Sun Chips Case

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  • Topic: Snack food, Doritos, Sun
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  • Published : April 29, 2013
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Frito-Lay, Inc. – Sun ChipsTM Multigrain Snacks Case Study Analysis

Assessment of the Sun ChipsTM test market results
This test market was held at Minneapolis – St. Paul, Minnesota metropolitan, which was chosen as a representation to the 90 million snack chip households in the United States. The analysis of the Sun ChipTM‘s test market results is organized chronologically according to the order of findings as stated in the case.

Type of purchase
The coupon program was an effective advertising tool that should be actively used during its introduction into other cities. The importance of retailing supermarkets and convenience stores in its distribution network was exemplified in its 90% purchase contribution. The sales mix of different pack sizes enabled Frito-Lay marketers to work out the average price per pound to be $2.701 approximately. In addition, the trial pack of 2.25 ounces could be seen as an effective advertising tool in trading customers up to bigger pack sizes of 7 and 11 ounces, in which these packs contributed 47% and 38% of purchases respectively. Lastly, the French onion flavor was preferred by consumers as this flavor contributed 55% of purchases, an excess of 10% of purchases in natural flavor.

Trial & Repeat rates
The cumulative trial and repeat rates for Sun ChipsTM after 40 weeks were 19.9% and 41.8% households respectively, as well as the average purchase amount for triers was 6 ounces. Hence the trial volume was estimated at 6,716,250 pounds2 and repeat purchase volume at 6,082,684 pounds3. The depth of repeat was 2.9 times while the repeat and repeater households purchased average of 13 ounces per purchase occasion. Thus the repeater purchase volume estimated at 17,639,783 pounds4. The total volume purchased would be 30,438,717 pounds5, which was equivalent to $82,187,718.436 in projected first-year sales revenues. This was short of the requirement of at least $100 million sales goal for new products, thus it would be...
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