Frito Lay Case Study

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Business Description

In 1932, two young entrepreneurs independently started two separate companies that were thousands of miles apart. Elmer Doolin of San Antonio, Texas and Herman W. Lay of Nashville Tennesse, had the same objective in mind, and both shared the same basic business philosophy: "Provide the customer with a product of the highest quality and value; sell it for a fair profit; and make service a fundamental part of doing business."

Frito-Lay's snacks include a broad portfolio of products including chips and granola bars, dips, salsas, nuts and seeds. The company's range of branded products include Lay's potato chips, Doritos flavored tortilla chips, Tostitos tortilla chips, Cheetos cheese flavored snacks, Fritos corn chips, Ruffles potato chips, Rold Gold pretzels, Sun Chips multigrain snacks, Munchies snack mix, Lay's Stax potato crisps, Cracker Jack candy coated popcorn and Go Snacks. Frito-Lay also sells a variety of branded dips, Quaker Fruit & Oatmeal bars, Quaker Quakes corn and rice snacks, Grandma's cookies, nuts and crackers. In addition to its extensive range of products, the company also offers extensions and limited time available products that provide variety for current consumers and appeal to new consumers.

Frito-Lay branded products are sold to independent distributors and retailers; which are then available via warehouse clubs/mass merchandisers; convenience stores; foodservice/vending; supermarkets/grocery stores; and other channels. The company owns and leases approximately 50 food manufacturing and processing plants and approximately 1700 warehouses, distribution centers and offices.

2.0 STRATEGIC FOCUS AND PLANS

2.1 Business DEFINITION

Frito-Lay manufactures, markets, sells and distributes branded snack foods.

2.2 Business MISSION

The overall mission of Frito-Lay is "to be the world's favorite snack and always within arm's reach".

2.3 GOALS AND OBJECTIVES

For the coming years, Frito-Lay seeks to achieve the following goals:

To offer a workplace where all associates can grow and develop in an inclusive environment, leveraging individual strengths and differences.

To create a sustainable competitive advantage; thus maximizing business performance, and ensuring that Frito-Lay is recognized as the employer of choice for all.

To truly understand the needs of retail customers, and succeed in the marketplace - Frito-Lay must reflect that diversity in through employees, suppliers

To deliver authentic products and relevant promotions for every consumer.

To maintain the brand's name to trade off the company's equity in salty snacks food

To capitalize the company's strengths in marketing and distribution

To maintain its profit contribution in the dip market

3.0 PROBLEM DEFINITION

The major issue is where and how Frito-Lays Dips could be developed further and enhanced within the snack food market. The two main concern of the marketing department are as follows:

Frito-Lay's dip line should be more aggressively promoted in it present market segment, which is the "Chip Dip" category, OR

Frito-Lay should actively pursue the "vegetable dip" category which is the recently introduced shelf-stable, sour cream-based French onion dip.

There are two major constraints for Frito-Lay to take into account before they decide to pursue either one of their plans. First, there are plenty of competitors in the dip market. Second, Frito-Lay had already set a limit for selling expenses, such as advertising and merchandising expenditure. Therefore, Frito-Lay must decide on the most efficient and effective way to use the marketing budget that has been allocated by the management.

4.0 ENUMERATE THE DECISION FACTORS

ALTERNATIVE REASONING UNCERTAINTIES

The first possible alternative would be to remain in the production of its chip dip and take a more assertive marketing position

With the introduction of cheese dips in 1983, Frito-Lay began promoting...
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