For the Bold and Daring!

Frito-LayGroup Members:

Brenda Lockwood

Ingrid Rein

Manoj Thomas

Mary Thomas

Monica Bahmata

Nitin Jain

To be the world’s favorite snack

and always within arm’s reach

Frito-Lay’s Mission StatementFrito-Lay’s Mission Statement

To be the world’sworld’s favorite snack

and always within arm’s reach

Frito-Lay’s Mission StatementFrito-Lay’s Mission Statement

To be the world’s favoritefavorite snack

and always within arm’s reach

Frito-Lay’s Mission StatementFrito-Lay’s Mission Statement

To be the world’s favorite snack

and always within arm’s reachalways within arm’s reach

Frito-Lay’s Mission StatementFrito-Lay’s Mission Statement

•Early Days, Frito® Bandito

• Now, Integrated Marketing Strategy….

Caution: He loves cronchy Frito corn chipsso much he'll stop at nothingto get yours. What's more, he's cunning, clever -- and sneaky!Advertisement, c. 1970.

Evolution of Frito-Lay MarketingEvolution of Frito-Lay Marketing

• Emerging health conscious consumers

• Generation Y and busy life style

• Individual taste preferences

• Influence of children on snack purchase

• Increasing diversity in population

Macro Trends For Salty Snacks

Opportunity/Threat Matrix

Demand for Convenience Food

Private Local Brands

Increasing Health Consciousness

Government RegulationsLow

Low

High

High

Lev

el o

f Im

pact

Probability of Occurrence

Industry Competition

• Low level threat of new entrants at national level

• Relatively easier in local market

• Weak bargaining power of Suppliers – Farmers

• Fixed amount of potatoes at a set price

• Forward integration Strategy – Gaining ownership

• Weak bargaining power of buyers - Stores

• Continuous threat from existing and new alternative snack food

• ‘White Label’ brand of Large grocery store chains

Fierce rivalry among large companies – General Mills, Nabisco, P & G

• 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 product lines.

• 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

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

Competitive Analysis – Frito-lay

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

• 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

Market Positioning – Frito-Lay

• 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)

Market Positioning – Doritos

I asked my son: Why do you like Doritos chips?

His answer: Because they are yummy and orange!

Perceptual Map of Doritos

Bold FlavorBland Flavor

Classic Image

Loud Image

Positioning Statement &Value Proposition

Positioning StatementFor the Bold and Daring, Doritos indulgence snacks offer extreme taste, high decibel crunch and bold flavor.

Value PropositionTarget Market:Generation YBenefits offered: Bold flavor, Extreme ImagePrice: Comparable to competition,

inexpensive

So, Who Are the

???

Three Market Segments

1. MTV Teens

2. Pigskin Enthusiasts

3. Get-A-Life Students

Name: Kyle (in Black Shorts)

Screen Name: spazzalicious

Age: 19

Occupation: College Freshman

Interests: Extreme Sports, Video Games (X-box), Computers, Movies, Music (MTV), Brand Name Clothes, Girls

Lifestyle: Goes to Cancun for Spring Break, Likes to Party, Likes Loud Music, Lives For The Day

Needs: Tasty, Loud, Outrageous Snacks in Cool Packages

Wants: Isn't It Obvious?

MTV Teen

Name: Eddie (in Orange Sweater)

Age: 27

Occupation: Public Relations Rep.

Income: $45,000

Interests: Sports (on TV), Happy Hour, Trading Stocks Online

Lifestyle: Single, Has Girlfriend, Hosts Football-Sunday Parties for the Guys

Needs: Quick/easy (no cooking required) Snacks, Food that tastes good with Beer

Wants: A Dog That Fetches Beer

Pigskin Enthusiast

Name: Brenda (me)

Age: 31

Occupation: Web Producer, Grad. Student

Interests: Movies, Water Skiing, Traveling

Lifestyle: Work by Day – School by Night, Very Busy

Needs: Convenient, Small Packaged Snacks to Eat During Class, “Food On the Move”, Crunchy Fix for Late Night Studying

Wants: A Vacation

Get-A-Life Student

Three Market Segments

1. MTV Teens

2. Pigskin Enthusiasts

3. Get-A-Life Students

Targeted segment

Online Marketing

• Digital investment up to 9% overall budget

• Revamping Doritos.com

• Viral-marketing – underground site

" 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

Online Marketing

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

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

Market Attractiveness/Competitive Position Matrix

High

High

MTV Teens

Medium

Low

MediumLow

Get-A-Life Students

Pigskin Enthusiasts

Competitive Position

Market Attractiveness

•Analyzer Strategy

•Global Strategy

Frito-Lay Business Strategy

• Maximum Distribution

• Consumer Advertising

• Merchandising

Convenience Foods

Full line designed to meet all needs of consumer segments

Frito-Lay Product Line

• Size of Bag

• Shape of Chip

• Packaging

• Flavor

Product Decisions

•3Ds ®

•Tostitos ® and Fritos ® Scoops

Shape

• Bags

• Snack Packs

• To Go ® Packs

Packaging

• U.S. Flavoring Choices

• Global Flavors

Flavor

Some International Flavors

United States Sour Cream & Onion Barbeque Salt Ranch Salt & Vinegar Cheddar & Salsa

Great Britain Roast Beef & Mustard Mature Cheddar & Onion Smoked Ham & Pickle Roast Chicken & Stuffing

Switzerland Paprika

India Salt Masala Tomato

Egypt Vinegar Hot Chili Salt Chicken Curry Cheese Kebab Ketchup Turkey Sour & Spicy

Thailand, Malaysia, Singapore Texas Barbeque Onion Garlic Mexican Barbeque Prawn Durian & Shrimp

Interesting Tastes

Cuttlefish !!!!!!!!

•Hidden Valley Ranch®

•Cracker Barrel® Cheddar

•KC Masterpiece® Barbecue

Brands and Chip Flavors

• With aging population, increasing market segment, i.e. snack like a kid again

• Need similar flavors and textures

Healthy Chips

• Convenience Product - Low Price

• Variety-Seeking Behavior

• “Good Quality Snack at Fair Price”

•Wide Range of Chips to Meet Every Budget

Price

Frito-Lay Product Price

Chip Price OuncesCost per Ounce

Santitas $1.99 18.00 $0.11Roll Gold Pretzels $1.99 15.00 $0.13Sun Chips $2.29 13.50 $0.17Fritos $2.29 10.00 $0.23Doritos $3.29 13.50 $0.24Cheetos $2.29 9.50 $0.24Lays $2.99 12.25 $0.24Ruffles $3.19 11.00 $0.29Bistro chips $2.59 9.00 $0.29Munchos $1.99 6.50 $0.31Funyuns $2.29 7.00 $0.33WOW chips $4.29 12.00 $0.363D Snacks $2.59 7.00 $0.37Baked Chips $4.28 10.00 $0.43To Go Snacks $1.29 3.00 $0.43

• New Products - Market Penetration

• Some Time Pricing

• Promotional Pricing

Price

Where are Frito-Lay Products Sold?

…..Everywhere…..

Distribution

Distribution

A. Sales people input store info into handheld

B. Handheld loaded into national database

C. Database generates vital market info D. Market info

gives up-to-the-minute sales info to...

Product Planning

Purchasing

Manufacturing

Distribution

•Core Competency

•Advantages of Frito-Lay System

•Global Distribution

Distribution

Distribution

•Aims at target groups

•Integrated message

Promotional Mix

Sporting Events

Promotional Mix

Ali Landry - 2001 Super Bowl

Frankie Muniz - 3 Ds Commercials

Spokesperson

Contests, Tie-in with other companies,

Movie tie-ins

Promotional Mix

Use of Humor

Promotional Mix

In-Store Promotions

Promotional Mix

More than 50% of Salty Snack Aisle is Frito-Lay

Doritos Section

Frito-Lay Uses Tie-ins With Parent Co., Pepsico

Frito-Lay Involvement In Design of Retail Stores

Eye-catching Displays

Displays Before Check-Out Line

• Sponsorship - Frito-Lay does research to determine best Sponsorships

• i.e Operation Bass

• Global Approaches - Indulgence

Promotional Mix

Frito-Lay Balancing Act

Plus Potential Minus

• Good segmentation • Large company could

• Market-oriented loose touch with Public

• Diverse product mix needs

• Good distribution system • Needs to pay attention

• Good partnerships all its products

Conclusion

Innovative Recommendations

• Advertising at Blockbuster on video tapes or DVD

• Different packaging ideas sphere

• Cartoon shaped chips in safe package

• Contests at school for new products, flavor, package

• Contest at school awarded with company’s products

• School sales of chips -like candy bars

• Fluorescent packages- glow in the dark chips

• Package tie with Pepsi -small can of Pepsi with small plastic can of chips wrapped together

• Musical package- hear a funny music or a distinctive sound while opening the package

• Packaging chips bag with wet- napkins to clean hands

• Popup advertisement on Internet, especially on sites visited by teenagers

• Zip package

• Two different chips in same packaging

• Package tie - two different kind of chips in different small plastic can wrapped together

Innovative Recommendations