Frito Lay Case

Problem Definition:

The Frito Lay Company is a leading manufacturer and distributor in snacks in America. They have 50 distribution centers in 26 states. They offer direct store delivery sales that are directly from the manufacturer instead of a warehouse. Frito Lays New Venture team is looking into new possible ventures for future growth of the company and when Borden decided they would devest in Cracker Jacks Frito Lay found it as a possible fit to all three criteria in their new marketing strategies.

Ready to eat caramel popcorn recorded a sales of $192 million in 1996 and $205 million in 1995 in retail sales. Acquiring Cracker Jacks from Borden requires the new venture team to research the underlying problems whether it is marketing, positioning, etc. of the failure in sales for Borden. They need to analyze ways to make the RTE popcorn a success at Frito Lay.

Strength:

• Brand Awareness

o Cracker Jack is one of the most recognized RTE popcorns in the United States. The brand name enjoys a 97% awareness among persons between the ages of 15-60. The brand also has a 95% brand awareness among heavy users of flavored popcorn.

Problems:

• Product Location in retail stores and supermarkets

o Cracker Jacks are placed in the “warehouse delivered snacks aisles.”

• Distribution

o 98.9% of sales occure in united States. 52% of Cracker Jack sales arose from supermarkets and grocery stores, 31% from mass merchandisers, 7% from drugstores, 4% from warehouse sales and 6% from other outlets. It is shipped from 13 company distribution centers to retail store distribution centers or warehouses and subsequently delivered to retail outlets for stocking on store shelves by retail store personnel (“warehouse-delivered snack aisle”). Pg272

• Advertising

o Most advertising involves retailer incentives, newspaper coupon redemption and very minimal consumer...