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.
