Chapter 5. Developing a Global Vision

The globalization of Frito-Lay accounts for 31% of PepsiCo’s annual sales. 

With 55% of the potato chip market, Frito-Lay is widely-known as the biggest snack maker in the U.S. But the U.S. snack market is full of other companies and in order to remain successful and grow is to develop the company overseas.

Frito-Lay created a strategy for moving into new countries where a local snack industry is already established. Instead of building a new business in an unfamiliar market, the company finds the top local snack manufacturer and proposes to buy it out. If however, the local manufacturer declines the offer, Frito-Lay goes into the market alone, using its marketing experience and size to its advantage; ultimately decreasing the local manufacturer's sales. Usually after that occurs, the local company admits to defeat and ends up selling to Frito-Lay (sometimes they even create a lower price than the initial offer.)

Frito-Lay contrives "differentiated products" if locals are accustomed to eating something other than potato chips, which bridge the way to the chip. 

Example:

•  In the Indian market, the company created by Kurkure Twisteez, a potato snack  is made with local flavors like, Masala Munch.

 At times, in a variety of places in the world,  Frito-Lay's are unfamiliar, and so the ad campaigns concentrate on teaching consumers hoping to change peoples' "consumption habits." 

 Examples: 

• In China, Frito-Lay ads present potatoes literally being sliced, informing people on where chips come from.
• In Turkey, Frito-Lay gave out pamphlets proposing brand-new recipes & eating habits: "Try a tuna sandwich for lunch, and join it with a bag of chips."

Similar to other transnational corporations, Frito-Lay has found that local managers, whom are very acquainted with the market and its culture, are the best ones. Despite the fact that they must adhere to specific global standards, regional managers are advised to search for new "occasions" to enhance sales in their particular region.

Examples: 

• In Holland: the Dutch are accustomed to eating potato chips only during the nighttime, (as a snack after dinner). By centering his efforts on breaking their habit, manager, Eugene Willemsen, distributed free samples of potato chips on the streets in the daytime and as an outcome, he modified the Dutchs' traditional custom. Another endeavor of Willemsens' was targeting high schools. He recognized that kids were the primary contributors to the Frito-Lay's expansion in Holland. 

• In China: Sales director, Jackson Chiu brought up sales by 57 % within a year, while concentrating on targeting young and adult females. "We market to girls and the boys follow," he said.

• In South Africa: By hiring local drivers to deliver the product, in turn making it product seem not as foreign, national sales manager, Arnold Selokane caused sales to skyrocket.

Below is a statement released by PepsiCo's chief executive, Steve Reinemund, in regards to Frito-Lay's international strategies:

  "We're making products in those countries, we're adapting it to the tastes of those countries, building businesses and employing people and changing lives."

In retrospect of company efforts towards globalization, we can conclude...

• Frito-Lay uses it's international logo for its global brand and manages operations in various countries. 

• When developing international strategy, Frito-Lay has learned to respect the needs of the local markets. 

• They've learned that the culture of a country can be appeased by a particular type of flavor. 

• Frito-Lay takes advantage of customer desires and necessities via international borders.

• The company retains its global strategy by marketing their products in grocery and convenience stores throughout the world. 

Chapter 4. Marketing Environment

Frito-Lay's target market is not as straightforward as other companies and that probably has everything to do with the fact that it has a much broader range of products in its manufacturing and promotional set. Frito-Lay sells a variety of products varying in price. A Frito-Lay price range is about $1to $5, depending on the size of the bag and the kind of chip being purchased. Pricing strategies used in Frito-Lay include price skimming and promotional pricing. Essentially, Frito-Lay products are more costly compared to no-name chip products. Although they may be very similar in taste to the less commonly known chips, the fact that Frito-Lay chips are higher in price promotes the notion that the Frito-Lay chips are a better quality product.

                    Frito-Lay promotes their product in a number ways, one of them being E-marketing. They place ads for their snacks on various gaming sites such asaddictinggames.com,armorgames.com,miniclip.com/games, and the like. Generally people playing online games range from ages 10-16, so one of Frito-Lay's target markets are preteens and teenagers online.

           Frito-Lay also uses sponsorship as a means of promoting their products. Many television advertisements for Lays, Cheetos, Doritos and other Frito-Lay chips are often shown prior to the beginning of a sports game. In fact, a mere 30-second commercial can make a company an enormous amount of money. As one of the companies that sponsors the Super Bowl, Frito-Lay can attest to that.  In my experience, I have made attempts to purchase Frito-Lay chips & dip during SuperBowl week and have invariably scoured supermarket shelves for them without much success.

Among the millions of NFL fans who watch the Super Bowl, many of them are bound to go out and buy Frito-Lay chips, unconsciously and consciously, after seeing the Frito-Lay commercials. For its Super Bowl promotions, the Frito-Lay target market is anyone who watches or goes to see football games, so it runs the gamut in terms of the ages to which the commercials will appeal. Adults may buy a bag of Doritos after seeing an ad, for instance, or a child who liked a commercial may get their parents to buy Frito-Lay products. Frito-Lay proves to be very effective in its promotion.

            Frito-Lay has many customers worldwide and tries to categorize them by the usage of  four types of segmentation (location, branding, stage of development, and product-profiling Frito-Lay customers) in order to meet their needs. In doing such, it tries to target some customers more than others. For example, studies show that teenagers and young adults tend to purchase more junk food than older people. Thus, people between the ages of 13 and 22 may want to buy more chips than people whose ages range from 30 years old and up. The former is a huger target for Frito-Lay because of their likelihood to buy more of the product.  

             

            Ethnic background is not really a consideration, but where the consumers live is a definite factor. The flavor of the chip has to appeal to the people living in a specific spot, and that changes as you move from country to country. For example, people in North America would prefer to eat barbecue- flavored chips, whereas people living in China may prefer to eat duck-flavored chips. Frito-Lay must also take note of which brands are the most popular as well as the habits of their customers. If the most popular snack in Canada is Cheetos, for example, then Frito-Lay should ship more Cheetos to Canada than any other of their products. In this way, they will maximize their profit on Cheetos in Canada. It is not likely that Frito-Lay sells a lot of chips to professional athletes, so they need to find out what their customers enjoy doing to sell to more people. For example, if a lot of hunters like to eat Spitz (a Frito-Lay product), then Frito-Lay should start targeting people who go hunting while promoting Spitz. 

         Other chip-manufacturing brands such as No Name and President's Choice have provided a bit of competition in the market for Frito-Lay because of their lower cost. Generally, however, Frito-Lay has little competition. In fact, Frito-Lay owns all of the major chip brands (including Lays, Doritos, Cheetos, Ruffles, inter alia) thus restricting their competition severely. The factor that really sets it apart and gives Frito-Lay the distinct edge over other chip manufacturers is that they have a larger variety of snack foods to market, promote and sell to the public.

Frito Fun Fact #1

"It's Electric!"

Chapter 3. Ethics & Social Responsibility

Frito-Lay has made significant efforts towards developing environmentally-friendly products for its company.  So far, the corporation has demonstrated numerous ways they use renewable energy and resources.  Since 1999, Frito-Lay has managed to decrease the usage of per-pound water by more than 38% , reduce electricity usage over 21% and lower manufacturing fuels by more than 27%.

In the following links, based on the data provided, it can be concluded that 
Frito-Lay has established corporate social responsibility (CSR), 'a business's concern for society's welfare'.  The preceding website links present information on consumer concerns regarding the company along with it's products and the firm's progress towards the improvement of the environment.

• Frito-Lay's SunChips Brand Changing the Future of Snack Food Packaging

(This page introduces one of Frito-Lay's feats of 2010; the development of the first fully compostable snack chip bag made from plant-based materials which has, a result, become highly beneficial towards not only the environment but the company and it's consumers. It then furthers discussion of the company's progress in depth. In one section it describes how Frito-Lay managed to lower the amount of plastic usage by 10 % (which led to the removal of twelve million pounds of materials annually utilized in order to produce snack bags).

• Sustainability through our planet

(This is a link to the direct site for the Frito-Lay company. 
This page explains how the company
helps protect the Earth by producing sustainable products in four ways.)

• Pepsi-Co's 2007 annual report on environmental sustainability

(This page describes Frito-Lay's dedication to being "an environmentally responsible corporate citizen" in various ways. It also provides a link explaining "how Sunchips is using solar energy".)

• Frito-Lay Marks One Million All-Electric Miles, Adds CNG Vehicles

• Frito-Lay Corporate Awards 

• Three Frito-Lay Plants Join EPA's National Environmental Peformance Track Program

• Frito-Lay Goes Green: Companies Discover Benefits Beyond Help The Environment (Photos)

• Sustainable Snacking (Solar Power & Recycled Water Make Frito-Lay's Facility A Desert Oasis  (Solar power at Frito-Lay's snack food manufacturing plant allows the facility to function almost wholly on renewable energy source) 

    In 'Pepsi Co's environmental sustainability report' holds two crucial statements that serve as additional evidence of Frito-Lay's sincere dedication to society's welfare:   

  

1. "Frito-Lay uses the energy from the sun in so many ways. Many of our products are distributed through our Phoenix, Arizona distribution center, where we have solar panels on the roof that generate electricity; and we are installing solar collectors at our plant in Modesto, California to provide up to 75% of the thermal energy the plant uses to make SunChips snacks in that location. As a six-year member of the Frito-Lay sales organization, I’m glad to work for a company that is finding many ways to use renewable energy." ― Carrie Carroll, National Account Manager, Frito-Lay North America 2007 PepsiCo President’s Ring of Honor Recipient for Top Sales Performance

2. "We strive to replenish the resources we’ve used, where possible, as part of our commitment to being an environmentally responsible corporate citizen. Our associates are passionate about this vision and continue to drive programs to reduce our energy and water consumption, invest in new energy research and improve our packaging sustainability."


 The well-recognized snack foods company has made a special commitment, among it's other duties, to helping the environment and in turn the world and all who inhabit it. 
Based on my research, it has become evident that Frito-Lay has advanced as a company with it's vigorous actions and significant contributions towards improving the world environmentally through it's products.

Chapter 2. Strategic Planning & Competitive Advantage

We live in a country that thrives to a certain extent on the perpetuation of the fast food industry and the ease of sale and distribution of such products. 

Frito-Lay is a company that joined the race to the consumer’s mind through strategic marketing.

 Thus, one can surmise they gained a sustainable competitive advantage (one that cannot be copied by the competition). 

They’re recognized in homes worldwide and have used this as leverage in an effort to hold the market sway for years.

 They advertise thoroughly their several varieties of salsas, dips, crackers, nuts and seeds. 

It’s evident that they’re not lacking as they cover 50% of salty snack isles in our supermarkets. 

Their charm may be within the fact that their prices remain generally inexpensive and more sufficient in opposition to competitors. 

They are convenience foods and generally in the category of “on the go” items. 

Supermarkets, amusement parks, universities, gas stations, subway stations, and groceries all carry these types of products.

 The influx of people is what fuels the sale and distribution of such products. 

Yet, the choice as to what they purchase tends to be unconsciously affected by what they know, recognize. 

This is where Frito-Lay's loud image and bold flavor is emanated through the usage of various advertisement platforms such as magazines, newspapers, the Internet, Television, and radios. 

Thus, they have made themselves renowned and a product close to the general public through their integrated marketing initiatives.

"Playing with your food" just got a whole new meaning

#nowthatsart #cheetosart #conanobrien #butincheetoform