance management, covering both skill levels and
achievements, and goal setting and analysis of the results. Brumbach‟s definition is
ambiguous, to some extent, since it does not specify what kind of result is referred to
and what exactly is meant by behavior.

Philippe Lorrino (1997) states that performance in the enterprise is what contributes to
improving cost-value couple and not just what helps to reduce the cost or increase the
value. In other words the definition of performance can be translated into another
equivalent definition: performance in the enterprise represents all that contributes to
the achievement of strategic objectives. A company is efficient if it has the ability to
create economic value added, that is, a positive value after the remuneration of all
factors, including equity.

2.1.3 The Concept of Marketing Performance

A review of the literature has shown the interchangeable, sometimes even conflicting
use of key concepts such as marketing effectiveness, marketing efficiency, and
marketing performance. Such indiscriminate use of these key terms has led to
significant confusion in the basic concepts involved. In order to promote clarity and
precision of usage and to explain how the term „marketing performance‟ is used
throughout this study, the use of the concepts mentioned above is reviewed and
analyzed.

I. Marketing Effectiveness

The word effectiveness is simply can be defined us to be doing the right thing
(Drucker, 1974). In the organizational literature, effectiveness is considered from the
perspective of the extent to which a certain performance achieves the goals of the
organization (Clark 2000). Similarly, in the marketing literature, marketing
effectiveness is described as the extent to which marketing actions have helped the
company to achieve its business goals (Ambler et‟ al, 2001). Marketing effectiveness
has attracted a great deal of attention in academic and managerial circles (Vorhies and
Morgan 2003). According to Connor and Tynan (1999), the majority of studies of

12
marketing effectiveness have relied essentially on the use of one or more of three key
approaches developed by Kotler (1977).

II. Marketing Efficiency

In order to clarify the distinction between effectiveness and efficiency, Drucker (1974)
states that: “Effectiveness is the foundation of success - efficiency is the minimum
condition for survival after success has been achieved. Efficiency is concerned with
doing things right. Effectiveness is doing the right things”. Thus, efficiency is
concerned with the outcomes of business programmes in relation to the resources
employed in implementing them (Walker and Ruekert 1987). More specifically,
efficiency concerns the relation between the results of marketing (marketing output) to
the effort and resources put into marketing (marketing input), with the aim of
maximizing the former relative to the latter (Bonoma and Clark 1988).

The literature on this topic uses a wide variety of methods to measure input (e.g.
marketing expenses, knowledge and technology, man-hours) and output (e.g. sales,
profit, services, cash flow).

III. Marketing Performance

The use of the term performance in this sense, according to some scholars is not
uniform. This is based on the fact that some authors use productivity and performance
interchangeably. Others suggest a number of criteria for evaluation (Mentzer, 1991).
The evaluation of marketing functions may be divided into three areas: productivity,
utilization, and performance, where productivity is the ratio of real output to real input,
utilization is the ratio of capacity used to available capacity, and performance is the
ratio of actual output to standard output (ibid).

In essence, performance measurement is an analysis of both effectiveness and

efficiency in accomplishing a given task that promotes the marketing performance of
firms in terms of sales volume, sales growth, and profitability (Konrad, 1991). All
evaluation is in relation to how well a goal is met, a goal is composed of both future

13
attainments and allocation of currently generated efforts. Establishing and
accomplishing marketing goals is a basic function of marketing management as well as
other functional elements of the firm. Also, overall goals of a company must be
reconciled with the sub-goals of the individual departments (ibid).

Alluding to the views of these researchers, are the notion that there is no clear
consensus on an appropriate definition of output (Triplett 1990, as quoted by Oster and
Antioch, 1995). For instance, the concept of productivity is also used interchangeably
with performance when comparing logistics performance which in our view is a subset
of marketing performance. Other scholars have also used effectiveness and efficiency
while measuring firm‟s distribution performance. This study would center on sales
volume, sales growth and profit (Seligman, 1998).

The researchers also advanced the opinion that there is input efficiency and output
efficiency, with input efficiency focusing on the degree of efficiency with which firms
combine their inputs to produce a given level of output at minimum cost, and output
efficiency focusing on efficiency in pricing and achieving levels of output measurable
in terms of sales volume, sales growth and profit. As an insight to the achievement of
firm‟s marketing objective, Zeller (1998) discussed that firms should expand
marketing strategy to include the seller‟s development in the course of optimizing
performance. This was suggested as yielding positive impact on firms‟ performance. It
was also revealed in the study that when firms expand their market study to include
identification and meeting the needs of consumers, following up with consistent
executive business plans might give the firm superior advantage in terms of sales
volume, growth and profit which will move in the upward direction.

Performance behavior is evaluated based on the contributions it is capable of bringing

about in the realization of organization‟s goals (Dalrymple et al., 2004). Marketing
performance is a measure of contribution of an organization‟s marketing functions to
its corporate goals and objectives (Jackson et al., 2004). The appropriate way of
measuring marketing performance has for long remained a matter of controversy in the
literature, and as such, scholars were of the view that performance measurement ought
to be evaluated based on its relevance to the achievement of corporate objectives in

14
direct proportion to firm‟s expressed strategy (Asiegbu et al., 2011, and Maskell,
1994).

In view of the divergent opinions of many researchers, which point to the fact that
there are several marketing scales of measurements/variables that could be used to
measure, performance, we base our choice of measuring tools on the statements of
specific variables that could be applied as measurement instruments for variables
should be relevant in measuring what it is supposed to measure (Spegel, 2004). On this
basis, marketing performance measuring tools need to be determined based on the
formulated framework for the study, as well as the direction of the research.

Since we are at liberty due to availability of choices to select some marketing

performance measuring instruments, we therefore selected three among marketing
performance variables to test the extent of relationship between our predictor variable
which is Brand Extension Strategy against our criterion variable which is Marketing
Performance. The selected variable for marketing performance are; sales volume, sales
growth and profitability. While the predictor variables indicators are Product Category
similarity and Brand Image similarity. This section therefore examines how brand
extension strategy affects marketing performance.

Extant literature have suggested some potential performance benefits that might accrue
to firms where consumers perceive the firms brand as being of high quality and
transferring sufficient fit perception to the extended brand (Keller, 1998). However,
achieving significant result through higher sales volume, sales growth and profit is said
to be difficult for most firms, in that, consumers often use price as quality cue. This
makes it difficult to achieve perception of both high quality and low price that have
direct bearing with volume of sales, growth in sales and profit (Karmani and Rao,
2000). In addition, achieving superior quality perception in the mind of target
consumers is often high in cost. Because, such may involve using higher quality raw
materials or better trained service operatives, superior manufacturing or operations
technologies and greater marketing communication expenditure in deriving
organizations objectives (Keiningham et al, 1995). Such additional cost can increase

15
the challenge of selling firm‟s extended brands at prices that consumers may perceive
as reasonable (Morgan and Rego, 1994).

2.2 An Overview of Marketing Performance Related Studies

2.2.1 General Trend of Marketing Performance Measurement
Although there is little consensus on how to measure marketing performance, some
general trends may be identified from studies of marketing performance. Early work
on the measurement of marketing performance focused mainly on the financial
measures of profit, sales (unit and value) and cash flow (Sevin, 1965). However, there
is some unease about the use of financial measures to assess business performance
(Eccles, 1991).

Traditional accounting systems have been criticized for the lack of consideration they
give to long-term factors (Chakravarthy, 1986). Newer, nonfinancial measures of
output, such as customer satisfaction, customer loyalty, and brand equity have attracted
considerable research interest (Clark, 1999). Similarly, Davidson (1999) also
recognized the growing importance of nonfinancial measures of performance in his
emphasis of the fact that intangible assets, such as brand, technology, competence and
customer loyalty, have gradually become more important measures of corporate
performance. Secondly, there has been an expansion from the measurement of just the
output yielded by marketing to measuring the marketing input as well.

Marketing activities (input) such as marketing audit, marketing implementation, and

market orientation lead to intermediate outcomes such as customer satisfaction,
customer loyalty, and brand equity, which in turn lead to financial output. The
intermediate outcomes may therefore be considered as marketing assets (Srivastava et
al, 1998) that may be used to produce superior financial performance. Thirdly, there
has been a gradual change in emphasis from the use of one-dimensional to the use of
multidimensional measures of performance. Bonoma and Clark (1988) suggested
independently that the measurement of marketing performance should include the
assessment of both marketing efficiency and marketing effectiveness. More
researchers now agree that marketing performance is multidimensional (ibid).

16
More recently, a new trend has appeared that links marketing performance to firm
value and in particular to shareholder value (Lehmann, 2004). This trend has emerged
due to demands for marketing to have greater accountability and credibility (Luo and
Donthu, 2006). For marketing professionals truly to occupy an equal seat at the
executive table, they must define and deliver quantitative measurements that
demonstrate the contribution of marketing to the value of the firm (Lehmann, 2004).

As a result of this requirement, the number and variety of measures that are available
has increased. While companies rarely suffer from having too few measures (Kaplan
and Norton, 1992), it has been suggested that marketing researchers should develop
sets of measures that are small enough to be manageable but comprehensive enough to
give an accurate evaluation of performance (Clark, 1999).

2.2.2 Categorizing Marketing Performance Studies

According to O‟Sullivan and Abela (2007), research on the measurement of marketing
performance may be divided into three streams, namely the measurement of marketing
productivity (Rust et al, 2004), the identification of metrics in use (Barwise and Farley,
2004), and the measurement of brand equity (e.g., Aaker and Jacobson, 2001).
However, this classification is incomplete and needs to be updated in order to
incorporate more recent studies. For this reason, the study described herein provides a
comprehensive review of studies related to marketing performance. As a result, the
following research themes are identified: marketing accountability and credibility,
marketing productivity, the interface between marketing and accounting, linking
marketing performance to financial performance, the selection of metrics, and the use
of marketing metrics in organizations.

2.3 A Framework for Measuring Marketing Performance

From the literature on marketing performance, it may be seen that a system that
incorporates nonfinancial measures into new financial ones is urgently required.
Although there is no generic tool for measuring marketing performance, Clark (1999)
suggests that better use should be made of the existing measures, rather than devising
new ones. Judging from the literature, five dimensions of the measurement of

17
marketing performance are the most crucial: market share, customer satisfaction,
customer loyalty/retention, brand equity, and innovation.

Given the rapidly rising costs of marketing, marketing managers are under pressure to
provide more convincing evidence that designed marketing strategies will indeed yield
more value for the company and its shareholder (Weber, 2002). As a result of
increasing pressure to justify marketing expenditure, a better measure of marketing
performance that can demonstrate the contribution of marketing to the value of the
firm is clearly required (Stewart 2008). A performance measurement model that can
provide the link between nonfinancial performance and financial performance is
needed.

2.3.1 Marketing and Financial Performance

Financial analysis assists in measuring and identifying the strengths and weaknesses of
a business and ultimately the sustainability of the organization over time. The financial
analysis consists of financial ratios that indicate and determine the relationship
between the company‟s activities such as current assets in relation to sales (Kretlow et
al., 2006). The main reasons Sexton (2009) found for the slow progress made with the
measurement of marketing return are the following:

 Absence of understanding what marketing return constitutes. In many

companies the managers reported that their company does not define the
marketing return or ROI.
 Shortage of time and resources dedicated to the marketing return. Many
companies have not yet developed systems to measure the marketing return
and therefore are not allocated time to the advancement of internal
evaluation and measurement techniques.
 Little motivation for staff to contribute to the marketing return
measurement. The remuneration systems in companies do not encourage
work on marketing measurement and return.
 Shortage of skills and resources. Companies do not have the skills and
resources internally to allocate to the research of marketing return and
measurement or are reluctant to apportion it to the research.

18
  Absence of collaboration between the marketing and finance departments.
The marketing and finance functions seem to operate in separate silos and
therefore there is no impetus to advance the understanding and
improvement of marketing measurement.
 Inertia. The managers in companies do not feel the need to change their
current method of operation, neither have they the time to change.

The measurement of the marketing function continues to become more and more
challenging because several factors, such as the highly competitive nature of markets
and competitors, well-informed and educated customers, rapid advancement of
technologies, development of new industries and new industry leaders.

2.3.2 Business Performance Measurement

In order for companies to be successful and to gain competitive and sustainable
advantages, it is necessary to design and implement performance measurement systems
and structures. Therefore, it is important to measure and evaluates every function in the
business with the objective to increase efficiency and ultimately profitability and
business success (Taticchi, 2010). Eusibio et al. (2006) state that, notwithstanding the
importance of business performance and the pressure on companies to measure the
inputs, there has been little research done on the measures implemented to ensure
marketing effectiveness.

2.3.3 Marketing performance measurement

Ambler and Robert (2008) define marketing as the actions the company as a whole
engages in with the intent to create shareholder value. Therefore, it is not the
performance of the department or a specific marketing activity but the company‟s
overall performance and achievement with regard to marketing that makes the
enterprise successful. In order to evaluate the performance of marketing, it is necessary
to adhere to three criteria namely a comparison to internal benchmarks, external
benchmarks and adjustments for any variation in brand equity (Ambler et al., 2001;
Mills, 2010).

Internal benchmarks: Measurement of performance has become essential to senior

management in companies that are responsible for strategic and operational decisions.

19
This has brought about the use of benchmarks to compare best performance in business
(Jin et al., 2013). Marketing or business plans are generally considered as an internal
benchmark for performance (Mills, 2010).

External benchmarks: The external benchmarking process compares the company‟s

performance against that of successful companies or competitors. No matter how good
the performance of a company‟s internal process and performance, it should always
benchmark outside its environment against competitive forces and companies in order
to ensure continued improvement (Stapenhurst, 2009).

An exploratory research was completed by Kokkinaki and Ambler (1999) regarding

the current practices of marketing performance assessment as part of the Marketing
Metrics project.

The research revealed that marketing performance measurement should be done in

accordance with the following classifications:

1. Financial measures such as sales volume and turnover, profit, returns of capital.

2. Competitive market measures such as market share of voice, relative price and share
of promotions.

3. Consumer (end user) behavior measures such as penetration and number of users
and consumers, user and consumer loyalty and user gains and losses.

4. Consumer (end user) intermediate measures such as awareness, attitudes,

satisfaction, commitment, buying intentions and perceived quality.

5. Direct customer (trade) measures such as distribution or availability, customer

profitability, satisfaction and service quality.

2.4 Strategic Marketing

Marketing strategy is the component of marketing plan that outlines how the firm will
achieve its marketing objectives. Marketing strategy consists of target market selection
and the development of a marketing mix. In a broader sense, however, marketing

20
strategy refers to how the firm will manage its relationships with customers, so that it
gains an advantage over the competition.

Target market selection is the first stage of this process. The marketing plan should
clearly define target markets, in terms of demographics, geography, psychological
profiles, product usage, and so on. This step is crucial because to develop a marketing
mix that can satisfy customer needs, a marketer must understand those needs. In
developing a marketing mix, the firm should determine how the elements of the mix-
products, distribution (place), promotion and price-will work together, to satisfy the
needs of the target market.

Kerin, Roger et al. (2010) describe that marketing strategy is the means by which a
marketing goal is to be achieved, usually characterized by a specified target market
and a marketing program to reach it. Although the term marketing strategy is often
used loosely, it implies both the end sought (target market) and the means to achieve it
(marketing program).

To implement a marketing program successfully, hundreds of details, decisions are

often required. These decisions, called marketing tactics, are detailed day-to-day
operational decisions essential to the overall success of marketing strategy strategic
marketing process is the approach whereby an organization allocates its marketing mix
resources to reach its target markets. This process divided into three phases such as
planning. The planning phase of the strategic marketing process consists of the three
steps such as situation analysis, market-product focus and goal setting and the
marketing program. The essence of situation analysis is taking stock of where the firm
or product has been recently. Where it is now and where it is headed in terms of the
organization‟s plans and the external factors and trends affecting it.

An effective shorthand summary of the situation analysis is a SWOT analysis, an

acronym describing an organization‟s appraisal of its internal strengths and
Weaknesses and its external Opportunities and Threats. Both the situation and SWOT
analyses can be done at the level of the entire organization, the business unit, the
product line or a specific product. Further authors discussed that describe that the
promotional element consists of communication tools, including advertising personal

21
selling sales promotion, public relations and direct marketing. The combination of one
or more of these communication tools is called promotional mix all of these tools can
be used to inform prospective buyers about the benefits of the product, persuade them
to try it and remind them later about the benefits they enjoyed by using the product.

Today the concept of designing marketing communications program that coordinate all
promotional activities advertising, personal selling, sales promotion, public relations
an direct marketing to provide a consistent message across all audiences is referred to
as integrated marketing communication (IMC), promotional programs are directed to
the ultimate consumer, to an intermediary (retailer, wholesaler or distributor) or to
both. All products have a product life cycle and the composition of the promotional
objective in the introduction stage of the product life cycle. The primary promotional
objective of the growth stage is to persuade the consumer to buy the product.

The primary promotional element is advertising, which stresses brand differences. In

the maturity stage, the need is to maintain existing buyers and advertising‟s role is to
remind buyers of the product‟s existence. Sales promotion, in the form of discounts
and coupons offered to both ultimate consumers and intermediaries, is important in
maintaining loyal buyers. The decline stage of the product life cycle is usually a period
of phase out for the product, and little money is spent in the promotional mix. The rate
of decline can be rapid when a product is replaced by an improved or lower cost
product, for example, or slow if there is a loyal group of customers.5

Philip Kotler and Gary Armstrong (2008) define marketing strategy as marketing logic
by which the company hopes to achieve its profitable relationships. Through market
segmentation, targeting and positioning, the company decides which customers it will
serve and how. It identifies the total market, then divides it into smaller segments,
selects the most promising segments. Guided by marketing strategy, the company
designs a marketing mix made up of factors under its control-product, price, place and
promotion. To find the best marketing strategy and mix, the company engages in
marketing analysis, planning implementation and control.

Through these activities, the company watches and adapts to the actors and forces in
the marketing environment. Further authors explain that to design a winning marketing

22
strategy, the marketing manager must answer two important questions: (1) what
customers will we serve (what is our target market)? (2) How can we serve these
customers best (what is our value position)? Market penetration strategy is a strategy
for company growth by increasing sales of current products to current market segments
without changing the product.

Market development strategy is a strategy for company growth by identifying and

developing new market segments for current company products. In undifferentiated
market coverage strategy a firm decides to ignore market segment differences and go
after the whole market with one offer. In differentiated market coverage strategy firm
decides to target several market segments and designs separate offers to reach. Micro
marketing is the practice of tailing products and marketing programs to suit the tastes
of specific individuals and locations. Companies need to consider many factors when
choosing target marketing strategy. Which strategy is the best depends on company
resources. The best strategy also depends on the degrees of product variability. The
product‟s life cycle stage also must be considered when a firm introduces a new
product, it may be practical to launch only one version and undifferentiated marketing
or concentrating marketing may make the most sense. In the mature stage of the
product life cycle, however differentiated marketing begins to make more sense.

Adel I. EI-Ansary (2006) in their review marketing strategy, taxonomy and frame
work discussed that the literature casts marketing strategy formulation and
implementation in the context of strategic planning and marketing strategy process
models. The focus of the strategic planning model is on achieving corporate financial
objectives through the implementation of product, pricing promotion, and place
(distribution) program. The focus of the marketing strategy process model is on the
formulation of segmentation, targeting, differentiation, and positioning strategies to
create, communicate, and deliver the value to the customer resulting in gaining
customer satisfaction and loyalty; i.e. marketing objectives.

William M Pride and Ferrell O.C. (2005) define marketing strategy as typically made
up of two components: the selection of a target market and the creation of a marketing
mix that will satisfy the needs of the chosen target market. Thus, a marketing strategy

23
includes a plan of action for developing, distributing, promoting and pricing products
that meet the needs of the target market. A marketing strategy articulates the best use
of the firm‟s resources and tactics to achieve its marketing objectives. In a broader
sense, however, marketing strategy refers to how the firm will manage its relationships
with customers so that it gains an advantage over the competition.

Philippe Lasserre (2003) highlights that the strategy (from the Greek stratus: an army
and ageing: to lead) has traditionally been a military art. The ancient Chinese military
theorist, sun Tzu (Circa 5. BC) stated that “the supreme art of war is to subdue the
enemy without fighting”. Strategy as an art of war was transferred into a business
context in the early 1960s. This does not mean that there was no „strategy‟ behind
business decisions earlier; but there were no formal theories of business strategy.

Regarding this concept Drucker (1973) elaborated that strategic marketing can be seen
as a process consisting of: analyzing environmental, market competitive and business
factors affecting the corporation and its business units, identifying market
opportunities and threats and forecasting future trends in business areas of interest for
the enterprise , and participating in setting objectives and formulating corporate and
business unit strategies. Selecting market target strategies for the product-markets in
each business unit, establishing marketing objectives as well as developing,
implementing, and managing the marketing program positioning strategies in order to
meet market target needs.

For Hart and Stapleton (1977) strategic marketing is a statement in very general terms
of how the marketing objective is to be achieved, e.g. acquiring a competitive
company, by price reductions, by product improvement, or by intensive advertising.
The strategy becomes the basis of the marketing plan. Its‟ role is to lead the firm
towards attractive economic opportunities, that is, opportunities that are adapted to its
resources and knowhow and offer a potential for growth and profitability (Lambin,
1977).

Although definitions for the term vary, we define marketing strategy as a consistent,
appropriate and feasible set of principles through which a particular company hopes to
achieve its long-run customer and profit objectives in a particular competitive

24
environment (Hamper and Baugh, 1990). Although marketing has basically a strategic
conception of the selling activity, we use to distinguish between strategic marketing
and operational marketing, depending on long term or short term objectives. Strategic
marketing starts in thoughts about current situation of the company and situational
analysis and possible evolution of the markets and the environment, with the goal of
detecting opportunities which can establish objectives (Aramario and Lambin, 1991).
The strategic marketing process therefore implies deciding the marketing strategy
based on a set of objectives, target market segments, positioning and policies.

2.5 Marketing-Mix
The term can be understood as the combination of the elements of marketing and what
roles each element plays in promoting products and services and delivering those
products and services to the customers. Marketing mix is originating from the single P
(price) of microeconomic theory (Chong, 2003). McCarthy (1964) offered the
“marketing mix”, often referred to as the “4Ps”, as a means of translating marketing
planning into practice (Bennett, 1997). Marketing mix is not a scientific theory, but
merely a conceptual framework that identifies the principal decision making managers
make in configuring their offerings to suit consumers‟ needs. The tools can be used to
develop both long-term strategies and short-term tactical programmes (Palmer, 2004).
The idea of the marketing mix is the same idea as when mixing a cake. For instance, a
baker will alter the proportions of ingredients in a cake depending on the type of cake
we wishes to bake.

In addition, marketing mix is a tool that can be used by firms to set appropriate
strategies so as to get the desired responses from their target markets (ChaiLeeGoi,
2009). It is a framework businesses use to pursue their marketing goals in the target
markets. McCarthy (1964) classified marketing mix in to four broad groups that he
called four Ps of marketing: product, price, place and promotion.

2.5.1 MARKETING MIX OF PEPSICO

PepsiCo is one of the world‟s largest food and beverage companies with 2007 annual
revenue of more than 39 billion US dollars. The company employs approximately
185000 people worldwide, and its products are sold in approximately 200 countries

25
through its marketing mix which are the following: Product, price, promotion and
place (www.docstoc.com).

2.5.1.1 PRODUCT
PepsiCo‟s beverage products are: Diet Pepsi, Gatorade, Mountain Dew, Thirst
Quencher, Tropicana, Aquafina, Bottled Water, Sierra mist. It also produces, Savory
and Snacks such as Fritos corn chips, Cheetos, Ruffles potato chips, Lays potato chips,
Tostitos, Doritos. Other food products in the list are breakfast cereals, cakes and cake
mixes. PepsiCo recently created Baked Snacks North America Business Unit to meet
consumers‟ interest in more nutritious snacks and foods. (www.marketing
teacher.com)

The Pepsi-Cola drink contains basic ingredients in most of other similar drinks
including carbonated water, high fructose corn syrup, colorings, phosphoric acid,
caffeine, citric acid and natural flavors. The caffeine free Pepsi-Cola contains the same
ingredients but no caffeine. (www.scrib.com). Pepsi follows one quality standard
across the globe. It has a long standing commitment to protecting the consumers whose
trust and confidence in its products is the bedrock of its success.(www.docstoc.com).

In order to ensure the consumers‟ stay informed about the global quality of all Pepsi
products sold in the world, Pepsi products carry a quality assurance seal on them.
PepsiCo analyze water, sugar, and flavorings in accordance with the best international
guidelines. Therefore, Pepsi products are safe and comply with most stringent
international regulations, including the new regulations for carbonated soft drink
(www.docstoc.com).

2.5.1.2 PRICE
PepsiCo‟s drink pricing strategies may be heavily influenced by its working
relationship with Wal-Mart, whose low price themes put pressure on PepsiCo to hold
down prices (www.marketingteacher.com). Pricing decisions are almost always made
in consultation with the marketing management. Price variables such as dealers‟ price,
retail price, discounts, allowances, credit terms etc. influence the development of
marketing strategy, as price is a major factor that influences the assessment of value
obtained by customers. Pepsi being a company which emphasizes product quality, it

26
intends to sell its products with price range from moderately low to high prices
depending on the use and the targeted customers. (www.docstoc.com).

Expenses related to transportation, ingredients and labor continue to pressure the

beverage industry towards price increases. However, the company strives to cut or
maintain current price by cutting overhead, re-engineering the manufacturing process,
and expanding its use of inexpensive and recyclable plastic bottles
(www.marketingteacher.com). PepsiCo uses the competition from rivals as a basis for
price decision. The best thing about the company is that it is very flexible and it can
come down with the price very quickly. The company is renowned to bring the price
down even up to half indeed (www.scrib.com). But, this risk taking attitude has
brought a loss to the company. Even though lowering the price would attract the
customers but it would not help them cover up the cost incurred in production and
hence causing losses. This was the situation in earlier periods of the company but now
PepsiCo is a full-fledged and rapidly growing company. (www.scrib.ccom).

2.5.1.3 PROMOTION
Promotion is a key element in the marketing mix of PepsiCo and is concerned with
effectively and efficiently communicating the decisions of marketing strategy to
favorably influence target customers perceptions and satisfy their needs, thereby
achieve the objectives of the company. PepsiCo has advertised its products through
many different ways and media. Through TV, for instance different advertisement of
Pepsi has been televised. (www.docstoc.com).

It also advertises its products by targeting those favorable television programs, like
sports and other programs presented to viewers in series. Besides, PepsiCo uses events,
newspapers and posters to promote its products and make people aware of its offers
(www.docstoc.com). PepsiCo instituted a so called Pepsi stuff promotion whereby
customers could accumulate Pepsi points from buying various products and use these
points to buy another product. In 2009 Pepsi launched its “Pepsi Throwback”
campaign offering a drink with the sugar content of its original product
(www.marketingteacher.com).

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2.5.1.4 PLACE
PepsiCo is primarily a US based company with approximately 52% of its revenue
located in the states. Today, it has spread in the world. It is in the midst of making a
$1000 million investment in China and a $500 million investment in India. Both
initiatives are part of its expansion into international markets and a lessening of its
dependence on US sales. In addition, PepsiCo plans on major capital initiatives in
Brazil and Mexico and also acquiring Russia‟s leading Juice Company, Lebedyansky,
and V Water located in the United Kingdom. When entering a new market the
company does not go in alone but it looks for partners and mergers
(www.marketingteacher).

Until now, Pepsi has collaborated with companies like Quaker Oats, Frito-Lays,
Lipton, and Starbucks etc. (www.scrib.com). Decisions with respect to distribution
channel focus on making the products available in adequate quantities at places where
customers are normally expected to shop for them to satisfy their needs. Depending on
the nature of the product the marketing management decides to put into place an
exclusive, selective or intensive network of distribution while selecting the appropriate
dealers or wholesalers. (www.docstoc.com).

2.6 The Components of Marketing Mix

i. Product

As defined by Kotler and Armstrong (2008), product is anything that can be offered to
a market for attention, acquisition, use, or consumption that might satisfy a want or
need (Ayad and Majed, 2012). While designing a product strategy issues as product
variety, quality, design, features, brand name packaging, sizes, services, warranties and
returns should be considered. In other words, product is a combination of tangible and
intangible aspects of the products offered by the manufacturer to the customers. It can
also be defined as a bundle of satisfaction and dissatisfactions offered by company to
the customers at a point of time (Arachchige, 2002). Their physical attributes what
they do, how they differ from your competitors and what benefits they provide. The
products can be classified as durable and non durable, consumers and industrial goods,
perishable and non perishable, finished and semi-finished etc.

28
The product offering can be manipulated to create different market effects at three
levels: the core product, the tangible product and the augmented product (Belay, 2013).
At its core a product is not a physical entity but rather the benefits that it offers to
customers. Those benefits could be physical or psychological in nature. The tangible
product refers to its features, quality, styling, packaging, branding and labeling (ibid).
Augmented product is that additional services elements which are attached to the
product such as after sales service, extended guarantees, credit facilities, technical
advice and product trials.

ii. Price

As it is defined by Arachchige (2002) price is a flexible and influential element, which

determines the revenue/profitability/ market share for the organization. On the
customer‟s point price is a determinant factor because most customers depending on
their income level consider the price before they purchase the product. Price attributes
different names. “Price is all around us. You pay rent for your apartment, tuition for
your education and a fee to your physician or dentist. The airline, railway, taxi, and bus
companies charge you a fare; the local utilities call their price a rate; and the local
bank charges you interest for the money you borrow” (Philip 1997).

As quoted by Belay (2013), Ayad et.al (2012 described price as the amount of money
charged for a product or service or the total values that consumers exchange for the
benefits of having or using the product or service prices should be set in relation to
specific pricing objectives. Decisions concerning the pricing of a product or services
include payments, terms, discounts, contract and pricing. Prices have to reflect the
costs of production and marketing as well as targeted profit margins. A variety of
approaches may be taken to pricing including cost based, demand based, competitor
based and market based. Price is a key element of the marketing mix because it
represents on a unit basis what the company receives for the product or service which
is being marketed (Jobber, 2001).

A company's pricing decisions are affected by both internal and external factors
(Belay, 2013). The internal factors include the company's marketing objectives,
marketing mix strategy, costs and organizational considerations. Internal factors that

29
have impact on pricing decisions include the nature of the market and demand,
competition, and other environmental elements (Philip and Armstrong, 2004). Setting
the base price for products is a decision which is a very challenging task that requires
carful considerations of multiple marketing variables (Michael et al, 2004). According
to Arachchige (2002) the concept of price constitutes two different types: the monetary
price, and the social price. Monetary price implies the payment of certain sum by the
customer, and the social price refers to the additional effort that the customer must
make in order to obtain access to a product. Price for the product is set when the
organization introduces or acquires a new product. Price can be revised to match the
change of the product. Organizations have different objectives and offer various
products to different market segments. Their position of the market may be different
from each other. Strategies are defined to accord with these objectives. Therefore,
pricing as a mix is obviously based on the marketing objectives of the company. Some
organizations price their product mainly for the survival in the competition (ibid).

iii. Promotion

A promotion is an institution ability to communicate with its markets (Al Fatal, 2010).
As defined by Borden (1984), and quoted in Ayedet.al. (2012) promotion is defined as
sales promotion, advertising, personal selling, public relations and direct marketing.
The promotion concept is applied for products or services and to the business. It
includes all communications a marketer used in the market for his products of services
to create awareness, persuade the customers to buy and retain in future also. As a
result, for improvement in the position of sales or progress of business this method is
used. The message is given to target group regarding the features and benefits of the
products or services to the target customers. Indeed without communication the
features, benefits and schemes would not be known to the customers and objectives of
in launching of products or services and increasing sates would not be completed.
When communication creates awareness then only the interest would be created and
customers would take the decision for buying. For promotion different methods of
communication can be used.

30
These activities can influence consumer's way of thinking, their emotions and
experience as well as their purchasing. The whole purpose of promotional activities
relates the product to the target customer and persuades them to buy it (Ayed et al,
2012). Promotional activities are more effective when they are sustained and targeted
(Al Fatal, 2010). According to Palmer (2000) quoted in Zelalem (2011), the success of
a promotional activity of a company is dependent on the successful execution of each
activity in the overall mix i.e. advertising will not succeed unless good personnel
selling and sales promotion support it.

Any promotional decision has to take into account the activities in the mix. This
includes sales promotions, personal selling, advertising, public relations, direct
marketing, internet and on line promotion. Davar (1996) stated that, strategies are
needed to combine individual methods described earlier into an integrated
communication campaign. Such strategies should also be improved and adjusted as a
product moves from early stages to the final stage of its life cycle. (Michael J. et al.,
2004).

iv. Place

According to Arachchige (2002) organizations provide their product to customers

through an effective position. Place mix represents the distribution channels that the
organization utilizes to convey their physical products or services to the end user.
Distribution channel designer must understand the service output levels that are
expected by target customers. The author discussed that it is necessary to have a clear
understanding of what, how, why, where, and when customers purchase, his aiting
time for the purchase, the convenience that facilities the customer when buying is
completed, product variety for the choice and the service backup which represents
additional services associated with the product.

Distribution can be performed through single channel or multiplicity of channels. In

other words, it can include any physical store as well as virtual stores on the Internet.
Place is not exactly a physical store where it is available Place is nothing but how the
product takes place or create image in the mind of customers. It depends upon the

31
perception of customers (ibid). The products or services should reach to the customer
that channel is called distribution channel of placement.

Furthermore, place involves decisions concerning the distribution channels to be used

and their management, the locations of outlets, methods of transportation and
inventory levels to be held. The intention here is to ensure the availability of the
products or services in the required qualities at the right time and place. The
distribution channels consist of organizations such as whole sellers or retailers through
which goods are channeled on their way to customers (Jobber, 2001). The distribution
activity also includes warehousing and transportation facilities (Davar, 1996).
According to Anderson and Vince (2004), and quoted in Zelalem (2011), distribution
can be described as a set of interdependent organizations involved in the process of
making a product or service available for consumption.

Therefore, place in marketing mix consist all company activities that make the product
available to the targeted customers (Armstrong, 2004). In general while planning for
product placement strategy under marketing mix analysis companies consider six
different channel decisions including choosing between direct access to customers or
involving middlemen, choosing single or multiple channels of distributions, the length
of the distribution channel, the types of intermediaries, the numbers of distributors, and
which intermediary to use based on the quality and reputation (Proctor, 2000).

2.7 Nature of Competitive Conditions

According to Porter (1990) these competitive forces facing an organization can be
classified into 5 major categories. These are; threat of new entrants, rivalry among
industry players, bargaining power of suppliers and buyers and threat of substitute
products. In developing countries, company like Pepsi cola is facing direct competition
from coca cola and brewing companies. They also further face stiff competition from
small indigenous manufacturers of traditional beverages. Substitute products which
include sodas, fruit juices, beer and water also compete for soft drinks (e.g., Pepsi cola
and coca cola).

32
In other words beverages such as tea, coffee, beer and drinking chocolates are also
consumed instead of soft drinks. However, strategic response involves change in firm‟s
strategic behavior to ensure success in transforming future environment. Strategic
diagnosis identifies whether there is need to carry out such change (Ansoff, 1999).
Specific action is selected and executed to bring the firm aggressive and
responsiveness in line with the future environment.

2.8 Setting Strategic Responses

Strategic responses involve a change in the competitive position a firm occupies in the
competitive industry (Porter, 1998). A change in the competitive position will require a
company to decide on which generic strategy to adopt. For Poter the choice involves
cost leadership, place focus and segregation. This is essential in the strategic planning
process since it determines the superiority total organization performance. All the
strategic planning variables will fall in place once a clear choice of the basic generic
strategy has been determined.

2.8.1 Retail Marketing Strategies

Strategic management is getting everybody in the company to do the right things. It
entails deciding what things are right for company under some given set of consumer
expectations and competitive circumstances. Regarding this Davidson et al (2000)
defined the concept as the process of deciding on the mission of the enterprise, the
basic goals and objectives that it seeks to achieve and the major strategies that will
govern the use of firm‟s resources to achieve its objectives. In fact, a fully developed
retail marketing strategy identifies: the specific markets and market segments that the
firm intends to pursue, the consumer and competitive performance that the firm desires
in its selected markets, the specific means by which the firm intends to appeal to its
target customers and establish its competitive position.

The growing complexity of large, diversified retail enterprises, the rapid change in
consumer markets and the intensifying competitive environment make it imperative
that the retail firms have a thoroughly well thought out strategic plan detailing how it
intends to capture the target market. Companies are therefore evaluating their retail
services with an aim of coming up with more focused strategies that help them meet

33
their unit and company-wide objectives (ibid). They are working towards developing
coherent strategies on how to differentiate and add value to retail customers. They are
also pursuing marketing strategies to not only win and grow their businesses but to
also stay ahead of the competition, towards this end, the most commonly pursued
marketing strategies are; product portfolio management, pricing, distribution and
relationship marketing or customer services and promotion strategies.

Apart from this, Renart (2007) argues that the conventional wisdom was that
leadership in the market place could be attained by means of designing and
implementing a sound marketing plan. Such a plan entails first defining the four P‟s
later evolved to six elements of the marketing mix: Market segmentation (product or
service), Pricing, channels of distribution, sales team management, advertising,
promotions and public relations.

2.8.2 Market Segmentation

In today‟s market place different groups of consumer exhibit different sets of shopping
expectations referred to as market segments. Soft drink beverage companies can view
the total consumer market as being made up of a collection of segments, each one
representing a distinct and separate set of customer expectations. As Davidson et al
(2000), elaborated Soft drink beverage firms view of market segment consists of those
customers who share a common set of expectations regarding retail stores, and
consequently tend to respond favorably to a particular combination of value offers,
consisting not only attributes of physical products but also of services, atmosphere and
any other sources of potential satisfaction.

Thus, market segmentation can be understood us the process of dividing the

heterogeneous market into segments. The various segments identified should be
homogeneous within themselves, but heterogeneous without (i.e. different from other
segments). The goal is to facilitate the development of unique and effective marketing
programs that will be most effective for these specific segments (David and Albert,
2006).

As view is expressed by Smith (1956) to sustain growth in apparently non-growth

scenarios, companies had to adopt the concept of market segmentation. The essential

34
logic behind the proposition was that by acquiring a deeper understanding of variations
in customer needs, companies could develop new products specifically aimed at
satisfying different groups of customers. Market Segmentation starts with the belief
that there are identifiable differences among a product‟s various consumers and that
the differences are relevant to their buying and store patronage behavior. The goal of
market segmentation therefore is to identify smaller, homogeneous submarkets within
the larger heterogeneous mass market (Lewinson and Delozier, 1982).

On the other hand it is argued that the possible benefits of segmentation were; by
specialization, companies could stimulate greater consumption and thereby market
expansion (Cahill, 1997). If there are few competitors within a given segment,
promotional costs might be reduced. For the alcoholic beverages, it is essential that a
decision to use a market segmentation strategy should rest on consideration of four
important criteria that affect its profitability. The market must be; identifiable,
measurable, accessible, substantial, and responsive. There are a number of variables
that can be used to segment a market (ibid).

In general, those variables can be grouped into two broad categories; customer
characteristics and buying situations. The traditional bases for segmentation have been
classified as geographic, demographic, socioeconomic conditions (whether upscale or
down scale), psychographic and behavioral, nature of housing, fashion interest and the
concept of value. In retail operations approach, the alcoholic beverages examine
factors that might enhance or limit operations. Several factors influence directly the
alcoholic beverages‟ chances to operate successfully namely distribution, competition,
promotion and legal considerations.

2.8.3 Product Strategy

The product can be argued to be the most important element of the retailing mix, as
only with reasonable products will the effort put into such things as pricing and
promotions reap any rewards Rose and Watkins (1997). Product is the principal item
offered by a company to satisfy the needs of their consumers.

It is important to win over the consumer by product excellence. Some of the strategies
adopted in the domain of products are: Perceived quality or Image, as the market faces

35
competition, quality and reliability of the product offerings gain importance. Quality in
this case is viewed as customer‟s perception of the product. Perceived quality or image
has to be created. Features- with many products in the market, what distinguishes them
is the features. The „first with the new feature‟ has an advantage similar to the „first
product‟ in the market. In the consumer non-durables, brand extensions have taken the
line of added features. New products face difficulties of acceptability in the market.
The first product of its kind has an edge over others and sets the standards for
subsequent ones (Ramanuj, 1996). Successful product management relies on a well
planned and executed product strategy and product range strategy. Product strategy is
mostly influenced by competition and customer needs.

Consumers patronize a particular retail outlet for many different reasons: its
convenient location, friendly personnel, desirable prices, and pleasant shopping
atmosphere. The patronage reason common to all consumers for visiting a certain a
particular store, however is the expectation of finding a product or a set of products
that will fulfill some present or future need. Fulfilling customer product expectations is
what retail merchandising all about, (Lewinson and Delozier 1982). Merchandising is
the process of developing, securing, and managing the merchandise mix to meet the
firm‟s objectives (ibid). The Merchandise mix therefore refers to the alcoholic
beverages total offering, be it goods or services or both. The total product concept is
the sum of the product‟s functional, aesthetic, and service features plus the
psychological benefits the customer expects from buying and using the product.
Alcoholic beverages companies respond to the changes taking place in the market
place by employing the either the shotgun or a rifle approach to merchandising. The
shotgun, the merchandiser appeals to a combination of market segments by broadening
its product lines through either product –item addition or product line combination.
The Rifle merchandiser appeals to a target market segment by using either a market
positioning strategy or multiplex distribution system, (Lewinson and Deloizer (1982).

2.8.4 Pricing Strategy

Consumers are becoming more increasingly price sensitive (Eaglesham, 1990). Pricing
is a major competitive tool. The economics of production only sets the bottom line
limit and the company then has a wide range of strategies to set the price. The

36
commonly used price strategies are: „Image‟ pricing, the price here follows the image
of the brand. Adidas shoes or Nike are priced high because of the premium value
attached to the brand name. Price undercutting, some companies have used this
strategy very successfully.

For undercutting to succeed, the company has to offer the minimum performance
standard (Ramanuj, 1996). Aggressive or Penetration pricing, firms in this sector
wishing to offer a high level of benefits at an average price; this pricing strategy
normally works in market areas where the supplier is able to inform the customer from
the onset that if high volumes are moved, the firm is able to lower prices down as a
result of the economies of scale. Skimming price strategy involves the supplier
exploiting the knowledge that customers are willing to pay a higher than average price
for goods which offer only an average level of benefits.

In early stages of product life cycle for a new product, companies skim the market by
setting high price, and then reduce the price to an average level as the product moves
to later stages of growth. Average pricing is used by firms which service the needs of
the majority of customers seeking an average range of benefits from the product
purchased. Accordingly Davidson et al (2000) discussed that sale pricing involves a
lower price than usual price on average benefit goods. This strategy is used by firms
which normally want to retain customer confidence over the benefit claim. It is usually
when firms want to stimulate short term increase in sales. In the case of many
convenience good purchases, for example, small price differences may be irrelevant to
the consumer. Even when it is important, it may be but one of the many differentiating
variables which are important to the store (ibid).

2.8.5 Distribution Strategy

Distribution of products usually involves some form of vertical system where
transaction and logistics responsibilities are transferred through a number of levels, Ian
(2005). Davidson (2000) argued that distribution is part of merchandising and must be
considered in any merchandising system. Distribution management involves;
merchandise replenishment, transportation management and distribution center
facilities management. The type of distribution system a nonalcoholic beverage firm

37
needs is influenced by the buying system the nonalcoholic beverages uses, the number
of stores the alcoholic beverages has, the geographic dispersion of the stores, and the
characteristics of the merchandise carried.

Some of the distribution systems employed by the retailing companies are; Store direct
systems, vendor pre-pack through distribution center systems, the stocking distribution
center system, and multiple and master/ satellite distribution center system: Store
direct system, in this system the merchandise is delivered directly from the vendor to
the individual stores, although the merchandise can be ordered at the store level by the
central merchandising staff. It is appropriate for high fashion content, significant
seasonal fluctuations or high bulk such as paper. Stocking distribution center system
employs the distribution center much as a ware house. Merchandise is sent from the
warehouse to the individual stores, allocated either by the central headquarters staff or
as requisitioned by the store personnel. This system normally reduces costs of goods
sold from the vendor because merchandise is ordered and sent to the distribution center
in large quantities.

2.8.6 Promotion Strategy

Promotion involves both providing the consumer information regarding the alcoholic
beverages‟ store and its product or service offering as well as influencing the consumer
perceptions, attitudes, and behavior towards the store and what it has to offer. It is both
an informative and persuasive communication process. Companies use news paper ads,
posters, TV, internet that stress its good prices (persuasive communication) and but
instead of just listing the merchandise, the ads tell exactly why the manufacturer closed
out the goods. That way, customers would not suspect that the products are irregular,
damaged or counterfeit (informative communication). Promotional mix comprise of a
number of different elements. Each element exhibits certain strengths and weaknesses.

The development of a successful promotional mix demands the careful integration of

each of the following elements; situation analysis, developing objectives, designing
messages, selecting channels, preparing budget, choosing mix and evaluating. In
situation analysis, companies are assessing the current position of customer features,
the competitive situation and the environment. While assessing the target audience,

38
companies look at the demographics and lifestyles, life stages, usage levels,
understanding and perception of services and the organization and the buying process
of the targets. While designing advertising messages, manufacturers use emotional and
moral appeal, there is also use of rational messages and humor, one danger is that a
wrongly chosen promotional strategy can bring negative reaction.

Sponsorship contributes to the building of the brand/product and corporate image.

Direct marketing is an interactive system of marketing which use one or more
advertising media to affect a measurable response and / or transactions at any location,
Betts and York (1994), it aims to create and exploit the dialogue between the service
provider and the customer, and offer several potential benefits such as targeting
precision, testing the market, providing new distribution channels and support existing
ones, it also leads to cost effective advertising. There is a role for consumer
promotions in the marketing of even the strongest brand, a role which is mainly tactical
and which needs to be carefully planned. The alcoholic beverage distributors must be
involved, since most promotions necessarily require their cooperation, but it should be
the manufacturer who decides on the purpose of and budget for the schemes.

Trade promotions at the same time need negotiations with customers, but again the
decision must be designed by the manufacturers and have specific targets Randall
(1991). Personal selling is the direct face to face communication between a retail sales
person and a retail consumer. Store displays are direct, impersonal in-store
presentations and exhibitions of merchandise together with related information.

Singh (2012) defines advertising as a relatively low-cost method of conveying selling

messages to numerous prospective customers. It can secure leads for salesmen and
middlemen by convincing readers to request more information and by identifying
outlets handling the product. It can force middlemen to stock the product by building
consumer interest. It can help train dealers salesmen in product uses and applications.
It can build dealer and consumer confidence in the company and its products by
building familiarity. The author also discussed that advertising is to stimulate market
demand. While sometimes advertising alone may succeed in achieving buyer
acceptance, preference, or even demand for the product, it is seldom solely relied upon.

39
Advertising is efficiently used with at least one other sales method, such as personal
selling or point-of-purchase display, to directly move customers to buying action
(ibid).

2.9 The concept and Purpose of Advertising

Advertising plays a vital role in marketing consumers‟ purchasing decision and
promotion to particular. Most consumers have the erroneous impression that promotion
is synonymous with advertising and vice-versa. The partnership between producers
and consumers through advertisement is solely aimed at achieving certain mutually
beneficial objectives. These are; To introduce new product: One of the roles of
advertising is to inform consumers about the existence of a new product in the market
i.e. creation of awareness.

Persuade customers to buy: it also helps in arousing the customer‟s interest and by so
doing persuades them to buy the product. Creation of demand: Advertising stimulates
demand by constantly reminding potential consumers about the availability of the
product in the market. To change consumer belief: it is a very good instrument that can
be used to change consumer mind-set about a product or service. Hence, help to tap
into their buying power and influence their thoughts. To create brand loyalty: The
demand of the consumers can be maintained by constantly arousing their interest on a
particular product and this will ultimately create brand loyalty. Develop large market:
Advertising create large market segment which leads to the development of larger
market. To promote the image of the firm: Advertising builds a corporate image for a
company.

2.10 The Concept of Sales

Sales in business terms are the actual sales in money values, a company receives after
necessary collections are made from different sales channels of the original total
production put on the market (Mc Cathy et al, 1994). It is sales that stimulate
production in a company and consequently profits which are affected by various
factors some of which are controllable like quality and others are uncontrollable like
competition and general price changes.

40
Sales performance is an integrated frame work that enables organizations to plan and
model sales strategies and ensure timely execution of sales initiatives while ensuring
both front line sales people and decisions-markers have visibility into performance .
Sales performance represents the next generation of best practices for sales. (Michael
D, 2006). Sales performance also refers to the total amount of firm‟s output sold to the
market especially on monthly or annually basis. This is affected by many factors
including customer relationship, 13 marketing management of the firm and sales force
skills and motivation and even the pricing of the goods and services (Amanda D.H,
2002) Sales revenue is the total amount of money that the firm gets from the sale of all
its goods and services in a given period of time. This is usually six months or a year if
a firm produced only one product or service, the sales revenue will be the price of the
product multiplied by the number of products sold.

In the case of more than one product or service the revenue from each needs to be
added together (wood, 1996). The figure for sales revenue in profit and loss account
does not necessarily mean that the firm has received all the money because although
they may have sold that quantity of the product, they may still be owed some of the
money as debtors (Baker, 2001). Sales performance refers to consistent and
satisfactory turnover of goods and services produced and put on the market by an
organization or company.

It is the sole economic goal of companies to have as much goods sold on the market.
This facilitates the rate of goods turn over and consequently revenue and increased
production. Designing or adopting sales methodology is critical, without this
methodology in place; training is a tactical attempt to a larger problem. The selling
methodology must be developed based on the company‟s unique situation in their
market, their customers, how the customers buy, the complexity and price levels of the
products and services the company offers, competitive pressures, reporting
requirements, the participation partners and the skill level of their current sales people
(Stein 2006). Sales performance describes the trend of collections in terms of revenue
when comparing different periods. It may be in form of offering products or services to
consumers. Sales volume is the core interest of every organization and is based on
sales and profit (MC Cathy, 1994).

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2.10.1 Parties Involved in Sales Promotion
When the companies are involved in marketing of products or services, take services
from different parties. The products start from the manufacture and through sales men,
distributors, dealers, wholesalers, retailers and finally reach to the end users or
customers. The products are passed through these parties. It depends upon the
involvement of these parties how the customers get the products. They may get in
timely in proper condition or not. When the company is interested to serve their
customers in a better way so that the sales can be increased, customers relationship get
improved and image of the company goes high, the company needs the support of all
concerned parties. They should their best services to the company. But it is not so easy
to convince everyone. Without any benefits no one can be motivated in present time.
Without any substantial benefits no one is interested to take extra pain. To make these
people happy and contribute their efforts there is need to motivate them. For that
purpose the company has to undertake sales promotion methods.

When extra benefits are given to the salesmen, dealers and customers they would get
motivated and do their work perfectly. If any one out of them is not interested the
objectives of the company would not be fulfilled. Every one serves as an important
link in the sales chain. The major parties involved in this sales promotion process are
following:

(a) Salesmen: Selling is one of the important activities of marketing in any company.
It is through selling the products from the manufacturers move to the customers
through selling process. Through selling only the goods and products are exchanged
for price in the market and company gets the revenue. This function of selling is
performed by the salesmen in different capacity and different locations. The salesmen
provide information to the dealers, distributors, wholesalers, retailers and customers.
They explain all features and benefits of the products to the concerned parties for sale
purpose. Whenever there is requirement of demonstration is needed that is given 56 by
the salesmen. They clarify the doubts of customers and dealers. He gets the order from
them and closes the sales. He is very important in maintaining customers‟ relationship
for the company. It can be said the role of sales men is very important. To get the best

42
services from them they are to be motivated. Therefore, there is need for their
motivation through sales promotion.

(b) Traders: The second important party involved in sales of the products or services
is trader. Trader is a party that is involved in trading of the business. In traders we can
include dealers, distributors, wholesalers and retailers mainly. There job is to buy the
products in larger quantity from manufacturer or from higher level in hierarchy in
larger quantity and sell in smaller quantity to the lower level in hierarchy. They
provide an important link between manufacturers and customers. All the products
cannot be sold out to the customers directly by manufacturers due to location of
customers and nature of products. The need for service of middlemen or traders is
needed. The traders are known by different names. The company is interested to sell
the products more and more to the customers. For this purpose the support of this party
is needed. To get the support as per expectation of the company they are to be made
happy and motivated. This can be done with the help of sales promotion methods. The
sales promotion methods are to be selected trader oriented. The methods of promotion
would provide extra benefits or value to the traders. This link would be strengthened to
meet the sales target of the company.

(c) Customers: The third party involved is customers. This is the party that buys the
products either for themselves or their family members. They are called the end users.
This party is very important because they buy the products and the company gets the
price in lieu of the products sold out to them. The customers understand the value of
their money and they buy the products when they feel that is worth paid. They do a lot
of comparison then only the taken the decision to buy the products. Every company is
interested to keep their customers well informed, happy and wants to retain them for
repeated sales. It is very easy to lose a customer but difficult to get a new customer and
further it is more difficult to retain the existing customers. The company must 57
understand their customers‟ profile. The customers vary in their income, education,
status, preferences, taste, liking and disliking, family size and location. It is necessary
to understand the customers profile through marketing research. To increase the sales
the role of customers is most important. They should be encouraged to take the
decision to buy the products. They would only get stimulated when they get extra

43
value for their money or benefits. The company must take the decision regarding sale
promotion methods suitable for customers depending upon the sales of particular
products.

2.10.2 Sales Promotion Methods

For promotion of sales, profits, market shares and image of the company a variety of
sales promotion methods are being used in the market by different company. The one
sales promotion method is not suitable for all products and party involved in selling.
The management has to think about it and many factors are to be considered before
taking decision regarding promotion methods. One method may be suitable for one
party or two parties but may not be suitable for the third party. The variable factors like
type of product, location of party, role of the party, strengths and weaknesses of
particular method of sales promotion, objectives of sales promotion, and sales
promotion budget are to be studied carefully for decision purpose. The sale promotion
methods can be divided into following groups:

2.10.3 Customers Oriented Promotion Methods

This is the well-known methods of sales promotion and it is targeting customers to
appeal to buy the products. Consumers are exposed to sales promotions nearly every
day; due to this many have become habituated and looking for extra benefits from
companies most of the time for purchase decisions. Different types of sales promotion
methods are used by the company in the markets. There is a big list of these methods.
The sales promotion methods for customers are following:

 Price off or discount: Price probably is the most commonly used promotional
techniques. The concession or reduction in price is given to the customers and
they save the money in the purchase. The customers get the products in lower
price. The same features of the products are 58 offered to the customers at
lower price. The value of the money of customers is increased. The concession
is given in net amount then it is called price off and if it is given in percentage
then it is called discount. These methods can be communicated through POP
advertising, window displays, sales men, advertising, packaging etc. Such
promotion methods work very well in gaining the attention of consumers,

44
 particularly at the point of purchase among similar brands. For example, the
price of Colgate Total tooth paste is marked MRP as Rs. 100. When it is
marked Rs.10 off, then it means the customer has to pay Rs. 90 only. When is it
is mentioned on package 15 % discount then the percentage on MRP is to be
calculated and deducted. Rs. 100-15= Rs. 85 is to be paid.
 Premium: When the product is purchased the customers get additional items
with the purchased item free of cost. This provides extra benefit or value to the
customer. The customer saves money through this. Sometimes when extra item
with the purchased item is given to the customers and they may not be in need
that item. It may not motivate much to more customers in comparison with
price off or discount. The premium may be of different types such as over the
counter, packed premium, banded premium and loyalty premium. When a
customer is purchasing items and on the counter itself an extra item is given
that is called over the counter premium. For example a customer purchased one
pen and with pen a pencil is given free of cost on the counter itself it is an
example of over the counter premium. When a product is packed inside the
pack of the product purchased then it is called packed premium. For example a
packet of pencils is purchased and inside the pack a scale and cutter are
enclosed. This is called packed premium. When a product is banded with the
tape or strip with the main product and sold to the customers. It is example of
banded premium. When a customer repeatedly bought the products in past and
giving proof of the purchase, then it is called loyalty premium. On producing
evidence of the purchase the customers get additional item is example of
loyalty premium.
 Quantity off: Under this sales promotion method the additional benefit is
given through the quantity of the product bought. Without payment an extra
quantity of the product is packed in the pack itself or separately. It is called
quantity off method. For example, in a pack of Rin detergent cake of 100 gms
extra quantity of 20 gms is included and in total 120 gms is packed. The price
of the packet is not changed but it is market on the package as 20 gms extra.
 Free samples: In this sales promotion method small packs of the products are
distributed to the customers during buying or without buying free of cost. In

45
 market the samples of shampoo, washing powder, tea and coffee powder
medicines, etc. while purchasing various items from the market. Sometimes
these free samples are distributed by the shopkeeper even without purchasing
any item from his shop. The main objective of this method is to attract
consumers to try out a new product and thereby create new customers. Some
businessmen distribute samples among selected persons in order to popularize
the product. For example, in the case of medicine free samples are distributed
among physicians, in the case of textbooks, specimen copies are distributed
among lecturers and teachers in schools and colleges.
 Exchange schemes: When the customers are going for purchase of the product
they are offered to get exchanged their old item at a reasonable price It refers to
offering exchange of old product for a new product at a price less than the
original price of the product. This is useful for drawing attention to product
improvement. This is more suitable for the durable goods mainly. For example
a colour TV set price is Rs 10000 and exchange offer is giving for black and
while set of Rs 1000. It means the old set is to be given to the dealer and it
price would be counted as Rs. 1000. Balance of Rs. 9000 is to be paid. This
motivates the person those who are having less amount but want to purchase
the costly item.
 Coupons: Sometimes, the company issues coupons either in the packet of a
product or through an advertisement printed in the newspaper or magazine or
through mail. The presentation of the coupon accepts the benefits to the
customers. A coupon authorizes the holder to get the discount of printed
amount of coupon. These coupons can be presented to the retailer while buying
the product. The holder of the coupon gets the product at a discounted 60 price.
For example, if a packet of biscuit is purchased and inside its pack a coupon of
Rs. 3 is found. The customer presents it to the retailer and get discount of Rs 3
when he buys another packet of biscuit.
 Fairs and exhibitions: This is one of the methods of promotion for creating
awareness of the new products and mainly durable and high price products.
Fairs and exhibitions may be organized at local, regional, national or
international level to introduce new products, demonstrate the products and to

46
 explain special features and usefulness of the products. Goods are displayed
and demonstrated and their sale is also conducted at a reasonable discount. The
fairs are conducted mainly for IT, engineering goods, automobiles, industrial
goods etc. Every year trade fare is conducted at Pragati Maidan in New Delhi
for this purpose.
 Trading stamps: Another method of inducing the customers to buy the
product is issue of trading stamps. In case of some specific products trading
stamps are distributed by the companies as per the value of their purchase. The
customers those who have collected and produced these stamps of sufficient
value within a particular period get benefits from the company. This method
induces customers to purchase the product more and get benefits by collecting
trading stamps.
 Scratch and win offer: In this method the company provides the scratch
facility on the pack itself. Those who buy the product can scratch the card and
win the prize. In this way customers may get the benefits as per the scratch
scheme whatever is mentioned on the scratch mark. This method also motivates
the people to some extent but not very high.
 Money back offer: When the product is not known to the customer in the
market. The customers are not sure about the benefits of the customers
especially in case of new products. Under this scheme customers are given
assurance that full value of the product will be returned to them if they are not
satisfied after using the product. This creates confidence among the customers
with regard to the quality of the product. Under assurance only the customers
taken chance to buy the new products.
 Easy finance scheme: This scheme is offered by the company when the
product is of high price and customers may not have that much amount to buy
the products. The easy finance schemes are arranged by the company with the
banks and finance companies. The loan facility is given at lower rate of interest
subject to certain terms and conditions. This motivates the customers to buy
such products like cars, laptops, refrigerators etc.
 Contest or sweepstakes: To motivate the customers for purchase of the
product another method of contest or sweepstakes can be used by the company.

47
 In contest for entry certain skills are needed but in sweepstakes no skill is
required to participate. It may also motivate the customers in some of the cases
also.

2.11 The Relationship between Advertising and Sales

The essence of advertising is to increase sales revenue hence improving sales
performance (David et al, 1988). Advertising combines with a host of other influences
to determine what contribution advertising makes to the buyer‟s purchase decision.
The retailer john Wanamaker is said to have remarked that he knew that only half of
his advertising was effective but he was unable to know which half it was.

It is through advertising or other forms of promotion that brands in different market

segments can effectively tell people in the market that a product is intended specially
for them (Engel, 1991, mc Gann and Russell, 1998). The significance of advertising is
to let customers know that an established brand is still around and it has certain
characteristics, uses and benefits. (Pride et al 1989) Effective advertising can provides
consumers and other prospects with information about different products that are
available to them. This enables consumers to compare and choose between the
products and encourages competition. Competition encourages companies to be more
price and quality conscious so as to retain customers and clients.

The decision to advertise implies a decision to compete in a new and aggressive way
with in the market. This means, the provider will no longer rely too solely upon
personal salesmanship to gain distribution. Instead, he implies his readiness to and
intention of speaking directly to consumers in abroad countries. The decision to
advertise also helps the marketer to expand his share in the market. Advertisement
helps in development and expansion of the market and the consumer acceptance of the
product.

Dunn (1968) points out that the market needs and conditions are changing; therefore
there is need for creativity in selling. This will show the company what to produce so
as to satisfy the needs of the users. When companies produce such a commodity and
they advertise, there is an automatic high response in consumption.

48
Penchman (1992) found out that advertising has a greater potential of building
awareness of people hence obtaining a high preference in the market share because a
big percentage of the population has one or more of the mass medium such as radios
and television. This fact introduces the advertised company to many people. If the
advertising is satisfying, it will lead to increase in volume of sales.

Pride F et al (1999) observes that advertising often stimulates demand thus stimulating
sales. For advertising to have a direct relationship with sales revenue, the entire market
mix must be viewed by the customer as the right one (Engel et al 1991, McCathy and
Perveault, 1988). Gordon (1993) states that companies advertise in order to compete in
a new and aggressive way within the market to increase their market share through
increased customer, utilize the low cost way of teaching customers to create marketing
approaches. David et al (1988) recognizes that many scholars have heard different
views on the effect of advertising on sales performance. However, most of them agree
that effective advertising will eventually increase sales volume.

A lot of empirical studies have been carried out on advertising, one of such was carried
out by Karounwi (1998), he said the producer‟s ultimate goal is to sell product and
make profit and one of the ways which he could achieve this is through advertising.
The researcher noted the fact that there are stiff competitions in the market especially
with advertising messages reaching the ultimate consumers first. Wright (1991)
believed in is tentative findings that consumers are not helpless victims of
advertisement once they are constantly exposed to various kinds of advertisement, they
become motivated. Olawuyi (2004) in his own study, says that men of the world who
want the best wherever they find it know that advertised goods are invariably the best
of its kind for reliable product can stand up to intensive publicity. The manufacturer
who makes a public claim must be able to prove it by advertising goods that are good
for buying.

Kassarijian et.al (1995) stated that increased social interaction permits the more rapid
spread of new ideas and that there is a relationship between advertising appeals and
social character. It may be necessary to mention that marketing activities are
interwoven and no one‟s activities are in stage and except one stage is completed the

49
company may not go over to the next stage. This has resulted in people seeing
marketing as an integrated system.

Stanton (1978) in one of his books sees marketing as a total system in which we price,
promote, and distribute satisfying goods and services to potential customers. Arising
from Stanton‟s definition, it becomes evident that marketing activities are all geared
toward consumer‟s wants, needs, and satisfaction with a view to making some level of
profit.

Satisfying the needs of target market brings one to the use of 4p‟s in marketing
otherwise known as marketing variable. When discussing the marketing variable many
talk about the types of product, the price attached to the product, the advertising aspect
to create product awareness, persuasion and finally, the place or distribution/logistics.
For any good organization, the satisfaction of the needs of target market is highly
dependent on its fashion and how it manipulates the four utilities to suit the needs of
the consumers and the organization.

As a matter of fact, profit making should not be the primary objective of any
organization rather, quality product will satisfy consumer‟s needs and enhance repeat
purchase. Definitely the company will make some profit in order to remain in business.
This is also applicable to the beverage industry; it is pertinent to mention that this will
only be achieved when a company produces a quality product and this product is
reasonably priced based on its value to the consumers and a good promotion employed
to inform and create product awareness and the product is within the reach of the target
consumers. According to Young (1965), advertising does not inform the public that a
product exists but promotes its benefits, it also persuades, induces people to like, prefer
and buy a product to others.

Empirical evidence on the relationship between advertising and sales is mixed. The
pioneering study by Comanor and Wilson (1967) found a positive and statistically
significant relationship between advertising and profits, as did an early study by
Shephard (1972). These results were challenged by Bloch (1974), Ayanian (1975) and
Demsetz (1979) because they treated advertising as an expense rather than as an
investment, overstating the true rates of return to advertising.

50
After reviewing more than 100 studies of the effects of advertising on sales, Julian
Simon and Johan Arndt concluded that the effects of advertising budgets follow the
microeconomic law of diminishing returns. That is, as the amount of advertising
increases, its incremental value decreases. The logic is that those with the greatest
potential to buy will likely act on the first (or earliest) exposures, while those less
likely to buy are not likely to change as a result of the advertising. For those who may
be potential buyers, each additional advert will supply little or no new information that
will affect their decision. Thus, according to the concave-downward function model,
the effect of advertising quickly begins to diminish. Budgeting under this model
suggests that fewer advertising dollar may be needed to create the optimal influence on
sales.

The researcher‟s finding came up with the following concave downward response
curve of sales volume. Many advertising managers assume the s-shaped response
curve (as shown below), which projects an S shaped response function to the budget
outlay (again measured in sales). Initial outlays of the advertising budget have little
impact (as indicated by the essentially flat sales curve in range A). After a certain
budget level has been reached (the beginning of range B), advertising and promotional
efforts begin to have an effect, as additional increments of expenditures result in
increased sales. This incremental gain continues only to a point, however because at
the beginning of range C additional expenditures begin to return little or nothing in the
way of sales. This model suggests a small advertising budget is likely to have no
impact beyond the sales that may have been generated through other means (for
example, word of mouth). At the other extreme, more does not necessarily mean
better: Additional dollars spent beyond range B have no additional impact on sales and
for the most part can be considered wasted. As with marginal analysis; one would
attempt to operate at that point on the curve in area B, where the maximum return for
the money is attained.

From the above two findings the outcome of the study was different: the first one is
came up with concave downward response curve of sales volume to advertising cost
while the second one came up with the S shape response curve as shown above. When

51
we bring this to our country and our company we will see the result after the finding in
this study.

2.12 Conceptual Framework

2.12.1 Operational Definition of Variables
 Marketing: - is a set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for
customers, clients, partners and society at large (American Marketing
Association, 2007).
 Performance: - is the ability of an organization to gain and manage its
resources in different ways to develop competitive advantage (Iswatia and
Anshoria, 2007).
 Market efficiency: - is measure of the availability (to all participants in a
market) of the information that provides maximum opportunities to buyers and
sellers to effect transaction with minimum transaction costs.
 Market effectiveness: - is the measure of how effective a marketing plan is at
optimizing spending to achieve positive short and long term results.
 Marketing performance: - is the effectiveness of suppliers in a market/
industry in utilizing economic resource to their maximum efficiency and to the
ultimate benefit of consumers.
 Marketing management: - is the analysis, planning, implementation, and
control of programs designed to bring about desired exchanges with target
audiences for the purpose of personal and mutual gain (Philip and Gerald,
1971).
 Marketing strategy: - is an endeavor by an organization to differentiate itself
from its competitors, using its relative corporate strengths to better satisfy
customer needs in a given environmental setting (Amanze, 2008).
 Marketing mix: - is a tool that can be used by firms to set appropriate
strategies so as to get the desired responses from their target markets. It is a
framework businesses use to pursue their marketing goals in the target markets
(Goi, 2009).

52
  Four Ps of marketing: - is a marketing mix comprising of product, price,
promotion, and place (Mcarthy, 1964).
 Product: - is anything that can be offered to a market for attention, acquisition,
use, or consumption that might satisfy a want or need (Ayad et al and Majed,
2012).
 Price: - is the amount of money charged for a product or service or the total
values that consumers exchange for the benefits of having or using the product
or service (Ayadet.el, 2012).
 Promotion: - is an institution ability to communicate its customers. It includes
sales promotion, advertising, personal selling, public relations and direct
marketing (Al Fatal, 2010).
 Place: - is an activity of a business that involves decisions concerning the
distribution channels to be used and their management, the locations of outlets,
methods of transportation and inventory levels to be held. (Jobber, 2001).

As it is noted earlier, marketing performance is determined by many factors. For the

purpose of this study the determining factors are categorized as internal and external
factors. These factors such as technology, globalization, innovation, marketing mix,
consumer preferences and change in marketing environment can immensely influence
the marketing of PepsiCo (www.carm.com). The internal determinants that affect
marketing performance of a product are mainly features of a product and its
management that have effect on sales and can be influenced to most extent by factors
within the organization. Whereas external factors are opportunities and threats of the
marketing on which the company has little to no control. Thus, these factors are
described in diagram as follows:

53
Figure1.conceptual framework

External factors: -
Internal factors:-
• Competitors actions
• price • Technological change
• product • Social change
development • Customer preferences
• promotion and behavior
• marketing
strategy

Sales volume, sales growth, and profit, customer preference,

pricing

Marketing performance

Source: developed by the researcher

54
 CHAPTER THREE
3. Research Methodology
This chapter deals with how the research was designed, population and sampling
techniques considered, and types of data as well as instruments employed for data
collection. Furthermore, procedures of data collection and methods of data analysis are
also addressed in this particular chapter.

3.1 Description of the study area

Hawassa city is located at the heart of the rift valley. It is the head quarter of the
Sidama Zone Administration as well as the capital of Southern Nations, Nationalities
and Peoples Regional State. The city named after the lake that stands next to it, which
is one of the Rift Valley lakes. The study area is also the main administrative,
commercial, industrial and tourist center in the Southern Region.

Much of the population growth in Hawassa has been the result of internal migration
and expansion of educational and other facilities, also widening of the city‟s
boundaries has caused some of the increase. The city has a young population. Around
65% of the people are under 25 years of age, and only about 5.5% of the population is
over 50 years of age (Hawassa City Socio-Economic Profile 2014:17). Based on the
result of Housing and Population Census of May 2007, the projected population of
Hawassa city is 357, 196. Out of the total number of the population of the city
administration 231, 382 people live in urban areas, while the remaining 125, 814
people live in the rural areas of the administration (ibid).

Various nations and nationalities made their home in the city, which makes it
diversified city. This is one of the significant bases for exploring the region. Different
languages are spoken in the city but majority constituting 50% of the population
speaks Sidamigna (Hawassa City Socio-Economic Profile 2014:24). Thus, believing
that the result of the research is important for the sustainability of its development, the
city is purposefully selected. Furthermore, the following map of the city portrays eight
sub-cities‟ administrations.

55
Besides, Hawassa Millennium Pepsi Cola Plant is one of the seven soft drink plants
under MOHA. It is located in the industry zone 7 kms from Hawassa city and a few
meters breaking to the East on the high way road from Addis Ababa to Moyale. The
total compound area is 48,000 M2 and was secured from SNNPR lease bureau for 99
years on lease basis. The official establishment of the plant dates back to June 5, 1998
when the cornerstone was laid-down at the current site. Expending a total cost of 180
million birr, construction of this plant has taken some-time and with the erection of a
new state of the art bottling line, the plant was inaugurated on September 8/2007,
marking the Ethiopian millennium 2000 E.C.

It is the Latest plant using the new state of art technology such as Reverse osmosis
water treatment plant, Electronic bottle inspection (using infrared technology) and
having a filling machine with a capacity of 36,000 bph of 300 ml which is estimated
to cover the demand of soft drinks of the southern region.

Currently the plant produces the major Pepsi brands (Pepsi cola, Mirinda Orange,
Mirinda Tonic, Mirinda Apple, & 7-up) and succeeding AIB international audit
awarded silver in 2010/11 and gold in 2011/12 ( recognition of high achievement
Award ) from PepsiCo international earning Excellence and superior level
respectively through four years successive Food Safety audit program.

3.2 Study Design

The study employed a mixed approach to answer the research question. Both
quantitative and qualitative analyses used to conduct the study. In order to provide
answers to the questions considered in the research and thereby achieving the objective
of the study, data was collected from randomly selected customers of Pepsi cola found
in Hawassa. In addition qualitative information was gathered from the management
and employees of the plant under the study and analysis will be carried out using the
elements which are used to measure market performance.

As a matter of fact, a mixed method is rich field for the combination of data (Johnson
and Onwuegbuzie, 2004). The researcher uses both quantitative and qualitative
methods for two main reasons-triangulation, and complementarity. In other words

56
triangulation ultimately fortify and enrich a study‟s conclusions. In fact, this is a way
of assuring the validity of research through the use of a variety of methods to collect
data on the same topic, which involves different types of samples as well as methods
of data collection. And also complementarily allow the researcher to gain a fuller
understanding of the research problem and/or to clarify a given research result.
Additionally, a study‟s findings may raise questions or contradictions that will require
clarification (Hesse-Biber, 2010). Quantitative approach employed for the purpose of
triangulation that increases the validity and reliability of the research.

Besides, qualitative data add an in-depth understanding of research results and allow
the researcher to explore variance within the data (Hesse-Biber, 2010). The author also
stated that qualitative data also clarify the meaning of statistical results by adding a
narrative understanding to quantitative research findings. In other words, it can also
help researcher to test the validity of the research questionnaires by sequentially
utilizing mixed methods. Therefore, using both qualitative and quantitative methods
gives a cross-check on the research results.

3.3 Sampling Procedure of the Study

The population of this study was the marketing manager, sales manager, production
manager, employees of Hawassa Millennium Pepsi Cola Plant, and marketing agents
of Hawassa Millennium Pepsi Cola Plant. According to the plants' marketing
department there are about 109 product agents (licensed Pepsi cola product distributers
which are normally confined to specific sales territories) in sales territories of the
plant. From the total population by using systematic sampling method the size of the
sample for these agents was:

Let sample size = n and population size = N

Now we select with each N/nth interval individual from the list.

N= 109 and

n = 21.8 N/nth = 109/21.8= 5 is a sampling interval

57
Then within 5 intervals, we draw one sample randomly using lottery method. We will
get 21.8 (22) product agents from the total population taken for the study. In addition,
since the characteristics of the other population (i.e employees) is different from by
using systematic sampling method the researcher also selected a sample from the
employees of the plant. Whereas, according to Hawassa Millennium Pepsi cola plant
Human Resource Management Department the total number of the employees is 525.
Therefore, to search the sample size from the total population the following formula
(Yamane, 1967) leads to the appropriate sample size.

Where n=sample size

N=population size

e=level of precision (0.05)

n=525/1+525(0.05)2

n=525/1+525(0.0025)

n=525/2.3125=227 is the sample size for the employees of the plant.

Therefore, the total sample size for this study will be the sum of the sample size for the
employees of the plant and the sample size for product agents (22+227=249). Then the
total sample size for this study will be 249.

3.4 Methods of Data Collection

After the sample size is identified, the study employed questionnaire, interview, and
focus group discussion to collect the necessary data. Questionnaire is the major
instrument that employed by the researcher, which contains diverse range of question
to find out preference and feelings of customers towards Pepsi cola, and so on. Self-
administered questionnaire survey used in order to obtain data from Pepsi cola
customers. To be objective and understand the weight of the factors that influence
marketing performance of Pepsi cola, the items had both closed and open ended
questions which was administered face to face.

58
Interview is another data collection instrument which was used in this study.
Structured interview questions included issues related to sales volume, sales growth
and profit, challenges that the faces on Pepsi cola. Six purposely key informants were
selected from the member of the management board of the plant and interviewed. They
were sampled purposively and they comprised the manager of the plant. The interview
helped the researcher to obtain more information about each determinant of marketing
performance of Pepsi cola. And it was conducted in the respondent‟s language
preference of English or Amharic.

Apart from this, secondary data was collected from both published and unpublished
materials (such as books and journals which have relation with the research problem,
published research papers, websites.etc.).

3.5 Methods of Data Analysis

The collected data was presented, analyzed and interpreted using mixed method (both
qualitative and quantitative). All data collected from informants was coded, entered
and analyzed using Statistical Package for Social Science (SPSS) version 20. This
software is used to conduct the descriptive statistics such as frequencies and
percentage. The data collected using questionnaires; interview and document analysis
were analyzed and discussed in the form of notes, tables and percentage using this
software.

Information gathered through interview and review of secondary data sources were
analyzed qualitatively using descriptive and explanatory methods of analysis.
Qualitative data was supplemented by figures and secondary data evidences. The
qualitative data collected through interview was first transcribed and translated from
Amharic to English day by day after each interview was over. After deep reading of
the qualitative data, the data was analyzed by grouping respondents‟ answers to each
question. The researcher developed information by labeling each group of answers. By
doing this he gained knowledge by asking how the information answers the research
objectives. Based on the evidence the researcher will also judge what it means.

59
With regard to the quantitative data, Statistical Package for Social Science (SPSS)
version 20 was used to calculate frequencies and percentages to all questions.
Quantitative data entered in to the computer after open-ended questions were coded
and edited. Finally, data from interview and questionnaire were integrated and an in-
depth analysis and interpretation were made based on each of the pre-identified
groupings.

3.6 Ethical Consideration

Throughout all the research stages, the researcher is secretly kept all essential ethical
issues. Necessary ethical issues that are implementing in this research are giving
official letter for the concerned body, asking permission from the plant, informing all
the participants about the objective and keeping their confidentiality. In order to
preserve their privacy, researcher tries to keep the anonymity of the participants.

In research, ethical consideration is one of the major relevant points that deserve
attention. This is mainly because of the necessity to respect the consent of the
participant to participate, to assure the possibility to back from participation whenever
they found it necessary and to respect and protect them from possible dangers it might
be encounter. For confidentiality, the actual names of participants have kept in secret
but the sex or age of respondent‟s uses because of where it‟s appropriate.

60
 CHAPTER FOUR
4. RESULTS AND DISCUSSION
I. Demographic Profile of the participants informations
A. Sex of the participants
Table 2: Sex of the participants
Frequency Percent Cumulative Percent
Valid Female 69 27.7 27.7
Male 180 72.3 100.0
Total 249 100.0

Accordindg to the survey result from the total of 249 ,69(27.7%) was
females and the rest 180(72.3%) was male
B. Age of the participants
Table 3 Age of the participants
S/N Age Category Frequency Percent

1 15-25 16 6.4

2 26-35 136 54.6

3 36-45 64 25.7

4 46-55 33 13.3

Total 249 100.0

Accordindg to the survey result

Figure 2 Age of the participant

61
According to the survey data of table 3 and figure 3, from the participants 16
(6.4%) are fifteen up twenty five; 136 (54.6%) are twenty six up to thirty five; 64
(25.7%) are thirty six up to forty five and 33 (13.3%) are forty six up to fifty five
age groups. It implies that, the research participants of the study were dominantly
youths.
C. Education level of the participants
Table 4 Education level of the participants

Frequency Percent Valid

Percent
Valid 4 up to 8 9 3.6 3.6
9 up to 12 13 5.2 5.2
Diploma 82 32.9 32.9
Degree and above 145 58.2 58.2
Total 249 100.0 100.0

Figure 3. Education level of the participant

The education level of the participants as indicated in table 4 and figure 4, 9 (3.6%)
are grade four up to eight; 13 (5.2%) are grade nine up to twelve; 82 (32.9%) are
diploma and 145 (58.2%) are degree and above. The above figure implies that most

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of the participants of the study were degree holders and small numbers of the
participants were grade 4 up to 8.
II. Product Dimension of the Product

Table 5: Quality of Pepsi cola

Frequency Percent
Valid strongly agree 187 75.1
Agree 50 20.1
Disagree 3 1.2
Strongly disagree 2 .8
5.00 7 2.8
Total 249 100.0

According to the summary in table 5, 187 (75.1) respondents have evaluated the
quality of Pepsi cola as good. Others 50 (20.1%) customers of the total respondents
forwarded their judgment as fair. This is followed by the response from some 7 (2.8%)
participants don't want to evaluate the taste quality, whereas, out of the 5 (2%) sample
customers have answered rating the quality of Pepsi cola as poor. The result entails
that the quality level of Pepsi cola is good.
Table 6: Quality comparability with other soft drinks
Frequency Percent
Valid Strongly agree 161 64.7
Agree 77 30.9
Disagree 7 2.8

Strongly disagree 4 1.6

Total 249 100.0

Concerning the quality of Pepsi cola as compared to others soft drinks, as indicated in
table 6 about 161 (64.7%) responded Pepsi cola has better quality than other soft
drinks, 77 (30.9%) respondents and somewhat better respectively. 7 (2.8%) and 4
(1.6%) respondents had the opinion that Pepsi cola has worse and a much worse
choice among the alternatives, respectively. The quality comparative result of Pepsi
cola with other soft drinks is good.

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Table 7: Attractiveness of packaging
Frequency Percent
Valid Strongly Agree 95 38.2
Agree 110 44.2
Disagree 37 14.9
Strongly disagree 7 2.8
Total 249 100.0
With regard to the package of Pepsi cola, 110 (44.2%) and 95 (38.2%) of the
respondents have formed the opinion of attractive and very attractive respectively. In
contrast, 37 (14.9%) and 7 (2.8%) have responded not attractive and less attractive
respectively (see table 7).
In fact, packaging strategies enable marketers to align brands with target groups of
consumers. Brand values are inferred from packaging design and this has an impact on
purchase intent, particularly when brand values are congruent with personal vales
(Liman, 2009). As personal values stem from membership of cultural and peer groups,
careful attention is paid to which values are important to the target group (De
Chernatony, 2006). Tobacco industry documents show clear segmentation with regards
to groups such as young people and lower social classes (Lowe 1997).

The values of such groups are monitored to allow packaging strategies to fit in with
any changes. For instance, value packaging becomes more prominent in times of
economic pressure (Spink, 1996).In respect to innovative packaging, it is more likely
to appeal to individuals who place greater significance on the visual aesthetics of
design, and this innate sense of design has been shown to have a strong effect on the
perceived alternativeness of the packaging and pack innovations are often appealing to
youth, who are drawn to novelty and the desire for something new. (Wakefield et al,
2002). Packaging therefore has the potential to increase product sales by tailoring its
design to consumer preferences. Growing academic attention has been paid to how the
use of visual design factors or peripheral cues (Wansink, 2003), such as colour, shape
and size of packaging, can inherent meaning for consumers (Bottomly, 2006) and also
affect their perceptions, brand impressions, and purchase and consumption behavior.

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Table 8: Features of Pepsi-cola packaging
Frequency Percent
Valid Strongly agree 44 17.7
Agree 110 44.2
Disagree 62 24.9
Strongly disagree 31 12.4
5.00 2 .8
Total 249 100.0
About the question asked to the sample respondents as regards to what influence them
more to buy the features Pepsi cola packaging, the 110 (44.2%) respondents the feature
influencing them to buy in the contrast 62 (24.9%) who responded to this particular
question disagree about the feature. 44 (17.7%) of the participants strongly influenced
by the feature and in contrast 31 (12.4%) negatively influenced about the feature of
Pepsi cola. From the participants, 2 (0.8%) are not given their response for this
question. significant portion or about 60% them have chosen taste of the product (see
table 8).
Table 9: A habit of customers to continuing to Buying Pepsi-Cola
Frequency Percent
Valid Strongly agree 153 61.4
Agree 81 32.5
Disagree 6 2.4
Strongly disagree 9 3.6
Total 249 100.0

As can be understood from the table 9, out of the respondents who have responded of
their likelihood to continue buying Pepsi cola, 153 (61.4%) have responded most likely
, 81 (32.5%) answered likely in the contrast 9 (3.6%) and 6 (3.6%) have said that their
reaction is most unlike and unlike to buy Pepsi cola.
III. Price Dimension of the Product
Table 10: Fairness level of Pepsi-Cola price
Frequency Percent
Valid Strongly agree 66 26.5
Agree 134 53.8
Disagree 44 17.7
Strongly disagree 5 2.0

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 Total 249 100.0

As can be seen from table 10, a total of 249 respondents expressed their view about the
current price of Pepsi cola. Out of these, 134 (53.8%) respondents rated the prevailing
price as fair and 66 (26.5%) respondents called the price cheap and excessive. In
contrast to this, 44 (17.7%) considered it as expensive and 5 (2%) labeled it as very
expensive.
According the results from the interview the major problem of MOHA‟s product
especially Pepsi cola are No full promotion by different media at any place as well as
any time the company always use advertising the product will be developed. This is
because of very high competition product is increased. In order to develop the
company product use like Coca Cola Company MDC. This means give for agent or
distribution at different area increase so as to develop the product of the company. The
existing agents are not full distribution the product. The huge problem of the company
on the distribution especially mirinda orange & Miranda apple big problem, so change
this way of distribution. However, this happens not because of the shortage of product,
but the problem on distribution.

The other opinion on the product of MOHA price, the price of the product it is
expensive, and as well as on packaging problem. For example the half liter is very
needed by customers but the researcher find out that it is rarely available.

Table 11: Value of Pepsi-Cola compared with its price

Frequency Percent
Valid Strongly Agree 68 27.3
Agree 111 44.6
Disagree 58 23.3
Strongly Disagree 12 4.8
Total 249 100.0

From the table 11, one can understood that how Pepsi cola is being perceived in terms
of value it has provided to customers against its price. In this aspect, of all the
respondents 111 (44.6%) and 68 (27.3%) of them confirmed that, it has average value

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and the value as good respectively. 58 (23.3%) and 12 (4.8%) of them perceived the
value as poor and very poor.
Table 12: Price comparability of Pepsi-Cola with other soft drinks

Frequency Percent
Valid strongly Agree 51 20.5
Agree 118 47.4
Disagree 68 27.3
strongly Disagree 12 4.8
Total 249 100.0

With respect to the comparison between the prices of Pepsi cola and other soft drinks,
118 (47.4%) and 51 (20.5%) of the respondents confirmed that the price of Pepsi cola
is fair and better. However, 68 (27.3%) and 12 (4.8%) have evaluated the price of
Pepsi cola as expensive and very expensive, respectively (see table 12). Accordingly,
William R. George (1999) reveals purpose of study of factors responsible for brand
preference in soft drink industry, increasing competition more, due to globalization is
motivating many companies to base their strategies almost entirely on building brands.
Brand preference means to compare the different brands and opt for the most preferred
brand. This brand preference is influenced by various factors. In the identification of
factors affecting the brand presence; this brand persona deals with the personality
aspects or the external attributes of brand. Thus it can be said that consumer prefer any
brand looking at the external attributes of a brand.

Donnelly (1995) said intensity of color and the flavors are the key drives behind
consumer acceptance of soft drinks. But packaging and labeling are not as important
for winning over consumer s according to findings published in the journal food
quality and preference. The study involved consumers at different stages of
development and highlights the importance of adopting a “sensory marketing
approach” said the researchers from French research organization Adriant. The
University of Rennes “Companies need to continuously innovate to maintain market
leadership,” wrote the researchers. “When the market is overloaded the challenge
consist in creating innovative products able to attract and satisfy consumers” This

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experiment showed the feasibility of the proposed multi-sensory design method based
on mixed qualitative and quantitative approaches.” The study also demonstrates the
importance of flavor and color selection for new products. The global flavors market
was been valued at some USSL 8bn in 2006 (Business Insights).

Meanwhile, the value of the international coloring market was estimated at around
$1.16bn in 2010 up 2.5% from $1.07bn in 2007, according to leatherhead food
international (LFI) Natural colors now make up 31 percent of the coloring market.
Stephen Daniells (2008) said these four factors were identified for the formulation;
four color intensities; three flavoring two label types (soft versus hard). And two pack
sizes (standard versus oversize). By using both quantities (hedonic testing) and
qualitative (focus groups) approaches the researcher found that “the main factors
which drive consumer preference for this concept are color intensity and flavoring”.
Indeed color intensity accounted for 43% and flavor 32% of the consumers‟ overall
liking,” pack size and label type are taken into account by the consumer to a lesser
extent,” they added,” “this methodology of a qualitative screening associated to a
conjoint analysis on relevant sensory attributes has shown good performances to fit
consumers‟ expectations; it has now to be reproduced, as every brand. Concept and
product is a unique combination designed for a specific consumer group,” concluded
the researchers.

Table 13: Pepsi-Cola's price as an important decision source to buy

Frequency Percent
Valid Strongly Agree 51 20.5
Agree 91 36.5
Disagree 84 33.7
Strongly Disagree 23 9.2
Total 249 100.0

As depicted in table 13, out of the total respondents considered, 91 (36.5%) and 51
(20.5%) of them responded that price is an main and important factor in making
decision to buy Pepsi cola. But, 84 (33.7%) and 23 (9.2%) respondents have said that
price is unimportant in their view to make decision about the purchase of Pepsi cola.

68
The interview result also revealed that PepsiCo‟s pricing strategy also influenced by
some wholesalers. Their pricing strategy is offering products with low prices to
customers; PepsiCo should not sell their products to Wal-Mart in high price.

Another important pricing strategy of PepsiCo is segment pricing. That is, PepsiCo
sets different prices for different customers. To be more specific, Pepsi sells its
products to luxury hotels at higher prices than prices of other stores (“Pricing Strategy
of Pepsi”). In other words, this is the reason why people have to pay more to buy a
bottle of Pepsi in luxury stores than in pharmacy stores. In addition, because PepsiCo
spent a lot of money on promotions and advertisements, it cannot set the price of
products at really low prices.

Table 14: Discount of Pepsi-Cola's price as a source for customer reaction

Frequency Percent
Valid Strongly Agree 89 35.7
Agree 80 32.1
Disagree 45 18.1
Strongly Disagree 35 14.1
Total 249 100.0

Summarized in table 14, is the data regarding the level of reaction customers could
made to the discount in the price of Pepsi cola. Based on the tabulated information, 89
(35.7%) and 80 (32.1%) have answered that their reaction would be very high and
high. Nearly 45 (18.1%) and 35 (14.1%) have responded that the reaction of them
would moderately and be less chosen to react respectively.
IV. Distribution Dimension of the product
Table 15: Response for the customer compliant
Frequency Percent
Valid Strongly Agree 61 24.5
Agree 86 34.5
Disagree 55 22.1
Strongly Disagree 47 18.9
Total 249 100.0

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Complaint handling was one of the variables in the category of promotion dimension.
In this regard, 86 (34.5%) and 61 (24.5%) of the respondents rated the service as good
and very good respectively; and 55 (22.1%) and 47 (18.9%) rated the compliant
handling of the company as satisfactory and poor respectively (see table 15). The result
shows that compliant handling of the company is good.
Table 16: The response quality of customer compliant
Frequency Percent
Valid Strongly Disagree 109 43.8
Agree 100 40.2
Disagree 19 7.6
Strongly Disagree 21 8.4
Total 249 100.0

The research participants were asked to respond about the quality of the response for
compliant. As indicated in table 16, among the total participants, 109 (43.8%) and 100
(40.2%) given the response for good and very good respectively. However, among the
participants 21 (8.4%) and 19 (7.6%) of the respondents put their response for bad and
worst respectively.
Table 17: The response for customer's call

Frequency Percent
Valid Strongly Agree 127 51.0
Agree 88 35.3
Disagree 30 12.0
Strongly Disagree 4 1.6
Total 249 100.0

In addition to this, customers were asked to respond on whether they have obtained a
quick response or not, to the telephone calls they use to make to the customer
representative. Their answers to this question are summarized in table 17. From the
table, one can understand that 127 (51.0%) of the respondents have responded as
strongly agree for the quick response; 88 (35.3%) of the participants agree; 30 (12.0%)
disagree and 4 (1.6%) strongly disagree about the response.

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Table 18: The quality level of service delivery
Frequency Percent
Valid Strongly agree 112 45.0
Agree 85 34.1
Disagree 33 13.3
Strongly Disagree 19 7.6
Total 249 100.0

As shown in table 18, customers responded about the quality of the service they have
obtained from sales personnel of the plants. Of the total respondents, 112 (45%) have
evaluated the service delivery quality as very good; 85 (34.1%) as good; 33 (13.3%) as
bad and the rest 19 (7.6) as worst. The result implies that the quality of service delivery
of the customer representative of the company is good.
V. Promotion Dimension of the Product
Table 19: Pepsi-Cola's availability on the market

Frequency Percent
Valid Strongly Agree 59 23.7
Agree 76 30.5
Disagree 38 15.3
Strongly 76 30.5
Disagree
Total 249 100.0

In table 19, the summary for product availability variable is presented as follows. Out
of the total respondents, 76 (30.5%) of the total respondents have acknowledged that
Pepsi cola is most of the time available in their stock and also the same number of the
participants or 76 (30.5%) responds that they don't have enough amount of the product
at their stock. Among the participants 59 (23.7%) always have that Pepsi cola is
available in their stores and in the contrast 38 (15.3%.) of the customers have disclosed
that it is rarely available in their stock.

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Table 20: Availability of Pepsi-Cola with other soft drinks
Frequency Percent
Valid Strongly Agree 45 18.1
Agree 69 27.7
Disagree 27 10.8
Strongly Disagree 108 43.4
Total 249 100.0

Contrast with other soft drinks, as shown in table 20, 108 (43.4%) of the participants
agreed on that there is shortage of Pepsi cola product in the market. The participant
those responding about its availability are 69 (27.7%) and 45 (18.1%) of the
participants agreed on availability of Pepsi cola contrasting with other soft drinks is in
a better position and the rest 27 (10.8%) have agreed on not available on the market.
Table 21: Sources of Information
Frequency Percent
Valid Radio 11 4.4
News paper 5 2.0
Magazine 3 1.2
Television 135 54.2
Billboard 78 31.3
6.00 15 6.82
Total 249 100.0

In accordance with the summary in table 21, out of the total respondents, 135 (54.2%)
of the participants responded that their source of information about Pepsi cola is
television. Next to it, 78 (31.3%) billboard is the major source of information. Out of
279 respondents, 15 (6.82%) have responded that their source of information about
Pepsi cola is more than one sources. The rest, 11 (4.4%), 5 (2%) and 3 (1.2%) of the
participants have responded that radio, news paper and magazine are the major source
of information about Pepsi cola respectively

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Table 22: Promotional strategies
Frequency Percent
Valid Free gifts 48 19.3
Price discount 72 28.9
Allowance 18 7.2
Credit term 10 4.0
Lottery 92 36.9
6.00 9 3.0
Total 249 100.0

As shown in table 22, customers were asked to respond about their favorite
promotional activity on Pepsi cola. Accordingly, 92 (36.9%) of the participants in the
survey have chosen lottery followed by 72 (28.9%) of respondents who favored price
discount. The same table has revealed that, 48 (19.3%) of the total preferred to obtain
free gifts in their purchase. The rest of the respondents who have accounted for 18
(7.2%), 10 (4.0%) and 9 (3.0%) of the total, have taken a position in favor of
allowance, credit term and more than one promotional strategies respectively.
Table 23: Attractiveness of Pepsi-Cola advert

Frequency Percent
Valid Unattractive 23 9.2
Less attractive 66 26.5
Attractive 64 25.7
More attractive 49 19.7
Indifferent 45 18.1
6.00 2 .8
Total 249 100.0

It can be learnt that, of all the customers participated in answering the question
summarized in table 23, 66 (26.5%) have evaluated the advertisement of Pepsi cola is
less attractive. However, 64 (25.7%) the respondents considered the Pepsi cola‟s
advertisement as attractive. In contrast, 49 (19.7%) and 24 (9.2%) of them described it
as more attractive and unattractive respectively. Yet, others 45 (18.1%) of the
respondents have preferred to take an indifferent position and the rest 2 (0.8%)

73
undecided about the attractiveness of Pepsi cola's advert. The attractiveness level of the
advertisement of Pepsi cola is shown that not clear result on the response of the
participants.
Table 24: Customer handling of Hawassa Millennium Pepsi-Cola Industry
Frequency Percent
Valid Poor 55 22.1
Satisfactory 34 13.7
Good 75 30.1
Very good 58 23.3
Excellent 27 10.8
Total 249 100.0

Customer handling is one of the variables in the category of promotion dimension. The
data in table 24 in this regard shows that, 75 (30.1%), 58 (23.3%) and 27 (10.8%) of
the respondents rated the service of customer handling of Hawassa Millennium Pepsi
Cola Industry as good, very good and excellent respectively. In the contrast, 55
(22.1%) and 34 (13.7%) of them also considered it as poor and satisfactory. The
customer handling of Hawasa Millennium Pepsi-Cola industry is good, as indicated in
the result of the above table.
Table 25: Branding of Pepsi-Cola
Frequency Percent
Valid Unpopular 4 1.6
Less popular 35 14.1
Popular 64 25.7
Very popular 85 34.1
Extremely 61 24.5
popular
Total 249 100.0

The popularity of the Pepsi cola brand itself is one of the parameter to check
promotion dimension of the product. The data presented in table 25 Sample customers
were asked how popular Pepsi cola is and responded as follows. From the total
participants 85 (34.1%), 64 (25.7%) and 61 (24.5%) of the respondents have witnessed
that Pepsi cola is very popular, popular and extremely popular. On the other hand, 35
(14.1%) and 4 (1.6%) of them labeled it as less popular and unpopular respectively.

74
The branding nature of Pepsi cola is popular on the bases of the responses of the
participants.
Table 26: The frequency of customer habit of buying Pepsi cola
Frequency Percent
Valid Ones a week 71 28.5
One up to two per a 66 26.5
week
Three up to four per 58 23.3
a week
Five up to six a week 13 5.2
Every day 41 16.5
Total 249 100.0

As can be understood from the statements in table 24, 36% of the customers
participated in the survey have responded that their habit of buying Pepsi cola once in
a week. Among the participants, 71 (28.5%) have expressed their willingness to buy
Pepsi cola ones a week; 66 (26.5%) buy one up to two; 58 (23.3%) buy three up to
four; 41 (16.5%) buy every day and 13 (5.2%) buy five up to six times per a week (see
table 26). The frequency of the customers habit to buy Pepsi cola is as indicated in the
table above is that all types of customers the company had.
Table 27: The quantity customer buying
Frequency Percent
Valid 1 up to 25 cases 183 73.5
26 up to 50 cases 28 11.2
51 up to 75 cases 8 3.2
76 up to 100 11 4.4
cases
Above 100 cases 19 7.6
Total 249 100.0

With respect to how many cases they buy at a time, significant number or 183 (73.5%)
of the sample customers have responded they use to buy 1-25 cases, followed by 28
(11.2%) and 19 (7.6%) of respondents who buy 26-50 cases and above 100 cases every
time they make a purchase for Pepsi cola. The rest 8 (3.2%) and 11 (4.4%) of the
customers buy 76 to 100 and 51 up to 75 cases at one purchase in a week respectively.

75
(See table 27). The result entails the 1 up to 25 cases were the most quaantity level of
the customers.
Table 28: Influential character of Pepsi-Cola on the customers
Frequency Percent
Valid Taste 163 65.5
Price 21 8.4
Promotion 11 4.4
Price substitute 4 1.6
Delivery and 50 20.1
distribution
Total 249 100.0

Table 28 revealed that the response of customers under this survey as to what influence
them to buy Pepsi cola. The summary as mentioned in the table, most of the
participants or 163 (65.5%) have expressed their opinion that taste of the product
influenced them more to buy Pepsi cola. Out of the 249 participants 50 (20.1%) have
expressed delivery and distribution is influencing them. The rest 21 (8.4%), 11 (4.4%)
and 4 (1.6) have expressed price, promotion and price substitute as a factor in their
purchasing Pepsi cola. The result of the table indicated that the most influential
character of Pepsi cola in this study area is the taste of the product.
Table 29: Customers interest to buy Pepsi-Cola

Frequency Percent
Valid Yes 230 92.4
No 19 7.6
Total 249 100.0

Concerning the question about customers‟ interest to continue buying Pepsi cola, 230
(92.4%) of the respondents have suggested that they are willing to continue buying
Pepsi cola. But, 19 (7.6%) of them expressed their feeling by saying no to the question
mentioned earlier. (See table 29). This implies that the customers‟ interest to buy Pepsi
cola is positive.

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Table 30: The level of customers interest to buy Pepsi-Cola
Frequency Percent
Valid High 169 67.9
Average 70 28.1
Minimum 6 2.4
No interest 4 1.6
Total 249 100.0

As described in table 30, out of 249 participants who have shown interest to
continuously buy Pepsi cola, 169 (67.9%) of them have said that their level of interest
is high and for the 70 (28.1%) it is found to be average. However, the level of interest
for the others 6 (2.4%) is minimum and the rest 4 (1.6%) respondents has no interest to
buy Pepsi cola. The result implies that the level of customers‟ interest to buy Pepsi
cola is high.
4.2 Discussion
The main assessment of this thesis is searching the common factors that influence
marketing performance of Pepsi cola, marketing mix, reasons for declining of the
demand and at Hawassa Millennium Plant and recommend possible marketing
strategies. Based on these basic research questions the discussion part of the thesis will
be presented as the following.
4.2.1 Product
As one of the four elements in the marketing mix framework, the product dimension
has been dealt with considerable depth in this study. Initially in the design of the
project, one of the research questions raised was “what are common internal and
external factors influencing Pepsi cola‟s market performance?” The intention was not
merely to deal with the function of the product but to address product aspects such as
quality, package, taste, brand name and etc.
To this effect, customers were asked questions in relation with issues of Pepsi cola. As
can be inferred from the description made earlier in the preceding section of this
chapter, quality, package and taste of Pepsi cola are found to be major factors that
contribute for the product to be chosen by the customers. This is the overall finding
reached from the customer survey conducted. However, there existed results that may

77
affect the product aspects. For instance, considerable portion of the respondents rated
the quality of Pepsi cola as good. In addition, when asked about the quality of Pepsi
cola as compared to other soft drinks, significant number of respondents responded
supporting Pepsi cola's quality.
As in the case mentioned above, quite a number of respondents have expressed their
approval about the attractiveness of the package of Pepsi cola. From the table 7 and 8,
it can be understood, those who have described the package as attractive.
4.2.2 Price
In many marketing literatures price is described as a key element of marketing mix. It
is believed to be a means of creating value to owners of business organizations and at
the same time benefits customers. A well designed strategy is required to decide on the
pricing of a product and follow up its practical implementation in the market. In setting
price for a product careful considerations of the objective of the company, the nature of
the market and customer demand as well as competition are needed. It is in
consideration of this fact that questions assumed to generate appropriate information
that can help understand the current price strategy and also be used as an input to
design a pricing strategy have been asked to customers.
In the analysis of the data mixed results have been obtained. In one hand the current
price viewed by notable number of respondents as fair and on the other it has been
considered as expensive and very expensive, respectively.
With regard to the value to customers in terms of the price they are paying to the
product, respondents perceived that Pepsi cola has average value followed by those
whose perception about its value is good. This implies that the value rating in
aggregate can be considered favorable but extra efforts need to be made in order to set
a price that is value creating to the customers as well.
Another point to be discussed here is that, the response from sample customers to the
inquiry about the price of Pepsi cola in comparison with what they are paying for other
soft drinks. Nearly, 70% of them responded that they are paying the same price for
both drinks. The result seems impressive despite the less competitive nature of the soft
drink market. The market for carbonated soft drinks in Ethiopia has a duopoly nature
i.e. there are only two sellers. Therefore, neither price maker nor taker existed in this
market. In such a market, one of the companies may take the lead to decrease or

78
increase the prevailing price of a product or certain products. In such a situation, the
reaction from the rival company should be to follow or not to follow, respectively, for
the previously mentioned actions by the leader. This is what the theory suggests based
on the assumption that the products of both companies can be closely substituted.
Although the products, Pepsi cola and coca cola, are close substitutes, the real practice
in pricing the products does not resemble what is described in the theory. Most of the
time, coca cola take the lead in altering the price and Pepsi cola often follow suit. No
price warring. I think that is why the same price exists currently in the market.
This part of the discussion further considered the views customers expressed in intent
to respond to the question they have been asked about the importance attached to price
in deciding to buy Pepsi cola. Except for the few customers who have responded
unimportant in this regard, most of them stood in favor of the notion that price is
important to make decision of buying Pepsi cola. Therefore, it is better to give
attention and consider pricing issue seriously while designing a marketing mix
strategy. In connection to this, customers were also asked to respond about their
reaction if discount in the price of Pepsi cola is being made. The summary of the result
for this particular inquiry have shown that, large portion of respondents forwarded
their opinion labeling their reaction the same, higher and cheap. The result in aggregate
could be considered significant. However, more than half of the respondents expressed
that their reaction for a discount in the price of Pepsi cola will be less and moderate. In
fact, this result may contradict with what the respondents expressed about the
importance of price in their decision. But, this is what is obtained from the analysis
made earlier based on the information gathered.
4.2.3 Place (distribution)
Place or distribution includes all activities to make products available to customers
with the required quantity as well as, quality, at the right time and place. This requires
the management of available resources (human, physical and financial) to move the
products to the target customers so as to satisfy their needs and thereby achieve the
goal of profit making of the company.
In general, while designing a product distribution strategy within the framework of
marketing mix, companies should consider different conditions in choosing the best
way or channel to place the product in order that serve the customers properly.

79
Cognizant of all this and assuming that the human involvement in this particular aspect
of marketing mix is central, customers were asked about the service they obtain from
employees involved in the product distribution activities.
The intention here was to measure their overall satisfaction in the distribution service.
In dealing with this, customers were asked whether they have ever made a complaint
or not and significant number of them responded yes. Those who said yes were asked a
subsequent question with regard to the way their complaints were handled. And these
customers have expressed their evaluation calling it as good and somewhat not good.
The result has shown that there existed both satisfied and unsatisfied customers in this
particular aspect. Still emphasizing on the human element and in an attempt to evaluate
the efficiency of the sales force, customers were asked about the quality and
effectiveness of the service rendered to them, in terms of quick response for their
telephone call, product delivery and availability. For all inquiries in all aspects of the
distribution issues raised, customers responded positively by expressing their
satisfaction and agreement on the service. This being the overall result, however, there
were large number of customers who have evaluated the service as poor and also
expressed their disagreement particularly on the responsiveness of the customer
representatives, product delivery and availability. The implication here is that
improvement is needed specially in product availability and the quality of the service
in order to fully satisfy and retain the existing customers as well as attract the new
ones. Otherwise, this will have a negative impact on the demand for Pepsi cola by
these customers.
4.2.4 Promotion
It is a means of persuading customers to buy a product or service. Also, promotion is
the ability of business companies to communicate their target markets. The activity
includes sales promotion, advertising, personal selling, public relations and direct
marketing. For a company to register success in its promotional undertakings there has
to be coordination in executing each activity in the overall mix. Carefully designed
strategy is required to combine every activity described earlier into an integrated
communication system. Promotion is a crucial element in the marketing mix of Pepsi
cola. The concern here is to make appropriate decisions of marketing to communicate
the target customers about what the company is offering to them to satisfy their needs

80
and thereby achieve the objectives of the company. Promotion as a key element in the
marketing mix, has a very significant role to play in influencing the perceptions,
beliefs, and attitudes of customers towards buying a given product or service. And the
rationale behind every promotional activity is to sale as much as a product that is being
promoted. But, the success in this regard is very much dependent on the type, design
and appropriateness of the promotional mix. The same holds true in the case of Pepsi
cola.
Therefore, to learn more from the practical application of the theory and investigate
how Pepsi cola is being practically promoted, questions which have taken elements of
promotional mix into account have been asked to customers. The queries in this
connection were comprised of issues like advertisement, sales promotion, public
relation and branding. Based on the responses of customers, Pepsi cola‟s advertising
on television is the source of information for many of them. However, in terms of
attractiveness, considerable number labeled the advertisement from Pepsi cola is
attractive than other soft drinks. In responding to sales promotion, lottery found the
most favored activity among the mix followed by price discount. With regard to the
public relations aspect measured in terms of customer complaint handling, more than
half of the respondents rated this service as good. Finally, customers have witnessed
that Pepsi cola is a popular brand. Generally, the findings seem to have shown that the
company is trying to apply different methods of promoting Pepsi cola. However, the
result found in terms of the attractiveness of its television advert. Besides, extra efforts
are also required in selecting appropriate sales promotion activity to strategically and
continuously promote Pepsi cola.
4.2.5 Demand condition
Demand for a product can be defined as the ability and willingness to buy it. In
general, demand can be influenced by several factors such as price, taste, quality,
income of customers and advertisement. The successful company, therefore, need to
understand the factors that specifically determine the demand of its products. An
understanding of such factors is vital to the overall wellbeing of the company (Ian
Worthington, Chris Briton, and Andy Ries, 2005). It is on the basis of such knowledge
that Pepsi cola is being marketed and as a result the demand for it has been increasing
in absolute terms. But, its demand as measured by the market share from the overall

81
product mix has been declining. This market situation has been an issue of great
concern for the management of the company. To examine the problem and learn about
the situation, demand state of the product has been incorporated and responses were
provided by the customers. The result has shown that, customers are not willing to buy
Pepsi cola frequently.
Most of the respondents buy Pepsi cola once in a week. The reason they have attached
to this is that, the product is not often demanded by the consumers. Again, the quantity
these customers buy at a time found to be the least among the alternative categories.
For instance 73.5 % of them buy 1-25 cases of Pepsi cola during their one time
purchase in a week. This shows less quantity of demand for the product. According to
the survey, most of the customers are found to be influenced to buy Pepsi cola, by the
distribution and delivery as well as the taste of the product. This implies that more
demand could be created by further improving the distribution activity and thereby
alleviates the existing low demand situation. Lastly, in the demand state, customers
have expressed their interest in continuing to buy Pepsi cola. The result seen in this
particular aspect is quite encouraging in that customers have shown not only their
interest but significant of them proved that their interest is high. This seems to have
implied that there existed huge potential demand in the market.

82
 CHAPTER FIVE
5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 SUMMARY
This section summarizes major findings of the study based on the analysis and
discussion made thus far about the marketing of Pepsi cola within the framework of
marketing mix.
Product dimension
 Based on the result from the customer survey, most of the respondents
considered, evaluated the quality of Pepsi cola as good.
 Concerning the quality as compared to other soft drinks, the quality of Pepsi
cola found to be somewhat better.
 The package of Pepsi cola found to be attractive as per the survey result.
 The taste of the product found to be the most influential factor to buy Pepsi
cola.
 Significant number of customers proved that they will continue buying Pepsi
cola.
 Goodwill of the company and familiarity of the brand considered important
product aspects.
 Members of the sales force have little knowledge about the production
planning.
 Production planning is dependent on the availability of required inputs and
strictly considers the profit making objective of the company, but not based on
the market demand.
Price dimension
 The price of Pepsi cola prevailing in the market viewed by the customers as
fair.
 Pepsi cola is perceived by customers as a product that has average value in
terms of the price paid for it.
 Customers assured that they are paying the fair price comparing with other soft
drinks.
 Price is considered as an important factor in making decision to buy Pepsi cola.

83
  The pricing strategy of the company is found to be cost based as well as
competition based.
 The market price is highly influenced by the market demand and the interest of
customers.
Promotion dimension
 Television is found to be the source of information about Pepsi cola for many
of the customers.
 Lottery is the most favored sales promotion activity followed by price
discount.
 The advertising on Pepsi cola is attractive.
 Personal selling as measured in terms of the service to handle customers
complaints rated as good.
 Pepsi cola is perceived as popular brand by customers.
 Promotion is being carried out both at plant and corporate levels.
 Promotional mix of the company comprises personal selling, price discount,
lottery, media advertising, signage, assistance for social and community based
projects, and sponsorship of special events as well as festivals.
Place (distribution dimension)
 Customers‟ complaint handling found to be satisfactory but there are customers
who are unsatisfied with the service.
 The quality of the service from the sales personnel evaluated as good by large
number of customers.
 Customers have agreed that they have obtained quick response for their
telephone calls.
 Customers have acknowledged that Pepsi cola is always available in their
stock.
 The delivery service found to be good.
 External factors are opportunities and threats of the marketing on which the
company has little to no control. Thus, these factors are described in as
follows: as technology, globalization, innovation, consumer preferences and
change in marketing environment can immensely influence the marketing of
Pepsi Cola

84
 


5.2. Conclusions
Marketing mix or four Ps of marketing, as a tool of offering a product and
communicating customers about the product, had a wider application since the
inception of the idea in the 1960s. The concept has contributing significantly in the
management of marketing, even though criticisms have been raised on its application
in the original form. The critics seriously expressed their doubt on the role the mix
could play in marketing goods in general and services in particular.
This being the fact, however, the frame work still serves its purpose and considered by
many as pillars of marketing. Companies analyze and manage their marketing
activities using the elements in the framework. Marketing strategies are built upon
such components of the marketing mix as product, price, promotion and place.
Therefore, it is possible to conclude that the same applies to Hawassa Pepsi Cola
Millennium Company. Based on the findings of the study, the company is executing its
marketing activity within the framework and applying fully every element in the mix.
The results obtained from both quantitative and qualitative analysis in the study proved
that the marketing of Pepsi cola basically considers these elements.
Consequently, the following conclusions have been reached from the analysis made
earlier to address the research questions and specific objectives set in the study based
on the dimensions considered in the framework.
 Quality, package and taste are major features of the product. This being the
overall conclusion in the product aspect, however, there were customers who
rated the quality of Pepsi cola as poor. Customers also expressed their
disapproval about the attractiveness of the package of Pepsi cola by labeling it
as less attractive. All these have contributions in creating negative effect on the
acceptance of the product offered to the customers. Therefore, appropriate
corrective measures have to be taken to enhance the existing perceptions about
the product.

85
 With regard to the price of Pepsi cola, the prevailing price in the market viewed
by customer as fair. But, considered by some as expensive. The value from
consuming Pepsi cola in terms of the price paid for it proved to be good. The
study reveals that, customers are paying fair price for Pepsi cola. According to
the study, price found to be an important variable to decide on buying Pepsi
cola and price discount can influence more customers to buy Pepsi cola. This
study has also shown that the company is following cost based as well as
competitor based pricing strategies in setting price.
 Based on the findings of the study, the result from the customer survey
supports this and proved that the distribution of Pepsi cola is satisfactory in
terms of customer service, product availability and delivery. However, there are
minor cases to be addressed in terms of quality of the service and major cases
to be addressed availability of Pepsi cola as well as its delivery.
 The company is promoting its products using different promotional activities
such as personal selling, price discount, lottery, media advertising and signage.
The survey result confirms that, television advertisement is the most source of
information about Pepsi cola and lottery as the most favored sales promotion
activity. In addition, the study proves that Pepsi cola is a popular brand but
some customers have expressed their doubt about Pepsi cola being preferred by
consumers.
 The study reveals that there exists huge potential demand for Pepsi cola. The
result from the customer survey about their interest in continuing to buy Pepsi
cola has proved this. Yet, there existed customers considered in the survey,
who have no interest to continuously buy Pepsi cola. The reason these
customers attached to their stand is that Pepsi cola is not the preference of
consumers.
 Also, the study shows that, inability to avail Pepsi cola as a possible causes for
the decline in the demand for the product.

86
5.3 Recommendations
The following suggestions and recommendations are brought forward based on the
conclusion made earlier so as to allow the management of the company to take
appropriate actions to set the problems identified in the study right.
 Although the application of the four Ps principles is well under way, to manage
the marketing of the company. Therefore, the company shall design a
comprehensive marketing strategy that can help in serving its target customers
well and thereby achieve its overall objectives.
 Even though most of the respondents said that the package of Pepsi cola is
attractive, there existed considerable number of customers who responded less
attractive and not attractive. Thus, appropriate technical and managerial actions
should be taken in order to maintain the status of the product quality and
further improve it through addressing the problems raised by customers
regarding Pepsi cola‟s package.
 The company should review its pricing strategy and take measures that could
enable the management set a price which is value creating for both the business
and customers.
 As confirmed in the study, price is an important variable in making decision to
buy Pepsi cola. Price discount also found to be the most influential factor for
customers to buy more Pepsi cola. Thus, the company should seriously
consider these situations in order that it could gain the advantage of setting fair
market price. Because, doing so would enable the company to create additional
demand for its product and thereby boost the market share.
 The company should sometimes take the lead in altering the market price rather
than often following the competitor. If the company takes such action and
register success the benefit would be high both in financial terms and image
building as well. However, such a decision has to be supported by the evidence
based information obtained from a carefully designed and conducted market
research.
 Continuous skills and development training should be given to employees
engaged in marketing the product. This would definitely help in improving the

87
 quality of the service that these members of the company could provide to
customers.
 Proper planning is required for producing and marketing Pepsi cola to address
problems in the market concerning the availability and delivery of the product.
 Pepsi cola the most preferred soft drink in the long term. But, as for the short
term measure, a combination of aggressive advertisement and continuous
campaign is required to familiarize the product and increase the consumers‟
level of awareness about its quality.

88
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 APPENDIX
HAWASA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS

SCHOOL OF MANAGEMENT AND ACOUNTING

An Academic Research on “AN ASSESSING OF FACTORS INFLUENCING

MARKETING PERFORMANCE OF PEPSI COLA: THE CASE OF HAWASSA
MILLENNIUM PEPSI COLA PLANT”
Introduction: The Researcher is one of the master‟s students at HAWASSA
UNIVERSITY SCHOOL OF GRADUATE STUDIES. As a partial requirement
for the completion of the program he is undertaking a research on the above topic.

The purpose of this questionnaire is to capture first-hand information on the issue

under consideration. All questions to be asked are for academic purpose. It is purely
academic study and no way affects you personally or organizationally because the
information supplied through this questionnaire will be treated in strict confidentiality
and personal details will kept unspecified.

The objective of this study will be a fruitless exercise without your whole hearted
cooperation, genuine, frank, and timely responses.

Thank you in advance

Dawit Deneke

Mobile -0913270169

Email Address-dawadeneke1135@gmail.com

Hawassa University

Ethiopia

MAY, 2019

94
Direction: - Please select your answer by encircling the appropriate response category
from part I- part VI.
Part I. Demographic Profile
1. Gender
1. Male 2. Female 3. Prefer not to say
2. Age category
1. 15-25 2. 26-35 3. 36-45 4. 46-55 5. Above 55
3. Education
1. up to grade 4 2. 4 up to 8 3. 9 up to 12 4. Diploma 5. Degree
6.And Above
Part II Product dimension of the product
1. How do you rate the quality of Pepsi-Cola?
1. Poor 2. Fair 3. Good 4. Very good 5. Excellent
2. Compared to other soft drinks, Pepsi Cola is
1. Much better 2. Somewhat better 3. About the same 4. Somewhat
worse
5. Much worse
3. How do you rate the package of Pepsi Cola?
1. Less attractive 2. Somewhat attractive 3. Attractive 4. Very
attractive
5. Not attractive
4. What attributes of Pepsi-Cola influence you more?
1. Package of the product 2. The brand name 3. Taste of the product
4. Physical appearance 5. Safety of the product
5. Based on your experience will you continue buying Pepsi-Cola?
1. Most unlikely 2. Not likely 3. Unknown 4. Most likely 5.
Extremely likely
Part III. Price dimension of the product
1. How do you rate the current price of Pepsi Cola?
1. Cheap 2. Fair 3. Expensive 4. Very expensive 5. Exorbitant
2. What is your perception about the value of Pepsi Cola as compared to its price is
1. Excellent 2. Good 3. Average 4. Poor 5. Very poor

95
3. How do you evaluate the price of Pepsi-Cola against what you are paying for Coca-
Cola?
1. Less expensive 2. Expensive 3. Very expensive 4. The same
4. How important is price to you in buying Pepsi Cola?
1. Unimportant 2. Neither important nor unimportant 3. Relatively important
4. Important 5. Very important
5. How much would be your reaction to the discount in the price of Pepsi -Cola
1. Less 2. Moderate 3. High 4. Very high 5. Extremely high
Part IV. Distribution dimension of the product
1. Have you ever made a complaint about Pepsi-Cola?
1. Yes 2. No
2. If your answer to questions 1 is "yes" how do you evaluate the customer handling
service you have obtained?
1. Unsatisfactory 2. Somewhat satisfactory 3. Satisfactory 4. Very satisfactory
5. Indifferent
3. Based on your recent experience how was the quality of the service you received
from the Customer Representative of the company?
1. Average 2. Poor 3. Good 4. Very good 5. Excellent
4. The Customer Representative handled your telephone call quickly
1. Strongly disagree 2. Somewhat disagree 3. Neutral 4. Somewhat
agree
5. Strongly agree
5. What is your comment on the availability of Pepsi cola?
1. Always available 2. Most of the time available 3. Occasionally
available
4. Rarely available 5. Often unavailable
6. Based on your experience how do you rate the delivery of Pepsi Cola?
1. Very poor 2. Poor 3. Good 4. Very good 5. Excellent
Part V. Promotion dimension of the product
1. From where do you get information about Pepsi-Cola?
1. Radio 2. News papers 3. Magazines 4. Television 5.
Billboards

96
2. Which of the following promotional activities do you like?
1. Free gifts 2. Price discount 3. Allowances 4. Credit terms
5. Lottery
3. How do you evaluate Pepsi's advertising against Coca Cola's?
1. Unattractive 2. Less attractive 3. Attractive 4. More attractive
5. Indifferent
4. How do you rate the company's customer complaint handling?
1. Poor 2. Satisfactory 3. Good 4. Very good

5. How do you perceive the brand image of Pepsi-Cola?

1. Unpopular 2. Less popular 3. Very popular 4. Popular
5. Extremely popular
Part VI. Demand state of the product
1. How often do you buy Pepsi - cola in a week?
1. Once in a week 2. 1 to 2 days a week 3. 3 to 4 days a week 4. 5 to 6
days a week
5. Everyday
2. How many cases of Pepsi cola do you buy per day?
1. 1 to 25 cases 2. 26 to 50 cases 3. 51 to 75 cases 4. 76 to 100
cases
5. More than 100 cases
3. What influences you to buy Pepsi cola?
1. The taste of the product 2. The price of the product 3. The promotion on
the product
4. The price of close substitute 5. The delivery and distribution of the product
4. Do you have an interest to continue buying Pepsi cola?
1. Yes
2. No
5. If your answer for question 4 is "yes" how much is your interest
1. High 2. Average 3. Minimum 4. No interest

97
Part VII. Demand state of the organization
1. Do you think the primary focus of the Hawassa Millennium Pepsi cola Plant is on
the needs of the customer?

1. Strongly Disagree 2. Disagree 3. Agree 4. Strongly Agree

5. I Don‟t Know
2. Do you think everyone in the organization accepts and implements a customer
orientation
1. Strongly Disagree 2. Disagree 3. Agree 4. Strongly Agree
5. I Don‟t Know

3. Do you think there has to be a balance between the needs of the customer and the
strengths of an organization so that it too can get its needs met

1. Strongly Disagree 2. Disagree 3. Agree 4. Strongly Agree

5. I Don‟t Know
4. How do you rate the company's ability to stressing the highest possible product

1. Very high 2. High 3. Medium 4. Low 5. Very

Low
5. How do you rate the company's ability of emphasizing the expertise of the service
deliverer
1. Very high 2. High 3. Medium 4. Low 5. Very
Low
6. Do you think the primary focus of the Hawassa Millennium Pepsi cola Plant is on
the needs of the customer?

A) Strongly Disagree B) Disagree

C) Agree D) Strongly Agree E) I Don‟t Know

7. Do you think everyone in the organization accepts and implements a customer
orientation?
A) Strongly Disagree B) Disagree

C) Agree D) Strongly Agree E) I Don‟t Know

98
8. Do you think there has to be a balance between the needs of the customer and the
strengths of an organization so that it too can get its needs met.

A) Strongly Disagree B) Disagree

C) Agree D) Strongly Agree E) I Don‟t Know

9. Do you think focusing on the efficiency of supply.

A) Strongly Disagree B) Disagree

C) Agree D) Strongly Agree E) I Don‟t Know

10. How do you rate the company's ability to stressing the highest possible product?

A) Very high B) High C) Medium

D) Low E) Very Low F) I Don‟t Know

11. If your answer for question number 5 is „Low‟ or „Very Low‟ then specify some of
the problems_________________________________

12. How do you rate the company's ability of emphasizing the expertise of the service
deliverer.
A) Very high B) High C) Medium

D) Low E) Very Low F) I Don‟t Know

13. How do you rate the company's ability of using sales techniques to sell its products
A) Very high B) High C) Medium

D) Low E) Very Low F) I Don‟t Know

14. Did you think Hawassa Millennium Pepsi cola Plant is accessible to individual
customers

A) Strongly Disagree B) Disagree

C) Agree D) Strongly Agree E) I Don‟t Know

99
15. The company is working for the customers‟ favor of company's products that are
widely
available and of low cost.
A) Strongly Disagree B) Disagree

C) Agree D) Strongly Agree E) I Don‟t Know

16. The company is production oriented and concentrates on the increasing of high
production and wide distribution
A) Strongly Disagree B) Disagree

C) Agree D) Strongly Agree E) I Don‟t Know

100
Part VII1-AN Interview questions
1. የደንበኞችን ፍላጎት የሚያረካ አቅርቦትና አገልግሎት አሰጣጥን ለማሻሻል መወሰድ ያለባቸው ርምጃዎች
ምንድናቸው ይላሉ?
2. የሀዋሳ ሚሌኒየም ፔፕሲ ኮላ ፋብሪካ ምርታማነቱን ለማሳደግ ምን ማድረግ ይኖርበታል?
3. የድርጅቱ የገበያ አገልግሎት ባለሙያዎች በሚሰጡት አገልግሎት መሻሻል ይገባቸዋል የሚሉአቸው
ምንድናቸው?
4. ድርጅቱ የምርቱን ተቀባይነት ለማሳደግ ማደረግ ያለበትን ለውጥ ቢገልጹ?

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