a study on the distribution channel of frito
DESCRIPTION
A Study on the DISTRIBUTION Channel of FritoTRANSCRIPT
A Study on the Distribution Channels of Frito lay with reference to
Guwahati (Rural) and perform a SWOT analysis on it.
A Report Submitted in Completion of two months Summer Internship Programme in Frito-lay, Guwahati .
Institutional guide: Organisational guide
Sanjib Raj , Assistant Professor Mr. Hitesh Das
Assam Institute Of Management Sales officer,
Frito Lay, Guwahati(rural)
Submitted by:
Nipul Sarma,
40/D/2011.
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Contents
Particulars Page no.
1. Preface…………………………………………………………………..2. Acknowledgement………………………………………………………3. Declaration……………………………………………………………....4. Abbreviations……………………………………………………………
………………………………………………………
5. Chapter 1-Executive summary……………… Chapter 2- Introduction.
2.1-PepsiCo India……………………………… 2.1-Mission and Vision………………………………… 2.2-Frito-lay India……………………………………… 2.3-Frito-lay Guwahati………………………………… 2.4-Product line and depth…………………………… 2.5-Competitors of Frito lay…………………………………… 2.6-Organisational hierarchy of Frito lay Guwahati…………
2.7-Distribution chart of Frito-lay, Guwahati……………………….
2.8-Selling and Distribution system of Frito-lay, Guwahati………..
2.9Strategies of Frito-lay……………………………………………
2.10 Schemes and discount during SIP
7.Chapter 3 – About the SIP……………………………………
3.1-A brief about the SIP………………………………
3.2-Findings and Recommendation during SIP………
3.3--Subject and objective………………………………………….
3.4-Scope of the Study……………………………………………..
3.5-Limitation………………………………………………………
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8. Chapter 4- Research methodology
4.1-Research Methodology and Approach………………………….
4.2-Sampling plan……………………………………………………
10. Chapter 5-Analysis from the market survey………………………………
5.1-Retailer perception on different attributes and service………..
5.2-Consumer perception on different attributes of ………..
5.3-SWOT analysis…………………………………………………
……………………
. Findings from market survey…
12. Chapter 6-Recommendation and conclusion……………………………..
6.1-Recommendation ……………………………………………
6.2-Conclusion……………………………………………………..
13. Chapter 8-Annexure………………………………………………………………….
8.1 Biblography…………………………………………………………………
8.2 Questionnaire………………………………………………………………..
8.3 Weekly report...................................
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PREFACE
Projects are an important part of any formal education to get a practical exposure as
well as implementation of the subjects studied. In a professional course like PGDBM, the
students are equipped with strong theoretical knowledge about the business operations and
the time-tested methods of running a successful business. To make this theoretical
knowledge stronger, the students are assigned certain projects in various organizations to get
an idea of the practical knowledge of the market.
I was assigned to do a project work in PEPSICO India (Frito Lay division).The topic of my
study was “A study on the distribution channel of Frito lay in Guwahati(rural) market and
perform SWOT analysis for it”. The Project started from 2nd May 2012 and ended on 2012
30th June.
Best efforts were been put to accomplish the task in the stipulated period of two months. As
a part of this project I have conducted an extensive study on the retailers to understand their
views about the distribution channel(rural) of Frito lay and also some of its core competitors
i.e. ITC Bingo, Parle and Perfetti Stop Not and some local brands like
ZING,KAYKICKS,DIAMOND etc.
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ACKNOWLEDGEMENT
This report is the result of the contribution, guidance and co-operation received from number of people. This report cannot be claimed as individual effort. This is to acknowledge all people who have offered their help and support in preparing this report.
I am greatly indebted to Mr.Gautam Sarmah, Sales officer (Frito-lay, Nagaon) for selecting me as a summer trainee.
My sincere thanks and gratitude to Mr. Hitesh Das, Sales officer Guwahati (RURAL) for giving his valuable advice and showing me the right path throughout my work and helping me in completing the project.
My sincere thanks to Mr.Sanjiv Raj (Institutional guide) and Mr. N.N Sharma, for giving me their valuable advice throughout the project.
Finally I would like to extend many thanks to my parents and my friends for their moral support and suggestions during the project work.
Nipul Kr.Sarma
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Declaration
I hereby declare that the enclosed project is done on the basis of real market study and the
data is extracted through primary research work and no part of it has been extracted from any
other published research or journal except those specified in bibliography.
Nipul Kr.Sarma.
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Project Title: A study on the distribution channel of Frito Lay with reference to Guwahati market(rural)and to perform a SWOT analysis for it.
Organization: - PepsiCo India Holdings Private Limited (Frito-lay Division).
Organizational Guide: - Mr.Hitesh Das.
Institutional Guide: - Mr.Sanjib Raj.
Duration of the project:- 2nd May-30th June 2012.
RESEARCH OBJECTIVES: -
1. To understand the present scenario of the services provided by Frito Lay to the retailers in the rural market of guwahati.
2. To identify the strengths and weaknesses of the distribution channels in Guwahati (rural).
3. To evaluate the satisfaction level of the retailers regarding the margin provided by Frito Lay.
4. To map the competition in the market with respect to the services provided by the other brands in the rural market.
5. To suggest some measures if possible to the distribution channels to improve further.
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CHAPTER 1: EXECUTIVE SUMMARY
RESEARCH METHODOLOGY:-
The type of Research used in this project is a Descriptive cross-sectional study including mostly the primary data, observation, and methods of interviews conducted to the Retailers. The sampling technique used is probabilistic cluster sampling as it is easier and cost effective. The data have been collected through questionnaires and depth interviews. Statistical tools such as Pie chart and bar diagram have been used to analyze the data.
FINDINGS:-
1)The average time taken to start the distribution process is around 10:30-11 am,and due to this, time taken to reach the designated market is quite late as most rural area retailers close down around 1pm,hence hampering the sales.
2)In some areas,the racks given for display are not anti rodents,so retailers suffer losses as chipps are destroyed by rodents causing financial losses.
3)At many times it is seen that retailers are unable to buy products as the date of visit and delivery to a particular market is not fixed by the agents of the sub-stockists and RRSA,so they ask for credit facilities which is not given by the sub –stockist,hence reducing sales.
4)At times it is informed that when a retailer is out of stock,they on their own visit the sub-stockist but the response time taken by the sub-stockist is not satisfactory,hence wastage of time by the retailer and they tend to ask for if any other sub-stockist available or not which sometimes lead to cross market supply.
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RECOMMENDATIONS:-
1)The Super-stockist should open as early as possible and availability of auto vans should be confirmed first and all paper works should be done at early or if possible at evening ,so that market hitting time is around 9am-9:30am,hence increasing visits and deliveries.
2)Anti rodents racks should be given if possible so that retailers don’t incorporate losses caused by rodents and the existing damaged racks should be changed or repaired properly.
3)Incorporation of uniforms is very essential to the RSAs as they are the faces of Fritolay in the market
4)The RSA s with the agents of their respective Sub- stockist should prepare a journey plan and inform the retailers about this plan so that the retailers also know when they will be visited and hence are prepared for it in advance,so problem of credit may be solved.
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CHAPTER 2
Introduction
1.1PepsiCo India
1.2Mission, vision and values.
1.3 Frito-Lay India
1.4 Frito-Lay in Guwahati
1.5 Product line and depth of Frito-lay
1.6 Product Highlight
1.6 Competitors of Frito-lay
1.7 Organizational hierarchy of Frito-Lay in North east
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2.1 PepsiCo India Holdings Private limited.
PepsiCo entered India in 1989 and in a short period of time. It has grown up into the largest and one of the fastest growing food & beverage business in the country. PepsiCo India growth has been guided by PepsiCo global vision of “Performance with Purpose”. This means that while business maximize shareholder value, they have a responsibility to all the stakeholders including the communities in which they operate, the consumers they serve and the environment whose resources they used .The largest US multinational investors in the country investing with an investment of over $1 billion. PepsiCo India provides direct and indirect employment to over 1,50,000 people across the country. It’s beverage and snack food business is supported by 36 beverage bottling plants, (13 company and 23 franchisee owned) and three food plants. PepsiCo has pioneered and established a model of partnership with farmers and now working with over 22,000 happy farmers across ten states.
Foods: PepsiCo foods division Frito-Lay is the leader in the branded salty snack market. All its products are free of trans-fat. It manufactures Lay’s potato chips, Cheetos extruded snacks, Uncle Chips and traditional snacks under the Kurkure and Lehar brands. The company’s high-fibre breakfast cereal, Quaker Oats and low-fat and roasted snack options like Aliva increase the number of healthy choices available to consumers.
Beverages: PepsiCo India expansive portfolio includes iconic refreshment beverages Pepsi, 7UP, Nimbus, Mirinda, Slice and Mountain Dew, in addition to low-calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drink Gatorade and fruit juices such as Tropicana and Tropicana Twister.
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CHAPTER 2: INTRODUCTIONCHAPTER 2: INTRODUCTION
1.2 Mission, vision and Value.
Mission
PepsiCo mission is to be the world's premier consumer products Company focused on convenient foods and beverages. And seek to produce financial rewards to investors even as by providing opportunities for growth and enrichment to their employees, business partners and the communities in which they operate. They always strive for honesty, fairness and integrity.
Vision
PepsiCo's responsibility is to continually improve all aspects of the world in which they operate – environmental, social, economic – creating a better tomorrow than today. Our vision is to put into action through programmes and a focus on environmental stewardship, activities to benefit society and a commitment to build shareholder value by making PepsiCo a truly sustainable company.
Values & Philosophy
PepsiCo values and philosophy are a reflection of the socially and environmentally responsible company they aspire to be. They are the foundation for every business decision.
Guiding Principles
We must always strive to………………
Care for customers, consumers and the world we live in
Sell only products we can proud of
Speak with truth and candor balance short term and long term
Win with diversity and inclusion respect others and succeed together
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2.3 FRITO-LAY INDIA
Lay's is the brand name for a number of potato chip varieties as well as the name of the
company that founded the chip brand in 1938. Lay's chips are marketed as a division of Frito
Lay, a company owned by PepsiCo Inc. since 1965. Other brands in the Frito-Lay group
include Fritos, Doritos, Ruffles, Cheetos and Rold Gold pretzels.
Product line of FRITO-LAY INDIA
In 1932 salesman Herman W. Lay opened a snack food operation in Nashville, Tennessee
and, in 1938, he purchased the Atlanta, Georgia potato chip manufacturer "Barrett Food
Company," renaming it "H.W. Lay & Company." Lay criss-crossed the Southern United
States selling the product from the trunk of his car. In 1942, Lay introduced the first
continuous potato processor, resulting in the first large-scale production of the product. The
business shortened its name to "the Lay's Company" in 1944 and became the first Snack food
manufacturer to purchase television commercials, with Bert Lahr as a celebrity spokesman.
His signature line, "so crisp you can hear the freshness," became the chips' first slogan along
with "de-Lay-sious" As the popular commercials aired during the 1950s, Lay's went national
in its marketing and was soon supplying product throughout the United States.
In 1961, the Frito Company founded by Elmer Doolin and Lay's merged to form Frito-Lay
Inc., a snack food giant with combined sales of over $127 million annually, the largest of any
manufacturer. In 1965, Frito-Lay merged with the Pepsi Cola Company to form PepsiCo,
Inc. and a barbecue version of the chips appeared on grocery shelves.
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Shortly thereafter, the company introduced the "Wavy Lays" products to grocery shelve. In
the mid to late 1990s, Lay's modified its barbecue chips formula and rebranded it as "K.C.
Masterpiece," named after a popular sauce, and introduced a lower calorie baked version and
a variety that was completely fat-free (Lay's WOW chips containing the fat substitute
olestra). In the 2000s, the company began introducing a variety of additional flavour
variations.
2.4 FRITO-LAY IN GUWAHATI
Frito Lay Division, a part of PepsiCo India Holdings Pvt. Ltd., came to Guwahati in the year
1994 and initially it had only one distributor named NOVA which was located in the area of
Rajgarh. It became very hard to cover all the area due to the increase in demand of Frito
Lay products in the market. Currently, it has six distributors situated all over Guwahati. The
entire supply of North-east is initiated by the C&F agents from the Depot located at
Chansari, Guwahati which has the India’s largest godown of Frito Lay products.
Since starting, the sales of Frito lay products in Guwahati is showing a upward trend. The
Guwahati(rural) market is currently supervised by one sales officer headed by the Area Sales
Managers who is finally headed by the Zonal Manager. The products of Frito Lay available
in the Guwahati(rural)mainly observed by me are – Lehar , Lays, Uncle Chips, Cheetos,
Kurkure.But Frito-lay has products like Aliva and Quaker Oats which are not so demand in
rural market.
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2.5 Product mix of Frito lay.
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Uncle chipps
Plain Salted
spicy treat
chatpata masala
papdi chaat
Lay's
American Style
Spanish Tomato
Classic Salted
Magic Masala
Masala Munch
Chilli Chat
Yummy Cheese
Cheetos
Masala Balls
Tango loops
cheese balls
cheese puff
Aliva Oats
Natural Oats
ORGANIZATIONAL HIERARCHY OF FRITO LAY DIVISION
SALES OFFICER
ZONAL MANAGER
REGIONAL
MANAGER OR V.P
OF THE REGION
SALES DIRECTOR
BUSINESS UNIT
GENERAL
MANAGER
COUNTRY HEAD
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AREA SALES
MANAGER
2.6 ABBREVIATIONS USED
R.S.A. Route service agent/ Route sales agent.
R.R.S.A. Roaming route sales agent.
F.S.C.O. Frito-Lay star club outlet
G.R . General Store
P.A.N. Pan Shop
B.A.K. Bakery
N.C.D. New Centre Development (railway stations, parks, cinema halls etc.)
O.T.H. Others
F.S.C.O .Gold- FSC outlet having two racks, Oats and Aliva biscuit.
F.S.C.O. Silver FSC outlet having only one rack, Oats and Aliva biscuit.
T.T. Traditional Trade (going to the retailers and delivering the product)
M.T. Modern Trade (shopping malls)
W.S. Whole Sale.
BEAT Beat is the area of distribution to be covered by a particular
R.S.A.
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Flavour Weight(gm)
Retail price(Rs)
Consumer price(Rs)
Plain salted 22 4.25 5
30 9 10
70 18 20
Spicy treat 22 4.25 5
30 9 10
70 18 20
Chatpata masala
22 4.25 5
30 9 10
70 18 20
Papdi chaat 22 4.25 5
30 9 10
70 18 20
LAY’S
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Flavour Weight(gm)
Retail price(Rs)
Consumer price(Rs)
American style cream and
onion
22 4.50 5
30 9 10
70 18 20
Spanish tomato tango
22 4.50 5
30 9 10
70 18 20
Classic salted 22 4.50 5
30 9 10
70 18 20
Magic masala 22 4.50 5
30 9 10
70 18 20
CHEETOS
Flavouur Retail price(Rs)
Consumer price(Rs)
Masala balls 4.50 5
9 10
18 20
Tango loops 4.50 5
9 10
18 20
Cheese balls 4.50 5
9 10
18 20
Cheese puffs 4.50 5
9 10
18 20
KURKURE
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Flavour Weight(gm)
Retail price(Rs)
Consumer price(Rs)
Masala munch
25 4.50 5
9 10
18 20
Chilli chat 4.50 5
9 10
18 20
Yummy cheese
4.50 5
9 10
18 20
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ALIVA
Flavour Weight(gm)
Retail price(Rs)
Consumer price(Rs)
Multigrain waves
50 13.50 15
Milk minis 50 13.50 15
Crispi thinz 45 13.50 15
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QUAKER OATS
Natural Oats
SKU Retail price(Rs)
Consumer price(Rs)
200 gm 27 30
400 gm 49.50 55
550 gm 84 89
1 kg 143.1 159
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CORE COMPETITORS OF FRITO-LAY IN GUWAHATI RURALMARKET.People are now more concerned about the quality of the product and its price. Frito-Lay
provides good quality product and fine packaging and as such it has captured a large market
share. Now big brands like ITC Ltd., Parle Agro and Perfetti are giving a tough competition
to Frito Lay. Moreover, a few local players (popcorn, zing,diamond,krazzykure etc) are
dominating the market through high profit margin and credit facility specially in rural
market.
1. ITC BINGO2. Zing3. Diamond4. Parle fultoss5. Krazy kure
DISTRIBUTION SYSTEM OF FRITO-LAY IN GUWAHATI:
The main factory of Frito Lay Division is located at Pune, India where the products are
manufactured. From the factory, the products are sent to the depot in Chansari, Guwahati.
The depot is looked after by the C&F agents called the Tirupati &Associates Pvt. Ltd whose
primary job is to execute the whole process.
The depot in Chansari has the country’s largest godown with an area of about 45,000 sq.ft. It
is responsible of supplying Frito Lay products to the entire north-eastern states. The stock of
goods is sent via railway and highway through big trucks to the depot. . The C&F agents
supply goods to the other states via roadways.
According to the requirement of the distributors sends draft to the CNF and then after
receiving the draft the CNF sends the required amount of products to the distributors. Within
Guwahati Metro Distributors purchases the highest amount of Frito Lay products. The CNF
makes the payment in monthly basis to the company.
There are mainly three type’s distributors in Frito Lay which are as follows:
1. Wholesale Distributor : - It looks after the wholesale market within a specific
geographical area allotted by the company.
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2. Traditional Trade Distributor : It looks after the retail market of a particular
geographical region.
3. Super Stockiest : These are those distributors which supply products to retail
outlets and also to sub distributors. The sub distributors cannot order or get the
delivery from CNF; the super stockiest give them the supply. These super
stockiest also operate within a specific geographical area allotted by the
company.
In some cases the super stockiest may supply to wholesale outlets but it is in rare
occasions.
In Guwahati Jagiroad,Sualkushi,Mirza,Chaygaon,Changsari,Baihata chariali etc. The
Roaming Route Service delivers the consignment to those sub distributors.
AREA STUDIED FOR THE PROJECT
DISTRIBUTION NETWORK OF FRITO LAY IN GUWAHATI AND RURAL
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Guwahati (Rural)
9th mile,sonapur ,khetri,jagi
road
mirja,vijayanagar
saraighat,iit-g,changsari,
baihata chariali
sualkuchi,singimari,kalita
kuchi
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COMPANY FACTORY
C & F
DISTRIBUTOR (WS)
DISTRIBUTOR (SS)
DISTRIBUTOR (TT)
WHOLESALER
RETAILER
SUB DISTRIBUTOR/ SUBSTOCKIST
CONSUMER
DISTRIBUTION PRACTICES OF FRITO-LAY IN GUWAHATI RURAL.
The distribution practices follow the two processes of delivery-
1. Ready stock
2. Pre sale
Ready stock:
The goods are delivered without any prior booking from the outlets. The vehicle is
stuffed with as much as goods possible and the product is supplied on the basis of ready
order. The van man himself is the merchandiser who is accompanied by the RSA. It is
mandatory in case of Ready Stock to cover 25 outlets per day, whatever may be the sales
volume. Many a times some of the products or a particular product flavour gets finished
before all the outlets of a particular beat gets completely covered. This results in the
dissatisfaction of those retailers.
Pre sale:
In this process, the RSA takes the order from the outlets prior before the delivery is made.
The scheme is communicated to the retailer about when the delivery will be madeon basis of
order order. The goods are supplied on the day according to the prior booking. The delivery
is done by 2 people- a van man and sub –stockist and the goods must reach retail outlets in
that particular day.
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STRATEGIES FOLLOWED BY FRITO-LAY, GUWAHATI(RURAL)
a) EVERY OUTLET IS FRITO-LAY’S VALUEABLE CUSTOMER
Frito-Lay considers every outlet as its important customer irrespective of the outlet
being small or big. The primary objective is to make Frito-Lay’s products available in
every outlet of Guwahat(RURAL). This strategy will help in dominating 100% chips
market share of Guwahati(RURAL)inspite of challenges from local players.
b) PUSH AND PULL STRATEGY
Frito-Lay pushes new products in the market with schemes and discount in the
market. They apply promotional activities to pull up the products to a good position in
the market.
c) DISPLAY OF ITEMS
Frito Lay gives strong emphasis on the visibility of the products in the outlets. It is believed that the more visibile a product is, the more it is sold. Therefore Frito Lay very often implements scheme related to the display of items which have been very successful. Proper merchandising of the products is done along with the delivery to ensure effective display to attract more customers. Frito Lay follows the saying,” Jo Dikhta hai who Bikta Hai”.
d) UNDERSTAND THE CUSTOMER EXPECTATIONS
Frito-lay main focus is on knowing customers’ expectations. They always try to know
about the likes and dislikes of the customers and try to fulfil their expectations with
their level best.
e)POTENTIAL SUB STOCKIEST
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Frito-lay emphasizes more on the number of outlets covered everyday and focuses
more in servicing maximum number of outlets rather than concentrating on the sales
volume. It is utmost important for the company to reach each and every retailer in
every nook and corner of the city. Providing service to a larger number of retailers
and thus reaching a greater section of people is the basic aim of Frito-lay in terms of
selling and for this they are always looking for potential sub stockists so to penetrate
more in the rural market.
f) REPLACEMENT OF THE DAMAGES: Frito-lay follows another strategy of
replacing the damaged items of the product. Although, the packaging of Frito-lay
product is of superior quality, yet due to various reasons, sometimes the packets are
found to be torn or damaged. Also, the company replaces those items whose date of
expiry is close at hand which is around 4 months from date of manufacturing.
However, the packets damaged by rodent are not replaced. It is an important strategy
as it helps the retailers to recover the money invested in the damaged items and as
such the losses of the retailer are decreased.
g) ADDITIONAL SERVICES: Frito-lay provides additional services to the retailers in
the form of Racks and Hangers. The racks are of several types depending on the
design and capacity to keep the products. The outlets whose sales are very high are
generally provided with large racks whereas, the shops with low sales are provided
with hangers or small racks . However, most of the retailers prefer to keep the ANTI-
RODENT racks. The ANTI-RODENT racks are however not available in the
market . And this is creating problem of most of the retailers is that their products are
damaged by the rodents and as such they have to incur a huge loss. Taking this issue
into consideration, the ANTI-RODENT racks are again in consideration by the
company to provide a safer storage for the products. However, the disadvantage of
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these racks is that they are closed racks and that their visibility is less than the other
racks.
h) SCHEMES AND DISCOUNT
Frito-lay introduces time to time schemes and discount to attract the retailers. Such
schemes and discount helps the company in entering new outlets and increasing sales
volume of existing outlets too. Attractive and profitable schemes are generally
produced to retain the loyalty and trust of the retailers on the company. It motivates
the retailers to sell more of the products as their expectation level rises. Its success
brings high profit for the company as well as to the distributors, wholesalers as well
as the retailers.
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SWOT Analysis of Frito-Lay
Strength:
Frito-Lay enjoys a strong brand image and reputation in the snacks market.
Frito-Lay products have good demand in the local markets including rural market.
It has a variety of product lines from chipps as well as snacks.
Weakness:
Lack of information about the local customers’taste preferences in the Indian rural
market.
Inability to deliver the products in proper quantity to meet the demand in the local
market.
Lack of a proper journey plan of the base level employees
Opportunities:
Frito lay can set up distribution channels in the rural market of Assam with proper
focus on big retailers as well as retailers selling high quantities of other brands.
Frito lay can set up some potential sub stockiest in rural market having good hold
over outlets of those areas thus increasing sales and market share.
Threat :
Many big brands like ITC,perfetti,Parle are also entering the market with quality
products and different schemes and policies for the retailers and distributers thus
causing threat to frito-lay market share.
Many local brands like Zing,Diamond,krazzykure etc are also entering the rural
market by providing greater profit margin to the retailers and distributers and also
with credit facilities in some cases hence reducing the market share of fritolay.
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3.1 A BRIEF DESCRIPTION ABOUT THE PROJECT.
The project is all about the distribution channels, how they work in the rural markets of
Guwahati. It tries to explore all the aspects relating to the distribution channels and their
working strategies. The study is based on the availability of Frito Lay products in rural
market and studies the factors influencing the buying behaviour of the retail outlets of the
Frito Lay products from its distributors.
Initially I was assigned to work with Metro trading Agency (super stickiest) and was
asked to check the availability of the various competing brands in the rural outlets. It has
been seen that there are a number of local brands which are making a mark in the minds of
the retailers by giving them better schemes and profit margin in comparison to Frito Lay.
The brands like Diamond, Zing, Krazy kure, Parle Fultoss and other local brands are entering
the markets strongly and to a certain extent they are being able to generate a considerable
demand for their products.
I was given the opportunity to visit most of the rural markets of Guwahati and study
the present scenario of the services availed by the distributors of Frito Lay and also those of
other competing brands.
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CHAPTER: 3 ABOUT THE PROJECT.
3.2 SUBJECT, OBJECTIVES, SCOPE & LIMITATION OF THE PROJECT
SUBJECT: A Study on the Distribution Channels of Frito lay with reference to
Guwahati (Rural) and perform a SWOT analysis on it.
OBJECTIVES:
1. To understand the present scenario of the services provided by Frito Lay to the
retailers in the rural market of guwahati.
2. To identify the strengths and weaknesses of the distribution channels in Guwahati
(rural).
3. To evaluate the satisfaction level of the retailers regarding the margin provided by
Frito Lay.
4. To map the competition in the market with respect to the services provided by the
other brands in the rural market.
5. To suggest some measures if possible to the distribution channels to improve
further.
SCOPES:
1. To learn about the strategies applied by other brands
2. To study whether the potential sub stockiest will help in raising the market share
of Frito Lay in the rural markets.
3. To know about the difference in the mindsets of the retailers and consumers of
urban and rural markets.
4. To know about the future scope of Frito Lay with respect to the competition
provided by the local players.
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LIMITATIONS:
While approaching the respondents mainly the retailers for collecting
data, most of them were reluctant and as were initially hesitated to give any
information.
The authenticity of the data given by the respondent was not guaranteed as the
seriousness of the respondents while filling up the questionnaires was not known.
The study was limited only to selected parts of the Guwahati(rural)area .
Time Constraint for the project to be completed.
Non-cooperative approach and rude behaviour of the respondents. A number of
retailers did not respond positively at all.
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4.1. RESEARCH PLAN
The type of research used in the project is Descriptive cross-sectional study that included primary data,observations and conducting interviews with the retailers.Primary data is collected through questionnaires while statistical tools like Pie chart and bar diagram are used to analyse the data.The research is Cross-sectional as collection of information from sample size is only once.
4.2. SOURCES OF DATA
Primary data
For the research the primary data is collected mainly through questionnaire and personal
interviews.The collection of primary data is quite time consuming as well as a costly affair
Secondary data:
The secondary data were collected from internet, mainly from some marketing research
agency’s website. (Mentioned in the Bibliography)
SAMPLING PLAN
Sample design is a definite plan of obtaining some items from the whole population. The
sample design used in this project is Simple random sampling and judgemental sampling.
These sampling techniques are used Sampling has been used for the sake of convenience of
data and to minimize the wastage of time.
Sampling Unit: Retail outlets.
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CHAPTER: 4: RESEARCH METHODOLOGY.
Sample size: 50 retail outlets
Sampling procedure: Observation, questionnaire, personal interaction and secondary data
4.5. RESEARCH APPROACH AND RESEARCH INSTRUMENT
1)Questionnaire: A set of Questionnaire were designed to understand retailers’ views on the
distribution channel of Frito Lay
2)Personal interview:Interaction with the retailers was done to know about their views on the
distribution channel of Frito lay in the guwahati (rural) market.
4.6 ANALYSIS TECHNIQUE:
The data are analyzed with the help of Microsoft Excel and has been presented with the
help of graphical method like Pie charts, Bar-diagram and tables to interpret the information
attained from them.
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5.1. Awareness among the retailers about all the Frito Lay products.
Opinion Respondents Percentage (%)
Yes 37 74
No 13 26
TOTAL 50 100
74%
26%
respondents
yesno
Interpretation: From the above pie diagram it is seen that around 74% of the respondents are totally aware of all the products of Frito Lay while around 26% respondents are not much aware about all the products especially Aliva and Quaker oats.
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CHAPTER: 5 ANALYSIS AND INTERPRETATIONS.
5.2. Opinion about the varieties of Frito lay products stored by the retailers.
Opinion Respondents Percentage (%)
LAYS,UNCLE CHIPPS,KURKURE 33 66
CHEETOS 10 20
ALIVA 5 10
OATS 2 4
TOTAL 50 100
Interpretation: from the above histogram we have seen that around 66% of the respondents store Lays, Uncle chipps and kurkure as a whole while around 20% store cheetos with only 10% storing aliva and 4% storing oats.
Page | 38
LAYS,UNCLE CHIPPS,KURKURE
CHEETOS ALIVA OATS0
10
20
30
40
50
60
70 66
20
104
percentage
5.3. Opinion of the respondents about importance of various promotional schemes by Frito Lay.
Opinion Respondents Percentage (%)
racks and hangers provided 12 24
more profit margin 6 12
credit policy 18 36
discounts on bulk purchase 14 28
50 100
racks
and han
gers
provid
ed
more pro
fit marg
in
credit p
olicy
discounts
on bulk purch
ase05
10152025303540
importance of promotional schemes
percentage
Axis Title
Axis Title
Interpretation:From the above histogram it is seen that24% among retailers prefer racks and hangers are important promotional schemes,while 12% feels more profit margin more important,36% feels credit policies while 28% feels discount on bulk purchases as more important promotional schemes.
Page | 39
5.4. Opinion of the respondents on the promotional schemes of other brands.
Opinion Bingo zing diamond parle fultoss
racks and hangers provided 16 0 0 12
more profit margin 0 46 50 2
credit policy 23 0 0 0
discounts on bulk purchase 11 4 0 0
neutral about it 0 0 0 36
TOTAL 50 50 50 50
bingozing
diamondparle fultoss
05
101520253035404550
Chart Title
racks and hangers providedmore profit margin credit policydiscounts on bulk purchaseneutral about it
Interpretation:From the above chart it is seen that out of 50 respondants,16 respondents like racks and hangers of BINGO,while 23 like credit policy,while 11 like discount policies on bulk purchase.In case of ZING 46 respondents like their profit margin scheme while 4 like their discount on bulk purchase scheme.While in case of DIAMOND 50 respondants like their profit margin schemes.While in case of PARLE FULLTOSS,12 like their hanger and rack schemes,while 38 are neutral about it as its availibily is less in the market.
5.5. Rankings given by the respondents about the various brands according to consumer preference.
Page | 40
brands respondents Percentage (%)
frito lay 22 44
bingo 17 34
zing 7 14
diamond 4 8
parle fultoss 0 0
others 0 0
TOTAL 50 100
frito lay bingo zing diamond parle fultoss others
44
34
14
8
0 0
Ranking by customer preferenceSeries1
Interpretation:From the above histogram it is seen that customer preference for Frito lay products is about 44%,while for ITC Bingo its about 34%.and that of Zing is about 14% and that of Diamond is about 8% whereas that of other products is not known due to their irregular availability in the market.
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5.6. Opinion about the satisfaction level of the respondents on the frequency of visit by the RSA.
Opinion respondents Percentage (%)
not at all satisfied 0 0
partially satisfied 6 12
Neutral 7 14
Satisfied 33 66
highly satisfied 4 8
50 100
not at a
ll sati
sfied
partiall
y sati
sfied
neutra
l
satisfi
ed
highly
satisfi
ed
0
5
10
15
20
25
30
35
0%6% 7%
33%
4%
respondents
Interpretation:It is seen from the above bar that around 12% retailers are satisfied by the frequency of visit of RSAs while 14% are neutral about it.66% are satisfied about it while around 4% are seen as highly satisfied.
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5.7. Opinion about the satisfaction level of the respondents on the approach of the RSAs.
Opinion respondents Percentage (%)
not at all satisfied 0 0partially satisfied 18 36
Neutral 3 6
Satisfied 24 48
highly satisfied 5 10
TOTAL 50 100
not at all satisfied partially satisfied neutral satisfied highly satisfied0
10
20
30
40
50
60
0%
36%
6%
48%
10%
opinion about the approach of RSA percentage
Interpretation: From the above diagram it can be observed that about 36% of respondents are partially satisfied with the approach of the RSA, while 6% are neutral,48% are satisfied, and about 10%are satisfied highly by their approach.
5.8. Rating on frito lay in terms of margin provided.
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ratings respondents Percentage (%)
1 (very high) 0 02 0 0
3 0 0
4 13 26
5 23 46
6 14 28
7 (very less) 0 0
TOTAL 50 100
1 (very high)
2 3 4 5 6 7 (very less)
0
5
10
15
20
25
respondents
respondents
Interpretation:It can be seen that on the basis of margin provided by Frito lay on basis of ranking around 26% find that it is near very good while 46% and 28% respondents mindset inclines towards rating of 7i.e very less.
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5.9. opinion on whether Frito lay provides good margin based on its quality and demand.
Opinion respondents Percentage (%)
strongly disagree 0 0
Disagree 4 8
neither agree nor disagree 14 28
Agree 28 56
strongly agree 4 8
50 100
disagree8%
neither agree nor disagree
28%
agree56%
strongly agree8%
Chart Title
Interpretation:it is seen that on the basis of margin provided by Fritolay on its quality and demand 8% stongly agree to it ,while 56% agree to it,while 28% neither agree nor disagree to it and around 8%disagree to it.
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5.10. Rating on all the brands in terms of margin provided.
Opinion Frito lay Bingo parle fultoss zing,diamond
very good 0 0 0 27
Good 31 27 17 18
moderately good 16 23 33 5
low margin 3 0 0 0
too low margin 0 0 0
TOTAL 50 50 50 50
Frito lay Bingo parle fultoss zing,diamond
0 0 0
27
31
27
17 1816
23
33
53
0 0 00 0 0
Chart Titlevery good good moderately goodlow margin too low margin
Interpretation:while on the basis of margin provided by all brands available,around 27 respondents feel that Zing,Diamond provide very good margin,while around 3 respondents feel that Fritolay provides low marhin that could be increased.
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5.11. Rating of all brands in terms of their frequency of visit.
Ratings respondents Percentage
1 (high) 0 02 0 0
3 14 28
4 15 30
5 11 22
6 7 14
7 (low) 3 6
50 100
1 (high)
2
3
4
5
6
7 (low)
0 5 10 15 20 25 30 35
0
0
28
30
22
14
6
percentage
Interpretation:While rating on the basis of frequency of visit for all brands as a whole,around 28% and 30% feels that frequency of visit is near to good and average,while 22% and 14% feels it near low while 6% feels it to be very low.
5.12. Rating of all brands in terms of approach by sales agents.
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ratings Respondents Percentage
1 (high) 3 62 13 263 21 424 11 225 2 46 0 0
7 (low) 0 050 100
1 (high) 2 3 4 5 6 7 (low)0
5
10
15
20
25
30
35
40
45
percentage
percentage
Interpretation: On the basis of approach by the sales persons,6% feels approach is very good,while around 26% and 42% feels the approavh is near to good,while around 22% and 4% feels that could be improved.
SWOT Analysis of Frito-Lay Disribution channel(Rural)
Strength:
Frito-Lay enjoys a strong brand image and reputation in the snacks market.
Frito-Lay products have good demand in the local markets including rural market.
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It has a variety of product lines from chips as well as snacks.
Good approach by the RSAs towards retailers and sub-stockiest.
Racks and Hangers are provided to retailers to display the products.
Weakness:
Lack of information about the local customers’ taste preferences in the Indian
rural market.
Inability to deliver the products in proper quantity and time to meet the demand in
the local market.
Lack of a proper journey plan of the base level employees.
No credit policies for the retailers and average margin provided.
Opportunities:
Frito lay can set up distribution channels in the rural market of Assam with proper
focus on big retailers as well as retailers selling high quantities of other brands.
Frito lay can set up some potential sub stockiest in rural market having good hold
over outlets of those areas thus increasing sales and market share.
Threat :
Many big brands like ITC, perfetti, Parle are also entering the market with quality
products and different schemes and policies for the retailers and distributers thus
causing threat to Frito-lay market share.
Many local brands like Zing, Diamond, krazzykure etc are also entering the rural
market by providing greater profit margin to the retailers and distributers and also
with credit facilities in some cases hence reducing the market share of Frito-Lay.
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FINDINGS FROM MARKET SURVEY:
1. The average time required per shop for delivery of the items is quite high for which
the RSAs have to work for a longer period of time. Due to this the market leaving
time is very late.
2. The rains also causes hindrance in the sales as movement is not possible.
3. As a result of the market leaving time being late, sometimes the RSAs could not
finish their paper works.
4. It is observed that most of the shops are serviced at evening hours for which the
retailers find it difficult to purchase as it is the peak hours of customers and there is
heavy rush in the outlets.
5. In case of non mechanized vehicles it takes more time to reach the market and more
often there is a delay in the market hitting time.
6. Sometimes due to lack of stock in the godwon the delivery is not made as per order
for which the retailers get offended.
7. The RSAs are hardly interested to open new outlets as they prefer to service in the
existing outlets.
8. At times it is observed that some retailers are not aware of all the products of Frito
Lay.
9. Most of the retailers prefer to purchase Frito Lay product on credit whereas only a
few retailer pay in cash.
10. Ready stock requires more time in servicing the outlet then in Pre Sell for which they
are not able to cover all the outlets in that specific beat.
FINDINGS FROM QUESTIONNAIRE:
Page | 50
CHAPTER 6: FINDINGS AND SUGGESTIONS
1) It is seen that around 74% of the respondents are totally aware of all the products of Frito
Lay while around 26% respondents are not much aware about all the products especially
Aliva and Quaker oats.
2) We have seen that around 66% of the respondents store Lays, Uncle chipps and kurkure as a whole
while around 20% store cheetos with only 10% storing aliva and 4% storing oats.
3) It is seen that24% among retailers prefer racks and hangers are important promotional
schemes,while 12% feels more profit margin more important,36% feels credit policies while
28% feels discount on bulk purchases as more important promotional schemes.
4) Tt is seen that out of 50 respondants,16 respondents like racks and hangers of
BINGO,while 23 like credit policy,while 11 like discount policies on bulk purchase.In case
of ZING 46 respondents like their profit margin scheme while 4 like their discount on bulk
purchase scheme.While in case of DIAMOND 50 respondants like their profit margin
schemes.While in case of PARLE FULLTOSS,12 like their hanger and rack schemes,while
38 are neutral about it as its availibily is less in the market
4)On the basis of approach by the sales persons,6% feels approach is very good,while around
26% and 42% feels the approavh is near to good,while around 22% and 4% feels that could
be improved.
5)It is seen that customer preference for Frito lay products is about 44%,while for ITC Bingo
its about 34%.and that of Zing is about 14% and that of Diamond is about 8% whereas that
of other products is not known due to their irregular availability in the market.
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6)It is seen that around 12% retailers are satisfied by the frequency of visit of RSAs while
14% are neutral about it.66% are satisfied about it while around 4% are seen as highly
satisfied.
7) It can be observed that about 36% of respondents are partially satisfied with the approach
of the RSA,while 6% are neutral,48% are satisfied,and about 10%are satisfied highly by their
approach.
8)It can be seen that on the basis of margin provided by Frito lay on basis of ranking around
26% find that it is near very good while 46% and 28% respondents mindset inclines towards
rating of 7i.e very less.
9)It is seen that on the basis of margin provided by Fritolay on its quality and demand 8%
stongly agree to it ,while 56% agree to it,while 28% neither agree nor disagree to it and
around 8%disagree to it.
10)While on the basis of margin provided by all brands available,around 27 respondents feel
that Zing,Diamond provide very good margin,while around 3 respondents feel that Fritolay
provides low marhin that could be increased
11)While rating on the basis of frequency of visit for all brands as a whole,around 28% and
30% feels that frequency of visit is near to good and average,while 22% and 14% feels it
near low while 6% feels it to be very low
12) On the basis of approach by the sales persons,6% feels approach is very good,while
around 26% and 42% feels the approavh is near to good,while around 22% and 4% feels that
could be improved.
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From the study I have done, it has been seen that there are a lot of issues relating to the distribution channels. Taking into account those issues, I would like to make a few recommendations which could probably benefit the company as well as its distributing channels.
1) In most of the cases I have found that there is a great demand of good margins
from the retailers. They are very specific about the profit margin and discounts
they have been receiving from Frito Lay and the other competing brands. Most of
the retailers opine that the margins of the other brands especially local ones are
better than those provided by Frito Lay. So I recommend the company to think
about the mater and come up with some good margin which will attract the
retailers very much.
2) The RSAs helps the retailers in arranging the products at the store but it consumes
some time. Training programs for RSA should be given in the form of some
practice of arranging the products in less time and also train them in such a way
that they learn how to promote a product. Promotions for Aliva and Quaker oats
could also be done through the RSAs.
3) Company personnel should keep watch and ensure the availability of all the
products in the super-stockiest, so that products could be available during all the
seasons, as some retailers complain that products are not available to them in
some period of time.
4) In most of the cases it is found that the packets get air leaked too soon. Most of
the retailers have asked for more quality packaging as they are not happy with the
packaging of currently available products. I want to recommend the company to
look after such kind of problems.
5) In most of the cases it has been noticed that the retail outlets in rural areas do not
want to store Quaker Oats. So it is recommended that the company must
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CHAPTER 7: RECOMMENDATIONS AND CONCLUSION.
implement some good quality promotional activities and advertisements in order
to make the product popular among the customers and the consumers.
6) The retailers want attractive racks in their outlets. They opine that the consumers
like to buy products from a rack which is good looking. So the company should
arrange to deliver more new racks with attractive colours and the brand image to
the retailers which will help the company to expand into more retail outlets.Also
some retailers prefer anti- rodent racks rather than the regular racks as they suffer
financial losses due to rodents,so company should consider attractive as well as
anti rodents racks which ensures the retailers of safe storage.
7) The company in order to improve its efficiency in the distribution process should
look upon timely delivery of products to the retailers,ensure theta schemes are
properly conveyed to the retailers and also if possible look after the profit margin
given so that it can cope with its competitors .
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CONCLUSION:
In the study done by me, I have come across many problems and prospects of the distribution
channels of Frito Lay. The customers of Frito Lay are very much inclined towards the
aspects like profit margin, discounts etc. This problem has aroused because of the margins
provided by the other local brands.
There are some other aspects also, which the company should look through in order to
remain healthy in the market of snacks and chips.
From my personal experience all throughout these two months, I have recommended on
some important aspects of the distribution channels. I hope it will help the organisation to
some extent.
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BIBLIOGRAPHY
Websites Visited:
A)www.pepsicoindia.co.in
B)www.wikipedia.com
Books Referred:
a. 1) Philip Kotler, Kevin Lane Kellar, Abraham Koshy and Mithileshwar Jha, Marketing
Management (13th Edition). Pearson Education
b. Naresh K. Malhotra and Satyabhushan Dash , Marketing Research (Sixth Edition). Pearson
Education
Page | 56
Page | 57
ANNEXTURE 1
Questionnaire
Retailer name:...........................................................
Location:....................................................................
1) are you aware of the products of Frito-Lay?
a) yes
b) no
2)Which Frito-Lay product do you store?
a)lays
b) uncle chips
c)kurkure
d)cheetoz
e)aliva
f)quaker oats
3) which product/brand do you store besides fritolay?
a)bingo
b)zing
c)diamond
d)parle fulltoss
e)stopnot
f)others(specify)
4) Are any promotional schemes run by fritolay?
..................................................................................
5)Are any promotional schemes run by other brands?
...................................................................................
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6)please rank different brands of chips based on customer demands?(1-highest demand,2-moderately
high,3-average demand,4-low demand,5-no demand)
a) fritolay
b) bingo
c) stopnot
d) parle fulltoss
e) others(zing,diamond,krazykure etc)
7) Are you satisfied with the distribution system of Frito-Lay in terms of frequency of visit?
---Dissatisfied----2------3------4------5-------6--------7(highly satisfied)
8) Are you satisfied with the approach of the sales agent?
_1_ dissatisfied----2------3------4------5-------6--------7(highly satisfied)
9) Rate Frito-Lay in terms of margin provided
_1_ dissatisfied----2------3------4------5-------6--------7(highly satisfied
10)Fritolay provide good margin based on its quality and demand
1................2.........................3.......................4.......................5
Strongly disagree neutral agree strongly agree
Disagree
11) Rate all brands in terms of margin provided?1-very good,2-moderately good,3-good,4-low margin,5-
no margin
a)fritolay
b)ITC
c)Perfetti
d)Parle fulltoss
e)others(zing,diamond)
12)Rate all brands in terms of frequency of visit?
_1_ dissatisfied----2------3------4------5-------6--------7(highly satisfied
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13)Rate all brands in terms of approach by sales agent?
_1_ dissatisfied----2------3------4------5-------6--------7(highly satisfied
14) Do you have any suggestion for Fritolay?
...............................................................................................
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ANNEXURE-2 Weekly Progress report
Name: Nipul Kumar Sarma Roll No: 40/D/2011
Company: PepsiCo (Frito Lay division)
Project Title: A study on the Distribution channel of Frito Lay with reference to Guwahati(rural)
marke and to perform a SWOT analysis for it.
Faculty Guide: Mr. Sanjib Raj Company Guide: Mr.Hitesh Das.
Work assigned Work Done REMARKS (If any)Week 1
Sales and Distribution related tasks
Engaged in the sales job in the 9th
mile,jorabat,highway etc area as assigned by the Sales Officer.
Week 2
Sales and Distribution related tasks
Engaged in the sales job in the mirza,vijayanagar,palashbari area as assigned by the Sales Officer
Week 3
Sales and Distribution related tasks
Engaged in the sales job in the jagiroad,khetri,highway area as
assigned by the sales officer.
Week 4
Sales and Distribution related tasks
Engaged in the sales job in the changsari,baihata chariali,IIT area
as assigned by the Sales Team Leader
Week 5
Sales and Distribution related tasks
Engaged in the sales job in sualkushi,bamundi,dadara,kalitaku
shi and adjacent areas.
Week 6
To Collect data about the current scenario of
the distribution channels
Visited the retailers of 9th
mile,khetri,jagiroad etcI was able to collect the detailed data as
required by the Company
Week 7
To Collect data about the current scenario of
the distribution channels
Visited changsari,kalitakushi,baihata,sualkushi,
mirza etc to collect data from the retailers.
Week 8
Analysis of the collected data
Analyzed all the data and completed the project
Date: Signature of Student.
Page | 61
Name and address of the outlets visited for the survey
Sl no Outlet name Address
1 K.P, store Jorabat
2 Amarjyoti store Jorabat
3 Baba loknath pan shop Jorabat
4 M.D.store Jorabat
5 Chandan catering 9th mile
6 Thakuria store Mirza
7 Dheraj store Mirza
8 Bitu hiru teleservice Mirza
9 Sarma store Roybari
10 Maa store Bogora
11 Ali store Bogora
12 Sarma store Airforce gate
13 Deep pan shop Raibari
14 Uttam pan shop Vizayanagar
15 Tarali store Vizayanagar
16 Prabin pan bhander Baihata chariali
17 Manashi store Baihata chariali
18 Maa store Baihata chariali
19 Kalita food bhander Baihata chariali
20 Jaymati store Baihata chariali
21 Hakim ali store Changsari
22 Tulika store Chansari
23 g.store Changsari
24 Bhai bhai store Changsari
25 Saikia store Changsari
26 New Ramakrishna store Khetri
27 Dutta store Khetri
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28 Kamini store Khetri
29 Biki store Khetri
30 Singha sale point Khetri
31 Hotel abhiruchi Topatoli
32 Rubi store Jagiroad
33 Hotel swagatam Jagiroad
34 Dipika bhander Jagiroad
35 Pramila store Jagiroad
36 Sahid pan bhander Kalitakushi
37 Saikia restaurant Kalita kushi
38 Gokul store Kalita kushi
39 Mehek pan bhander Kalita kushi
40 Mandeep store Sualkushi
41 Raju store Sualkushi
42 Dhan store Sualkushi(bangsar)
43 Biswajit store Sualkushi(bangsar)
44 Pushwak store Sualkushi(bamundi)
45 Barasha store Sualkushi(bamundi)
46 Nilomoni store Sualkushi
47 Novelty Sualkushi
48 Pallab store Dadara
49 Medhi store Dadara
50 Bhaiti store Dadara
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