Frito-Lay`s® Dips
The Problem
The problem for Frito-Lay company is that they are not
sure whether they should grow their share on chip dips
market or should focus on vegetable dips market to
reach the best future growth.
Limitations
For Chip Dip Market : Requirement of high marketing
investment, uncertain ROI, nutrition concerns of
customers, increasing competition.
For Vegetable Dip Market : Production warehouses of
supermarkets, Frito`s delivery and distribution systems,
requirement of a different sales approach, potential
increase of selling expenses, effect of Frito`s new image
on consumers, the need to produce new innovative dips,
additional research-development-advertising expenses.
Alternative Solutions
Reserve leadership in chip dip market and at the same time focus
more on vegetable dip market (Since Frito-Lay has strong
distribution channels, very good at Information Technology Systems
like using hand-held computers, efficient at using the data
(resources : instant-essays.com, line56.com, speedofheat.com);
this won`t be hard.
Create really innovative dips for vegetable dip market (Frito-Lay`s
has expertise on innovative products like the new Lay`s Stax chips
and chips for Hispanic consumers which are profitable – resources :
vendingbiz.biz, Wall Street Journal Oct. 8, 2003).
Consider the long-run success with vegetable dip market (Nutrition
concerns are increasing. So, Frito-Lay`s currently produces organic
and no trans-fat chips in accordance with FDA ruling – reources :
pepsico.com, phx.corporate-ir.net, Wall Street Journal Aug. 6,
2003).
Alternative Solutions (cont.)
Take necessary risks for vegetable dip market (Elmer
Doolin, one of the founders of Frito-Lay was first in icecream business, but after facing competition, he went into
chips business [resource : fritolay.com]. Here, he did take
a big risk. Because he had no experience with chips and it
was impossible for him to be sure about the future of this
business. This proves us again that firms must be open to
take risks.
Implement impressive advertisements and promotions for
the new sour cream dip.
Do a more detailed marketing research + a good research
on supermarket warehouses (contact ally firms to learn the
process completely and then have employee training
programs).
Produce new fat-free chips and tell that you highly value
health via advertisements.
Pros and Cons of Alternatives
Reserve leadership in chip dip market and at the same time focus more on
vegetable dip market.
Pros : More profits and the advantage of being the “first-in” company to dominate
vegetable dip market.
Cons : Additional expenses, also risks. Concentration on chip dip market will lower.
Create really innovative dips for vegetable dip market.
Pros : Vegetable dip project will be much more easier which can lead to very high
profits.
Cons : Manufacturing, advertising and research expenses. Demand to new dips is not
guaranteed.
Implement impressive advertisements and promotions for the new sour cream dip.
Pros : A good first perception of consumers can create additional reputation and
continual demand.
Cons : Advertising and promotion expenses will be high.
Pros and Cons of Alternatives (cont.)
Do a more detailed marketing research + a good research on
supermarket warehouses (contact ally firms to learn the process
completely and then have employee training programs).
Pros : Exact info. will determine the best move to make, supermarket
warehouses may not be a nightmare.
Cons : Training programs, marketing research & supermarket
warehouses research will require funds.
Produce new fat-free chips and tell that you highly value health via
advertisements.
Pros : Chip dip sales will go up, nutrition concerns for chips will lower,
new image will bring comp. advantage
Cons: Advertisement costs will be high, producing new chips will
require time and financials.