(Tiểu luận) topic marketing channelmanagement of the suntory ofpepsico

Ho Chi Minh City University of Economics and Finance – UEF

LECTURER’S NAME: Nguyễn Thị Ngọc Dung

Course Name: Marketing Channel Management Ho Chi Minh City, October 21th, 2023

Ho Chi Minh City University of Economics and Finance – UEF

-GROUP FINAL PROJECT

Course Name: Marketing Channel Management

GRATITUDE EXPRESSION

To complete this comprehensive research overview, the author would like to sincerely convey deep appreciation to the esteemed professors at the University of Economics - Ho Chi Minh City for sharing invaluable knowledge throughout the research postgraduate program Special thanks are extended to Mrs Nguyễn Thị Ngọc Dung for her care, dedicated guidance, research direction, and insightful problem-solving advice on the chosen topic.

During the research process, despite the author's diligent efforts to consult various sources, exchange ideas, and absorb input from respected professors, colleagues, and peers to create the most valuable research, this study is not without imperfections The author genuinely hopes to receive precious contributions and invaluable feedback from the esteemed professors and fellow colleagues.

With profound appreciation!

PepsiCo

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Suntory PepsiCo's distribution and channel management strategy in Vietnam is carefully structured to address the dynamic beverage market Key findings reveal that the company relies on a mix of in-house and third-party transportation partners to navigate market channels, emphasizing control, flexibility, and cost savings However, the company faces potential challenges due to increasing transportation costs, which could impact product pricing and consumer demand.

Chapter III outlines a comprehensive channel strategy proposal for PepsiCo Suntory, aiming to boost beverage sales, reach new customers, and enhance brand perception Despite the option to build new channels, it is strategically wiser to optimize existing ones, considering the resource-intensive nature and potential risks of venturing into new channels.

The proposed multi-channel strategy covers traditional retail, modern retail, e-commerce, food service, and vending machines It also introduces a unique focus on enhancing presence in convenience stores, using influencer marketing techniques to build brand awareness and social responsibility Additionally, a special program will be created with popular celebrities acting as sales staff in convenience stores, and a portion of the profits will be allocated to charitable activities.

The channel management strategy encompasses direct and indirect methods, utilizing CRM systems and partnerships with distributors and retailers to enhance channel performance A cost analysis report for 2023 highlights the various operational costs and suggests recommendations for optimizing transportation, inventory management, and digital marketing campaigns.

Suntory PepsiCo's distribution and channel management approach seeks to maintain a competitive edge in the Vietnamese market By focusing on existing channels and incorporating innovative marketing strategies, the company aims to not only increase sales but also bolster brand credibility and community engagement Ongoing monitoring and adjustments, as per the recommendations, will further enhance operational efficiency.

CHAPTER II CURRENT MARKETING CHANNEL ANALYSIS 10

1 Current channel structure 10

2 End – user analysis 12

3 Channel system audit 16

3.1 Auditing channels using The efficiency template 21

3.2 Auditing channels using gap analysis 24

4 Key findings 26

CHAPTER III CHANNEL STRATEGY’S PROPOSAL 27

1 New channel structure 27

1.1 Reasons for not building a new channel 27

1.2 Channel Strategy 27

1.3 Focus on the Grocery Store channel 28

2 Channel gaps closing 32

CHAPTER IV CONCLUSION 34

CHAPTER V REFERENCES 36

Table of Figure Figure 1: Current channel structure 10

Figure 2: Suntory Pepsico's customer segment 15

Figure 3: Suntory Pepsico VietNam participation in various channel function 20

Figure 4: The efficiency template 21

Figure 5: Service gap Analysis 24

Figure 6: Combine gap Analysis 25

CHAPTER I INTRODUCTION

1 Introduce business and field of activity

Nestled within the vibrant pulse of Vietnam's business landscape, Suntory PepsiCo Vietnam stands tall as a paragon of refreshment and quality excellence Born from the collaboration of two industry titans, Suntory Holdings Limited and PepsiCo Inc., our company emerged with a clear vision: to satiate the nation's thirst with beverages of unparalleled quality Since our inception, we have become more than a mere beverage provider; we are the embodiment of innovation, integrity, and above all, refreshment Exploring Our Diverse Beverage Universe

At the heart of our enterprise lies an intricate tapestry of beverages that cater to every palate Our core activities revolve around the meticulous crafting and widespread distribution of an extensive range of drinks From the effervescent joy of carbonated soft drinks that fizz with excitement to the wholesome goodness of our healthy juices and the invigorating allure of our teas, every sip encapsulates the essence of our dedication to excellence

A Commitment to Quality, Sustainability, and Beyond

What sets Suntory PepsiCo Vietnam apart is not just our diverse array of beverages but our unwavering commitment to quality and sustainability We have meticulously carved a niche in the market, earning the trust of discerning consumers through products that tantalize taste buds while nourishing bodies Our commitment to sustainability runs deep, woven into the fabric of our operations We employ eco-friendly practices, championing a greener tomorrow while ensuring that our products continue to grace the tables of millions.

Beyond Refreshment: We Enrich Lives

Our journey transcends mere business transactions It's a narrative of enriching lives, fostering communities, and creating memorable moments Each beverage we produce is a testament to our dedication to enhancing the lives of millions of Vietnamese consumers We don't just quench thirst; we inspire moments of joy, celebration, and togetherness.

In Closing: A Future Refreshed with Innovation

As we move forward, our vision remains clear: to be more than just a beverage company We are architects of refreshing experiences, custodians of taste, and pioneers of sustainability With innovation as our guiding star, we are poised to script a future where every sip is not just a momentary delight but a lasting memory

Headquarters: Suntory PepsiCo Vietnam Beverage Company Limited Sheraton

Building, No 88, Dong Khoi Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam

2 Historical development

A Journey of Innovation and Growth

Suntory PepsiCo Vietnam's story began in [year of establishment], when the partnership between Suntory Holdings Limited and PepsiCo Inc gave birth to a venture that would redefine Vietnam's beverage industry In the subsequent years, our company experienced exponential growth, leveraging cutting-edge technology and a deep understanding of consumer preferences to introduce a myriad of refreshing beverages to the market Through strategic acquisitions, relentless research, and a commitment to community development, Suntory PepsiCo Vietnam expanded its operations, becoming a market leader known for its quality and reliability Our historical development is a testament to our resilience and adaptability in the face of evolving market dynamics.

December 24, 1991, a joint venture between Suntory Pepsico and Marcondray (Singapore) contributed capital to establish the International Beverage Company (IBC) Hoc Mon Factory was launched in 1992.

1994 – PepsiCo officially entered the Vietnamese market when it entered into a joint venture with IBC International Beverage Company with the launch of its first two products, Pepsi and 7Up.

1998 - 1999 – This time was also the time when the capital structure was changed with 100% ownership belonging to PepsiCo

2003 – The company was renamed PepsiCo Vietnam International Beverage Company Many non-carbonated beverage products continue to be launched such as: Sting, Twister, Lipton Ice Tea, Aquafina.

In 2004, the company expanded production and started doing business in Quang Nam This is through merger and acquisition with the Dien Ban factory.

As of 2005, Suntory Pepsico Vietnam was officially recognized as one of the largest beverage companies in Vietnam.

April 2013 – Suntory PepsiCo Vietnam strategic beverage alliance was established between Suntory Holdings Limited and PepsiCo, Inc in which Suntory accounts for 51% and PepsiCo accounts for 49% with the launch of new products Olong Tea+ Plus and Mountain Dew.

3 Vision and mission 3.1Vision

Elevating Refreshment, Enriching Lives

At Suntory PepsiCo Vietnam, our vision reaches beyond the realms of ordinary aspirations We aim to transcend the conventional boundaries of a beverage company, striving to become the most admired and innovative entity in Vietnam's ever-evolving market Central to our vision is an unwavering commitment to three pillars: quality, sustainability, and customer satisfaction These pillars not only shape our products but define our purpose We envision a future where our beverages do more than quench thirst; they become a source of nourishment for the soul In this future, our drinks don't just refresh the body; they create moments of pure joy and contentment, enriching lives and fostering a sense of community among our consumers.

Crafting Exceptional Moments, One Sip at a Time

Our mission is a promise, a pact we make with every consumer who trusts us We are dedicated craftsmen, meticulously creating and distributing exceptional beverages that cater to the vast tapestry of tastes and lifestyles in Vietnam In this pursuit, innovation is our guiding light We understand that preferences change, and so do lifestyles Hence, we embark on a journey of continuous innovation, ensuring that our products are not just in tune with but ahead of the evolving trends and preferences of our diverse consumers Simultaneously, our mission goes beyond individual delight We are stewards of sustainability Environmental harmony is not just a choice; it's our responsibility We invest tirelessly in eco-friendly practices, ensuring that every sip is a step toward a greener planet Moreover, our commitment to community initiatives is unshakeable We actively engage in projects that contribute positively to society, forging connections and making meaningful differences in the lives of the communities we serve.

Through our mission, we are not just bottlers of beverages; we are architects of happiness and refreshment Each drink we create is an opportunity to inspire, to evoke smiles, and to refresh both body and spirit We understand that our role extends beyond the confines of commerce; it's about weaving moments of genuine joy and making a tangible, positive impact in the lives of our consumers and communities.

CHAPTER II CURRENT MARKETINGCHANNEL ANALYSIS

1 Current channel structure

Suntory PepsiCo Vietnam has a wide distribution network nationwide, including distribution channels such as supermarkets, convenience stores, agents and hotel restaurants This helps the company reach customers everywhere and meet their needs Suntory PepsiCo Vietnam products can be easily found and purchased at familiar retail locations such as Family Mart, Circle K, Vinmart and large supermarkets such as Big C, Coopmart In addition, Pepsi also expanded its distribution channel system by cooperating with agents and fast food stores such as Lotteria, KFC and McDonald's.

Figure 1: Current channel structure

Suntory Pepsico distributes directly to key customers These are customers and organizations with large sales volumes such as supermarkets, convenience stores or places such as restaurants, hotels and fast food chains with large sales volumes.

Suntory Pepsico distributes from manufactures to distributors such as: CJ Logistic, Minh Quang Mekong, Khai San Food, HT Sai Gon From those distributors, they distribute to three main channels: GT, MT and Horeca

GT is the traditional channel and the main distribution channel of Pepsico in Ho Chi Minh City Retailers in the GT channel are usually retail establishments within the coverage area of the retailer's upper intermediary Retail establishments can be traditional physical stores such as grocery stores, markets, or stores that have applied technology to the process of providing goods and services self-service shop but not on a large scale PepsiCo has a widespread agent network in Ho Chi Minh City, with more than 10,000 retailers level 1 and 20,000 retailers level 2 Retailers lv1 will distribute to retailers lv2 and then distribute directly to end users These retailers provide PepsiCo products to grocery stores, markets, across the city The total number of GT channels is more than 30000 retailers and all are aimed at the end user In this channel, Pepsico can contact many consumers, thereby helping Suntory PepsiCo reduce inventory, lack of products supplied to consumers and act as a "lubricant" to help products reach the hands of consumers consumers in the fastest and most convenient way.

In the MT channel, Suntory PepsiCo distributes products to locations with large consumption such as large supermarket chains (AEON Mall, Emart, Mega Market, Coop Mart, Lotte Mart, Big C, ) and other models Modern retail stores such as convenience stores (VinMart, BHX, Circle K, GS25, Family Mart, Satra, B'Mart, ) and Pepsico also create convenience for customers when distributing products at the machines vending machine (Vending Machine VN, Sunwon, Kootoro, TSEdding) In addition, Suntory PepsiCo mainly distributes drinking water products to users through online platforms such as e-commerce floors On the e-commerce platform, Suntory PepsiCo is present on major platforms such as Shopee, Lazada, Tiki,

Suntory PepsiCo's decision to choose and focus on direct distribution via e-commerce platform is necessary in accordance with the current progressive era Deploying distribution via e-commerce platforms helps Suntory PepsiCo save costs and increase revenue instead of having to go through agents and distributors to bring products to consumers Reach customers quickly and easily when these e-commerce platforms have a huge number of users Easier to manage and compare business metrics than traditional channels.

In addition, Suntory PepsiCo's products are also distributed through an intermediary quite different from the above intermediaries, the Tiki e-commerce platform Suntory PepsiCo products are delivered to customers through Tiki Trading Tiki Trading is a business store on the Tiki e-commerce platform and is directly managed by Tiki Suntory PepsiCo products on Tiki distributed by Tiki Trading will be purchased by TikiTrading from Suntory PepsiCo and then sold through the Tiki e-commerce platform to users that Suntory PepsiCo does not directly manage.

Suntory Pepsico VietNam has a very extensive distribution network, including all restaurants, hotels and catering in Ho Chi Minh City, and the number that the group can

count is very large, so it can be narrowed down Furthermore, the group will highlight a few manifestations in two locations: fast food and cinema PepsiCo has invested heavily in this distribution channel to meet the increasing needs of customers The company has cooperated with many large cinema and fast food chains in Vietnam At fast food, there are two most prominent brands: McDonald's (18 stores) and Lotteria (90 stores) In cinemas, the highlights are CGV (20) and Galaxy (9) The total number that the team has counted on the Horeca channel is 137 stores and all are aimed at end users.

Suntory Pepsico will distribute 3 parallel channels including GT channel, MT channel and Horeca channel.

With the GT channel, Suntory PepsiCo, through the wholesaler level including exclusive and non-exclusive distribution agents, distributes goods to retailers, mainly retail establishments following the traditional model system, from these retail points the products are resold to consumers.

With MT channel and Horeca channel, Suntory PepsiCo will distribute products to a system of supermarket chains, convenience store chains, restaurants, hotels, and Tiki and through these intermediaries, the product will resold to users.

PepsiCo has invested heavily in its distribution system in Ho Chi Minh City to ensure the company's products can reach consumers everywhere PepsiCo's distribution system in Ho Chi Minh City is considered effective and flexible, helping the company meet the increasing demands of consumers.

2 End – user analysis

Figure 2: Suntory Pepsico's customer segment

Table …: Suntory Pepsico's customer segment

After researching and reviewing, we decided to choose 2 target customer groups is: 1 Companions

Companion customers are more likely to purchase Suntory PepsiCo products more frequently, generating more revenue for Suntory PepsiCo.

Marketing to loyal customers is less expensive than attracting new customers because they are familiar with Suntory PepsiCo's products and brands, so they are more likely to respond to marketing campaigns.

They are also more likely to recommend Suntory PepsiCo products to their friends and family, which can help Suntory PepsiCo attract new customers It also helps reduce competitive pressure on customers compared to other competitors.

2 Bulk Consumer

Bulk consumers are people who buy large quantities of products, often for large businesses such as restaurants, hotels, event venues, or households They are important to Suntory PepsiCo because they generate a significant portion of the company's revenue.

By focusing on the bulk consumer segment, Suntory PepsiCo can increase its revenue because when they buy products in bulk, they generate a significant portion of Suntory PepsiCo's revenue.

In addition, customers buying large quantities of products also helps reduce costs such as shipping and other costs.

Suntory Pepsico must also build strong relationships with customers and increase brand awareness to increase their likelihood of repeat purchases.

Segmentation is important to Suntory PepsiCo because it makes marketing more targeted, uses resources more efficiently, helps identify and address customer needs.

3 Channel system audit

After researching, our team decided to focus on analyzing Suntory Pepsico Vietnam's distribution channel in Ho Chi Minh City for deeper analysis.

FunctionsSuntory Pepsico

distribution hub for then set its own retail prices for

to connect with consumers and promote products.

Negotiation Suntory Pepsico VietNam and Coopmart

have equal power, so the Negotiation rights of both parties are equal

Does not perform goods and will pay for the goods within 45 days from the date of receipt of the full functions for end users when there is