Marketing

marketing case study

Pros for the Chip dip/Cons for the Vegetable Dip

There are some constraints for Frito Lay's in pursuing for the vegetable dips. Firstly, the vegetable dip business is handled by the production warehouses of supermarkets. So, Frito-Lay's front-door delivery system will not be sensible here. That would mean that Frito Lay will have to create or establish a whole new delivery system to be able to comply with the supermarkets. Even if Frito Lay implements a new delivery system, distribution concept is another limitation because distribution through supermarket production warehouses will prompt them to meet with supermarket produce buyers and managers. Because Frito-Lay is unfamiliar to these persons and lacks experience, it might set them back a bit in terms of time and smooth process. Additionally, completely different sales approach (plan) will have to be implemented to accommodate the changes. However, when the vegetable dips are advertised, it might confuse the customers because Frito Lay's image of chip Dip Company, meaning that the dips are associated with the chips, the customers might be confused if the vegetable dips which is not associated with chips. The number of sales might drop as a result. With introduction of vegetable dips, the need of developing a new flavor grows and the expense for research will increase. Obviously, the marketing cost might increase depending on whether the company pursues an aggressive marketing strategy. But the chip dip segment is an area that Frito Lay has established as a leader. As indicated in the research, only 20% of chips were currently eaten with dips. It means that there are potentials for non-dip users to be introduced and marketed resulting in the increase in market share. Because Frito Lay was not as aggressive as other competitors are at 2.7% of A/S ration while the norm is 10%. The company needs to spend more money on marketing and sales by 25%. But if the vegetable dip sales increase, it cannibalizes the sales from the chip dip. The relative market size for shelf-stable chip dips are 185 million dollars and Frito Lay owns 135 million dollars worth of the market. They own about 73% of the shelf-stable market.

Pro