Frito Lays Case Analysis

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Recommendation: It is recommended that Frito-Lay’s (FLD) aggressively promote its current line of shelf-stable, “chip dip” products and should not enter the “vegetable dip” market until a future date. Problem Statement: Should Frito-Lay’s, the sales leader in the shelf-stable dip category, take an aggressive approach promoting its “chip dips”, or pursue the vegetable dip category? Facts: Market Conditions: FLD’s 1985 market share was 32.7% with sales of $135 million in that year. Total sales for the industry topped $620 million. (Refer to Attachment 1) Industry research shows that dip sales are growing at 10% per year. However this growth in 1985 is due to price increases throughout the industry. It is relevant to note…show more content…
(Refer to Attachments 2-4 for SWOT, Customer Environmental Analysis, and Competitive Analysis) Possible alternatives include the following: (1) Increase consumer advertising and consumer promotion dollars for existing shelf-stable dips (2) Build on the newly introduced sour cream dip and venture into the vegetable dip category (3) Increase marketing efforts and attack the vegetable dip category (4) Increase trade promotion expenditures or keep them consistent with 1985 Based in the direction FLD wants to go alternatives (2) and (4) are out of the running. FLD simply does not have the capacity to aggressively market its existing shelf stable chip dips and devote the necessary attention to introducing a new product and a relatively unknown market. An increase in trade promotional expenditures might be beneficial to increase the number of distributors thus increasing the volume of units sold, but with and increased focus on consumer advertising and promotion if done correctly the need to increase trade promotion funding will be unnecessary. Increase consumer advertising and consumer promotion dollars for existing shelf-stable dips Pros: (1) An increase of advertising and marketing dollars will increase brand awareness and the frequency at which consumers see ads. (2) Only 20% of chips are currently eaten with dips,
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