Frito Lay Case Study

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Summary- Frito-Lay is a division of PepsiCo, a New York-based diversified consumer goods and services firm. Frito-Lay is a nationally recognized leader in the manufacture and marketing of snack foods. The company’s leaders in the snack industry include potato chips, tortilla chips, cheese puffs and pretzels. Frito-Lay not only had net sales in 1985 of three billion but also captured about thirty three percent of the snack foods sold in the United States. When Frito-Lay first got into the dip industry they introduced two dips, the Jalapeno Bean Dip and Enchilada Bean Dip. These two dips were generally viewed as a complement to the companies Fritos corn chip. In 1978 a Picante Sauce Dip was introduced to complement the newly introduced…show more content…
Frito-Lay executives were still unsure to how much emphasis to place on each market segment. More aggressive marketing would require a larger marketing investment or there is the option of allocating funds. While at the same time the gross margin and profit contribution of dips would have to be preserved, expense budgets would need special consideration. Expressed at the planning meeting was that Frito-Lay should capitalize on its standpoint in the dip market and build market share. Many arguments were made for this strategy. Research had shown that only 20 percent of chips were eaten with dips at this time. Along with this research showed that only 45 percent of all U.S households used dips in 1985. Another argument in support of focusing more attention to the chip dip market was that there was a great increase in the competitive activity; forty new Mexican-style dips were launched into the market since 1983. The last argument was that in the past Frito-Lay was not big on the promotion of dips and did not go after the promotions in an aggressive way. The other executives that did not agree with the arguments that were just addressed disputed that the opportunity for Frito-Lay in the chip dip market was less promising. They based their arguments on three main points. The first is that competitive activity was such that Frito-Lay could only hope to hang on to its position, not improve it, in the chip dip

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