MARKETING

Case 2 Marketing Issues Frito-Lay

Question-1

Give a short presentation/summary of the central strategic problem in this case.

Frito lay is a part of Pepsi Company, a world famous beverage company; it had a net income of around $1.077 billion with total sales of around $17.8 billion during 1990. Frito lay is famous for marketing and manufacturing snack chips, it includes some of the well known brands, including Ruffles potato chips, Doritos, Fritos corn chips, Lays, Cheetos and Tostitos. Ruffles chips, Doritos, and tortilla chips are potato chips with strong brand equity, these snack chips have a worth of around $1 billion in retail sales from all over the world. Frito lay consist of around thirteen percent of sales only in United States snack food industry. It includes crackers, snack chips, candy, cookies and many other items. These all items accounts of around thirty seven billion annually. Moreover, company is one of the leading manufacturers of chips grabs the fifty percent of retail sales in United States in snack chips category, in 1990 the United States sales recorded around $3.5 billion.

Sun Chips

Sun Chips is a product of Frito lay, it is a crispy multigrain snack, consisting of specific blend of complete, corn rice, wheat and flours it includes a light salt, taste multigrain, aftertaste there is a slight sweet taste, Sun chips includes low sodium and made up of sunflower and canola oil. Approximately chip consist fifty percent low in soaked fats as compare to chips, which are made with the cooking oil it is free from cholesterol. According to a Frito-Lay, Inc. executive, it is a “thoughtful, upscale classy chip.”

Question-2

Characterize the chip category in general. This means looking into e.g. the life cycle, the growth situation, the competitive situation etc.

Product Lifecycle

The chip product has been on the market for a long time, but has until now managed to stay in a strong and constantly growing position, especially since the manufacturers introduce new offerings keeping their market share and image on a high level. The Product lifecycle (PLC) concept is often used to define the products or service life cycle, a managerial tool to find out where the in the market the product is according to opportunities and competitors. The PLC has four stages:

On the market, a product's sales growth is typically low, and losses are incurred because of heavy development and promotional cost. Companies will be monitoring the speed of product adoption and, if this is disappointing, may terminate the product at this stage. The point is to build up a market position and product awareness.

Growth

In this stage, faster sales and profit growth. Sales growth is reached by rapid market acceptance and repeat purchasing. Profits may begin to decline towards the later stages of growth as competitors enter the market. (KOTLER, P. 1980 Pp. 214-225)

Maturity

The market is now used to the product, and fewer new buyers or tries are there. The competition can get harder with aggressive price strategies. The battle for market increases and product improvements, advertising, and sales promotional ...