Video link: https://www.youtube.com/watch?v=rqXIwjD3Cso&feature=youtu.be
After watching the video (prior to Pepsico purchasing its bottlers) please discuss the following:
1. Identify all members of the value chain starting with Pepsico. Include the classifications of retail channels discussed and explain the roles of each. Pepsico uses a vertical marketing system (VMS) –
a) Explain each type: 1. Administered channel, 2. Company owned, and 3. Contractual systems (franchise; wholesaler-sponsored VMS; retail cooperative).
b) Which type did they use prior to purchasing the bottlers? Subsequent to the purchase?
2. What type of distribution intensity did/does Pepsico utilize? Exclusive, selective, or intensive? Why?
3. After reading the link below, please explain why Pepsico wanted to purchase its bottlers. Include 4 major benefits to Pepsico. Include reasons pertaining to market shifts in beverage preferences and how this relates to distribution strategies.
http://seekingalpha.com/article/131886-why-is-pepsico-buying-its-bottlers
4. Suppose Rolex managers decided to intensify distribution by broadening its reseller base (currently highly selective jewelers, etc.); argue for/against selling a line of $500.00 – $1500 Rolex watches through Walmart, targeting working and middle class people who want to look/feel more successful – aspirational; wanting to look one/two social class(es) higher. Assume total sales volume would increase by 15% over the next two years. Hints: immediate sales increases vs. long-term implications (consumer attitudes, channel conflicts, pricing/profits, competitive position, etc.).