Pepsi Case
... recurring costs and revenue expenditure comes down.” In the current system, the strike rate in the Delhi market is about 40 per cent, which can be improved to 80 per cent in the peak season, claims Vats. The result for Pepsi could be significant savings. “Colas service just 7.5-8 lakh accounts compared to the other FMCG players who service three times the number. Innovation in our distribution system will take us closer to the 21 lakh figure,” says Vats. Coke’s not convinced. Pepsi’s costs structures, say Coke insiders, are high mainly because it owns only 45 per cent of its bottlers and the balance 55 per cent of franchisee bottlers are inefficient — and require Pepsi to bail them out every time they run out of money due to their inefficiencies. Strategy of Pepsi IT’S the most important P in the cola wars — Place. And nothing evokes more passion in Pepsi and Coke than distribution. Major innovation is underway on the distribution front at Pepsi, pre-selling being the biggest of all. It’s been successfully test marketed in Bangalore, Baroda and Coimbatore — and may soon roll out nationally. Tanmaya Vats, franchise director, explains the concept: for example, the Northern market is serviced daily, while the West is serviced once in three days and the South on an average of two to three days. “For the same number of accounts in the North you require more people, vehicles, basically more expenditure. Therefore it makes sense to pre-sell or in other words, book orders and then sell. This reduces...