...Running Header: Frito-Lay Frito-Lay Capella University MBA 6118 TO: Frito Lays Executive DATE: January 24, 2015 SUBJECT: International Marketing Multinational corporations are transforming themselves by repositioning and rethinking their goods and services to tap into and capture the new global middle-class market. This worldwide economic phenomenon encompasses a huge customer base (International Marketing, 2012). Market research and analysis show that the proposed advertising media for Frito Lays line need to be reprioritized and changed for international expansions. Findings from focus groups and surveys have made it apparent that we need to update our advertising efforts to align them with the international markets of today. Also, it is has become increasingly important to use the Internet as a tool to communicate with our target audience to show our dominance in the snack industry. In attempts to attack the market and the fight against entrance into a new market and the newly fade of health food snacks. One idea that has come up during discussions is for Frito Lay’s to changing the name before entering into newer international markets. Donald Yacktman of Yacktman Funds, has suggested that PepsiCo rename itself Frito-Lay to reflect the growing importance of that business, and others like Nelson Peltz and Relational Investors have agitated for it to uncouple the snacks business from the drag of its beverage operations, has slowed as consumer tastes migrate to...
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...Case Analysis：Frito-Lay, Inc. Problem Definition In mid-1990, Frito-Lay, Inc. makes a new chips brand called Sun Chips Multigrain Snacks. The product had been in test market for 10 months in the Mineapolis-St. Paul, Minnesota, and metropolitan area. The senior Frito-Lay executives need to decide it they would launch this new product to market officially after the test period. Objectives: (1) Extend its product to attract the customers who always look for new and variety product. (2) Update healthier recipe to meet the current trend of healthy eating. (3) Pioneer a new snack chip category to maximize profit in the new market. Concerns: (1) Whether the premarket test results can correctly reflect the market performance when it introduced to nationwide market. (2) There are many competitors in national market or local market. It's easy for them to make similar products. (3) The advertising and merchandising budget will rise. (4) The new product will cannibalize volume from its previous products. The Situation of the Company Frito-Lay, Inc. is a division of PepsiCo, Inc. It is a worldwide leader in the manufacturing and marketing of snack chips. It is capturing nearly one-half of the retail sales in the United States snack chips market. Well-known brands include Lay's brand Lay's brand and Ruffles brand potato chips, Fritos brand corn chips, diorites brand, Tostitos brand, and Santitas brand tortilla chips, Cheetos brand cheese-flavored snacks, and Rold...
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...1. How would you characterize the snack chip category and Frito-Lay’s competitive position in this category? The snack chip industry is clearly a matured industry, showing significant signs of growth. This is evidenced by the steady growth in both dollar sales as well as volume of snack-chip pounds sold. The snack chip industry has grown 5% since 1989 to 1990 in terms of retail sales. The snack chips retail market was worth $9.8 billion in 1990. Since 1986 to 1990, the US bought 3.5 billion pounds of snack chips which is nearly 14 pounds per person. In 1986, snack chips per capita consumption was slightly less than 12 pounds. The snack chip industry contains mainly three types of competitors: national brands, regional brands, and private brands. National brands are those that distribute products nationwide, include Frito-Lay, Borden, Procter and Gamble, RJR Nabisco and Eagle Snacks. Regional competitors consist of regional brand firm which distribute products in certain parties of the United States. Private brands are produced by regional or local manufacturers on a contractual basis for major supermarket chains. The competition in the snack food industry is very intense. As many as 650 different types of snack chip products are introduced into the market each year by both national and regional brand companies. Most of the products are new flavors for existing snack chips. It is reported that the new product failure for snack chips is very high. Pricing is...
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...determine the present strategy: unrelated diversification, scope domestic or global for each division, what move have been made recently to add new business, rationale underlying recent divestures, the nature of any efforts to capture strategic fits and create competitive advantage based on economies of scope and other resource. Present Strategy Roger Enrico the CEO of PepsiCo (1996-2001) got involved in restricting PepsiCo’s business portfolio. Company had three business segments restaurants, beverages and snack foods. He found number of problems at PepsiCo. Company fall behind, Coca-Cola, the competitor by a growing margin in both domestic and international markets. The restaurant business declining and profit margin were slim. To get the company by on track Enrico developed a restricting strategy, which is: Related Diversification: The restaurants limited investment in the company’s snack food and beverage business and severely impaired the corporation’s overall operating and profit margin. The fact restaurant which included Pizza Hut, KFC, and Taco Bell were eliminated from the company’s portfolio of business and the three main restaurants were spun off as an independent publicly traded company, the divestitures was completed with a creation of Tricon Global Restaurants. Focusing on related diversification and spun off business unit which were unrelated to the core business of beverage and snacks. Maintain of one Culture: PepsiCo’s new strategy was to maintain a single...
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...distribution system Pepsi was one of the first to switch from horse drawn transport to motor vehicles. Throughout its existence Pepsi adjusted its marketing strategies trying to keep up with the social and economic conditions of its consumers. During the Great Depression and continuing into the World War II Pepsi emphasized the low prices of the drink knowing that people had narrowed their budgets. In the mid. 1950s the emphasis fell on Pepsi being a lifestyle accompaniment. The breakthrough move by Pepsi was made in the late 1950s to capture the market of new generation of baby boomers. Its best known advertisement slogans such as “You’re in the Pepsi Generation”, “Have a Pepsi day” or “You’ve got a lot to live, Pepsi’s got a lot to give” set a new standard for advertising. To dominate in a soft drink category Pepsi, after 65 years of selling only Pepsi-Cola, introduced new products: “Mountain Dew and Diet Pepsi.” To capture the completely new market of X-ers, throughout 1980s and 1990s Pepsi’s commercials featured superstars, supermodels, actors and sport stars. In the mid. 1980s Pepsi-Cola declared a victory in the cola wars. Keeping Pepsi-Cola as its cash cow presidents of Pepsi-Cola decided to back up their positions by investing in a fast food restaurants and snack industry. In 1965 the new PepsiCo resulted from the merger of Pepsi-Cola and Frito Lay’s, Inc.. Pepsi-Cola stuff knew that in order to survive in the direct competition with giants like Coca-Cola they will have to come...
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...Thompson−Strickland: Strategic Management: Concepts and Cases, 13th Edition 23. PepsiCo’s Acquisition of Quaker Oats Case © The McGraw−Hill Companies, 2002 1 case 23 PepsiCo’s Acquisition of Quaker Oats John E. Gamble University of South Alabama In 2001, PepsiCo was the world’s fifth-largest food and beverage company, with such brands as Lay’s, Tostitos, Mountain Dew, Pepsi, Doritos, Aquafina, and Lipton contributing to revenues of approximately $26 billion. PepsiCo’s revenues had reached $31 billion in 1996, but a new corporate strategy embarked upon in 1997 slimmed the company’s portfolio from a collection of fast-food restaurants, snack foods, and beverages to a sharply focused lineup of convenience foods and beverages. Between 1997 and 1999, CEO Roger Enrico spun off Kentucky Fried Chicken (KFC), Taco Bell, and Pizza Hut as one independent, publicly traded company; created a stand-alone softdrink bottling business through an initial public offering; and entered additional snack and beverage categories with the acquisitions of Cracker Jack and Tropicana. Enrico’s focus on convenience foods and beverages placed PepsiCo in food and beverage categories that grew at twice the 2 percent industry growth rate and gave it a 2-to-1 market share lead over its nearest competitor in the convenience food and beverage industry. Roger Enrico and Quaker Oats Company’s CEO, Robert Morrison, jointly announced on December 4, 2000, that PepsiCo would acquire Quaker Oats...
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...BINGO Since its launch period in March, 2007, BINGO as a brand has been though a lots of ups and downs. Both Branding and sales and Distribution aspects of marketing for BINGO have been explored and matured to a large extent. Though the product itself is considered to be in a growth stage with a market share of 16% in the branded snacks food category, it has been successful to a large extent in creating the required Brand recall for the category INDIAN SNACK INDUSTRY: Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is describes as a small quantity of food eaten between meals or in place of a meal. Snack food generally comprises bakery products, namkeen, ready-to-eat mixes, chips and other light processed foods. According to Ministry of food processing, the snack food industry is worth Rs 100 billion in value and over 4,00,000 tonnes in terms of volume. Though very large and diverse, the snacks industry is dominated by the unorganized sector. According to a survey almost 1,000 snacks items and 300 types of savouries are sold across India. The branded snacks are sold at least 25% higher than the unbranded products. Though there is no particular time for snacks, normally they are consumed at teatime. There is large no. of varieties with specialities from all regions, which have gained national acceptance. The industry has been growing around 10% for the last three years, while the branded segment is growing around 25% per annum to stand at Rs.6000-Rs...
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...Initiative University of New Mexico http://danielsethics.mgt.unm.edu PepsiCo’s Journey Toward an Ethical and Socially Responsible Culture COMPANY OVERVIEW PepsiCo is one of the largest food and beverage companies in the world. It manufactures and sells eighteen brands of beverages and snack foods and generates over $98 billion in retail sales. PepsiCo encompasses the Pepsi Cola, Frito-Lay, Tropicana, Quaker, and Gatorade brands and offers products in over 200 countries. It currently holds 36 percent of the total snack food market share in the U.S. and 25 percent of the market share of the refreshment beverage industry. The company’s headquarters are in New York and employs over 200,000 people. In 2006, Michael D. White became the CEO of PepsiCo International, and in 2007 Indra K. Nooyi became the CEO of PepsiCo. PepsiCo has received many awards and recognitions over the years, including being ranked in the top 25 of the best global brands, ranking number four overall by Diversity Inc, and earning the Green Award by the Environmental Protection Agency. COMPANY AND MARKETING HISTORY The Pepsi recipe was developed by pharmacist Caleb Bradham in the 1890s. Originally marketed under the unassuming name “Brad’s Drink,” Bradham’s creation was renamed Pepsi-Cola in 1898 due to the pepsin and kola nut ingredients used. Awareness of Bradham’s new creation spread quickly, and in 1902 he decided to create the Pepsi-Cola Company so people everywhere could enjoy the drink...
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...SECURITY This is the research report that was requested on January 23, 2003 about PepsiCo stock and whether it should be incorporated in to the Student Managed Investment Fund. The analysis was done primarily through secondary research. The analysis revealed that PepsiCo’s stock is currently undervalued at $42.65, as of April 25, 2003. We used a relative valuation model, and determined PepsiCo’s target price to be $50.65. In addition, we used a multi-stage dividend discount model, and determined the stock’s intrinsic value to be $56.83. PepsiCo’s current price of $42.65 is lower than both our target price and its intrinsic value. This confirmed our belief that the stock was undervalued. We also analyzed the company’s management strategies, financial data, products, performance in its markets, as well as other business indicators of the health of a company. After conducting a...
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...CASE 21 PepsiCo’s Diversification Strategy in 2014 John E. Gamble Texas A&M University–Corpus Christi P epsiCo was the world’s largest snack and beverage company, with 2013 net revenues of approximately $66.4 billion. The company’s portfolio of businesses in 2014 included Frito-Lay salty snacks, Quaker Chewy granola bars, Pepsi soft-drink products, Tropicana orange juice, Lipton Brisk tea, Gatorade, Propel, SoBe, Quaker Oatmeal, Cap’n Crunch, Aquafina, Rice-A-Roni, Aunt Jemima pancake mix, and many other regularly consumed products. The company viewed the lineup as highly complementary since most of its products could be consumed together. For example, Tropicana orange juice might be consumed during breakfast with Quaker Oatmeal, and Doritos and a Mountain Dew might be part of someone’s lunch. In 2014, PepsiCo’s business lineup included 22 $1 billion global brands. The company’s top managers were focused on sustaining the impressive performance through strategies keyed to product innovation, close relationships with distribution allies, international expansion, and strategic acquisitions. Newly introduced products such as Mountain Dew KickStart, Tostitos Cantina tortilla chips, Quaker Real Medleys, Starbucks Refreshers, and Gatorade Energy Chews accounted for 15 to 20 percent of all new growth in recent years. New product innovations that addressed consumer health and wellness concerns were important contributors to the company’s growth, with...
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...in india, nutyumz will be manufactured in the company-owned plant in pune. the fritolay spokesperson confirmed the launch of new brand. sources said pepsi is gung-ho about fritolay as the subsidiary has been making some money, it ended the year 2000 with a rs 4 crore profit, up from rs 3.04 crore earned in the year ending 1999. pepsi's idea is to create new categories to suit indian tastes and pump up the profit figures by at least rs 2 crore by the end of 2002. sources said that after pepsi acquired uncle chipps, it got within its fold an entire constituency. lays and uncle chipps together earn the maximum (around 50 per cent) for fritolay, while cheetos and lehar namkeen are still on the fringes. pepsi is yet to measure up to haldirams market share which has maintained its numero-uno position in the namkeen segment for years, industry sources said. Crunch time Brand Launches, TNN Jan 29, 2003, 01.57am IST Frito-Lay introduces Red Chilli Chatka, an exciting tangy and spicy variant of Kurkure. The launch has been timed to coincide with the cricket world cup since Kurkure is...
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...Executive Summary The case study will examine the strategy implemented by PepsiCo to exploit rapidly growing markets opportunities by acquiring the organisations Tropicana, Gatorade and Quaker. The case study will highlight that it was imperative for the PepsiCo organisation to embark on a radical restructuring strategy to optimise their return on investments. The paper will discuss the rationale behind the critical restructuring .The benefits of the acquisitions and restructuring strategy will be discussed and motivated in detail. The strong existing competitive resources that PepsiCo and the new acquired brands in the North America region possess will be emphasised. The modifications to PepsiCo structure in 2001 and 2004 will be scrutinised to motivate and justify the decisions of the PepsiCo leadership. In addition the case study will evaluate the execution of the radical change and the tasks that should be performed by key resources. The emotional impact on employees due to the radical transformation and the key role employees should perform will be described. The focus of the paper will be on the function; the leadership of PepsiCo must perform and the potential roles the employees of PepsiCo could execute. Ultimately, the case study will discuss the complex relationship between structure and strategy. The paper will establish that PepsiCo had to regular acclimatise their strategy and structure to accomplish their organisational goals. Introduction Over...
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...Mergers and Acquisitions Intro At the beginning of the 21st century the future of the beverage and food industry seemed to be unclear. With a slow growth rate of only 2% per year, food and beverage companies were desperately seeking the ways to enhance sales and profits. Many companies such as Kellogg's, Sara Lee, Quaker Oats and others considered merging to be a solution and thus the turn of the 21st century was marked by $ 30.5 billion worth of mega-mergers . One of the largest mergers was the merger between PepsiCo and Quaker Oats which occurred on August 2,2001. This biggest strategic decision PepsiCo Corporation ever made added not only the necessary boost in sales needed to attain tremendous growth, but also positioned company as a dominating force in the food and beverage industry. Detailed analysis of this decision, its impact on productivity and cost is presented below. Analysis In order to understand clearly the motivating factors of this decision, it would be useful to describe the nature and position of the two companies on the global market arena prior to the merger. Quaker Oats was formed in 1901 in Raven, Ohio by joining several oat-milling companies. Before the merger, 92% of Quaker Oats' U.S. brands held number one and number two positions in their respective categories. However, throughout its life, Quaker frequently tried itself in non-food industry, which all weakened the company's greatness and left little worse off. The primary reason was that Quaker...
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...short, sodas have a mass appeal. They carry an image with them; an image of a person with a comfortable lifestyle. This essay will take a look at the company Pepsi Cola. For a better understanding of the subject company, this paper will delve into a brief history of the Pepsi Company’s growth over the years and the effects of competition on Pepsi’s strategies in the international and domestic market. This essay will attempt to discuss the effectiveness of Pepsi’s marketing strategies and its results. Body Pepsi was one of several other brands that got their start in the late 1800s. A North Carolina pharmacist named Caleb Bradham invented "Brad's Drink" in 1893, which was later renamed Pepsi-Cola. Pepsi’s early growth was less significant than that of Coke's, and its real strength as a competitor to Coke began after Alfred Steele became CEO in 1950, a time when Pepsi was nearly bankrupt. Steele was expected to liquidate the Pepsi-Cola Co. Instead, he made it his goal to "beat Coke" (Wolburg, 2003). Pepsi Cola has taken part of that appeal and has used it in several different marketing strategies. Pepsi was born after Coca Cola, or Coke. It began in North Carolina, invented...
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