The end of the contract brought about a huge change in the market as Serm Suk went back to their drawing board to strategize on building their own beverage company. This brought about the emergence of another company that aimed at beating Pepsi at their own game. The products offered by Pepsi were replaced by Est. which had products that were quite similar to Pepsi’s. The market shares soon changed and declined as their more competition from three companies. This brought about changes as Pepsi only acquired 15% share of the market, Big Coke acquired 16% while Est. had 19% share of the market. These changes meant that Coke took the first position in the market share. Pepsi had declined their position as the leading soft drink company in Middle East Asia. It also brought about severe effects to Pepsi as it lost 30 senior brand managers over a period of three years. It revenue had also decreased over the region where in 2012 it was reported that their revenue declined from $7.4 billion to $ 6.6 billion.
Discuss the conflict between Pepsi and Est., giving ample details of what led to the final separation.
The separation between Pepsi and Est. occurred due to the fact that they had failed to reach an agreement on a new bottling contract. The main contract had existed for about 59 years and was due to expire on 1st November, 201. However, their disagreements had been in place long before that as the CEO to the PepsiCo had initiated plans to assume ownership of all upstream and downstream portions of the brand’s global operations. Similarly, Thai Beverage had purchased 41.5% of Serm Suk’s stock from PepsiCo in order to expand their non-alcoholic production lines. The two companies had however remained silent over the separation up until trade secrets, formulas or sensitive information that involves engaging in activities that would bring competition to the company. It aims at protecting the business of the employer. The non-compete clause upheld by PepsiCo and Est. expired on November 1st 2012 after they had failed to agree on the renewal of the contract. The contract’ terms had been hindered both companies from engaging in activities that brought competition to the company and this saw them through 59 years in partnership.
Est. Company had acquired the basic concepts used in PepsiCo and they had maintained their loyalty to the non-compete clause up until it came to an end. They had also be loyal in ensuring that they distributed the products appropriately to the about 200,000 stores, restaurants and vending machines available in Thailand’s market that served over 67 million people. However, after the clause had expired, Est. broke its way to establish a company that offered similar products to Pepsi’s. They also acquired similar labels and logos to those of Pepsi. Incidentally, they had acquired all the formulas and secrets used in Pepsi and used them to develop their own products. If these activities were carried out when the contract was in place, it would have been a violation of the terms but since the contract had expired, it meant that they were free to engage in such activities. The official from Est. commented over the issue and said that it was their intention to push Pepsi out of the market but since they had strong distribution networks, they were mandated to distribute products for another company. Explain the importance of distribution as part of the marketing mix. Is distribution the most important aspect of the international marketing mix? Provide detailed support for your answer.
Distribution is a very importance part of the international business as it ensures the availability of products to the retail market. It also ensures that the company creates awareness of its existence in the market and customers get to know what the product is all about. In reference to Serm Suk, they had acquired a wide network of distribution where they delivered to about 200,000 stores and restaurants. This gave them an upper hand as the retail market had build trust in the products they brought. It also ensured that their products were available to the market at all times and customers had a wide knowledge of the existence. This brought about much advantage in the establishment of their new company as they ensured that most of their products were available on the shelves in preference to Pepsi’s. It eliminated Pepsi’s products from the market and brought a product that was quite similar to Pepsi.
The strong distribution network also ensured that by Serm Suk had acquired the market and driven out Pepsi from the shelves. However, people adopted the Est. products due to the fact that it was available on the shelves and has similar looks to Pepsi. It also brought about the establishment of a new experience as people wanted to try out the new drink that was extensively marketed. Therefore, distribution is one of the most aspects in the international business mix as it ensures the availability of the products in the market which must be coupled with proper branding and marketing strategies.
As the international marketing consultant for Pepsi I would ensure that proper distribution strategies are put in place in order to curb the competition. This would involve acquiring patents and trademarks for the products Pepsi delivers in order to curb the problem where people copy their techniques. This would be followed by intensified marketing strategies that require celebrity faces who indicate the preference of the customers as well as bring back the unique taste of Pepsi in the market. Similarly, I would engage Big Cola and Coca cola into a partnership that ensures dominance in the market in terms of the distribution and bottling of the products. Customers have indicated that they preferred Pepsi when it was in a glass bottle, therefore I would ensure that all our products are available in glass bottles that are appealing and attractive to the customers. The first month of operation I would ensure that the company gives offers to the reliable customers and offer lower prices as compared to other companies.