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Frito Lay Backhaul

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SOUTHERN NEW HAMPSHIRE UNIVERSITY
|Graduate School of Business |

| | |
|Program: |SNHU School of Business Graduate Program |
|Course Title : |Marketing Strategies – MKT 500 |
|Instructor: |Jeannemarie Thorpe |
|Due Date: |Monday, January 26, 2004 |
|Submission Date: |Monday, January 26, 2004 |
|Type of Assignment: |Case Analysis (Final Review) |
|Title of Assignment: |Frito-Lay’s Dips – 3rd Case Study (Selection of Best Alternative) |
|Student Name: |Cevdet KIZIL |
| | |
|Student Phone #s: |(603) 626 9302 |
|Student E-mail: |cevdetkizil@yahoo.com |

CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this assignment. Any assistance I received in its preparation is fully acknowledged and disclosed within this document. For Mid-Term and/or Final Exams, I certify that I have not received any help from others.

I have cited any and all sources, both print and electronic, from which I have used data, ideas, or words, either quoted or paraphrased. My cited sources are indicated within this document. I also certify that this assignment was prepared by me specifically for the course as listed above.

[pic] Monday, January 26, 2004
Student Signature Date:

Assignment Grade: ______

Instructor Comments:

FRITO-LAY’S DIPS

SELECTION OF BEST ALTERNATIVE

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Selection of Best Alternative for Frito Lay’s Dips

First of all; before expressing my opinion on the best alternative for Frito Lay’s Dips case, I would like to discuss all mentioned alternatives in the class. Let me start by evaluating my alternatives (solutions) with their pros and cons. My first alternative for Frito Lay’s Dips case was “reserving leadership in chip dip market while at the same time focusing on vegetable dip market”. I did come up with this alternative; because after doing a lot of outside research, I did learn that Frito Lay’s company had strong distribution channels, was very good at information technology systems like the hand held computers and finally was efficient at using the data (resources : instant-essays.com, line56.com, speedofheat.com). As a result; I thought that by using these strengths, Frito could easily reserve its leadership in the chip dip market. Pros for this alternative were more profits and the advantage of being the “first-in” company to dominate vegetable dip market. Cons were additional expenses and risks. Also, concentration on the chip dip market would lower. Then; my other alternative was “creating really innovative dips for vegetable dip market”. Because; after doing an outside research on innovative products of Frito Company, I did learn that the company was also advantageous here. For instance; Lay’s new Stax chips is now having great battle with P&G’s Pringles chips. My outside research showed me that Lay’s Stax chips was off to a very good start and was stealing the market share of Pringles. Additionally; referring to my outside research, Lay’s new chips for Hispanic consumers were also very innovative products bringing good profits (resources: vendingbiz.biz, Wall Street Journal – October 8, 2003, Shapiro Library – Exp. Academic Database – December 2003, Exp. Academic ASAP Database – October 2003). Pros for this alternative were that; vegetable dip project would be much more easier which could lead to very high profits. On the other hand; cons were manufacturing, advertising and research expenses. Also; demand to new dips was not guaranteed. My next alternative was “considering the long-run success with vegetable dip market”. Because; again according to my outside research, I did learn that nutrition concerns in U.S. was increasing going parallel with obesity. For this alternative; my outside research proved that I was right. Because; I did learn that Frito was currently producing organic and no trans-fat chips in accordance with FDA ruling and increasing consumer product awareness (resources: pepsico.com, phx.corporate-ir.net, Wall Street J. – August 6, 2003, talksoy.com, infozine.com, thesoydailyclub.com). After that; I thought “taking necessary risks for vegetable dip market” was also a possible alternative. The reason is that; again related to my outside research, I did learn that Elmer Doolin who was one of the founders of Frito-Lay’s was first in ice-cream business. But after facing competition, he went into chips business (resource: fritolay.com). So, we can easily say that he did take a big risk. Because; he had no experience with chips before and it was impossible for him to be sure about the future of this business. Following this; in my opinion, “implementing impressive advertisements and promotions for the new sour cream dip” was another good alternative. Pros for this alternative were a good first perception of consumers, additional reputation and continual demand. Cons were high advertising and promotion expenses. Then; from my point of view, “Frito had to do a more detailed marketing research & a good research on supermarket warehouses”. As an example; they could contact ally firms to learn the process completely and then they could have employee training programs. Pros for this alternative were that; exact information would determine the best move to make. Cons were that; training programs, marketing research and supermarket warehouses research would require funds. My final alternative was “producing new fat-free chips and telling that Frito highly values health via advertisements”. Pros for this alternative were that; chip dip sales would go up, nutrition concerns for chips would lower and new image would bring competitive advantage. Cons were that; advertisement costs would be high and producing new dips would require time and financials. In addition to my alternatives (your favorites were creating innovative dips for vegetable dip market, taking necessary risks for vegetable dip market and doing a more detailed marketing research and supermarket warehouses research); I think the class did also come with very intelligent alternatives. One of the most creative alternatives was “producing new products like Taco Bell and Pizza Hut Dips”. Another nice alternative was “producing dry formula dips (when dry formula is added to water, it becomes a dip)”. Next, “horizontal marketing” idea was discussed as an alternative solution. Finally; the class also thought that “Frito could manage the dip marketing business with other companies”. In conclusion; among all alternatives, I think the best one is “creating innovative dips for vegetable dip market”. Because; as I told before, my outside research indicates that Frito has a significant expertise here. Especially; if this alternative can be well implemented; vegetable dips market will be owned immediately and much more easily which will result in very high profits (as mentioned in pros). I know that manufacturing, advertising and research expenses will be high (as mentioned in cons); but if we think of the potential profits waiting there; this will be a clever sacrifice. Finally; Frito has no other way, but to try. Demand waiting there can not be explored in any other way.…...

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