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For the Bold and Daring! Frito-Lay

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  1. For the Bold andDaring! Frito-Lay Group Members: Brenda Lockwood Ingrid Rein Manoj Thomas Mary Thomas Monica Bahmata Nitin Jain

  2. Frito-Lay’s Mission Statement To be the world’s favorite snack and always within arm’s reach

  3. Frito-Lay’s Mission Statement To be the world’sfavorite snack and always within arm’s reach

  4. Frito-Lay’s Mission Statement To be the world’s favorite snack and always within arm’s reach

  5. Frito-Lay’s Mission Statement To be the world’s favorite snack and always within arm’s reach

  6. Evolution of Frito-Lay Marketing • Early Days, Frito® Bandito • Now, Integrated Marketing Strategy….

  7. 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

  8. Opportunity/Threat Matrix Probability of Occurrence High Low High Level of Impact Low

  9. 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

  10. 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 productlines. • In the year 2000, many mega-mergers took place: • - Unilever acquired Best Food • - Nabisco acquired Philip Morris • - General Mills acquired Pillsbury • - Kellogg’s acquired Keebler

  11. 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

  12. Competitive Analysis - Doritos • Doritos is the market leader in it’s segment • There isn’t much direct competition. It’s closest competitor is Torengos, made by Procter and Gamble. • Other competition includes imitation chips made by local companies

  13. 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

  14. 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)

  15. I asked my son: Why do you like Doritos chips? His answer: Because they are yummy and orange!

  16. Loud Image Bland Flavor Bold Flavor Classic Image Perceptual Map of Doritos

  17. 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

  18. So, Who Are the ???

  19. Three Market Segments • MTV Teens 2. Pigskin Enthusiasts 3. Get-A-Life Students

  20. 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

  21. Name: Eddie (in Orange Sweater)Age: 27Occupation: Public Relations Rep.Income: $45,000Interests: 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

  22. 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

  23. Three Market Segments • MTV Teens • Pigskin Enthusiasts 3. Get-A-Life Students Targeted segment

  24. Online Marketing • Digital investment up to 9% overall budget • Revamping Doritos.com • Viral-marketing – underground site

  25. 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

  26. 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

  27. 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

  28. Market Attractiveness/Competitive Position Matrix Market Attractiveness Pigskin Enthusiasts MTV Teens High Get-A-Life Students Medium Low Competitive Position High Low Medium

  29. Frito-Lay Business Strategy • Analyzer Strategy • Global Strategy

  30. Convenience Foods • Maximum Distribution • Consumer Advertising • Merchandising

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

  32. Product Decisions • Size of Bag • Shape of Chip • Packaging • Flavor

  33. Shape • 3Ds ® • Tostitos ® and Fritos ® Scoops

  34. Packaging • Bags • Snack Packs • To Go ® Packs

  35. Flavor • U.S. Flavoring Choices • Global Flavors

  36. Some International Flavors

  37. Interesting Tastes

  38. Cuttlefish !!!!!!!!

  39. Brands and Chip Flavors • Hidden Valley Ranch® • Cracker Barrel® Cheddar • KC Masterpiece® Barbecue

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

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

  42. Frito-Lay Product Price

  43. Price • New Products - Market Penetration • Some Time Pricing • Promotional Pricing

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

  45. Distribution

  46. A. Sales people input store info into handheld B. Handheld loaded into national database Product Planning Purchasing C. Database generates vital market info Manufacturing D. Market info gives up-to-the-minute sales info to... Distribution

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