Frito Lay Case Study

BUS 346: Marketing Management

Workshop II

Steven E. Clemons

Instructor-T. Stamms

Case Study: Frito-Lay’s Dips

* How would you characterize the dip category in general?

Answer: In general, the “dip” category is an extremely disjointed, and hard to quantify market. This market offering has grown in popularity in recent years as an entrée, snack, or complement to the main course at meal time, mainly due to changes in the eating habits of Americans. Dips can be served with a host of different snacks or veggies and owe at least some of their popularity to their ease of use and handy availability. As a market, “dips” accounted for $620 million dollars in 1985, 80 % of which were sold in supermarkets, additionally, more than half of these products were of the refrigerated variety, while prepared or ready to eat dips, accounted for the majority of the sales volume (55%), the remainder of the market was represented by dip mixes for at-home preparation. Within the “dip” segment, shelf stable dips (dips that require no refrigeration) have become increasingly popular because they can be displayed practically anyplace, which might potentially aid in product placement strategies.

* How might the dip category be segmented?

Answer: As a complimentary product, the dip category is divided into two main parts; the “chip dip” category, and the “vegetable dip” category as the product types. The dip category exploded in popularity in the early mid-eighties, aided in no small part by the rise in popularity of Mexican food, especially nachos. Dips are either pre-prepared or made/mixed at home. Prepared dips are either refrigerated or “shelf stable,” meaning they can be sold in cans and don’t require refrigeration, which allows them to be displayed anywhere in the store. Within the “dip” segment, there are four different flavor offerings: sour cream based dips, which account for half of all dips; cheese based dips, accounting for a quarter of all dips; cream cheese...