Frito Lay Case Study Analysis

Category: Case Study

Last Updated: 20 Apr 2022

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Frito-Lay, Inc has been developing multigrain chips since the early 1970s after marketing research found that consumers wanted nutritious snacks, consequently in 1974 the company launched to the market Prontos, a multigrain chip that was not really a great success, hence withdrawn from the national market in 1978 (Kerin & Peterson, 2009). However, Frito-Lay knew that a healthier option was appealing to consumers and that this healthier option had proper time to be introduced, but the market was not ready for it yet (Kerin, Hartley, & Rudelius, 2009).Product research and development continued during the 1980s with The Harvest but in the early 1980s several market tests failed leading for marketing to introduce in the mid 1980s different flavors, flavor line extensions, on their traditional snacks like Cool Ranch Doritos and low-fat versions of potato, corn, and tortilla chips (Kerin & Peterson, 2009). In 1988 and with the idea still of multigrain products, marketing research studies conducted consumers’ testing for about 10 months, revealing that consumers wanted a multigrain rectangular chip with ridges and incomparable taste (Kerin & Peterson, 2009).Moreover, further research established that multigrain products were perceived by consumers as healthier option and considered for everyday snack, the conclusion was (Kerin & Peterson, 2009). The main idea is to introduce assorted flavors of multigrain chips that are appealing to consumers and would create an opportunity to develop a new product lines with line extensions in order to increase revenues, profits, and maintain the lead in the snacking industry (Kerin et al, 2009).Frito-Lay is a worldwide leader in the food industry, specifically the snacking industry that is highly competitive; recognized brands include Lay’s and Ruffles potato chips, Fritos, Doritos, Tostitos, and Santitas tortilla chips, Cheetos cheese-flavored snacks, and Rold Gold pretzels among others (Kerin & Peterson, 2009). Frito-Lay leads the U. S. snack manufacturing industry with about one-half of the retail sales in this category counting with 8 of top 10 best-selling snacks in U. S. upermarkets with the distinction that Doritos and Ruffles are the only snacks with $1 billion in retail sales worldwide (Kerin & Peterson, 2009).

The snack-food industry produced in 1990 in the U. S. retail sales for $37 billion, which denoted an increase of 5% respect to 1989, mostly given by an increase in consumption per capita. Although this is a highly competitive industry and market, Frito-Lay has always maintained in a leading position, possess brand equity, and the firm is constantly innovating and developing new products (Kerin et al. 2009). This creates a competitive advantage for Frito-Lay to introduce SunChips, and the fact that marketing actions are constantly oriented to customers’ wants and needs, SunChips is a product developed to respond to these behaviors (Kerin et al. , 2009). Frito-Lay had an innovating idea with its multigrain snacks that was introduced at the wrong time.

In the mid 1970s consumers were not appealing to healthier options, although research studies exposed interest in nutritious snack options but consumers were not ready for this type of product (Kerin & Peterson, 2009). However, the company kept investing in research and development in order to introduce this healthier snack, waiting the right moment. As population demographics changed and baby boomers, generation X, and generation Y have a better understanding nowadays about health matters, Frito-Lay had to approach the market with this “multigrain snack”.

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This consciousness of health between different generations impacted and may have been the reason that resulted in 1988, when testing and research conducted by Frito-Lay’s marketing team, found that consumers wanted a multigrain rectangular chip with ridges and incomparable taste and considered the multigrain snack healthier and for everyday snack (Kerin & Peterson, 2009). Retailers are interested in carrying products that consumers would actually purchase and not carry products that would stay on the shelves, and Sun Chips is one of those products that are irresistible, yet healthy.Consumer’s have accepted the product and find it appealing, great taste, healthy, and different flavors are key characteristics, accompanied by a unique shape and ridges make this snack an attractive and healthy option for consumers’ snacking habits. Consumers’ search for assortment and the best thing to do is offer consumers what they are looking for; therefore the following highlights some aspects to consider in the marketing program:Optimize assortment is a key strategy to take advantage of (Heller, n. d. ). Knowledge of demand levels by store from local consumers. Foresee and gauge consumer behavior to different influences, like purchase power, price, and competitor’s brand actions (Heller, n. d. ). Considering these basic aspects in the marketing program would enable SunChips to include more choices, like perhaps baked SunChips and low fat versions, which could be seen as an even healthier snack. This marketing program has to be escorted with aggressive publicity campaign, graphic and tv advertisement would make consumers aware of new variety and prompt them to purchase the product, try it, like it, and continue to purchase it. Displays in supermarkets are also a great way to promote the products.

Engage in negotiations with supermarkets for shelve preference allowing SunChips to be spotted immediately by customers. Frito-Lay already counts with brand equity and worldwide recognition, which provides a competitive advantage for a successful marketing action for SunChips. The brief marketing program described above, would help the company to position SunChips brand in a competitive position, and in the medium-run will allow for SunChips to be among the 10 best-selling snack products. Aggressive advertising, promotions, and price strategies would allow for consumers to choose SunChips as their favorite healthy everyday snack.

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