Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
Outlet Mapping for and Market Potential of PepsiCo
In the Outskirts of Greater Hyderabad
A. Suryanarayana* and Roshee Lamichhane**
The 50 billion soft drink (especially carbonated beverage) industry though
growing at 10-11 per cent, does not still cover a significant portion of
Indian beverage market and is presently dominated by Coke and Peps ,in
that order. An attempt is made in this Paper to understand the geography
of Hyderabad, the factors that are fueling the growth of the city and its
burgeoning outskirts, and to assess Pepsi’s growth prospects through
market penetration and its chances for capturing the untapped market
through outlet mapping of its market share. For this, an elaborate field
survey was conducted to study the retailer's view of the current market,
future trends, and consumer behavior patterns in order to be able to make
recommendations based on the research findings.
1. Introduction
India has over 1.21 billion population of which the middle class segment constitutes
150 million and is growing at the rate of 7-8% every year and expected to be 267
million in five years time as per National Council of Applied Economic Research
(NCAER). Soft drink industry (especially carbonated beverage) still does not cover a
significant portion of Indian beverage market. The per capita consumption of soft
drinks in India is three bottles per annum which is quite low compared to many other
developing countries and represents considerable potential for consumption to grow.
When segmented on the basis of place of consumption as against type of products,
premises i.e., restaurants, grocery shops, railway stations, and cinemas account for
80% and households account for the remaining 20%.
This Paper focuses on developing an understanding of the current market and
identification of the potential markets of Pepsico in the outskirts of Hyderabad. A
primary research was conducted through administration of structured questionnaires
to various retailers and consumers in the markets specially identified for this
purpose. Nine market areas viz., Uppal, Shamshabad, Kukatpally, Medchal,
Rajendranagar, Shameerpet, Kondapur, Manikonda, and Madhapur areas were
covered in the process of mapping the market share of the Pepsi products by
covering 248 outlets where Pepsi is already stocked or those that have the potential
for placing it. For instance, upcoming construction sites, mushrooming new
apartments and villas coming up in the suburb areas of Hyderabad could be the
potential places for establishing a new outlet and to place Pepsi.
The Paper incorporates the main findings emerging from a detailed analysis of the
performance of PepsiCo and probes into opportunities for increasing its market
share, presence, and visibility in these rural and semi-urban areas of Hyderabad. It
also identifies various problems that are impeding the growth of Pepsi and suggests
_____________
*Prof. A. Suryanarayana, Department of Business Management, Hyderabad, India,
e-mail: professorsuryanarayana@gmail.com
**Ms. Roshee Lamichhane, Manager [Business Development], CG-Group, CG-Towers, Kathmandu,
Nepal, e-mail: Roshee.Lamichhane@chaudharygroup.com
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
measures to overcome the same keeping in mind aspects such as population and
other commercial activities.
2. Literature Review
The Indian consumer sector is gaining dynamic momentum both in the near and
long term. It has a number of favourable domestic demand credentials and factors in
its favour including a youthful population, massive domestic consumption base,
rapid middle-class expansion, and these are set to keep multinational investments,
particularly in the consumer-facing sectors, intense. Headline Industry Data
projections for the year 2015 from the base year 2011 are as follows: Food
Consumption Growth at +8.7% to +42.4% Alcoholic Drink Value Growth at +12.4%
to +62.2%; and Soft Drink Value Growth at +11.6% to +55.9%.
The 50-billion soft drink industry is growing at 10-11% annually. In India, soft drink
industry is dominated by Coke and Pepsi. Their total share of soft drink market is
95% directly or through franchises. Rest is divided among local players. Cola and
non-cola drink are two distinct segments of the market. The cola segment claims a
share of 62% while the non-cola segment includes soda, clear lime, mango, and
orange flavours. While soft drinks and aerated drinks were considered products of
the affluent and middle class till recently, such segregation is no more valid as they
are now being consumed by all having the capacity to purchase a drink. NCEAR
study shows that 91% of the sales are made to lower, middle, and upper middle
classes.
Hence, producers of branded soft drinks including MNCs and regional players are
driven to chalk out new and bold strategies for targeting and luring the rural
consumers in a big way. However, penetration rates are still low presenting a
tremendous opportunity in the huge untapped market. The marketers need to treat
the rural consumer differently from their urban counterparts who are economically,
socially, and psycho-graphically different while developing the strategies. Despite the
differences, the potential that is present in rural markets is humongous. The
consumption of soft drinks, which is now only three ounces per person compared to
200 ounces per person in Europe and 300 ounces per person in North America, is
expected to witness a manifold increase. Though PepsiCo holds over 40% overall
share in the Indian market at present, the fact that an Indian customer has to work
for 1.5 hours to be able to buy a bottle of Pepsi poses a greater challenge to market
soft drinks in rural areas with masses having low purchasing power.
 Consumer habits and practices in the outskirts/ semi-urban/ rural areas:
Soft drinks are generally bought on impulse with little involvement of purchasers and
the market is characterized by brand loyalty. If a rural consumer who wants to
quench his/her thirst does not get cold drinks, might easily go for substitutes such as
lassi, coconut water, or packaged/plain water that are readily available in rural
market making it ery difficult to establish niche in one market or age group. While
consumers prefer convenient and economical products, there is no aversion to
consumption of soft drinks of any age but majority consumers fall under the age
group of 20-40.
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
3. Outlet Mapping in the Outskirts of Hyderabad
Outlet mapping is the process of finding out where people can buy products. It also
includes finding out the product needs of local people. In fact it is the need
assessment that can identify the geographical areas or communities that have the
greatest needs of a particular product along with a study of competitors. For our
study, competitors imply Coke and other local brands like RC Cola, which is also
making its presence in rural market. Identification of competitors‟ presence enables
decisions regarding placing Pepsi in an outlet nearby. Strategic decisions regarding
improving store visibility in terms of branding the outlet and PoP visibility also fall
under outlet mapping when the existing outlets are not fully functioning. Though in
India, the growth rate of Pepsi has been high in the recent past as compared to
Coke, the relative market share is still low. Pepsi still has a long way to go to beat
the market leader Coke, which is still going strong with its long history and powerful
brands like Thumps up. The share of Pepsi in the total beverage market of
Hyderabad is very less compared to Coke which has almost 60% of market share.
This survey is an effort to find out the potential market for Pepsi in the outskirts to
make forays into and increase its market share. This Paper focuses on the rural
sales promotion touts and mapping of outlets in the outskirts as a result of the
survey carried out in the months of August, September, and October 2012.
 Overview of the Real Estate Sector in Hyderabad
The major growth drivers of Hyderabad are established knowledge-based industries
such as IT/TES, Biotech, pharmaceuticals, construction, and manufacturing. The
State government undertook development of about 13000 sq.km of area towards the
western periphery of the city as a dedicated IT cluster. This cluster, popularly known
as Hi-tech City, has all major offices. The Rajiv Gandhi International Airport at
Shamshabad with express connectivity with Outer Ring Road has fuelled large scale
public private investments in the surrounding areas. Similarly Outer Ring Road
(ORR) itself has been instrumental in defining the future direction of growth.
Currently all areas 10-15kms around ORR is also witnessing large scale
investments.
In order to be able to identify the potential market for Pepsi, we need to understand
the geography of Hyderabad and the factors that fuel its growth and its surrounding
village areas. The outskirts of the twin-cities of Hyderabad and Secunderabad are
growing at a great rate than those of urban areas as there is massive exodus of
people migrating from other neighbouring districts such as Krishna and Warangal.
With more and more income levels at their disposal, their discretionary expenditure
and consumption habits are also changing over a period of time. Many factors have
propelled the demand of real estate in Hyderabad such as: (i) Boom in the IT
industry has brought several concomitant opportunities in all sectors of real estate
industry and (ii) The proactive initiatives of the government in developing
infrastructures like Outer Ring Road, Special Economic Zones (SEZs).
PSRs played significant role as they were the one to pick the orders and were given
the route planners and the particulars of the products, flavours, and quantities along
with the billing materials. While the vans cover the entire route, PSRs do the
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
merchandising and sales against cash, which is a unique feature of Pepsi as it does
not entertain credit transactions. The routes are allocated on the basis of individual
areas and the demand of the product in that particular area. PSRs are responsible
for the accomplishment of their sales targets on their routes and are given incentives
on achieving the targets.
They ensure proper visibility and arrangement of products in brand order along with
“VISI purity”. They remit the daily sales proceeds with the Customer Executives
concerned along with the route planner and billing materials, gate pass, and the
details of sales. All their activities are controlled by the Customer Executives, who
also assist them in achieving their targets and were in charge of the sales
performance in their areas assigned to them. A Customer Executive had 7 to 8
PSRs under him and each PSR had at least 30 outlets to cover. The number of
outlets to be covered also depends on the category of PSRs.
 Identifying the rural market
There are almost 850 surrounding villages in the outskirts of Hyderabad. These are
part of HMDA now. Most of the places that we identified and visited were semi-urban
and rural villages. As new constructions such as apartments are getting built, the
price of land is also skyrocketing in these areas. With a number of high end
apartments and villas coming up, these areas represent the main market for the real
estate people with significant marketing needs to cater to. Out of almost 30000
projects that are in the process of construction, 19000 are likely to be completed by
the end of this year (Source: magicbricks.com).
4. Research Methodology
 Objectives of the Research Survey
 To identify the market potential of PepsiCo in the semi-urban or rural areas
of the
twin-cities of Hyderabad and Secunderabad
 To identify the factors that would increase market penetration of Pepsi in
these
outskirts and semi-urban areas
 To map the market share of Pepsi in the areas as identified above
 Nature of Research and Sources of Data: Present research study is both
exploratory and descriptive using primary as well as secondary sources of
data. The idea is to obtain first hand information about the market and identify
the potential areas. We administered a structured questionnaire to the
retailers and used observation method to get an understanding of the
rural/sub-urban market of Hyderabad. Secondary sources of data were
collected from various online sources.
 Sampling Design: Details elicited from the respondents such as area name,
name of outlet, name of the contact person, contact number, description of
the stock, sales (cases per day), and feedback were mapped providing rich
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
insights into the existing market and also helping in identifying the problem
areas where Pepsi can focus to improve upon to increase its market share.
 Sampling Unit: Retail outlets such as grocery shops, dhabas, panshops,
hotels and restaurants, new construction ventures like shopping malls,
apartment, villas, and other commercial complexes in the areas surveyed and
included in our study constituted the sampling units.
 Population and Size of sample: While the estimated number of total outlets
in all the 850 villages surrounding Hyderabad is the population, the total
number of outlets we visited constituted our sampling frame.
By interacting with PSRs of respective areas, we could estimate the number
of total outlets constituting the „population‟ to be around 9000. We could
discern through our observation that while rural markets in villages had
virtually no supermarket and very few dhabas, retail stores were also
separated by a stretch of minimum one kilometre. The total size of our
sample is 255 units and this comprises a minimum of 25 retail outlets in each
of the areas that we identified as potential areas for PepsiCo.
 Collection of primary data through Field Work: Primary data was obtained
either through observation or through direct communication with respondents,
personal interviews, and administration of questionnaires to retailers. It
involved travelling to the identified markets and observing the current
developments in terms of new construction ventures coming up and also
finding out the factors that could justify PepsiCo to enter those emerging
markets.
 Route Riding: The beverage industry or to be more specific, the soft drinks
Industry, has one of the most active networks in term of its production, supply,
distribution, marketing, and consumption and is aptly categorized under “Very
Fast Moving Consumer Goods”. In this context, we undertook and
participated in Route Riding (i) to understand and analyse the market in its
raw and basic form, (ii) to gain understanding of the ways and means by
which the beverage market in rural areas can be differently catered to, and
(iii) to undertake a comparative study of the various Pepsi brands available
and with those of the competitors.
 Limitations
 The research was conducted in a comparatively small area, which does
not
represent the overall market position.
 Relatively small-sized sample of respondents doesn‟t allow making
specific
generalizations as the sample may not be representative of the
population.

The field survey was carried out during August-September, 2012 and data
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
obtained and results derived would be different in different seasons.

Reluctance of retailers of Pepsi and Coke to provide required information
posed as a major hindrance.
5. The Findings from the Field Survey
After surveying the market, we witnessed mixed trends in terms of market shares of
Pepsi and Coke with each of them taking the top honours alternatively in different
sales areas. Slice, a non-carbonated drink, was doing well in almost all the areas.
While pet bottles were high in consumption in urban areas, 200 ml bottles sales
were high in rural areas. Being pitted against Coke as its major competitor, Pepsi
finds itself always in a need for the betterment of its product performance and
satisfaction of its customers‟ as well retailers‟.
 With majority of Muslim population preferring a stronger brand i.e., Thumbs
up, the sales of Coca-Cola were higher than those of Pepsi in Hyderabad
compared to other cities
 With consumption levels of liquor going up, the derived demand for soft drinks
was also shooting up.
 Retailers were not able to get refrigerators and Visi-coolers on a timely basis
as PepsiCo itself needs to import them from Sri Lanka and Mauritius.
 Among all areas of Hyderabad, the west side around Hi-tech area, with largest
number of existing and upcoming townships, has the highest potential for
marketing Pepsi. While other areas are also doing fairly good, Hi-Tech City
and its adjoining areas such as Madhapur, Gachibowli, Kondapur, and
Kukatpally are the most lucrative areas for selling Pepsi.
 RETAILERS' PERCEPTION
The major findings of the survey conducted to elicit retailers‟ perceptions of the
current market status, future trends, and consumer behaviour patterns are as
follows:
 While majority retailers were happy with the service of coke they were not so
about the delivery of Pepsi as coke takes just a day to fill the order as against
two days for Pepsi on average.
 Many retailers complained that they never received visi coolers in time despite
having signed agreements long ago affecting adversely the purchase
decisions of consumers who generally expect and insist upon chilled soft
drinks.
 Most of the retailers opined that Pepsi designed good promotional schemes
offering attractive prizes to encourage retailers as well as customers to buy
the product when compared to Coke.
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
A summary of SWOT analysis of PepsiCo as per Retailers
 Strengths
 Good corporate culture and value system with strict working hours
 Well–trained and experienced workers and executives
 Good brand image
 Capacity to penetrate untapped market with sufficient funds at its disposal
 Presence of established distribution network in both urban and rural areas
 PepsiCo is always eager to expand its product line by introducing new
products or reposition the existing products
 In mineral water segment, PepsiCo‟s Aquafina is doing really good.

Weaknesses
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Is confronted with a highly dispersed and sparsely populated rural market
Inability to market its products in an efficient manner to satisfy consumers
High operational costs.
Deal with difficult social and cultural constructs involving significant variations
in product offerings
Low levels of education of rural folk leading to little exposure to different
brands
Opportunity
 Rural/semi-urban areas are the major market for growth of soft drinks industry
and
PepsiCo can capitalize on this untapped market
 Threats
 Availability of large number of Coke outlets and local brands
 Switching over of Pepsi distributors towards Coke offering better facilities to
their distributors and retailers
 Increasing inclination to avoid cola drinks by more aware and healthconscious buyers
In the „route riding” phase, we also met various Customer Executives (CEs) of
different territories to gain an understanding of that particular area, distribution
system, functioning of Pre-sales Representatives (PSRs).
 Of the total 156 outlets that we covered, most of them were small retail shops
(convenience stores), bakery, Dhabas, canteens, Tiffin and meals, sweet
shops and department stores.
 About 70% of the outlets had customers less than 50 per day. Sales of soft
drink were average as it was not peak season.
 Among the number of customers who visited the shop (retail, bakery, dhabas),
86% of customers between 0-50 group were likely to purchase soft drink
(either Coke or Pepsi) provided that it is readily available in chilled form.
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
 Among the outlets visited, the largest were selling Coke, market leader in soft
drinks industry and has larger market share in Hyderabad and surrounding
areas.
 Due to stepped-up efforts made by Pepsi, many new retail outlets are found to
have Pepsi.
 Most of the outlets that were monopoly outlets of Coke also tied up with Pepsi
in the recent time.
 Daily sales of coke per case are higher than Pepsi. The share of coke was as
high as 70% and the average case sold per day came to be 3-4 cases. While
Pepsi covered 43% of the total market share with sales averaging 2-3 cases.
 Those shops having mix of both had sales of 47% and sales per case
averaged to two cases of coke and one case of Pepsi. Of all the brands of
products Pepsi has, 200 ml is the most popular as village people are hardly
aware of the various brands and therefore are not brand loyal as well. So, for
them Pepsi 200 ml resonates to a cola drink. Even a customer who has come
to purchase Coke may substitute it with Pepsi in case Coke is not available.
But that is not the case with the rest.
 Mountain Dew, 7Up, and Mirinda are different in colour than the cola. So they
do not readily go for it but they were more popular among the youth
 Youth is less in numbers compared to people of other age groups as most
had migrated to the city in search of better jobs.
 Customers surveyed represent a varied mix of students, professionals, daily
wage-earners, and salaried people. With higher earning power, the prime
customers of the soft drinks in these areas are wage earners, salaried, and
other professionals.
 In most cases, soft drinks alone are not purchased but with other edible items
like bakery items, biscuits, and chips.
 For the promotion of Pepsi in rural areas, items such as chips, lays may be
given free rather than spending in other forms of advertising and sales
promotion to them to create surplus in their pockets.
 Maximum retailers surveyed were happy with the service of Coke such as
timely delivery of stocks.
 Retailers were not happy with Coke as not only the margins were small but it
was also not providing any offers.
 30% of retailers were satisfied with Pepsi as both the margin and service
were good and its incentives and promotional schemes were much better
than those of Coke.
 Shops keeping both coke and Pepsi were also of the opinion that they were
happier with Pepsi's schemes and offers compared to coke though on
delivery side Pepsi was not as good as Coke.
 Frequent changes in Pre-sales representatives and lack of proper monitoring
of delivery schedules were resulting in delays and hence the complaints.
 Coke on the other hand has good image in terms of its service delivery and
boasts of its strong distribution and brand image.
 High cost of electricity was cited as the main reason for shrinking profit
margins of retailers and their decision to stock the products in addition to the
power outages in the villages.
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
 Small sized fridges with insufficient capacity are adding to the woes of
Retailers who were unsuccessfully demanding for bigger fridges preferably
with a double door for a long time.
 Many retail outlets complained that company-provided fridges were not
working and company service engineers never come for their repair or
replacement.
 For most of the retailers, an increase in the margin per the bottle, specially
the glass ones, will help them boost sales besides recovering very high
electricity expenses.
 They also think that margin in glass bottles of both Coke and Pepsi is not
enough to cover the electricity charges. As a result they feel that if margin
were increased, they would stock more goods.
 Retailers also want company to come up with promotional campaigns like
free distribution of goods and providing different kinds of advertisements in
form of display of goods in van and showing them around villages.
 Next retailers believed that providing signage (like Digital light board,
umbrellas, stands, etc.) will help to increase the visibility and support
products‟ sales.
 Lastly some retailers of Pepsi were not happy with the fact that it does not
provide credit facilities to customers.
6. Summary and Conclusions
Purchase of soft drink is mostly based on impulse buying and it is necessary to
merchandise products of Pepsi efficiently and stock them in such a manner such
that they are made available as and when consumers need them. Promotional
schemes and discounts are a major factor for retailers to stock a particular soft drink.
Customers are not generally brand loyal and soft drinks become substitutable in
suburban and rural areas. When compared to Coke, if Pepsi is able to provide
better margin, retailers hitherto stocking Coke could be lured to stock Pepsi items.
Among all other brands of PepsiCo, Pepsi is the most popular as it is taken as „cola
drink‟. Rest of the soft drinks like 7up, Mirinda, and Mountain Dew are not very
popular among the common mass.
7. Suggestions and Recommendations
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In markets, as identified earlier, rather than setting up a complete outlet for
Pepsi, more economical and convenient pushcarts can be placed at places
like meals centres, cigarette outlets, or near pan shops where there is brisk
business.
Pushcarts should be utilized to penetrate into untapped new villages in the
outskirts.
Rather than spending on boards and other means of advertising, push carts
can be deployed in huge numbers in summer season to help establish market
presence of Pepsi.
For properly introducing and promoting Pepsi, bakeries and sweet shops
should come up with combo offers where in along with one Kg packet of
sweet or bakery items, one Litre Pepsi could be given free.
Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
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As most of the complaints against Pepsi were about delay in distribution,
efforts should be stepped up to improvise the logistics
As sales of soft drinks is not very high in rural market compared to the urban
market, so retailers should be provided with fridges with less cases of deposit.
They should also be provided assistance like taking back the stock if not sold
especially in case of a new client. This will help to develop trust on the
company and support new retailers in rural market.
As consumers are not very brand loyal in rural areas, the retailers push
becomes a critical issue. They usually sell the product in which they get the
maximum benefit. For this, company should try to offer higher margins to the
retailers.
Credit facilities to the otherwise cash-strapped retailers in the semi-urban and
rural areas should be extended liberally.
Customer Executives should make regular visits to the sales areas to ensure
that Pre Sales Representatives under him are working properly.
Provide signage and other promotional tools like umbrella, table, and chairs to
outlets (especially Dhabas) and also light boards
Colourful painting with Pepsi signs may be carried out to the outlets‟ walls.
Customer would be able to spot Pepsi outlets even in the dark if proper
lighting arrangements are made at the large number of Dhabas located on
the highway with no proper light (for example Medchal highway).
Recently coke has increased its price of glass bottles (200ml) to Rs 10. Pepsi
should continue providing it for 9 as it will help increase its sales in rural
areas as the consumers are not very brand specific and Rs 1 will make a
difference as the consumer are price conscious.
PSRs should be entrusted with the responsibility of setting up Monopoly
PEPSI Sales Counters where no soft drinks, especially Coca Cola, and
products other than those of PEPSI would be available giving to them special
benefits in terms of discounts, schemes, VISI‟s (fridges), display boards, glow
signboards, wall paintings, banners, posters, and other benefits/incentives.
References
Company, Government, and other Websites
 www.pepsico.com; www.google.com; and hmda.gov.in
Websites of Real Estate companies
 magicbrick.com; makaan.com; hdfcred.com; and www.scribd.com