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    Frito-Lay, Inc. Sun Chips Multigrain Snacks

    Uploaded by

    Haura IC
    This document discusses Frito-Lay's consideration of nationally launching their Sun Chips Multigrain snack brand. It provides background on the snack chip category and Frito-Lay. It then analyzes results from Sun Chips test markets, risks of a national launch, alternatives considered like flavor extensions, and recommends initially launching nationally while continuing to test other extensions.

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    Frito-Lay, Inc. Sun Chips Multigrain Snacks

    Uploaded by

    Haura IC
    399 views15 pages
    This document discusses Frito-Lay's consideration of nationally launching their Sun Chips Multigrain snack brand. It provides background on the snack chip category and Frito-Lay. It then analyzes results from Sun Chips test markets, risks of a national launch, alternatives considered like flavor extensions, and recommends initially launching nationally while continuing to test other extensions.

    Original Description:

    CASE STUDY FRITO LAY

    Original Title

    Frito Lay

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    This document discusses Frito-Lay's consideration of nationally launching their Sun Chips Multigrain snack brand. It provides background on the snack chip category and Frito-Lay. It then analyzes results from Sun Chips test markets, risks of a national launch, alternatives considered like flavor extensions, and recommends initially launching nationally while continuing to test other extensions.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    399 views15 pages

    Frito-Lay, Inc. Sun Chips Multigrain Snacks

    Uploaded by

    Haura IC
    This document discusses Frito-Lay's consideration of nationally launching their Sun Chips Multigrain snack brand. It provides background on the snack chip category and Frito-Lay. It then analyzes results from Sun Chips test markets, risks of a national launch, alternatives considered like flavor extensions, and recommends initially launching nationally while continuing to test other extensions.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 15

    Frito-Lay, Inc.

    Sun Chips Multigrain


    Snacks
    Ryan Brogan, John Campanioni,
    Patrick Hildebrandt, Tracy Lai,
    Ashlea Morrell, and Kate
    Piskorowski

    Snack Chip Category

    $37 billion in snack food retail sales- 5%


    increase from 1989
    Snack chip retail sales of $9.8 billion (26.7% of
    snack food sales)-also 5% increase
    Growth in snack chip category comes from
    increased per capita consumption
    In 1990 consumption was 14 pounds per person
    Three types of competitors

    National brand firms


    Regional brand firms
    Private Brands

    Snack Chip Category

    Highly competitive on price


    Chip manufacturers rely on technology
    to react quickly to competitors new
    product introductions
    Rely on media advertising, consumer
    promotions, and trade allowances
    New product failure rate is high
    Most products are new flavors for
    already existing chips

    Frito-Lay, Inc

    Division of PepsiCo, Inc


    National brand firm manufacturer and marketer of
    snack chips
    Well-known brands- Lays, Ruffles, Fritos, Chee-tos,
    Rold Gold,
    13% of US snack food sales
    Leading manufacturer of snack chips-half of retail
    sales
    U.S. sales of $3.5 billion in 1990
    8 of the chips are among the top ten best-selling
    chips
    Every step in process-agriculture to stacking
    shelves

    Risks and Challenges of


    Marketing Sun Chips

    Requires a new manufacturing


    process and introduces a new chip
    category-huge capital investment
    Requires a huge marketing
    investment-new brand name
    Sun Chips name had a negative
    past

    Past Problems

    In 1970s introduced Prontos- failure with low


    sales and manufacturing problems
    Unfocused copy, confusing name , and too small
    of target market
    Frito-Lay has to enter the market at the right time
    and before the competition
    When is the right time? Efforts to develop another
    multigrain product didnt occur until late 1980s.
    Need committed and focused advertising, a
    catchy and clear name, and a broader target
    market

    Assumptions

    The test market is reflective of the


    entire population
    The cannibalization rate for the
    test market will be used for the
    national market

    Pretest Results

    Healthier product
    Prior to use not an everyday snack
    After trying product, everyday snack
    Positive attitudes and perceptions of
    brand name
    Pretest indicates first-year sales of
    $113 million
    Focus on natural and wild onion flavors

    Statement of Problem

    To continue with the test market of


    Sun Chips or to introduce it nationally
    Manufacturing/marketing costs
    Manufacturing difficulties-still a new
    manufacturing process
    What new additions will be added to
    the product line. I.E. flavor extension,
    15 oz. Package size

    Brand Comparison
    Nationally

    OGradys had achieved 100 million in first


    year sales
    Sun chips sales for 10 months is
    $82,096,000 and after a year about
    $98,516,000 sales.
    It is comparable to the bench mark of
    OGradys Chips.
    Since we are creating a new segment of
    the market we would want to be the first
    to enter it to capture customers early.

    Test Results
    For The Test Market
    Quantitative analysis

    Possible Alternatives

    Continue the test market with 15ounce package


    Continue the test market with a
    flavor extension
    Introduce product nationally with
    same strategy as test market

    Brand Extension National


    Comparison

    Flavor extension achieved


    $110,328,000 in sales and achieved
    a gross profit after cannibalization of
    aprox $14,144,000
    15 oz Package achieved
    $101,469,000 in sales and achieved
    a gross profit after cannibalization of
    aprox $13,075,000

    Test Results
    Test Results for the Other
    product extensions
    Quantitative analysis

    Recommendation

    Because of the $98,516,000 in first year sales


    it is a good idea to launch the Natural and
    French Onion Combination.
    Initial analysis of the flavor extension states
    that we may have sales of $110,328,044 by
    launching the product nationally.
    Therefore we feel that it would be best to test
    market the mild cheddar extension since it
    may prove to be lucrative.

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