Marketing Channel

Final Project

Submitted To:
Sir Salman Mangol

Submitted By:

Farhan Bashir 10123

Ghulam Abbas 10111
Rashid Amjad 10126
Mah Noreen 10102

Submission Date: 29-09-2010

Marketing Channel

SUPERIOR UNIVERSITY RAIWIND ROAD, LAHORE

Table of Contents
Company Introduction:....................................................................................................................4
History.........................................................................................................................................4
Vision Statement:.............................................................................................................................6
Mission Statement:..........................................................................................................................6
Product Introduction:...............................................................................................................7
Product Evaluation:.........................................................................................................................7
Quality:............................................................................................................................................8
Style & Design:................................................................................................................................8
Flavors:............................................................................................................................................8
Pricing:.............................................................................................................................................9
Packaging:........................................................................................................................................9
Marketing Segmentation................................................................................................................10
Geographic Segment:.....................................................................................................................10
Demographic Segment:.................................................................................................................10
Psychographic Segment:................................................................................................................10
Competitors:..................................................................................................................................11
Current Channel structure:.............................................................................................................12
Description of each channel members.......................................................................................14
Manufacturer:............................................................................................................................14
Distributer:.................................................................................................................................14
Whole seller:..............................................................................................................................14
Sales agent:................................................................................................................................14
Retailer:......................................................................................................................................14
Channel function and flows:..........................................................................................................15
Service outputs and demand the customer and customer ability...................................................18
Gap analysis:..................................................................................................................................21
Powers and conflicts......................................................................................................................22

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Recommendation...........................................................................................................................23
Appendix........................................................................................................................................24
Questionnaire.................................................................................................................................24
SPSS Analysis:..............................................................................................................................25
References......................................................................................................................................27

Executive Summary:

For the making of our final project of marketing channel, we first choose The
PEPSI COLA Company. In this company we choose one of their fast products KURKURE. For
this we developed two types of questionnaire one for the consumers and other for the company
representatives. We conducted interviews from different consumers and company representatives
for the extraction of gap analysis of this product. We also conducted 3 semi structured interviews
from company employees for company perspective.
After conducted interview we entered data into the software which is named as SPSS for the
purpose of quantitative analysis, its use was identification of four segments of customers
according to their service output demand. After another kind of the method is use to collect the
data from the company representative of the KURKURE. The Three semi-structure interviews
are being made for this purpose according to the questionnaire 2 which is regarding the
companies flow. After the analysis of current structure of the channel and identification the
different flows which are performing for the company and certified performer of the each flow.
We identified the segment of the KURKURE according to the demand.
After conducting different tests which are applied to see the connection between them after all of
above we recognized the Gaps which are customary in the current marketing channel of the
KURKURE due to the cause of two both sides demand and supply. The conflict and the power
element are then described in detail. The sources of power which are going to be used to
manipulate each other have also discussed here. And at the end after getting a complete

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comprehensive overview of all of the activities we have given recommendations to overcome the
problems and for the improvement of channels.

Company Introduction:
History

In 1893, Caleb Bradham, a young pharmacist from New Bern, North Carolina, begins
experimenting with many different soft drink concoctions.  Like many pharmacists at the turn of
the century he had a soda fountain in his drugstore, where he served his customers refreshing
drinks, that he created himself. His most popular beverage was something he called "Brad's
drink" made of carbonated water, sugar, vanilla, rare oils, pepsin and cola nuts.
One of Caleb's formulations, known as "Brad's drink", created in the summer of 1893, was later
renamed Pepsi Cola after the pepsin and cola nuts used in the recipe. In 1898, Caleb Bradham
wisely bought the trade name "Pep Cola" for $100 from a competitor from Newark, New Jersey
that had gone broke. The new name was trademarked on June 16th, 1903. Bradham's neighbor,
an artist designed the first Pepsi logo and ninety-seven shares of stock for Bradham's new
company were issued.
It was first introduced as "Brad's Drink" in New Bern, North Carolina in 1898 by Caleb
Bradham, who made it at his pharmacy where the drink was sold. It was later named Pepsi Cola,
possibly due to the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to
create a fountain drink that was delicious and would aid in digestion and boost energy.
In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse.
That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce
bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer Barney

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Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing,
invigorating, a fine bracer before a race" The advertising theme "Delicious and Healthful" was
then used over the next two decades. In 1926, Pepsi received its first logo redesign since the
original design of 1905. In 1929, the logo was changed again.

In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy - in
large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a
result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight
years later, the company went bankrupt again. Pepsi's assets were then purchased by Charles
Guth, the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained
soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give
him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup
formula.
On three separate occasions between 1922 and 1933, the Coca-Cola Company was offered the
opportunity to purchase the Pepsi-Cola company and it declined on each occasion
In October 2008, Pepsi announced that it would be redesigning its logo and re-branding many of
its products by early 2009. In 2009, Pepsi, Diet Pepsi and Pepsi Max began using all lower-case
fonts for name brands, and Diet Pepsi Max was re-branded as Pepsi Max. The brand's blue and
red globe trademark became a series of "smiles," with the central white band arcing at different
angles depending on the product until 2010. Pepsi released this logo in U.S. in late 2008, and
later it was released in 2009 in Canada (the first country outside of the United States for Pepsi's
new logo), Brazil, Bolivia, Guatemala, Nicaragua, Honduras, El Salvador, Colombia, Argentina,
Puerto Rico, Costa Rica, Panama, Chile, Dominican Republic, the Philippines and Australia; in
the rest of the world the new logo has been released in 2010, meaning the old logo has been
phased out entirely (most recently, France and Mexico switched to Pepsi's current logo). As of
Present, The UK has started to use the new Pepsi logo on cans in an order different from the US
can. In mid-2010, all Pepsi variants, regular, diet, and Pepsi Max, have started using only the
medium-sized "smile" Pepsi Globe.

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Pepsi and Pepsi Max cans and bottles in Australia now carry the localized version of the new
Pepsi Logo. The word Pepsi and the logo are in the new style, while the word "Max" is still in
the previous style. Pepsi Wild Cherry finally received the 2008 Pepsi design in March 2010

Vision Statement:
 To be a market leader providing quality extruded snack products.
 To strive for excellence and global recognition by continuous improvement,
innovation, dedication and growth.

Mission Statement:
 To be a result oriented and profitable Company by consistently improving market
share, quality, diversity, availability, presentation, reliability and customer
acceptance.
 To ensure cost consciousness in decision making and operations without
compromising the commitment to quality.
 To set up highly ethical business standards and be a good corporate citizen,
contributing towards the development of the national economy and assisting
charitable causes.
 To adopt appropriate safety rules and environment friendly policies.

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Product Introduction:

Named after the Hindi word for "crunchy", Kurkure is a Cheeto -like snack made and marketed
by Frito Lay's. It is one of the most popular snack food products in Pakistan today. Kurkure
comes in 3 different flavors. Snacks are of two types extruded & potato chips, Kurkure is the
extruded snack item. Introduced in Pakistan by PepsiCo International on 1st September,2006.
Initially made in China under “Saudi Snack Food”. But now from 14th august, 2006 it is
produced by PepsiCo International at plot no.413 Sunder Estate Rewind Road Lahore. Kurkure
comes in the ownership of Frito-Lays. Kurkure capture a huge market in a very limited time due
to its mouth watering taste and aggressive marketing.

Product Evaluation:

Kurkure lies in the extruded item which comes under FMCG Products (fast moving consumer
goods). Like every other multinational company, before introducing the „Kurkure Company
conduct different surveys to get consumer interest about features, design and quality level.
Kurkure is the convenience good at the consumer level so they are not offering any after sale
service.Kurkure is unique in Quality, Flavor, taste and quantity. Kurkure is the consumer product
because it basically use at the consumer end, consumer buy or purchase for their personal use or

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consumption.In the case of Kurkure the consumer buying behavior is frequent purchase as
Kurkure is easily available at a very low price at almost every general or retail stores in the
country.

Quality:

As far as the quality is concerned, company is producing a high quality product at a very low
price. Customer in this region consider low price but still want for high quality. Kurkure is
positioning itself on the basis of unique tastes, flavors, ingredients and style. Kurkure is offering
“fast-mirchi” product to the customers.

Style & Design:

Style and design matter a lot on the outcome and response of the product. „Kurkure‟ as the
product (inside the pack and outside wrapper) has much attractive and catchy colors style and
design which attracts the customers a lot.

Flavors:

Initially Kurkure was introduced in the market with only 2 flavors but later on company add 1
more flavor in the family of Kurkure. All flavors of the Kurkure are mouth watering and
tempting. The real taste is in the crispness of the product, consumer can use Kurkure as plain or
with different styles & recipes. Kurkure has adding more and more flavors to attract the
consumers and retaining same taste. Usage:

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Kurkure is also positioning itself on the basis of its usage. Its promotional campaigns urge
consumers to use it on. Daily basis:
 At lunch
 Dinner
 Anytime, anywhere

Pricing:

Kurkure is standing in market as a low price chilli snacks. It is affordable by the consumers of
every income level from very low level to high level and price is delivering value to customer.
 Small Rs 5/-
 Medium Rs 10/-
 Large Rs 20/-

Packaging:

Kurkure is available in the market in 3 different packing. Kurkure comes in the air tight packing
& packing material of Kurkure is of high quality so that product will remain fresh and its taste
keeps secure up to
more than four
months. Kurkure is
available to the
consumer only in
primary packing.

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Marketing Segmentation

Geographic Segment:
Concerning geographical factor, Kurkure is trying to expand its wings to cover towns, villages,
cities; making it available to everybody. The product Kurkure is specially designed for the Gulf
& South Asian region specially India & Pakistan considering the taste & style of the traditional
foods & flavors.

Demographic Segment:
Concerning demographical environment, Kurkure will focus on several variables such as age,
gender and income level.

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a) Age:
Kurkure will focus heavily on children and young people.

b) Gender:
Kurkure is a generalized product for any sex, male or female.

c) Income level:
Kurkure pack is easily affordable and company is trying to give more for less making it best
value of money.

Psychographic Segment:

Considering psychographic factors, Kurkure will heavily focus on customer‟s life style, tastes,
and personal values that best math with the product usage and distinctive from competitors.

Making an image of style, standardized taste and variety of flavors, Kurkure will impact
positively on individual customer satisfaction.

Competitors:

The primary competitor of Kurkury is Kolson Slanty who still capture the most of the market
share. Other competitors are:
 Veezo
 Rings
 Twister
 potato stick

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Current Channel structure:

We have audited the channel of this company situated at (139-B Industrial Area KotlakhPat,
Lahore). It is a national company producing goods across the Pakistan. The marketing channel of
this company consists on the five channel members.

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Supply Chain of Company’s products

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Description of each channel members

Marketing channel consists of the five major channel members who don’t include the end-user of
the KURKURY.

Manufacturer:

KURKURY are the product of the PEPSI COLA which is a well-known Snacks company in the
Pakistan. There is only manufacture/supplier in Lahore of KURKURY situated in 139-B
Industrial Area, KotlakhPat, and Lahore.

Distributer:
The distributors are the second channel members of the marketing channel for the KURKURY
they are 2 in Lahore.

Whole seller:
The numbers of wholesaler which the company has for the product KURKURY are 9.

Sales agent:
There are only 23 sales agent through which the products are distributed to the resellers and then
to the end-user or the final customers.

Retailer:
KURKURY products have 960 retailers which arrange the availability the product at each corner
in Lahore.

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Channel function and flows:

The flows that are carrying by the KURKURY and which channel member performs which flow
are given below.

Figure 2.1

Manufacturer Physical Wholesaler Retailer Customer

Possession

Title

Payment

Information

Promotion

Explanation:
In Figure the flows which are performing the arrows which are in black color(title, payment) are
showing two way flows and the other are showing one way flows(inform, physical) which are
performed by the marketing channel of the KURKURE. There are five basic marketing flows,
which are carrying on by the channel members. Out of which only two are the both way flow and
three out of them (physical, title, promotion) are the flows which carry only one way activities.

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The information which is provided to us by the management of the company enables us to draw
the following diagram to describe the functions and their performers.

Activity Flow (Performer)

Customer connect to the Retailers Ordering Flows
Shops or Retail Outlets (Customer)

Order is Stored inside the shops Physical Flows

(Out stock should be Refilled)

Payment made for the product purchase Financing Customer Retailer
Risking Customer Retailer
Ownership Retailer Customer
Payment Retailer Customer

The Stock ordered in situation of out of Physical Flow Distributor

stock in which they carry order in Ownership Distributor
appropriate container Risking Distributor

Delivery of the Order to Retailer Physical Distributor Retailer

Payment Distributor Retailer

Retailer Unloaded Them Physical Retailer

Ownership Retailer

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Figure 2.2 shows that which activities are the necessary part of the marketing channel of the
KURKURY and which of the activities are carrying by them. There are six types of activities
which are carrying on in the marketing channel.

The first activity is the process of the customer to the Retailer which carries the ordering flow
which is performs by the customers of the KURKURE.

The second Activity is the orders storing inside the shop which carry the physical flow which is
perform by the retailer.

The third activity is about the payment which is made after purchasing the product it carry
different flows (Financing, Risking and Ownership which flows towards the Retailer from the
Customer and the payment flows from Customer to Retailer).

The forth activity is about the re-filling of the product in which the retailer orders to wholesaler
for fulfillment of the KURKURY in which Physical Flow and Ownership flow are being get
forward to retailer from distributor and the Payment Flow is one which is backward from retailer
to distributor. And the last activity which is discussed in the above figure is the Retailer
unloading process which includes two flows Physical and the Ownership which both are carried
by the retailers.

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Service outputs and demand the customer and customer ability

After getting the results from customers through questionnaire the data entered into the SPSS for
further analysis. As the general segmentation is based on the occupation of respondent there are
four segments, according to the survey 8 were professionals out of 31 respondents, 14 were
students, 5 were self-employees and the house wife was the last segment in which we have found
4 respondents.

Six SOD’s help us to identify the different segments of KURKURE according to their
requirement of Service output demand’s which are facilitated by the different SPSS outputs
shown in the appendix for the sake of helping us to develop the following Templates which we
are provided at the last

The Service output demand of each segment is differs from other. The first segment which is
named self employee requires bulk breaking, spatial continence, waiting on the medium priority
and assortment/variety medium /low, customer services low/medium and the information
provision medium/high.

The other segment which is house wife requires spatial convenience, waiting time, and
assortment and variety on the basis of high weight age while the customer services and
information provision low/med. While the requirement of the house wife regarding the bulk-
breaking is high/med.

The third segment is one of the most important segments which is students who requires the
SOD’s of bulk breaking, spatial convenience and information provision highly, and the other
SOD’s of the basses of High/med.

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While the last segment of KURKURE which we can identified is the Professional whom service
output demands is quite different from all of the other segments.
As above provided templates the interpreted result is that company needs to meet those SOD’s
which are necessary to fulfill the requirement of the customers. Super crisps and Frankie’s is
polishing its ability to meet those service output demands at the minimum cost.

The flow which the company is performing to meet the SOD’s requirement of the customers that
is payment flow, promotion flow, title flow, information flow and in the last the physical flows.

These are the different flows which the company carries out different level to meet the service
output demand of the customer.

The channel audit also tells us that KURKURY have a perfect logistics system for in time
delivery of the product with in the deadlines. These flows also carry different costs with them for
the KURKURE.

Table 1
Segments Bulk Spatial Waiting Assortment/ Customer Informatio
breaking convenience time variety services n provision

Self Medium Medium Medium Medium Medium Medium

employ
d
House wife High/Med High/Med High/Med High/Med High/Med High/Med

Student High High High High High High

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Professional High High High High High High

Table 2

Service output Self employee House wife Student Professional

demand

Bulk breaking Medium High/MED High High

Spatial Medium High High High/Med
convenience
Waiting time Medium High Med/High Medium
Assortment/varie Medium/Low High High/Med Medium
ty
Customer Low/Med Low/Med High/Med Low
services

Information Medium/high Low/med High Low

provision

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Gap analysis:

As we know that the channel which meets the SOD’s demanded by the customer at the minimum
cost is known as the zero-based channel. In the result of the current study we are enabling to
identify the few of gaps.

As the parent company is itself owning the one of the best channel structure and the distribution
network in the Pakistan. But by the making the complete analysis we have figure out few of the
gaps. This indicates us that the Channel which is owned by the KURKURE is not purely zero-
based channel.

The Gaps on both supply and demand sides are identified. And the sources are both
environmental and the managerial bound. While discussing the demand side gaps there are two
major flows which are noticed by us that the SOD’s demanded by the customers (Customer
Services, Information Provision before purchase) are not meeting according to the requirement
of customers.

The demand side gap which is analyzed by us is the SHORT FALL of the SOD’s which are
demanded by the customers. While considering the sources of this kind of gap are the
environmental bounds.

As the KURKURE product is providing us new favor almost every month but still a large
number of customers are not satisfied with the variety of assortment.

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The second Gap or the flow which was analyzed by us is the supply side Gap in which the
promotional flow is costing too much. The one of the major concern or the desire of the company
is to control the customers.

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Powers and conflicts

We have also identified few of the key factors regarding with the power and conflict issue which
are:-
 Reward Power.
 Expert Power
 Legitimate Power

The above are the basis of power which upstream channel member uses to influence the
downstream channel member or the other channel member some what the referent power is also
utilized. The major source or the center of the power is the supplier or the upstream member. But
we also analyzed that the power sometimes also control by the down stream member.
As the overall analysis we provided that there is overall compatibility between the all channel
members. But a LatentConflict is finding between the upstream channel member and the
downstream channel member regarding the margin, product selectivity and category selectivity.

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Recommendation

 To become the Zero-Base channel the KURKURE has to overcome or Narrow the
gaps;
 The demand side gaps which are existing in the channel should be overcome as
soon as possible.
 Offer the multiple, Service Output Demands (Customer Services, Information
provision) which are demanded by the customers.
 The supply side gaps should be narrow and the following suggestions are
necessary to fulfill for the sake of narrowing those gaps.
 The role of the channel members must have to be changed.
 The promotional flow cost must have to be reduced.
 We recommend that the management use more of the reward base power to
influence.
 We recommend to the channel management to settle the overall domain conflict
which becomes the reason of gray or unwanted markets.

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Appendix

Questionnaire
What is your occupation?
 Professional
 Student
 Staff
 House wife
Where you want to buy from?
 Near house
 A bit travel
 Can over a distant
How much time you wait to buy it?
 No waiting time
 within 30 minute
 Two hour
 One hour
Are you satisfied with its different flavors?
 Yes
 No
Do you want customer services?
 Yes
 No
Do you get information about product?
 Yes No

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SPSS Analysis:

Occupation
Frequency Percent Valid Cumulative
Percent Percent
Vali professional 4 13.33 13.33 13.33
student 16 53.33 53.33 66.66
d
staff 7 23.33 23.33 90
house wife 3 10 10 100.0
Total 30 100.0 100.0

AREA PREFERENCE
Frequency Percent Valid Cumulative
Percent Percent
Vali near house 22 73.33 73.33 73.33
A bit travel 5 16.67 16.67 90
d
can cover a 3 10 10 100.0
Total 30 100.0 100.0

waiting time
Frequency Percent Valid Cumulative
Percent Percent
Valid no waiting 10 33.33 33.33 33.33
time
with in 30 15 50 50 83.33
mint
2 hour 2 6.67 6.67 90
one day 3 10 10 100.0
Total 30 100.0 100.0

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satisfied with the different flavor

Frequency Percent Valid Percent Cumulative Percent

Valid yes 22 73.33 73.33 73.33

no 8 26.76 26.76 100.0
Total 30 100.0 100.0

information provision before purchase

Frequency Percent Valid Cumulative
Percent Percent
Vali yes 25 83.33 83.33 83.33
no 5 16.67 16.67 100.0
d
Tota 30 100.0 100.0
l

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References:

 http://www.docstoc.com/docs/24777893/Final-Report-on-Pepsico-and-Kurkure
 http://www.consumercomplaints.in/bycompany/kurkuri-a184029.html
 http://www.scribd.com/doc/8921312/PRESETATIONKURKURE
 Saeed Anwar Brand Manager

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