Frito Lay Case Analysis

Frito Lay Case Analysis

Introduction

Frito Lay, Inc. is a component of the PepsiCo, Inc. which is based in new York and is a well known organization of consumer goods and services. Frito Lay is most importantly known as a worldwide leader in the marketing and manufacturing of chips all over the world. The most famous chips brands of this company include Ruffles potato chips, Lay's chips, Fritos corn chips, Tostitos chips, Sanitas tortilla chips, Doritos chips, Cheetos cheese flavored snacks and Rold Gold pretzels (Pride, 2012). Frito Lay has been accounted to for 13 percent of the sales of the snack food industry of the United States.

Strategic Issue

The strategic issue that has been identified is that the company has to make a decision as to what will be the best future direction for the new product that the Frito Lay company has recently launched. It has been observed after a test market for the company's new product “Sun chips” have been successful in Minneapolis and now the Frito Lay company has to select that what they should do next for the success of their new product out of the following options.

Expansion of the test to other geographical areas.

Introduction of the product nationwide.

Modification of the strategy.

Evaluation and Analysis of Important Variables

Snack Chips Segment of the Snack food Industry

The segment of snack chips is a very important segment of the snack food industry. These snack products are made up of corn, potato, tortilla chips and pop corn. The snack food industry is extended to all kinds of snacks excluding cookies, nuts, crackers and candies (Smith, 2006). The snack chips segment has been operating very well in the United States and accounts for a heavy amount of retail sales achieved regularly.

Competition

It is very importantly noticed that the category of snack chips is a very competitive segment within the snack food industry. This segment relies heavily on the price deals and competitive pricing for attracting customers to different products. It has been analyzed that the around 650 snack products are introduced in the snack industry every year with new flavors which give tough competition to the existing products. On the other side, it is also observed that the failure rate of the newly introduced products is relatively high (Michman, 1998). The competition within the snack food industry carries on among three types of firms including the National brand firms like Procter & Gamble and Frito Lay, Private brand firms like Kroger and regional brand firms.

Strategies of Frito Lay

Frito Lay has been noticed to be the highest manufacturer of snack chips in the United States and it has been accounted for half of the sales of the snack chips of the United States. A very important finding is that eight of the top ten selling brands of snack chips belong to Frito Lay including Ruffles, Doritos, Tostitos, Cheetos, Lay's, Santitas and Frito Lay Variety Pack. The success of Frito Lay depends upon the successful and effective operations of the company that ...