Frito Lay

Marketing Strategies Case Study: Frito-Lay: Sunchips Selamawit Kebede

1.) The snack chip category includes; Potato, Corn and tortilla chips, pretzels, and ready-to-eat popcorn. These snack chip categories had estimated sales of $9.8 billion and the general snack-food industry in the United States had sales of $37 billion in 1990. There was a five percent growth in the snack chip category sales from 1989 to 1990. Americans bought about 3.5 billion pounds of snack chips which equals about 14 pounds per person in 1990.

2.) The snack chips category is highly competitive with over 650 new snack chip brands that are introduced to the market every year with mainly new flavors from existing products. Frito-Lay has three main types of competitors;

A.) National Brand firms: Companies that distribute their products nationwide like Frito-Lay (RJR Nabisco, Borden, Wise Brand potato chips, and Pringles by Proctor and Gamble e.t.c)

B.) Regional Brand firms: Distribute their products to certain parts of the United States (Snyder’s, Mike Sells and Charles Chips)

C.) Private Brand firms: Products that are manufactured for specific retailers like major supermarkets. The retailers can market and sell the product under their own brand name (kroger brands, Safeway)

3.) Frito-Lay has a competitive position in the snack food industry and snack chip category. They are worldwide leaders in the manufacturing and marketing of snack chips and have almost half of the retail sales. Eight of Frito-Lay’s brands are among the top ten best-selling snack chips in U.S supermarkets (Doritos, Ruffles, Lay’s, Fritos, Cheetos, Tostitos, Frito-Lay Variety Pack). Ruffles and Doritos are the two best selling chips in the world and accounted for $1 billion in retail sales in 1990. Frito-Lay Inc. accounted for 13 percent of sales in United States snack-food industry which included an assortment of snacks. They constantly update and add new flavors and snacks to meet every consumer needs....