Frito Lay Sun Chips Case Study Essay

1389 WordsFeb 20, 20136 Pages
1. How would you characterize the snack chip category and Frito-Lay’s competitive position in this category? The snack chip category is growing, mainly because of the increased per capita consumption, which rose from about 12 pounds in 1986 to nearly 14 pounds in 1990. The snack chip category consists of three types of competitors: national, regional and private brand firms. The market is very competitive and difficult; as many as 650 new products are introduced every year, but less than 1% of them generate more than $25 million in first-year sales. Frito-Lay is a national brand and a worldwide leader in the manufacturing and marketing of snack chips. Frito-Lay accounts for 13 percent of sales in the US snack food industry. Frito-Lay’s…show more content…
Frito-Lay first toyed with multigrain snack chips in the 1970s, when research indicated a need for a snack in this category. Prontos, released in 1974 and distributed for four years, weren’t incredibly well received. While a lack of success is attributed to a confusing name, poor manufacturing and too narrow a market, Dwight Riskey, VP of Marketing Research and New Business, admits that he is “not sure there were dramatic things wrong with the product design [...]. It may have been invented and introduced before its time.” This sentiment was reflected in the Harvest Project in the early 1980s, when Frito-Lay developed several multigrain products to attempt and have a possible healthy alternative to saltier snack foods for the baby-boomer generation. Lackluster response caused the project to stall into the mid 80s as focus was put on developing new flavors and healthier alternatives in other brands. Development for the product now under the Sun Chips brand picked up in 1988. Consumer testing found a few variations of the Sun Chip that were perceived by test markets as both healthy and as “everyday snacks” -- a factor necessary to the long term success of the snack. Ultimately, they had to wait until the right time to release the product. The market was slowly gaining health consciousness as baby-boomers matured and desired healthier alternatives to their snack foods. Early

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