For the Bold and Daring!

Frito-Lay
Group Members:

Brenda Lockwood
Ingrid Rein
Manoj Thomas
Mary Thomas
Monica Bahmata
Nitin Jain
Frito-Lay’s Mission Statement

To be the world’s favorite snack

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

To be the world’s favorite snack

and always within arm’s reach
Frito-Lay’s Mission Statement
To be the world’s favorite snack
and always within arm’s reach
Evolution of Frito-Lay Marketing
•Early Days, Frito® Bandito

Caution: He loves cronchy Frito corn chips

so much he'll stop at nothing
to get yours. What's more, he's cunning,
clever -- and sneaky!
Advertisement, c. 1970.

• Now, Integrated Marketing Strategy….

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

 Opportunity/Threat Matrix
Probability of Occurrence

High Low

Demand for Private Local

High Convenience Food Brands
Level of Impact

Increasing Health Government

Low Consciousness Regulations
 Industry Competition

• Low level threat of new entrants

at national level
• Relatively easier in local market

• Forward integration
• Weak bargaining power Fierce rivalry among Strategy – Gaining
of Suppliers – Farmers large companies – ownership
General Mills,
• Fixed amount of potatoes Nabisco, P & G • Weak bargaining power
at a set price of buyers - Stores

• Continuous threat from existing

and new alternative snack food
• ‘White Label’ brand of Large
grocery store chains
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 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 - 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
 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
 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)
I asked my son: Why do you like Doritos
chips?
His answer: Because they are yummy and
orange!
 Perceptual Map of Doritos
Loud Image

Bland Flavor Bold Flavor

Classic Image
 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
So, Who Are the

???
 Three Market Segments

1. MTV Teens

2. Pigskin Enthusiasts

3. Get-A-Life Students
 MTV Teen
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?
 Pigskin Enthusiast
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
 Get-A-Life Student
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
 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

 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

 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
Market
Attractiveness
Pigskin Enthusiasts MTV Teens
High

Get-A-Life
Medium
Students

Low

Competitive
High Position
Low Medium
 Frito-Lay Business Strategy
•Analyzer Strategy

•Global Strategy
 Convenience Foods

• Maximum Distribution
• Consumer Advertising
• Merchandising
 Frito-Lay Product Line

Full line designed to meet all needs

of consumer segments
 Product Decisions

• Size of Bag
• Shape of Chip
• Packaging
• Flavor
 Shape

•3Ds ®

•Tostitos ® and Fritos ® Scoops

 Packaging
• Bags

• Snack Packs

• To Go ® Packs
 Flavor

• U.S. Flavoring Choices

• Global Flavors
 Some International Flavors
United States Great Britain Switzerland
 Sour Cream & Onion  Roast Beef & Mustard  Paprika
 Barbeque  Mature Cheddar & Onion India
 Salt  Smoked Ham & Pickle
 Salt
 Ranch  Roast Chicken & Stuffing
 Masala
 Salt & Vinegar
 Tomato
 Cheddar & Salsa

Thailand, Malaysia, Singapore Egypt

 Texas Barbeque  Vinegar
 Onion Garlic  Hot Chili
 Mexican Barbeque  Salt
 Prawn  Chicken Curry
 Durian & Shrimp  Cheese
 Kebab
 Ketchup
 Turkey
 Sour & Spicy
Interesting Tastes
Cuttlefish !!!!!!!!
 Brands and Chip Flavors

•Hidden Valley Ranch®

•Cracker Barrel® Cheddar
•KC Masterpiece® Barbecue
 Healthy Chips
• With aging population, increasing market segment,
i.e. snack like a kid again

• Need similar flavors and textures

 Price
• Convenience Product - Low Price

• Variety-Seeking Behavior

• “Good Quality Snack at Fair Price”

•Wide Range of Chips to Meet Every Budget

Frito-Lay Product Price
Cost per
Chip Price Ounces Ounce
Santitas $1.99 18.00 $0.11
Roll Gold Pretzels $1.99 15.00 $0.13
Sun Chips $2.29 13.50 $0.17
Fritos $2.29 10.00 $0.23
Doritos $3.29 13.50 $0.24
Cheetos $2.29 9.50 $0.24
Lays $2.99 12.25 $0.24
Ruffles $3.19 11.00 $0.29
Bistro chips $2.59 9.00 $0.29
Munchos $1.99 6.50 $0.31
Funyuns $2.29 7.00 $0.33
WOW chips $4.29 12.00 $0.36
3D Snacks $2.59 7.00 $0.37
Baked Chips $4.28 10.00 $0.43
To Go Snacks $1.29 3.00 $0.43
 Price

• New Products - Market Penetration

• Some Time Pricing

• Promotional Pricing
 Distribution

Where are Frito-Lay Products Sold?

…..Everywhere…..
Distribution
 Distribution

A. Sales people
input store info
into handheld
B. Handheld loaded into
national database
Product
Planning

Purchasing

C. Database
generates vital Manufacturing
market info D. Market info
gives up-to-the-
minute sales info
to...
 Distribution

•Core Competency

•Advantages of Frito-Lay System

•Global Distribution
Distribution
 Promotional Mix
•Aims at target groups
•Integrated message
Promotional Mix
Sporting Events
 Spokesperson

Ali Landry - 2001

Super Bowl

Frankie Muniz - 3 Ds
Commercials
 Promotional Mix
Contests, Tie-in with other companies,
Movie tie-ins
Promotional Mix
Use of Humor
Promotional Mix

In-Store Promotions
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
 Promotional Mix
• Sponsorship - Frito-Lay does research to
determine best Sponsorships
• i.e Operation Bass

• Global Approaches - Indulgence

 Conclusion
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
 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
 Innovative Recommendations
• 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