Frito Lays Case Analysis

1455 WordsJun 18, 20116 Pages
Introduction: In the mid-eighties Frito-Lay’s Dips had become a highly profitable product line with sales of $30 million in 1981, growing to $87 million in 1985. In late 1986, Marketing Director Ben Ball, and Product Manager Ann Mirabito had completed the planning review for the Frito-Lay line of dips. A major issue at the planning meeting was where, and how, to further develop Frito-Lay’s Dips. Two divergent viewpoints developed; that the dip line should be more aggressively promoted in its market segment, and that Frito-Lay should actively pursue the “vegetable dip” category. The company had recently introduced a shelf-stable, sour cream-based French onion dip, the first cream-based dip for Frio-Lay, and some executives felt the dip…show more content…
Frito-Lay is a nationally recognized marketing leader in salty snack foods. The company uses a variety of techniques which include product sampling, couponing, and television and radio advertising. The products are placed strategically in stores, near the salty snacks. However, Frito Lay has not promoted as aggressively as its competitors. Their advertising/sales ratio is 2.7 percent as compared to the typical ratio of 10 percent. The company has a very organized distribution system called “front-door store delivery system,” distributing its products nationwide. This department is composed of over 10,000 individuals. The system is particularly well-suited to the non-chain outlets. The chain-store accounts require the participation of a Region or Division Manager. However, the sales task and account servicing are more time-consuming and complex, and this system would not work for the vegetable dip market. Distribution through the produce warehouse would involve dealing with supermarket produce buyers and managers. Dips were a highly profitable product line and had shown excellent sales growth in the past five years. Industry research indicates that dip dollar sales are growing at 10 percent per year, but this growth is from price (inflationary) increases. R&D Cheese dips were introduced in 1983 and were a success. Research should be done to figure out what buyers want and new
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