A Case Study About Pepsi Co's Place Strategy

MARKETING MIX: PLACE

Place is one of the group of variables in the marketing mix. Place includes company activities that make the product available to the target market. Specifically, place includes the following marketing tools: channels, coverage, location, inventory, transportation, and logistics. These marketing tools are essential in engaging your customer by knowing how to reach them. For further understanding of the place strategy, we are going to make use of Pepsi Company as the basis for discussion.

PepsiCo Inc. is a leading food and beverage company. It was established through the merger of Pepsi-Cola and Frito-Lay. Pepsi-Cola was created in the late 1890s by Caleb Bradham while Frito-Lay, Inc. was formed in 1961. Now, PepsiCo Inc. manufactures and distributes its products in more than 200 countries. It sells both food products, dairy-based products, and beverage products which includes carbonated soft drinks, juices, ready-to-drink tea and coffee, sports drinks, and bottled water. Its headquarters is in Purchase, New York, and employs around 274,000 people worldwide.

        Now in discussing its place strategy, we are going to look in the following marketing tools: channels, location, and logistics.

        Marketing channels, or distribution channels, are a set of independent organizations that help make a product or service available for use or consumption by the consumer or business user. There are two types of marketing channels according to channel level: direct and indirect. Direct marketing channels have no intermediary level meaning the company sells directly to its target consumers. Indirect marketing channel, on the other hand, contains one or more intermediaries.

        PepsiCo Inc. follows the indirect marketing channel. It follows a three-channel distribution network. PepsiCo Inc. identifies its marketing channels as direct store delivery (or DSD), customer warehouse, and third-party distributor networks. Under the DSD system, PepsiCo delivers its products directly to the retail stores. This system ensures that PepsiCo products are often restocked in retail stores. Customer warehouses on the other hand, are the intermediaries wherein products which are not easily perished are inventoried for eventual delivery to retail stores. This kind of system has lower turnover compared to DSD. Lastly, PepsiCo have third-party distributor networks. Under this system, PepsiCo distributes its products to businesses, restaurants, schools, food service units, and vending distributors and operators. From these units, PepsiCo products are sold to the businesses’ customers. Here in the Philippines, PepsiCo are partnered with some vending machine companies and some fastfood chains such as KFC and Dairy Queen. PepsiCo also have their own bottling company known as the Pepsi Bottling Ventures. This is an additional marketing intermediary wherein Pepsi delivers its cola syrup for final processing and bottling. Figure 1 illustrates the three-channel distribution network of PepsiCo and Figure 2 shows some of the restaurants which PepsiCo partnered with as third-party networks.