Using the “DECIDE” Formula, analyze the above case.
STEP 1 :DEFINE THE PROBLEM
This case is about the Frito-Lay Inc., which is the manufacturer and marketer of a snack chips in United States. They produce snacks such as band potato crisp, brand onion flavored snacks, and brand fried pork skins, dips, nuts, peanut butter crackers, popcorn and also cookies. Frito-Lay had developed their new healthy product named Sun Chips Multigrain Snacks. The problem of this case is whether Frito-Lay Inc wants to continue with the test market for another 6 months or straightly introduce their product to nationwide. The purpose of this study is to examine the nature of the US market and to evaluate whether Frito-Lay should consider venturing into healthy snacks industry.
STEP 2 :ENUMERATE THE DECISION FACTORS
There are two sets of decision factors that must be enumerated in the decision making process which are: 1) Alternatives course of action
Products - By introducing more variety of products such as natural and French Onion flavors and also the healthy product which is Sunchips Multigrain snacks.
Competitors -Frito-Lay can’t control the existence of competitors in the industry. Competitors might launch a similar product nationally and regionally and upstage Frito-Lay. Technology -The technology that needs to be used in order to produce the multigrain snack is still untested therefore Frito-Lay can’t proceed with the decision to market the product.
STEP 3 :CONSIDER RELEVANT INFORMATION
* Establish company name
Frito-Lay Inc. is a worldwide leader in manufacturing and marketing of snack chips industry. The company produced variety of snacks… * Capture nearly one half of retail sales of snack chip
The company has become the leading manufacturer of snack chips in United States. Eight of their snack chips are among the top ten best selling snack chip in U.S supermarket. * Plenty of capital available
In order to produce their products, Frito-Lay has owned 39 manufacturing plants, more than 1600 distribution facilities and 10,000 person route-sales team. * Test market research availability
The product had been in test market for 10 months in the Minneapolis-St. Paul, Minnesota metropolitan area. * Establish distribution strategy
Frito-Lay has more than 1600 distribution facilities and 10,000-person route sales team. Weaknesses
* Competitive pricing
Snack chip manufacturers often rely on price deals to attract customers. * High new product failure rate
The industry sources report that less than 1% of new products generate more than $25 million in first year sales. * Manufacturing capacity is limited
The multigrain snack process technology was still untested which would cause severe manufacturing difficulties. Opportunities
* Grow established Frito-Lay brands through line extension Frito-Lay marketing executives use line extensions to satisfy their customer’s wants which is they seek for variety in snack tastes and sizes without compromising the quality. Examples of line extension that they used are Tostitos® brand bite-sized tortilla chips and also Cheetos® brand Flamin’ Hot Cheese Flavored Snacks.
* Create new products to meet changing consumer preferences and needs The company had designed a marketing research in order to uncover the snacking needs of customers. Based from the result, they had introduced the low-oil light line of snack chip. * Develop products for fast growing snack food categories By looking at the growth rates of snack food categories and by monitoring the consumption pattern, the Marketing Executive of Frito-Lay had come out with the new product which is Smartfood® brand popcorn which has become the number one ready to eat popcorn in United States. * Reproduce Frito-Lay success in the international market By becoming the number one snack producer in United States, Frito-Lay...