Marketing Management Case Study

Marketing Management: A Case Study of Frito-Lay, Inc; Sun Chips Multigrain Snacks

Introduction

This case study analysis paper will critically analyze the case of Frito-Lay, which provides Sun Chips Multigrain Snacks as one of its primary products and identify the problems related to this case, a statement of the central problem, a detailed analysis about the issue at hand, identify the main alternatives, critically evaluate those alternatives, recommend the most appropriate course of action and implement a plan to ensure that the recommended course of action is effectively implemented.

Identification of Symptoms

One of the symptoms that can be identified in the case study of Frito-Lay, Inc. is the presence of numerous competing firms in the market that are providing snack chips. The leading national brand competitors that serve the snack chip category include Procter & Gamble, Borden, Keebler Company, Eagle Snacks, and RJR Nabisco. The regional brand firms available in the market include Charles Chips, Mike Sells, and Snyder’s. Safeway and Kroger are the leading private brand firms that are also present in the market. The second type of symptom that can be noted in the case study is a shift in a market trend whereby individuals are gaining more awareness about how their eating behaviors are gradually affecting their fitness and overall health. Hence, more people have started to care about what they eat. The third symptom that can be identified in the case study of Frito-Lay regarding the snack-food industry and its production of the sun chips multigrain snacks is the nature of the current technology that is being used by most of the companies in the snack food industry to swiftly responding to new snack products in the market and producing the snack chips. The fourth symptom that can be easily identified is the new market trend in which customers’ buying behavior is being influenced by the need for various snacks that have different sizes and tastes without their quality being compromised. Fifthly, the majority of the snack-food categories that are offered in the snack food industry tend to under different rates of growth in the market, and such growth is in most cases uncertain, especially for new products. Another common symptom that can be identified in the case study is the market pattern that confirms ever-changing consumer needs and preferences.

Statement of Central Problem

Frito-Lay, Inc. will encounter various problems in its operations, especially when dealing with sun chips multigrain snacks. One of the most significant challenges that Frito-Lay, Inc. will experience is stiff competition in the snack-food industry, with decision-makers being forced to come up with better ways to gain a competitive advantage over the rivals. The main competitors that Frito-Lay, Inc. is facing span from national to regional and private level companies. The sun chips multigrain snacks offered by Frito-Lay, Inc. will face stiff competition from products such as wise brand potato chips, cheese puffs, corn, and tortilla chips, O’Boisies brand potato chips, pretzels, and eagle snacks, among others that the rival companies provide. The product management team in Frito-Lay, Inc. that is responsible for sun chips multigrain snacks will be required to develop a strategy that will ensure that this product is of higher quality than the snacks products being offered by the rival companies.

The second central problem that can be identified in the case study of Frito-Lay, Inc. is that there is a significant increase in the demand for healthy food products. This new market trend presents a significant challenge for most companies, especially those in the snack-food industry, whereby most of the snack products provided are unhealthy, thus increasing the risk of the consumers suffering from eating habits-diseases as obesity. This is one of the most significant problems that the product management team in Frito-Lay, Inc. will have to effectively handle to ensure that it has retained most of the customers who are becoming conscious of the type of snack products they are consuming.

Another central challenge that can be noted in the case study is the easiness with which new firms are entering the snack food industry due to the use of advanced technologies. The majority of the rivals of Frito-Lay, Inc. are heavily relying on technology-enabled strategies to boost their operations, retain shelf space in supermarkets and stimulate their sales. Such use of technology to expand operations and enhance the competitive advantage of the individual firms in the snack food industry is presenting a significant challenge for the decision-makers in Frito-Lay, Inc. on how best to eradicate the problem of the high volume of new entrants into the snack food market and the ability of the majority of the rivals in to react new products introduced in the snack food market swiftly.

Problem Analysis

The snack chip is one of the most competitive categories in the snack-food industry. More than 650 snack chip products are introduced into the market annually by different national and regional brand firms. Available industry reports indicate that fewer than 1% of new products introduced into the market can generate more than twenty-five million dollars ($25 million) during their first annual sales since the risk of failure of new snack chips products is significantly high. However, the findings from a premarket test conducted regarding the likely first-year sales volume indicated that snack products worth $113 million. Therefore, the ratio of the projected sales of the sun chips multigrain snack against that of the standard annual sales achieved by new products in the snack food industry can be calculated as 113:25 or 1:5. The high level of competition that Frito-Lay, Inc. is experiencing in the snack industry has been facilitated by various factors such as the existence of very competitive pricing in the market, with most companies using pricing to attract and retaining customers.

The second problem that Frito-Lay, Inc. is facing in the snack food industry is the heavy reliance on technology during the production process amongst most of the competitors in the snack food industry and the easiness of use of this technology which has made it possible for most of the snack chip manufacturers to easily and swiftly react to the newly introduced products in the market. Technology has enabled most national and regional brands in the snack food industry to use sales and distribution systems to effectively monitor market activities such as product promotions of new and already existing products in the market. Most of the snack chip competitors rely on technology-enabled print media and electronic advertising to promote their products and reach a more extensive customer base.

Identification of Alternatives

The product management team, particularly the one responsible for sun chips multigrain snacks Frito-Lay, Inc., in collaboration with the top management, can implement a set of various alternative course of actions that can help it in effectively addressing the identified problems that it will be facing as it plans to introduce a new product in the market and enhance its sustainability in the snack food market. For instance, the decision-makers in Frito-Lay, Inc. will need to put into consideration the current effects of the use of technology by companies in the snack food industry to boost operations by inventing a new and unique technological innovation that cannot be easily copied or imitated by its competitors and use it in its production process to produce the newly intended sun chips multigrain snack.

The second alternative approach that can be used in addressing the identified problem of easy use of technology is obtaining the patient and copyrights of the new technology that it will invent for use in the production of the snack products, especially the newly proposed sun chip multigrain snack. This strategy will help the product management team at Frito-Lay, Inc. prevent its production technology from being imitated by its rivals for a given period, which may be long enough to enable the company to make its desired profit sales of the new products produced using the new invention.

Thirdly, the product management team should consider changing its production model by ensuring that it uses natural ingredients in the production of the sun chip multigrain snacks. In the attempt of responding to this challenge, Frito-Lay, Inc. will have to ensure that it has allocated a lot of resources in terms of capital and human resources towards effectively changing its production operations especially sourcing healthy ingredients from the suppliers, and ensure that the final sun chips multigrain snacks that will be offered to the customers are safe and healthy to consume.

The fourth alternative approach for effectively addressing the problem related to health concerns among the consumers is using a contracting supplier who can obtain and provide natural ingredients from the farmers or initial producers. This alternative will ensure that all raw materials produced using chemicals are avoided during the production process. The fifth alternative plan that the product management team at Frito-Lay, Inc. can use to gain a competitive advantage over its rivals is maintaining consistency in producing high-quality and healthy snack products. Another effective alternative that can be employed in Frito-Lay, Inc. in addressing stiff competition is conducting extensive market research that aims to identify all the consumer needs and wants, among other aspects that have created a market niche opportunity that needs to be exploited.

Evaluation of Alternatives

The evaluation of the above alternatives shows that each comes with advantages and disadvantages. For instance, the invention of a new and unique technological innovation will help enhance the quality of the products produced, redundancy will be eliminated, and the company will gain a competitive advantage over its rivals. However, such an invention may be very costly for the company to develop and implement. Secondly, patents and copyrights are significantly essential in protecting the invention made by the company and ensuring that Frito-Lay, Inc. can maintain a leadership position in the snack food market. However, patents and copyrights may not offer a long-term solution to the imitation of technology the rivals. Thirdly, the use of natural ingredients will enable Frito-Lay, Inc. to provide safe and healthy products and meet the current demand for healthy products, thus increasing sales and increasing customer loyalty. However, this alternative may be affected by the lengthy process involved in sourcing the natural ingredients, resulting in production delays.

Fourthly, partnering with suppliers who have access to natural raw materials may help ensure that the best ingredients are obtained, promote consistency in the provision of high-quality products, and reduce the risk of interruption in the production process. However, some suppliers may not be entirely reliable and may provide low-quality raw materials, thus compromising the final products’ quality. Fifthly, conducting adequate market research to assess the needs and wants of the consumers helps ensure that the company has exploited the current opportunities in the market and has customized its products to meet the identified needs and wants. However, such market research may be expensive to conduct for the company.

Recommended Course of Action

In effectively dealing with the identified problems, the product management team of Frito-Lay, Inc. should consider incorporating a ‘Four Milling Production Process’ as part of its production line for producing the sun chips multigrain snacks. This production approach will involve using a well-cleaned kernel, adjusted to appropriate moisture content, and mechanically reduced to the desired size of the particles. Such mechanical adjustments will help in effectively customizing the end sun chips multigrain products that will be manufactured. This production method helps in effectively addressing the main challenges that Frito-Lay, Inc. is facing the snack food product in that it helps in the production of high quality and unique snacks that are free from contamination since the entire production process involves neither the use of chemicals nor the use of thermal treatments. Through the use of this production approach, Frito-Lay, Inc. will solve problems related to the increased need for the production of healthy and safe to use products, the use of difficult-to imitate technological production process and the creation of competitive advantage through the use of production process that results to high-quality, and unique sun chips multigrain snacks that can compete well against the available substitute snack products in the market.

Implementation Plan

The employees will implement this production plan in Frito-Lay, Inc., where each will play an active role in ensuring a continuous production process. Given the repetitive nature of the tasks involved in this production process, there is no defined timeline for the production process. Below are the primary duties to be carried out by different employees during the production process.

• The team leader of the product management team:

Formulating work schedule

Assigning roles to team members

Ensuring effective communication and flow of information

• Team members 1 and 2:

Cleaning the grains

Sorting out the best grains

• Team members 3, 4, and 5:

Preparing other ingredients such as onions

Ensuring that the production machine is in good shape before the production to ensure high-quality products that meet the desired standards are produced

Monitoring the different stages during the production process

Packaging of the manufactured products

 

 

 

 

 

 

 

 

 

 

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