SOUTHERN NEW HAMPSHIRE UNIVERSITY
Graduate School of Business
Program:
SNHU School of Business Graduate Program
Course Title : Marketing Strategies – MKT 500
Instructor: Jeannemarie Thorpe
Due Date: Monday, January 26, 2004
Submission Date: Monday, January 26, 2004
Type of Assignment: Case Analysis (Final Review)
Title of Assignment: Frito-Lay’s Dips – 3rd Case Study (Selection of Best Alternative)
Student Name: Cevdet KIZIL
Student Phone #s: (603) 626 9302
Student E-mail: cevdetkizil@yahoo.com
CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this assignment. Any
assistance I received in its preparation is fully acknowledged and disclosed within this document. For
Mid-Term and/or Final Exams, I certify that I have not received any help from others.
I have cited any and all sources, both print and electronic, from which I have used data, ideas, or words,
either quoted or paraphrased. My cited sources are indicated within this document. I also certify that
this assignment was prepared by me specifically for the course as listed above.
Student Signature
Assignment Grade: ______
Instructor Comments:
Monday, January 26, 2004
Date:
FRITO-LAY’S DIPS
SELECTION OF BEST ALTERNATIVE
Selection of Best Alternative for Frito Lay’s Dips
First of all; before expressing my opinion on the best alternative for Frito Lay’s
Dips case, I would like to discuss all mentioned alternatives in the class.
Let me start by evaluating my alternatives (solutions) with their pros and cons.
My first alternative for Frito Lay’s Dips case was “reserving leadership in chip dip
market while at the same time focusing on vegetable dip market”. I did come up with this
alternative; because after doing a lot of outside research, I did learn that Frito Lay’s
company had strong distribution channels, was very good at information technology
systems like the hand held computers and finally was efficient at using the data
(resources : instant-essays.com, line56.com, speedofheat.com). As a result; I thought that
by using these strengths, Frito could easily reserve its leadership in the chip dip market.
Pros for this alternative were more profits and the advantage of being the “first-in”
company to dominate vegetable dip market. Cons were additional expenses and risks.
Also, concentration on the chip dip market would lower. Then; my other alternative was
“creating really innovative dips for vegetable dip market”. Because; after doing an
outside research on innovative products of Frito Company, I did learn that the company
was also advantageous here. For instance; Lay’s new Stax chips is now having great
battle with P&G’s Pringles chips. My outside research showed me that Lay’s Stax chips
was off to a very good start and was stealing the market share of Pringles. Additionally;
referring to my outside research, Lay’s new chips for Hispanic consumers were also very
innovative products bringing good profits (resources: vendingbiz.biz, Wall Street Journal
– October 8, 2003, Shapiro Library – Exp. Academic Database – December 2003, Exp.
Academic ASAP Database – October 2003). Pros for this alternative were that; vegetable
dip project would be much more easier which could lead to very high profits. On the
other hand; cons were manufacturing, advertising and research expenses. Also; demand
to new dips was not guaranteed. My next alternative was “considering the long-run
success with vegetable dip market”. Because; again according to my outside research, I
did learn that nutrition concerns in U.S. was increasing going parallel with obesity. For
this alternative; my outside research proved that I was right. Because; I did learn that
Frito was currently producing organic and no trans-fat chips in accordance with FDA
ruling
and
increasing
consumer
product
awareness
(resources:
pepsico.com,
phx.corporate-ir.net, Wall Street J. – August 6, 2003, talksoy.com, infozine.com,
thesoydailyclub.com). After that; I thought “taking necessary risks for vegetable dip
market” was also a possible alternative. The reason is that; again related to my outside
research, I did learn that Elmer Doolin who was one of the founders of Frito-Lay’s was
first in ice-cream business. But after facing competition, he went into chips business
(resource: fritolay.com). So, we can easily say that he did take a big risk. Because; he had
no experience with chips before and it was impossible for him to be sure about the future
of this business. Following this; in my opinion, “implementing impressive advertisements
and promotions for the new sour cream dip” was another good alternative. Pros for this
alternative were a good first perception of consumers, additional reputation and continual
demand. Cons were high advertising and promotion expenses. Then; from my point of
view, “Frito had to do a more detailed marketing research & a good research on
supermarket warehouses”. As an example; they could contact ally firms to learn the
process completely and then they could have employee training programs. Pros for this
alternative were that; exact information would determine the best move to make. Cons
were that; training programs, marketing research and supermarket warehouses research
would require funds. My final alternative was “producing new fat-free chips and telling
that Frito highly values health via advertisements”. Pros for this alternative were that;
chip dip sales would go up, nutrition concerns for chips would lower and new image
would bring competitive advantage. Cons were that; advertisement costs would be high
and producing new dips would require time and financials.
In addition to my alternatives (your favorites were creating innovative dips for
vegetable dip market, taking necessary risks for vegetable dip market and doing a more
detailed marketing research and supermarket warehouses research); I think the class did
also come with very intelligent alternatives. One of the most creative alternatives was
“producing new products like Taco Bell and Pizza Hut Dips”. Another nice alternative
was “producing dry formula dips (when dry formula is added to water, it becomes a
dip)”. Next, “horizontal marketing” idea was discussed as an alternative solution. Finally;
the class also thought that “Frito could manage the dip marketing business with other
companies”.
In conclusion; among all alternatives, I think the best one is “creating innovative
dips for vegetable dip market”. Because; as I told before, my outside research indicates
that Frito has a significant expertise here. Especially; if this alternative can be well
implemented; vegetable dips market will be owned immediately and much more easily
which will result in very high profits (as mentioned in pros). I know that manufacturing,
advertising and research expenses will be high (as mentioned in cons); but if we think of
the potential profits waiting there; this will be a clever sacrifice. Finally; Frito has no
other way, but to try. Demand waiting there can not be explored in any other way.