Frito Lay's Dip Case

Position Paper: Frito Lay’s Dip
Strategic Issues:
  * A highly profitable product line and had phenomenal sales growth between 1981($30M) and 1985 ($87M).
  * More than 80% of all dips are accounted for by supermarkets, with a total dip retail dollar sales volume of $620 million (in 1985).
  * Major competitor in shelf stable dips.
  * Virtually all of the growth in 1984 and 1985 was accounted for by cheese-based dips, which captured market share from other dip flavors.
  * Dip competitors spent $58 million for consumer advertising in 1985. This is 25% higher than in 1984.
  * Dip popularity increased in 1983.

Actions taken:
  * Products are shelved perfectly for better sales.
  * Front door store delivery system.
  * In 1985 consumer promotions began.
  * Every year from 1983-1986, Frito Lay’s have almost double their advertising and merchandising expenditure.

Scenarios as per problems or opportunities:
  * Where and How Frito Lay’s Dips could be developed further.
      * Chip dip
      * Vegetable dip
  * Expense Budget and aggressive marketing are major concerns.
  * Mexican food has fueled growth of cheese-based dips.
  * 20% of all dip volume consumed by households is homemade.
  * 35% of salad dressing is used in place of dips.
  * Should Frito - lay’s brand name be used with the cheese dips. Finally they stayed with the brand name.
  * Cheese dips showed huge sales in the introductory year.
  * Frito Lay’s lost few customers as they discontinued Enchilade Bean dip. They believed that customers would change to Frito lays other Mexican dip.
  * Decline of sales in 1985 was due to 3 factors. [continues]

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