Frito Lay

3/26/2015

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SUN CHIPS | Prepared by: Toshiba Austin-Smith, Ranin Ghannam, and Cassandra Tate |

SUN CHIPS | Prepared by: Toshiba Austin-Smith, Ranin Ghannam, and Cassandra Tate |

PROBLEM STATEMENT

Frito Lay Inc. a leader in manufacturing and marketing snack chips will introduce a new product into the US market, which is a multigrain snack called Sun Chips. Sun Chips will be perceived as a thoughtful, upscale chip and it will be positioned to satisfy the consumer’s need for having healthier snack options. Sun Chips multigrain snack requires a new manufacturing process, carries a new brand name, and pioneers a new snack category. Therefore, Frito Lay wants to get a precise projection about the new product performance. Consequently, they completed a test market over 10 months in Minneapolis and the results came back favorable. Frito Lay’s Vice President of marketing research wants the product management team to evaluate the alternatives available and the feasibility of launching this new brand. Finally, the main goal is to financially justify the heavy capital and marketing investment in this new brand, taking into consideration sustainability, product cannibalism, and timing.

SITUATIONAL ANALYSIS

External Analysis

Customer Analysis. The Sun Chip brand is introduced to satisfy the needs of their primary customers, which include adults between the age of 18 and 34. This age group is considered to be major consumers of snack chips. Secondary customers are adults between the ages of 34 and 49 because this age group seemed to be more accepting to healthier snacks, and seem to be more aware of their health and of what they eat. The product is then expected to reach to all customers under the age of 18 through in-home consumption.

Market Analysis. The snack-food industry in the US is at a mature stage and has witnessed a 5% increase in retail sales through the year 1990. The industry has been gradually growing over time due to an increase in per...