Macro Trends For Salty Snacks

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For the Bold and Daring! Frito-Lay
Group Members Brenda Lockwood Ingrid Rein Manoj
Thomas Mary Thomas Monica Bahmata Nitin Jain
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Frito-Lays Mission Statement
To be the worlds favorite snack and always
within arms reach
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Frito-Lays Mission Statement
To be the worlds favorite snack and always
within arms reach
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Frito-Lays Mission Statement
To be the worlds favorite snack and always
within arms reach
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Frito-Lays Mission Statement
To be the worlds favorite snack and always
within arms reach
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Evolution of Frito-Lay Marketing

• Early Days, Frito Bandito
• Now, Integrated Marketing Strategy.

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Macro Trends For Salty Snacks

• Emerging health conscious consumers
• Generation Y and busy life style
• Individual taste preferences
• Influence of children on snack purchase
• Increasing diversity in population

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Opportunity/Threat Matrix
Probability of Occurrence
Low
High
High
Level of Impact
Low
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Industry Competition

• Low level threat of new entrants at national
  level
• Relatively easier in local market

• Forward integration Strategy Gaining ownership
• Weak bargaining power of buyers - Stores

Fierce rivalry among large companies General
Mills, Nabisco, P G

• Weak bargaining power of Suppliers Farmers
• Fixed amount of potatoes at a set price

• Continuous threat from existing and new
  alternative snack food
• White Label brand of Large grocery store
  chains

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Competitive Analysis Frito-Lay

• The food industry has resurged as a result of
  rampant merger activity among several large food
  processors.
• Global food producers and multinational
  companies have acquired smaller food companies to
  gain market share, add a product line, and
  solidify/strengthen their current product lines.
• In the year 2000, many mega-mergers took place
• - Unilever acquired Best Food
• - Nabisco acquired Philip Morris
• - General Mills acquired Pillsbury
• - Kelloggs acquired Keebler

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Competitive Analysis Frito-lay

• Frito-Lay is the leader of chip market.
• They have approximated 2.17 billion / year
  tortilla chips category, with Doritos and
  Tostitos in top. Frito-Lay sold 82 of tortilla
  chips bought in the US.
• The Frito-Lay competitors are- Procter and
  Gamble - General Mills- Nabisco

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Competitive Analysis - Doritos

• Doritos is the market leader in its segment
• There isnt much direct competition. Its closest
  competitor is Torengos, made by Procter and
  Gamble.
• Other competition includes imitation chips made
  by local companies

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Market Positioning Frito-Lay

• As market leader they set industry trends
• They have a good positioning in the market
  because of their sustainable competitive
  advantage
• Competitive advantage
• - Well-developed product mix
• - Extensive management information system, the
  company uses a vast database updated daily
  (market share, displays, competitors pricing)
• - Elaborate distribution channels

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Market Positioning Doritos

• Competitive advantage
• - Loud image
• - Bold flavor
• Determinant Attributes
• - Endorsements (Ali Landry, Malcolm in the
  Middle, MTV)
• - Psychographic usage (loud/outrageous image)
• - Popularity usage (well known/trusted brand)

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I asked my son Why do you like Doritos
chips? His answer Because they are yummy and
orange!
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Perceptual Map of Doritos
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Positioning Statement Value Proposition

• Positioning Statement
• For the Bold and Daring, Doritos indulgence
  snacks offer extreme taste, high decibel crunch
  and bold flavor.
• Value Proposition
• Target Market Generation Y
• Benefits offered Bold flavor, Extreme Image
• Price Comparable to competition,
  inexpensive

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So, Who Are the

• ???

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Three Market Segments

• MTV Teens
• 2. Pigskin Enthusiasts
• 3. Get-A-Life Students

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Name Kyle (in Black Shorts)Screen
Name spazzaliciousAge 19Occupation College
FreshmanInterests Extreme Sports, Video Games
(X-box), Computers, Movies, Music (MTV), Brand
Name Clothes, GirlsLifestyle Goes to Cancun
for Spring Break, Likes to Party, Likes Loud
Music, Lives For The DayNeeds Tasty, Loud,
Outrageous Snacks in Cool Packages
Wants Isn't It Obvious?
MTV Teen
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Name Eddie (in Orange Sweater)Age 27Occupa
tion Public Relations Rep.Income 45,000Int
erests Sports (on TV), Happy Hour, Trading
Stocks OnlineLifestyle Single, Has Girlfriend,
Hosts Football-Sunday Parties for the
GuysNeeds Quick/easy (no cooking required)
Snacks, Food that tastes good with
BeerWants A Dog That Fetches Beer
Pigskin Enthusiast
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Name Brenda (me)Age 31Occupation Web
Producer, Grad. StudentInterests Movies, Water
Skiing, TravelingLifestyle Work by Day
School by Night, Very BusyNeeds Convenient,
Small Packaged Snacks to Eat During Class,
Food On the Move, Crunchy Fix for Late Night
StudyingWants A Vacation
Get-A-Life Student
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Three Market Segments

• MTV Teens
• Pigskin Enthusiasts
• 3. Get-A-Life Students

Targeted segment
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Online Marketing

• Digital investment up to 9 overall budget
• Revamping Doritos.com
• Viral-marketing underground site

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Online Marketing
" The teen target has a lot of skepticism toward
marketing activities online, but if we align
with the content they're interested in
entertainment, music, games it allows us to
engage them in a more meaningful way."
Jonathan Glicksberg, Atmosphere
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Market Attractiveness Factors

• Need for snacks are strong among all segments
• Teen segment is growing through online efforts
• Macro tends are favorable high influence on kids
  making snack purchase decisions, emerging Y
  generation has purchase power, busy lifestyles
  demand food on the go, growing Hispanic
  population likes bold, spicy flavor

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Competitive Position Factors

• Doritos has most Extreme flavor of any
  competitor, trend is in that favor
• Frito-Lay is strong company with other
  complementary products to Doritos
• Favorable forces low threat of entrants due to
  forward integration, excellent distribution
  channels, economies of scale, product
  differentiation
• Unfavorable forces threat of substitutes

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Market Attractiveness/Competitive Position Matrix
Market Attractiveness
Pigskin Enthusiasts
MTV Teens
High
Get-A-Life Students
Medium
Low
Competitive Position
High
Medium
Low
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Frito-Lay Business Strategy

• Analyzer Strategy
• Global Strategy

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Convenience Foods

• Maximum Distribution
• Consumer Advertising
• Merchandising

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Frito-Lay Product Line
Full line designed to meet all needs of
consumer segments
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Product Decisions

• Size of Bag
• Shape of Chip
• Packaging
• Flavor

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Shape

• 3Ds
• Tostitos and Fritos Scoops

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Packaging

• Bags
• Snack Packs
• To Go Packs

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Flavor

• U.S. Flavoring Choices
• Global Flavors

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Some International Flavors
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Interesting Tastes
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Cuttlefish !!!!!!!!
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Brands and Chip Flavors

• Hidden Valley Ranch
• Cracker Barrel Cheddar
• KC Masterpiece Barbecue

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Healthy Chips

• With aging population, increasing market
  segment, i.e. snack like a kid again
• Need similar flavors and textures

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Price

• Convenience Product - Low Price
• Variety-Seeking Behavior
• Good Quality Snack at Fair Price
• Wide Range of Chips to Meet Every Budget

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Frito-Lay Product Price
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Price

• New Products - Market Penetration
• Some Time Pricing
• Promotional Pricing

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Distribution
Where are Frito-Lay Products Sold? ..Everywhere
..
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Distribution
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Distribution
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Distribution

• Core Competency
• Advantages of Frito-Lay System
• Global Distribution

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Distribution
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Promotional Mix

• Aims at target groups
• Integrated message

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Promotional Mix
Sporting Events
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Spokesperson
Ali Landry - 2001 Super Bowl Frankie Muniz - 3
Ds Commercials
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Promotional Mix
Contests, Tie-in with other companies, Movie
tie-ins
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Promotional Mix
Use of Humor
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Promotional Mix
In-Store Promotions
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More than 50 of Salty Snack Aisle is Frito-Lay
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Doritos Section
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Frito-Lay Uses Tie-ins With Parent Co., Pepsico
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Frito-Lay Involvement In Design of Retail Stores
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Eye-catching Displays
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Displays Before Check-Out Line
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Promotional Mix

• Sponsorship - Frito-Lay does research to
  determine best Sponsorships
• i.e Operation Bass
• Global Approaches - Indulgence

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Conclusion

• Frito-Lay Balancing Act
• Plus Potential Minus
• Good segmentation Large company
  could
• Market-oriented loose touch with Public
• Diverse product mix needs
• Good distribution system Needs to
  pay attention
• Good partnerships all its products

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Innovative Recommendations

• Advertising at Blockbuster on video tapes or DVD
  
• Different packaging ideas sphere
• Cartoon shaped chips in safe package
• Contests at school for new products, flavor,
  package
• Contest at school awarded with companys
  products
• School sales of chips -like candy bars
• Fluorescent packages- glow in the dark chips
• Package tie with Pepsi -small can of Pepsi with
  small plastic can of chips wrapped together

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Innovative Recommendations

• Musical package- hear a funny music or a
  distinctive sound while opening the package
• Packaging chips bag with wet- napkins to clean
  hands
• Popup advertisement on Internet, especially on
  sites visited by teenagers
• Zip package
• Two different chips in same packaging
• Package tie - two different kind of chips in
  different small plastic can wrapped together