Frito Lay Essay

1646 Words Dec 26th, 2011 7 Pages
1. How would you characterize the snack chip category and Frito-Lay’s competitive position in this category? The snack chip industry is clearly a matured industry, showing significant signs of growth. This is evidenced by the steady growth in both dollar sales as well as volume of snack-chip pounds sold. The snack chip industry has grown 5% since 1989 to 1990 in terms of retail sales. The snack chips retail market was worth $9.8 billion in 1990. Since 1986 to 1990, the US bought 3.5 billion pounds of snack chips which is nearly 14 pounds per person. In 1986, snack chips per capita consumption was slightly less than 12 pounds. The snack chip industry contains mainly three types of competitors: national brands, regional …show more content…
Frito-Lay’s experience with multigrain snacks and the SunChips brand in the 1970s were not successful. The snack was sold on premise that it was a “different, delicious new snack made from nature’s own corn, oats and whole grain wheat all rolled into one special recipe”. The Prontos brand was not well received and eventually terminated. The latest SunChips line of multigrain snacks would involve large risks to Frito-Lay because of a huge capital investment (new manufacturing process) and an equally huge marketing investment (new brand) that could be financially justified only with a product that could be sustainable for an extended period. The challenges are evident for Frito-Lay to see. With the product development of SunChips, Frito-Lay took the correct decision to undertake proper market testing with a test market exercise in the state of Minnesota-St. Paul. This would give Frito-Lay an idea of the product’s potential without extensive risks or costs. 3. What insights can be drawn from Frito-Lay’s prior experience with multigrain snacks? Frito-Lay’s experience with multigrain snacks and the SunChips brand in the 1970s were not successful. The possibility of a multigrain product was explored in the early 1970s when corporate marketing research studies indicated that consumers were looking for nutritious snacks. Frito-Lay developed a multigrain snack chip under the brand Prontos and it was

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