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! ! ! ! Situational!Analysis! ! Tostitos!! ! Developing!a!Marketing!Plan! ! Dale!De!Mari! ! October!23,!2013!
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! The$Market$Summary$–$$ ! Product!–!Tostitos!tortilla!chips,!made!and!distributed!by!FritoDLay!North!America! ! Industry!D!Food!and!Snack!Foods! ! Snack!chips!are!a!segment!of!the!snack!food!industry.!!The!products!in!this!category! are! made! up! of! potato,! corn! and! tortilla! chips,! pretzels,! and! readyDtoDeat! popcorn.!! The! snack! food! industry! includes! snack! chips! but! extends! to! all! kinds! of! snacks! including!but!not!limited!to:!candy,!cookies,!crackers,!nuts,!etc.! ! Annual!snack!food!revenue!D!$36!billion!! ! SIC!Code!–!209603,!Photo!Chip!Factories!(Mfrs)!! ! NAICS!Code!–!311919,!Other!Snack!Food!Manufacturing!! ! Major!competitors!–! ! 1. General!Mills!! 2. Mondelez!International,!Inc.!! 3. The!Kellogg!Company!!! ! Tostitos!is!a!product!manufactured!and!distributed!by!FritoDLay!North!America,! they!make!up!13%!of!the!tortilla!chips!category.!FritoDLay!is!strategically!positioned! within!the!snack!food!industry.!!They!account!for!59!%!of!sales!in!the!United!States! snack!food!industry!and!are!the!leading!manufacturer!of!snack!chips!in!the!United! States;!accounting!for!half!of!the!retail!sales!of!snack!chips!(PepsiCo).!! ! In!fact,!8!of!the!top!10!bestDselling!snack!chip!items!in!United!States!supermarkets! are!a!FritoDLay!product!(Doritos,!Ruffles,!Lay’s,!Fritos,!Cheetos,!Tostitos,!FritoDLay! Variety!Pack,!and!Santitas).! !
FritoDLay!operates!based!on!four!basic!strategies:! ! 1. Grow!established!FritoDLay!brands!through!line!extension.!This!can!be!a!change! in!the!variety!of!tastes!or!sizes.! 2. Create!new!products!to!meet!changing!consumer!preferences!and!needs.!! 3. Develop!products!for!fastDgrowing!snackDfood!categories.! 4. Reproduce!FritoDLay!successes!in!the!international!markets.! ! Their! greatest! advantage! is! the! fact! that! FritoDLay! has! such! a! diverse! selection! of! goods!and!offers!innovative!products!to!their!consumers;!entirely!new!products!not! currently!on!the!market.!!! ! !
! ! ! Market$Demographics$–$ ! One!of!the!most!diverse!categories!in!the!consumer!packaged!goods!industry,!snack! foods!and!chips!account!for!$36!billion!dollars!in!total!U.S.!sales.!The!modest!prices! of!most!snack!foods!and!chips!give!customers!the!image!of!affordable!indulgence,! which!has!helped!keep!sales!up!through!the!economic!recession.!! ! The!snack!food!category!has!been!growing!continually!since!2005.!Negative! attention!to!the!category!for!some!snacks!being!poor!in!nutritional!value,!has!more! and!more!manufactures!producing!betterDforDyou!snack!options.!! ! As!the!overall!population!grows!older!and!the!number!of!households!with!children! decreases,!the!snack!food!industry!needs!to!ensure!that!is!stays!relevant!to!an!older! demographic!while!continuing!to!appeal!to!its!core!younger!markets.!! ! Potato!chips!remain!the!largest!segment!with!$6.8!billion!dollars!in!sales;!this! segment!shows!the!most!willingness!to!develop!new!flavors!and!impress!the! younger!market!18D34!years!of!age.!! ! Corn!snacks,!which!are!a!small!segment,!have!shown!a!decline!in!sales!since!2010.! Consumers!generally!stick!to!favorites!or!a!usual!flavor!when!it!comes!to!buying! corn!snack!foods.!! ! Asian!and!Hispanic!populations!have!been!buying!more!snack!foods!and!chips!in!the! past!year;!this!helps!the!category!significantly,!as!these!are!some!of!the!fastest! growing!ethnic!populations,!according!to!the!U.S.!Census!Bureau.!! ! ! Demographic!profile!category!! Figure!1!–!Total!Tortilla!Chips!! ! ! ! ! ! ! ! ! ! ! !
! Figure!1!is!a!representation!of!total!tortilla!chips!consumed.!The!numbers!in!red!are! indexing!extremely!high,!which!means!these!people!are!purchasing!more!tortilla! chips!then!average.!! ! Comfortable!country!and!affluent!suburban!spreads!are!indexing!very!close!to!each! other.!!In!addition,!older!bustling!families!index!the!highest!for!the!categories!total! at!174.!Meaning!they!are!74!times!more!likely!to!purchase!tortilla!chips!than!the! average!consumer.!! ! The!highest!individual!ranking!index!is!comfortable!country!–!older!bustling! families,!which!is!indexing!at!190.!This!segment!is!90!times!more!likely!to!purchase! tortilla!chips!than!the!average!consumer.!! ! Figure!1.2!Total!Tortilla!Chips!Volume!! ! ! ! ! ! ! ! ! ! ! Figure!1.2!is!representative!of!the!category,!tortilla!chips,!which!the!core!consumer! is!by!volume!percentage.!If!you!look!closely!–!affluent!suburban!spreads!and!plain! rural!living!are!accounting!for!20%!of!total!consumption.!! ! It!is!also!important!to!note!older!bustling!families,!younger!bustling!families!and! established!couples!are!a!key!segment!to!pay!attention!too.!! ! Figure!1.3! ! Figure!1.3!lists!the!importance!of!demographic! attributes.!If!you!look!closely!–!the!importance!ranking! is!connected!to!our!market!segment.!Number!of!persons! in!the!household!is!most!important!because!a!major! market!segment!is!families.!! ! ! ! ! ! ! !
! Figure!2!Tostitos!by!Index!! !
Figure 2 is a representation of Tostitos heavy customer segments. The areas in red index extremely high, which means these people are purchasing more units of Tostitos then average. If you look closely, the areas that are the most important would be affluent suburban spreads, older bustling families, younger bustling families, small-scale families, and start-up families – these are all Lifestyles. Figure 2.1 ! ! ! ! ! ! ! ! ! ! ! The!data!in!figure!2.1!helps!us!identify!who!are!core!consumers!are!by!percentage.! Affluent!suburban!spreads!and!comfortable!country!are!key!segments.!Families!are! definitely!another!key!segment!for!Tostitos.!Affluent!suburban!spreads!–!established! couples!are!an!important!segment!to!keep!in!mind.!! ! ! ! ! !
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! ! ! Figure 2.2 ! ! ! ! ! ! ! ! ! ! ! Figure!2.2!is!a!breakdown!of!demographic!skews.!All!of!the!items!under! demographic!skews!index!highly,!but!we!also!want!to!pay!close!attention!to! consumption.!! ! Looking!closely!at!Figure!2.2,!all!of!the!items!have!a!high!index!and!consumption! percentage!over!12%!an!important!segment.!Consumption!percentage!means!that! this!person!consumes!a!certain!percentage!of!all!units!sold!D!for!example,!homes! with!incomes!$100,000+!or!more!have!an!18%!consumption,!which!means!that! these!homes!are!buying!18%!of!all!Tostitos!bags!sold,!this!is!an!important!key! segment.!In!addition,!married!couples!with!and!without!children!index!highly!for! composition!total.!! ! ! ! Figure!2.3!! ! ! ! ! ! ! Age! 35D54!years!old! Gender! Male!and!Women! Income!level!! $75,000!D!$149,000+!a!year!!! Race! Caucasian!and!Hispanic!! ! Figure!2.3!indicates!the!importance!of!demographic!rankings.!The!number!one! category!is!household!income,!which!relates!back!to!homes!with!incomes!of!
! $100,000+!or!more!have!a!high!consumption!percentage!and!are!an!important!key! segment.!! ! ! Race of Head of Household ! White 71.9% 104 ! Black 7.9% 66 ! Hispanic 14.3% 115 Demographic!facts! Asian 4.0% 93 continued!–!Tostitos!! Other 1.9% 88 ! ! Tostitos!consumer!household!income!! Household Income Under $10,000
3.4%
43
$10,000 - $19,999
5.2%
45
$20,000 - $29,999
7.0%
62
$30,000 - $39,999
8.5%
81
$40,000 - $49,999
8.0%
86
$50,000 - $74,999
20.6%
114
$75,000 - $99,999
15.9%
135
$100,000 - $149,999
18.3%
160
$150,000 or More
13.1%
162
! Tostitos!consumer’s!geographic!locations!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! !Geographic!–!East!North,!South!Atlantic,!and!West!North!Central!are!strong! geographical!representations!of!Tostitos!consumers.!! ! ! ! ! Census Division East North Central
16.2%
106
East South Central
4.3%
70
Middle Atlantic
12.3%
93
Mountain
7.5%
105
New England
5.2%
109
Pacific
13.7%
91
South Atlantic
19.1%
96
West North Central
9.5%
137
West South Central
12.1%
105
! ! Spectra Lifestyle Urban High Society Suburban Aristocrats Prosperous Suburbs Elite Country Manors Affluent Suburbs Affluent Metropolitan Sprawl Affluent Country Living Age of Oldest Child Age Under 6 Age 6 - 11 Age 12 - 17 No Children
3.2% 5.4% 6.5% 5.4%
96 161 155 146
5.2% 6.6% 4.5%
124 123 142
9.8% 12.7%
130 135
23.2% 54.4%
146 81
15.1% 65.0% 19.9%
76 133 63
Marital Status of Head of Household Single Married Divorced, Separated & Widowed
! Lifestyle!! Vehicles! Martial!Status!!
Prosperous! suburbs! 1!vehicles!! Married!65%!
Suburban! Aristocrats! 2!vehicles! Divorced!20%!
! ! ! ! Tostitos!consumer! lifestyle!breakdown!! ! ! ! ! Age!of!children! ! ! ! ! ! Marital!Status!! ! Affluent!Metro.! 3!+!vehicles!! Single!15%!
! ! ! ! Demographics!–!Tostitos!are!a!product!consumed!by!families!and!households!with!an! income!of!$75,000!to!149,000!+!dollars!a!year.!This!is!a!heavy!customer!segment!for! Tostitos.!! ! In!addition,!white!and!Hispanic!races!are!a!big!consumer!segment!for!Tostitos.!! These!consumers!live!in!the!East!North!Central,!Middle!Atlantic,!Pacific,!and!West! South!Central!Census!Divisions.!! ! Tostitos!consumers!live!in!middle,!upper,!and!elite!class!suburban!areas!of!the!United! States.!! ! Psychographics!–!Tostitos!consumers!are!educated,!have!high!paying!jobs,!and!value! family!dynamics.!! ! ! ! !
! Business$Drivers$ ! 1. With!the!resurgence!of!healthy!eating!and!a!focus!on!overall!wellness,! the!tortilla!industry!is!continuing!to!grow!and!adapt.!Many!tortilla! manufacturers!have!reformulated!their!product!to!include!healthful! ingredients,!including!whole!grains!and!eliminate!trans!fats.!Even!the! low!carb!tortillas!continue!to!sell,!though!many!under!new!names,! when!other!lowDcarb!products!have!dwindled.!Plus,!the!retail!food! industry's!reliance!on!wraps!as!menu!options!has!provided!the!tortilla! industry!with!another!stable!base!of!consumers.! ! 2. Popularity!of!tortillas!in!the!food!service,!and!restaurants!segments!of! the!industry!has!led!to!increased!consumption.! ! 3. The!low!carb!diet!craze!that!caused!sales!in!other!bakery!product! categories!to!decline!did!not!affect!tortilla!sales.!Tortilla!manufactures! were!able!to!produce!tortillas!that!reduced!carbs!even!though!tortillas! are!typically!lower!in!carbs.!Tortillas!producers!have!also!been!able!to! increase!sales!by!adding!a!variety!of!flavors!and!by!marketing!to!nonD Hispanic!customers.!Note!that!increased!tortilla!sales!have!also!added! to!the!sales!of!flatbreads!including!products!manufactured!by!Alladin! Bakers!and!Damascus!Bakeries!both!based!in!Brooklyn,!N.Y.!Tortilla! chip!manufacturers!have!also!increased!sales!by!the!addition!of!new! flavors!such!as!FritoDLay's!Doritos!Black!Pepper!Jack!tortilla!chips.! ! 4. The!shift!from!chip!as!salsa!vehicle!to!chip!as!taste!statement!has! expanded!upon!the!category.!With!wide!popularity,!tortilla!chips!are! manufactured!with!an!impressive!array!of!ingredients.!Tortilla!chips! like!many!foods!–!are!becoming!a!pedestal!for!sustainability!issues.! The!industry!has!seen!trends!in!organic!and!glutenDfree!foods,!the! next!frontier!is!making!products!that!use!nonDgenetically!modified! products.!! ! 5. Consumers!prefer!matching!brands!for!products!that!are!consumed! together!because!they!believe!products!from!the!same!brand!have! been!designed!to!go!together.!Tostitos!realizes!this!consumer!trend!by! strategically!selling!their!tortilla!chips!and!salsas!in!close!proximity!at! the!retail!level.!A!company!that!offers!products!that!are!consumed! together!will!have!an!advantage!over!other!rival!brands!that!do!not! offer!both!individual!products,!since!consumers!often!look!for! matching!brands.!! ! ! ! ! ! ! ! ! !
! Value!is!realized!in!savings!of!dollars! To!do!this,!it!was!imperative!that!their! and!time.!Tostitos!is!teaming!up!with! consumers!be!able!to!interact!and! National!Football!League!this!football! participate!in!the!promotion!in!a!very! season!for!a!themed!promotion!that! simple!and!seamless!manner.!As! uses!SMS!messaging!to!keep! mobile!usage!rises!among!consumers,! consumers!continuously!involved.! Tostitos!understands!the!value!of!it! Through!partnerships!with!strong! playing!a!significant!role!in!this! retailers!throughout!the!United!States,! campaign,!which!allows!Tostitos!to! Tostitos!has!a!crated!a!360Ddegree! engage!with!their!consumers!in!an! promotion,!brining!the!spirit!of! easy,!streamlined!manner.!! football!into!the!shopping!experience.! ! ! Market$trends$ ! Emerging!health!conscious!consumers,!individual!taste!preferences,! influences!of!children!on!purchase,!increasing!diversity!in!population!are!all! trends!in!the!snack!market.!! ! Demographics,!the!aging!population,!and!changing!ethnic!mix,!and! bifurcating!income!are!the!trends!reshaping!the!way!people!are!eating.!! ! People!are!snacking!more!often!during!the!day,!and!they!are!looking!for! snacks!that!are!more!satisfying!physically!and!healthier.!! ! Consumers!of!the!category!are!branching!out!their!taste!buds!to!nuts,!dried! fruits!and!snacks!made!from!whole!grains.!! ! ! ! Market$growth$ $ FLNA!organic!revenue!growth!of!5%,!organic!volume!growth!of!3%,!and!core! constant!currency!operating!profit!growth!of!6%!in!the!quarter2012!(PepsiCo)! ! FLNA!gained!volume!and!value!share!across!measured!channels!in!the!U.S.!in!salty! snacks!in!the!quarter!and!year!to!date!(PepsiCo)! ! Continued!innovation!and!product!strength!–!Tostitos!Cantina,!Doritos!Jacked!Ranch! Dipped!Hot!Wings,!Cheetos!MixDUps!and!Lay’s!Do!Us!a!Flavor!(PepsiCo)!! ! 1. The!growth!in!the!sales!of!tortillas!have!been!affected!by!many!factors! including!the!increase!Hispanic!population!and!awareness!of!their! health!benefits.!!According!to!a!study!released!by!Packaged(Facts!the! Hispanic!population!accounts!for!more!than!$1!trillion!of!the!market.!!! !
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2. Business!has!been!good!since!tortilla!chips!moved!from!ethnic!food!to! widely!popular.!In!2012,!shoppers!spent!$145!million!scooping!up! tortilla!chips,!up!from!$136!million!the!year!before.!Tortilla!chips!have! grown!to!being!almost!a!quarter!of!snacks!bought.! 3. A!challenge!for!tortilla!chip!manufacturers!is!how!to!continue!to!grow! their!core!business!when!some!of!their!mainstream!brands!are!losing! share!to!some!of!the!smaller!premium!and!value!brands!as!well!as!to! other!snack!categories.!Pretzels!and!snack!bars!and!energy!bars,!trail! mixes!and!nuts!are!also!growing!at!a!faster!pace.!!
! Market$Position$$ ! FritoDLay!North!America!is!a!market!leader!that!sets!industry!standards.! FLNA!has!a!strong!presence!in!the!market!because!of!their!sustainable! competitive!advantage.!! ! 1. WellDdeveloped!product!mix! ! 2. Extensive!management!information!systems!including!vast!databases,! updated!daily,!which!detail!market!share,!displays,!and!competitors! pricing.!! ! • Price!–Tostitos!is!a!convenience!product,!pricing!is!at!a!lower!scale.!In!! addition,!the!price!of!Tostitos!is!comparable!to!products!in!the!category.!The! value!of!Tostitos!is!determined!by!how!much!benefit!the!buyer!feels!they! receive!for!their!purchase!price.!The!launch!of!Tostitos!Cantina!chips! followed!an!introductory!pricing!strategy!used!by!lowering!prices!for!a! limited!time.!By!advertising!at!a!lower!price!point,!even!for!a!limited!time! period,!Tostitos!may!influence!customers!to!try!their!product,!convert!their! current!buying!habits,!and!develop!loyalty!to!their!brand.!! ! • Product!–!Tostitos!are!available!in!a!wide!variety!of!flavors,!baked!or! traditional!and!restaurant!or!Cantina!style.!Tostitos!are!widely!available!to! consumers!through!retail,!pharmacy,!and!mass!merchandise!stores.!In! addition,!Tostitos!are!available!in!a!distinctive!colored!package,!which!makes! their!presence!on!the!retail!shelf!stand!out!from!competitors.!! ! • Place!–!Tostitos!serves!its!customers!in!North!America!through!indirect! retailers.!Tostitos!uses!retailers!to!sell!their!products!throughout!Northern! America.!Consumers!may!not!purchase!Tostitos!directly!from!the! manufacture,!they!must!rely!on!retail!distribution!channels.!! ! Tostitos!are!sold!at!several!retail!outlets!from!gas!stations,!universities,! groceries,!supermarkets,!and!convenience!stores.!!
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Promotion!–!Tostitos!uses!several!media!outlets!to!create!brand!awareness.! Consumers!may!visit!Tostitos!online!through!their!Facebook,!Twitter,! MySpace,!LinkedIn,!and!Pinterest!sites.!Tostitos!uses!more!new!media! methods!of!advertising!instead!of!traditional!methods.!This!is!due!to!change! in!the!way!people!interact!with!a!brand.!More!recently,!Tostitos!has!turned!to! banner!ads!on!the!Internet,!this!allows!consumers!to!directly!connect!with! Tostitos!via!their!online!presence.!!
! Tostitos!is!in!the!maturity!stage!of!the!product!lifecycle.!Market!shares!are!fairly! stable!and!rapid!sales!growth!has!slowed!down.!It!is!important!to!be!proactive!and! come!up!with!ways!to!extend!the!product!lifecycle.!This!can!be!accomplished!by;! ! 1. Modifying!the!market!–!find!new!users!for!the!product!by!reaching!out!to!low! volume!percentage!but!high!indexing!consumers.!! ! 2. Modifying!the!product!–!change!a!product!feature!to!attract!new!users!such!as!ecoD friendly!packaging.!! ! 3. Modifying!the!marketing!mix!–!change!of!the!marketing!mix!elements,!for!example! price!or!the!way!the!product!is!promoted!by!coDbranding!or!endorsing!ecoD friendly!sponsorships.!! $ Currently,!Tostitos!has!a!13%!share!of!sales!in!tortilla!chip!category,!drug!and!mass! merchant!channels.!! ! Tostitos!has!taken!great!strides!when!it!comes!to!their!competitive!position.!Rather! than!introduce!new!items!to!boost!sales,!Tostitos!partnered!with!Landor!to! completely!reposition!the!Tostitos!chips!and!dips!brand!and!broaden!its!competitive! context.!Tostitos!decided!to!position!themselves!as!a!more!compelling!substitute!for! traditional!social!snacks!–!such!as!popcorn!or!cheese!and!crackers!–!a!category!in! which!Tostitos!did!not!generate!high!volume.!! $ The!solution!to!their!competitive!position!involved!creating!a!“savoring!connection”,! which!allowed!Tostitos!to!compare!more!formidably!in!the!broadly!defined,!highD opportunity!social!snacks!category.!! ! Tostitos!created!an!iconic!brand!identity!to!reinforce!the!entire!line!of!packaging! with!unified!architecture!that!uses!a!strong!blue!background!to!maximize!shelf! presence.!A!year!after!the!new!identity!and!packaging!were!introduced,!Tostitos!not! only!reversed!its!sales!decline,!but!the!brand!experienced!a!1.16!percent!increase! across!its!portfolio!–!a!remarkable!gain!in!this!crowded!category.!! $ $ $ $ $
! The$Competitive$Analysis$$ $ Direct!competitors!–!Other!tortilla!chips!such!as!Grande,!Utz,!and!Snyder’s!of! Hanover.!! ! Indirect!competitors!–!Cookies,!popcorn,!salty!nuts,!trail!mix,!pretzels,!and!frozen! pizza.! ! Figure!3.1!is!representative!of!Tostitos!Competitors!! !!!!!!!!!!!!!!!!!!!!Top!Three!Competitors!–!Tostitos! 1. Grande! 2. Utz! 3. Snyder’s!of!Hanover!! ! ! ! ! ! ! Top!Competitors!Fast!Facts!–!Grande!tortilla!chips!! ! Grande!consumers!who!live!in! affluent!suburban!spreads! and!comfortable!country!are! an!important!customer! segment.!! ! ! ! ! ! ! ! ! ! ! ! Household!income,!composition,!and!number!of! persons!are!important!demographics.!! ! Primarily,!Middle!Atlantic!and!South!Atlantic!Census! Divisions!are!customer!segments.!! ! !
! ! ! ! Competitor!–!Utz!tortilla! chips! ! The!Utz!consumer!also! lives!in!affluent!suburban! spreads!and!confortable! country.!In!addition,! cosmopolitan!centers.!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! The!Utz!consumer!consists!of!married!families!with!children!living!in!East!North! Central,!Middle!Atlantic,!and!New!England!Census!Divisions.!! ! Utz!has!a!loyal!customer!base!but!they!are!not!a!brand!that!has!national!or! international!reach.!! ! Similar!to!Tostitos,!Utz!focuses!on!families,!married!with!children.!! ! Demographic!rankings!that!are!the!most!important!are!education!of!head!of! household,!household!income,!and!age!of!head!of!household.!! ! ! ! ! !
! ! ! Competitor!–!Snyder’s!of! Hanover!! ! ! !
! ! ! ! Snyder’s!heavy!consumer!lives!in!comfortable!country!and!affluent!suburban! spreads.!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Snyder’s!consumers!live!in!East!North!Central,!Middle!Atlantic,!New!England,!and! South!Pacific!Census!Divisions.!! ! ! Household!income,!number!of!vehicles,!and! household!composition!are!their!three!most! important!demographic!attributes.!! ! ! ! ! ! ! !
! Tostitos!three!main!competitors!Grande,!Utz,!and!Snyder’s!of!Hanover!each! manufacture!tortilla!chips.!! ! All!different!brands!meet!their!individual!customer!needs!on!different!levels,! primarily!through!distribution!and!products!offered.!! ! Currently,!Tostitos!is!expanding!its!sales!and!has!the!ability!to!reach!markets! throughout!the!United!States.!! ! FritoDLay!and!Tostitos!have!reconstructed!their!business!into!four!regional!divisions! to!strengthen!their!channels!of!distribution.!! ! Currently,!Tostitos!and!other!FritoDLay!products!may!be!found!in!over!400,000! retail,!vending,!and!food!service!locations.!! ! FritoDLay!and!Tostitos!continue!to!increase!brand!awareness!increasing!their! market!coverage,!which!includes!intensive!distribution!by!placing!its!products!in! convenience!stores,!mass!merchandise!stores,!gas!stations,!and!vending!machines.!! ! Comparing!Tostitos!to!its!top!competitors,!Tostitos!has!the!widest!area!of! distribution!and!does!not!focus!on!just!a!select!group!of!geographical!areas.!! ! Utz!tortilla!chips!for!example,!compete!with!Tostitos!but!they!serve!a!much!smaller! market.!In!order!to!compete,!Utz!targets!its!local!markets!directly.!Utz!uses!a!more! localized!approach,!which!targets!their!consumer!on!a!local,!smaller!scale.!! ! Strategies!such!as!targeting!a!local!market!directly!is!hard!for!a!company!like!FritoD Lay!to!achieve,!this!is!an!advantage!for!small!companies!such!as!Utz.!! ! The!importance!of!demographic!skews!for!Tostitos!relies!on!income,!household! composition,!and!number!of!persons!in!household.!! ! Competitor!Utz!demographic!skews!show!the!exact!same!top!three!attributes,! income,!household!composition,!and!number!of!persons!in!household.!! ! ! Competitor!Grande!demographic!skews!include!household!income,!composition,! and!number!of!persons.!! ! Competitor!Snyder’s!demographic!skews!include!income,!number!of!vehicles,!and! household!composition.!! ! ! ! ! !
! Indirect$competitor$–$Category$Pizza$$ !
! ! ! ! Index!values!for! frozen!pizza! consumers.!! ! ! ! ! ! ! !
! ! ! ! ! ! Total!volume! percentage,! frozen!pizza! category.!! ! ! ! ! !
!
! ! ! An!indirect!competitor!category!for!Tostitos!is!frozen!pizzas.! The!frozen!pizza!market!of!the!consumer!foods!category!is! composed!of!a!wide!range!of!consumers.!! ! From!the!volume!percentage!and!index!charts,!nearly!every! lifestyle!and!behavior!stage!purchases!frozen!pizzas.!! ! The!demographic!rankings!of!the!tortilla!chip!compared!to!frozen!pizza! category!are!similar,!except!household!income!is!a!bigger!factor!in!the!tortilla! chip!category!and!age!of!oldest!child!is!not!a!factor.!!
! ! Services$and/$or$Products$–$Gap$Analysis$ ! FritoDLay!North!America,!manufacture!of!Tostitos!tortilla!chips!has!a!longDstanding! commitment!to!health!and!wellness!and!has!led!the!food!industry!in!many!areas.! Whether!through!improved!products!or!new!product!information,!FritoDLay!offers! consumers!a!wide!variety!of!products!that!can!fit!into!a!healthier!lifestyle,!and!FLNA! continues!to!build!on!these!efforts.!Through!its!commitment!to!well!being!and!by! maintaining!its!tradition!of!providing!great!tasting!snacks,!FritoDLay!is!dedicated!to! meeting!the!evolving!needs!of!its!consumer!! FritoDLay!in!conjunction!with!Tostitos!continues!to!help!meet!consumers’!everD changing!snack!needs.!WellDbeing!continues!to!be!an!increasing!priority!to! consumers!and!it!is!their!commitment!to!provide!them!with!products!that!fall!into! several!key!areas,!most!notably!in!the!areas!of!weight!management!and!positive! nutrition,!which!along!with!heart!health,!comprise!FLNA’s!focus!on!wellDbeing.!! ! • Weight!Management:!Understanding!the!varying!needs!for!different! lifestyles,!FritoDLay!and!Tostitos!offers!a!variety!of!products!to!help!those! interested!in!minimizing!total!fat!and!caloric!consumption.! ! ! Starting!in!the!mid!the!80’s,!the!company!launched!a!variety!of!reduced,!low! and!no!fat!chips.! ! In!the!early!90’s,!the!company!introduced!Baked!!Tostitos!tortilla!chips!that! are!lower!in!fat!and!calories!than!original!Tostitos!chips.!! ! Along!with!singleDserving!bags,!FritoDLay!introduced!100!Calorie!Mini!Bites! bags!of!Tostitos!that!take!the!guesswork!out!of!portion!control.!! ! • Positive!Nutrition:!FritoDLay!products!and!Tostitos!contain!three!basic! ingredients,!corn!or!potato,!healthier!oils,!and!salt/!seasonings.!In!addition,! these!simple!ingredients!make!FritoDLay!products!a!good!source!of! potassium!and/!or!vitamin!C!and!E.!! ! • Healthy!Oils!Strategy:!FritoDLay!has!followed!sound!science!to!help!shape!the! approach!to!oils!used!in!their!products.!This!approach!often!resulted!in!FritoD Lay!making!hallmark!changes!to!improve!the!health!profile!of!its!! products!well!ahead!of!other!food!companies.! ! ! In!1987,!FritoDLay!North!American!removed!palm!oil!from!all!snack!chips!as! research!began!to!link!saturated!fat!to!heart!disease;!the!food!industry! followed!a!number!of!years!later.! ! ! FritoDLay!led!the!industry!in!2003!by!being!the!first!major!food!company!to! eliminate!trans!fats!from!its!entire!snack!chip!portfolio!by!converting! Tostitos!to!corn!oil,!a!healthier!oil.!All!of!the!company’s!chips!have!0!grams!of! trans!fats.!!
! ! ! ! In!2006,!FritoDLay!reduced!the!saturated!fat!content!in!Tostitos!by!more!than! 50!percent!by!switching!to!sunflower!oil.!!
! Clearly!Communicating!Nutrition!Information:!FritoDLay!recognizes!the!importance! of!clearly!communicating!with!consumers!about!its!products,!which!is!why!the! company!led!the!introduction!of!key!onDpackage!information!to!ensure!that! consumers!are!informed!about!their!products.!! ! 1. FritoDLay!began!nutritional!labeling!in!1989,!before!the!1992!FDA! requirements.! 2. The!company!listed!trans!fat!on!the!nutritional!label!more!than!two!years!in! advance!of!the!2006!FDA!mandate.!! 3. While!most!FritoDLay!snack!chips!are!available!in!singleDportion!packaging,! the!company’s!smallDtoDmediumDsized!packages!include!dual!labeling!that! provides!consumers!with!the!nutritional!information!for!the!single!serving! and!the!entire!package.! ! FritoDLay!North!America!recently!has!conducted!a!series!of!focus!groups,!in!which! they!found!out!women!shoppers!want!more!flavor!options!in!the!healthy!snack!chip! category.!FritoDLay’s!response!to!this!market!need;!the!rollout!of!several!variety! pack!Tostitos!chips!in!100!calorie!content!bags,!in!new!flavors.!! ! FritoDLay!is!committed!to!providing!its!consumers!with!variety.!Tostitos!currently! has!13!different!varieties!including;!! ! ! ! ! ! ! ! ! I! ! ! ! ! ! ! ! ! ! ! !
! ! ! ! !
! ! ! ! ! !
•
Individual!bags!of!Tostitos!range!from!9!oz.,!13!oz.,!and!18!oz.!sizes.!!
•
Individual!bags!of!Tostitos!range!from!$2.99!to!$4.99!a!bag.!
• Often,!retailers!will!run!promotional!campaigns!such!as!2!for!$5!deals.!! ! Situation$Analysis$–$Channels$and$Distribution$ $ Current!channels!of!distribution!–!grocery!stores,!mass,!merchandise!stores,!club! stores,!and!drug!stores.!! ! Most!important!channels!–!grocery!stores!and!mass!merchandise!stores.!! ! New!emerging!channels!D!mobile!messaging,!ad!delivery,!SMS!integration!and!optDin! mobile!number!acquisition.!In!addition,!online!video,!social!media,!and!rich!media! integration.!! ! ! ! ! ! ! ! Tostitos!channels!of! distribution!! ! ! !
! Additional$ways$of$getting$Tostitos$product$and$information$to$customers:! ! • Fulfillment!–!due!to!harsh!economic!times,!Tostitos!has!offered! consumers!several!ways!to!receive!discounts.!Customers!may!visit! www.Tostitos.com!and!enter!their!zip!code!for!retailers!in!the!area! offering!discounts!and!accepting!manufacture!coupons.!! ! • Customer!Service!–!Tostitos!listens!to!their!customers!and!through! focus!groups!have!found!out!the!needs!of!todays!consumer.!Tostitos! introduced!Tostitos!Scoops!as!a!result!of!consumers!wanting!a!more! rigid!design.!Once!the!product!was!conceived!and!developed,!Tostitos! was!able!to!leverage!its!existing!distribution!channels!to!successfully! market!the!product.!This!provides!great!quality!and!recognition.!In! addition,!since!the!ingredients!are!the!same!as!other!tortilla!chips,! Tostitos!already!had!a!wellDestablished!supply!chain.!! ! • Internet!–!Through!Tostitos!Facebook!page,!a!campaign!was!launched! called!“Tostitos!Reunite!America”.!Tostitos!encouraged!consumers!to! log!on!and!reunite!with!relatives,!friends,!former!teammates,!and!lost! romantic!partners.!The!campaign!was!geared!at!using!social!media! rather!than!traditional!forms!of!advertising!such!as!television! commercials!or!print!advertising.!! ! • Partnerships!–!Tostitos!and!the!NFL!have!teamed!up!to!create!the! Tostitos!Fiesta!Bowl.!The!Fiesta!Bowl!has!a!wide!audience!of!followers! and!targets!both!direct!and!indirect!consumers.!! ! • Alliances!–!The!Tostitos!Fiesta!Bowl!holds!charity!auctions,!which!all! the!proceeds!go!to!boy’s!and!girl’s!organizations,!crisis!centers,!and! juvenile!diabetes!research.!! ! • CoDbranding!–!This!football!season,!Tostitos!which!has!a!long!running! commitment!to!football,!has!introduced!a!new!football!shaped!tortilla! chip.!In!dozens!of!markets!across!the!country,!the!displays!are!coD branded!with!local!team!logos!and!colors!as!part!of!Tostitos!brand’s! sponsorship!of!37!college!teams!this!season.!! ! $ $ $ $ $ $ $ $
! Situational$Analysis$–$Macroenviornment$(PEST$Analysis)$$ ! Political,!Economic,!Sociocultural,!and!Technological!Factors! ! The!environment!that!FritoDLay!North!America!and!Tostitos!functions!in!is!currently! undergoing!a!political!overhaul.!New!regulatory!pressures!regarding!health! concerns!and!other!global!concerns!have!forced!companies!in!the!snack!chip! industry!to!take!on!new!challenges!and!reevaluate!their!products!to!meet!new! consumers!demands!(FLNA).! ! In!conjunction!with!their!subsidiary,!PepsiCo,!FritoDLay!has!developed!a!Blue! Ribbon!Advisory!Board,!made!up!of!leading!health!and!wellness!experts!and!thirdD party!advisors!from!across!the!globe!in!order!to!help!face!these!newly!strengthened! consumer!demands.!! ! The!major!economic!issue!facing!FritoDLay!is!the!rising!input!costs!of!their!business! due!to!structural!inflation.!Agricultural,!energy,!and!some!metal!industries!are!going! through!periods!of!steady!inflation.!Because!FritoDLay!relies!on!these!industries,! inflation!costs!must!be!factored!into!their!cost!equation!(FLNA).!! ! The!social!environment!within!food!services!markets!has!been!changing! dramatically.!The!new!demand!for!healthy!food!and!beverages!coupled!with!a!push! toward!green!operations!and!environmentally!friendly!company!management!has! changed!the!social!playing!field!within!most!markets.!FritoDLay!and!Tostitos!have! launched!healthier,!low!calorie!chips!and!implemented!a!green!section!on!their! website.!! ! FritoDLay!utilizes!technology!in!order!to!meet!company!growth!and!keep!up!with! demands!of!its!sustained!growth,!and!perform!efficiently.!FritoDLay’s!delivery! systems!provide!a!strong!competitive!advantage.!For!example,!the!most!powerful! distribution!system.!DirectDstore!delivery!allows!FritoDLay!to!supply!all!of!their! retailers!and!customerDdistributors!with!upDtoDdate!stock.!! ! FritoDLay!relies!on!the!importance!of!their!information!technology!infrastructure.! Today’s!corporate!world!must!realize!how!vast!and!powerful!information! technology!is.!FritoDLay!is!committed!to!building!and!maintaining!an!efficient!IT! infrastructure!as!a!key!asset!to!the!companies!operations,!which!helps!improve! communication!flow!within!their!massive!corporate!framework!(FLNA).!! ! The!conduct!of!FritoDLay’s!business,!including!the!production,!storage,!distribution,! sale,!advertising,!marketing,!labeling,!safety!and!health!practices,!and!transportation! are!subject!to!various!laws!and!regulations!administrated!by!federal,!state,!and!local! government!agencies!in!the!United!States!(FLNA).! !
! Legislation!has!been!introduced!in!certain!jurisdictions!in!which!FritoDLay!operates! that!would!impose!special!taxes!or!other!limitations!on!certain!products!sold! (FLNA).!! ! The!sociocultural!which!FritoDLay!and!Tostitos!operate!in!the!United!States!greatly! affects!their!ability!to!increase!sales!and!market!awareness.!Today’s!consumers!are! busy,!work!long!hours,!and!spend!their!leisure!time!accordingly.!It!is!important!that! Tostitos!reaches!its!consumers!via!the!internet!and!television,!due!to!consumers! allocating!a!great!deal!of!their!free!time!to!those!vices.!! ! In!today’s!culture,!women!and!men!are!frequent!grocery!shoppers.!Their!role!within! in!the!store!is!different;!women!tend!to!look!for!healthier!options,!while!men!do!not! pay!as!much!of!attention.!In!addition,!women!are!living!longer!lives!than!men!today.! It!is!important!to!reach!out!to!the!male!population!and!stress!the!importance!of! healthy!snacks!and!alternatives.!! ! $ Internal$Environment$H$$ ! Human$Resources!–!FritoDLay!North!American!in!conjunction!with!PepsiCo!are!not! only!incredible!successful,!but!take!great!pride!in!their!ability!to!focus!on!culture,! diversity,!benefits!and!development.!! ! Culture!–!FritoDLay!believes!in!giving!people!the!taste!they!crave!and!the!nutrition! they!need.!FritoDLay!is!always!looking!for!new!ways!to!benefit!people,!communities,! and!the!environment.!At!FritoDLay,!they!believe!innovating!and!dreaming!big,!while! still!keeping!a!focus!on!the!details!will!achieve!success.!! ! Diversity!–!FritoDLay!strives!to!overcome!diversity.!They!are!always!working!to!try! and!do!better!than!they!have!previously,!and!are!admit,!strong!believers!in!breaking! down!barriers.!Finding!people!to!work!for!FritoDLay!with!unique!traits,!points!of! view,!personal!experiences,!and!diverse!backgrounds!are!all!very!important!to!FritoD Lay.!! ! Benefits!–!FritoDLay!believes!strongly!in!proving!their!employees!with!the!benefits! they!need!to!live!healthy,!successful!lives.!They!offer!many!choices,!such!as!medical,! vision,!dental,!and!life!insurance,!as!part!of!their!benefits!package.!Providing! employees!with!the!tools!for!personal!wellDbeing!is!a!top!priority!at!FritoDLay.!In! addition,!FritoDLay!has!a!benefits!plan,!which!includes!preDtax!savings!plans!with! matching!contribution!by!FritoDLay,!and!a!stock!purchase!program.!! ! Development$and$Mentoring!–!FritoDLay!believes!in!training!their!employees! using!leading!industry!practices.!FritoDLay!also!believes!in!house!promotions,!which! is!something!that!sets!them!apart!from!their!competition.!! ! !
! Situation$Analysis$–$Customer$Satisfaction$and$Loyalty$$ ! FritoDLay!and!Tostitos!are!both!committed!to!their!customers.!Tostitos!particularly! takes!great!pride!in!having!a!loyal!customer!base.!In!order!for!Tostitos!to!measure! their!level!of!customer!satisfaction,!they!use!a!variety!of!methods.!Overall! satisfaction!can!be!measured!on!a!3Dlevel!scale;!! ! • Overall!satisfaction!(Emotional)! ! Overall!quality!–!Tostitos!in!conjunction!with!FritoDLay!holds!focus! groups,!which!are!geared!at!determining!how!people!feel!about! Tostitos.!! ! Perceived!reliability!–!Tostitos!in!conjunction!with!FritoDLay!uses! state!of!the!art!technology!to!ensure!its!retailers!are!stocked!with! their!products,!eliminating!consumers!from!not!being!able!to!find! their!favorite!tortilla!chips.!! ! Extent!of!customer’s!needs!fulfilled!–!Tostitos!uses!social!media!such! as!their!Facebook!page!to!engage!with!customers.!They!found!that! consumers!wanted!a!more!rigid,!durable!chip!made!for!dipping.!In! turn,!Tostitos!launched!their!Scoops!brand.!! ! • Loyalty!(Affective,!Behavioral)!! ! Overall!satisfaction!with!brand!–!In!order!for!Tostitos!to!stay!a!leading! competitor!in!the!market,!brand!loyalty!is!very!important.!Consumers! have!voiced!their!needs!and!Tostitos!is!there!to!deliver.!A!study! conducted!proved!that!consumers!prefer!a!brand!such!as!Tostitos!due! to!their!coDbranded!salsas.!! ! Likelihood!of!repurchasing!–!Tostitos!consumers!are!brand!loyal.! They!especially!enjoy!Tostitos!because!they!also!have!their!own!brand! salsa.!! ! Likelihood!of!recommending!product!–!Customers!prefer!Tostitos!due! to!their!size!offerings!and!variation!in!flavors!in!nutritional!content.!! ! • Attribute!Satisfaction!(Affective!and!Cognitive)!! ! Consumer!reports!and!product!studies!comparing!Tostitos!with!other! national!brand!leaders,!prefer!Tostitos!over!the!competitor.!! ! Tostitos!customers!are!extremely!satisfied!with!the!amount!of! product!each!individual!bag!of!Tostitos!contains.!!
! !! !
!
Strengths
!
• Tostitos!has!a!loyal!customer!base! ! • Tostitos!in!conjunction!with!FritoDLay!is! a!market!leader!in!the!snack!foods! category! ! • Tostitos!has!distinctive!packaging! which!sets!itself!apart!from!competitors! on!the!retail!shelf!
!
• •
Weaknesses ! Product!recalls! Negative!criticism!regarding!health! content!
! ! ! !
• Strong!initiatives!for!sustainability!and!!!! ecoDfriendly!practices!!
Opportunities !
•
Growing!need!for!healthy!foods
•
High!growth!in!developing!markets
•
Cost!reduction!measures!
•
!
Threats !
Rising!Hispanic!population!in!the! United!States!
•
Increased!branding!through!Fiesta! Bowl!
Increase!in!corn!prices!!
•
Increase!in!labor!wages!and! healthcare!costs!!
•
Changes!in!consumer!purchasing! behavior!!
!
EcoDfriendly!packaging!
•
•
!
!
!
! ! ! !
• ! •
•
! ! Strengths ! ! Utz!chips!has!been!successfully!in! ! business!for!ninety!years! ! !Utz!is!committed!to!quality!and!runs! ! their!business!from!a!family!owned! ! ! and!operated!stance! ! ! !Utz!has!a!dedicated!customer!base! ! ! $ $ ! !
Weaknesses
! !
•
Highly!competitive!snack!food!market!
•
Lack!of!distribution!in!the!West!and! Midwest!!
•
Low!brand!awareness!on!social!media! sites!!
!
!
! !
! • ! • ! •
! ! Opportunities ! ! Acquisition!of!Zappe!could!provide! new!distribution!opportunities!in!the! ! ! West! ! ! Investing!in!research!and! development!to!create!healthier!foods!! ! ! ! Increase!in!online!presence!! ! ! ! ! ! ! ! ! ! ! ! !
Threats !! •
Consumers!moving!toward!healthier! snack!alternative!!
•
News!and!media!scrutiny!regarding! unhealthy!category!!
•
FritoDLay!dominates!the!category!!
! !
! ! ! ! ! ! Strengths •
! !
Strong!support!from!parent! company!Snyder’s!of!Hanover!
! •
Competitive!product!mix!
•
Loyal!customer!base! !
$ $ $ $
!!!! • ! • ! •
$ $ $ $ $
! ! ! !
Weaknesses ! ! ! ! ! !
$ $ $ $ $ $ $ $
$ $ Opportunities $ $ Enhancing!market!presence!through! $ acquisitions!! $ $ Growing!market!for!savory!snacks!in! $ the!United!States!! $ $ Entering!social!media!sites!such!as! $ Facebook,!Twitter!and!YouTube! $ $ $ $ $
•
Weak!online!presence!through! social!media!!
•
Lack!of!sponsorships!and!or!coD branding!promotions!!
•
Out!dated!packaging!!
!
Threats !!! •
Move!towards!consumer!preferences! for!healthy!and!natural!foods!
•
Intense!competition!in!the!category!!
!
! $ $ $ $
$$ Strengths • ! •
Strong!brand!portfolio! Strong!manufacturing!and! distribution!operations!!
$ $ $ Opportunities ! •
CoDbranding!and!sponsorships!to! enhance!presence!!
•
Wider!distribution!channels!!
•
Wider!selection!of!glutton!free!and! fat!free!tortilla!chips!!!
! !
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $
Weaknesses
!!! •
Excessive!dependence!on!few! customers!
•
Product!recalls!
•
Low!visibility!on!social!media! sites!
! !
Threats ! •
Consumers!moving!toward! different!types!of!snacks!such!as! popcorn!and!pretzels!!
•
Trend!in!healthier!snack!foods!!
•
Strong!competition!in!category!!
! ! $ $ $
! Situational$Analysis$–$SWOT$Analysis$Continued$$
$ Strengths:!Tostitos!has!a!loyal!customer!base!and!strong!presence!in!North! America.!Tostitos!in!conjunction!with!FritoDLay!offer!campaigns!such!as!The!Fiesta! Bowl,!which!promote!NFL!football!and!also!coDbrand!with!local!sports!teams.!! ! Tostitos!has!a!loyal!customer!base!which!can!be!seen!online!through!their!various! social!media!sites!and!snack!blogs.!Tostitos!is!committed!to!their!customers!and! offer!a!variety!of!outlets!for!consumers!to!voice!their!opinion.!! ! Tostitos,!which!is!part!of!the!FritoDLay!family,!account!for!59%!of!the!consumer! snack!food!industry.!! ! Tostitos!also!has!a!competitive!advantage!in!retail!stores,!the!bold!packaging!helps! make!Tostitos!tortilla!chips!stand!out!on!the!retail!shelf.!! ! Tostitos!and!FritoDLay!focus!on!sustainability.!Great!efforts!have!been!made!to! reduce!their!chemical!footprint!and!the!company!has!moved!into!the!ecoDfriendly! category.!! ! Lastly,!Tostitos!is!also!part!of!PepsiCo.!PepsiCo!is!a!multiDbillion!business!with!a! strong!brand!portfolio!and!highly!net!worth.!! ! Weaknesses:$Both!FritoDLay!and!Tostitos!have!suffered!from!product!recalls.!In! February!2013,!the!company!recalled!Sunchips!and!Tostitos!due!to!wire! contamination.!Frequent!recalls!of!products!indicate!low!quality!control! measurements!and!may!diminish!consumer!confidence!in!the!company’s!products.!! ! Consumers!are!more!aware!of!their!health!than!ever.!The!trend!in!healthier! snacking!has!created!a!shift!in!people’s!eating!and!snacking!habits.!Tostitos!and! other!products!in!the!category!attract!negative!media,!news,!and!consumer!criticism! deeming!products!in!this!category!as!unhealthy!and!nonDnutritional.!! ! Opportunities:$Both!FritoDLay!and!Tostitos!realize!that!customers!need!healthy,! nutritional,!portion!controlled!snacking!options.!The!growing!demand!for!healthy! foods!has!opened!the!company’s!eyes!to!using!all!natural!ingredients!and!lowering! sodium!content!by!50%.!In!2010,!FritoDLay!introduced!a!new!natural!line!of!snacks! including!Tostitos!Organic!Blue!and!Tostitos!Organic!Yellow!tortilla!chips.!! ! Tostitos!saw!the!opportunity!in!the!healthy!snack!foods!market!to!reposition!their! salsas.!In!the!same!year,!Tostitos!launched!a!lower!sodium!line!of!salsas!to!coDbrand! with!their!tortilla!chips.!!
! ! The!introduction!of!lowDfat!and!organic!products!will!enable!FritoDLay!and!Tostitos! to!capitalize!on!the!rising!demand!for!healthy!snacks.!! ! FritoDLay!and!Tostitos!have!been!witnessing!a!growth!in!the!savory!snacks!foods! market.!The!rising!Hispanic!population!is!growing!in!America,!Tostitos!sees!this!as!a! market!segment!they!must!reach!out!to!gain!their!loyalty.!! ! Lastly,!the!Tostitos!Fiesta!Bowl!has!been!an!active!sponsor!of!NFL!football!since!the! mid!1990’s.!Through!this!partnership,!Tostitos!has!been!able!to!capitalize!on!snack! foods!in!the!entertaining!and!party!category.!The!collaboration!between!Tostitos! and!the!Fiesta!Bowl!has!strengthened!Tostitos!position!in!the!market.!! ! Threats:$The!market!in!which!Tostitos!and!FritoDLay!operates!has!had!an!increase! in!food!safety!regulations.!There!have!been!recent!concerns!from!the!public! regarding!the!safety!of!foods,!which!has!created!stricter!legislation!to!take!place.! Stricter!legislation!means!increased!costs.! ! In!February!2012,!the!Food!and!Drug!Administration!requested!companies!allocate! additional!funds!in!their!development!of!safer!food!practices.!Although!this!is! beneficial,!it!increases!the!burden!on!certain!compliances!for!Tostitos!and!FritoDLay! and!could!increase!the!related!expenditure!of!the!company.!! ! The!United!States!has!seen!rising!labor!wages!and!health!care!costs!increase!and! predict!this!trend!will!continue!to!rise.!The!markets!in!which!Tostitos!and!FritoDLay! operate!have!seen!tight!labor!markets,!increased!overtime,!government!mandated! increases!in!minimum!wages!and!higher!proportion!of!fullDtime!employees!are! resulting!in!an!increase!in!labor!costs.!! ! Tostitos!and!FritoDLay!operate!in!an!intensely!competitive!market.!Competition!in! the!snacks!food!industry!is!at!an!all!time!high.!FritoDLay!and!Tostitos!face! competition!from!large!national!and!international!companies!and!number!of!local! and!regional!companies.!The!stiffest!competition!comes!General!Mills,!Kellogg! Company!and!Mondelez!International.!General!Mills!markets!its!products!in!more! than!100!countries!and!in!2012!recorded!a!profit!of!$!1.6!billion!dollars!in!the! snacks!foods!category.!The!Kellogg!Company!and!Mondelez!International!have! operations!in!more!than!80!countries!and!sell!their!products!in!165!countries.!! ! Additional!competitors!in!the!category!are!Campbell!Soup!Company,!ConAgra! Foods,!The!Protector!&!Gamble!Company!and!Hostess!Brands.!The!increase!in! competition!could!negatively!affect!FritoDLay!and!Tostitos!market!share!and! margins.!! ! $ $ $
! Competitor$SWOT$–$$ $ $ $ $ $ Snyder’s!of!Hanover!–!! ! Strengths:$Snyder’s!of!Hanover!has!a!strong!brand!portfolio!and!distribution! network.!! ! Weaknesses:$Snyder’s!has!not!been!successful!on!branching!out!and!reaching!new! customer!markets.!Their!online!presence!is!not!strong,!which!is!a!fundamental! problem!to!reaching!newer!and!younger!markets.!In!addition,!product!recalls!have! taken!away!from!the!brands’!credibility.!! ! Opportunities:$Snyder’s!can!enhance!their!brand!presence!by!enhancing!their! online!company!profile.!! ! Threats:$Consumer!shift!towards!healthier!snacks.!Strong!competition!in!the! category!is!also!a!major!threat.!! $ $ $ $ $ $ $ $ $ $ Grande!Brand!tortilla!chips!–!! ! Strengths:$Strong!support!from!parent!company!Snyder’s.!Brand!loyal!customers! help!keep!the!Grande!brand!strong.!In!addition,!Grande!offers!a!strong!mix!of! products.!! ! Weaknesses:$Grande!suffers!from!a!weak!online!presence.!In!addition,!there! packaging!has!not!been!updated!in!several!years,!which!does!not!give!them!a! competitive!advantage!in!the!category.!! ! Opportunities:$Grande!needs!to!widen!their!distribution!channels.!In!addition,!coD branding!and!sponsorships!should!become!a!bigger!part!of!their!overall!advertising! strategies.!Grande!should!also!add!more!glutton!free!products!to!their!mix.!! !
! Threats:$Consumers!are!shifting!their!snacking!habits!and!looking!for!healthier! alternatives!such!as!nuts!and!popcorn.!In!addition,!Grande!competes!in!a!category! that!is!highly!competitive.!! $ $ $ $ $ $ $ $ $ Utz!Brand!tortilla!chips!! ! Strengths:$Utz!has!been!in!business!for!90!years.!Their!company!prides!themselves! on!being!family!owned!and!managed.!In!addition,!Utz!has!a!loyal!customer!base.!! ! Weaknesses:$Utz!does!not!have!distribution!channels!in!the!West!and!Midwest! areas!of!the!United!States.!In!addition,!Utz!does!not!have!an!online!presence!on! social!media!sites.!! ! Opportunities:$Utz!can!expand!upon!their!business!by!joining!different! geographical!areas!of!the!United!States.!In!addition,!through!acquisitions!Utz!would! be!able!to!widen!their!distribution!channels.! !! Threats:$Strong!competition!is!a!big!threat!for!Utz.!Since!Utz!primarily!operates!on! the!East!coast,!they!do!not!have!a!following!with!a!large!portion!of!the!United!States.! This!affects!their!business!because!their!market,!which!is!looking!for!healthier! alternative!snacks,!is!much!smaller!than!its!competitors.!! $ $ ! $ $ $ $ $ $ $ $ $ $ $ $ $ $
! Situational$Analysis$–$Critical$Issues$$ $ FritoDLay!and!Tostitos!operate!in!a!highly!competitive!market.!Changes!in!consumer! eating!habits!and!the!move!toward!healthier!snack!options,!is!a!major!issue!to!the! category.!! ! Looking!at!both!FritoDLay!and!Tostitos,!there!are!several!barriers!that!come! between!increased!success!in!the!market!and!potential!threats.!! ! • Tostitos!is!in!the!speculative!stage!of!the!product!lifecycle.!The!category!in! which!Tostitos!operates!is!high!in!major!opportunities!and!high!in!major! threats.!Often,!when!a!company!places!itself!in!a!risk!situation,!there!may!be! high!profit!returns.!! • In!order!for!Tostitos!and!FritoDLay!to!maximize!these!opportunities,!they! must!leverage!their!strengths!in!order!to!maximize!their!opportunities.!! ! Tostitos!knows!that!the!strong!Hispanic!population!in!the!United!States!is!a!major! contributor!to!the!multiDbillion!dollar!snack!food!category.!There!is!a!major! opportunity!to!gain!market!share!and!expand!the!brand!by!targeting!geographical! regions!in!the!United!States!that!are!heavily!Hispanic.!Utilizing!FritoDLay!North! Americas!wellDdeveloped!infrastructure,!Tostitos!has!the!ability!to!directly!market! their!product!to!this!population!segment.!! ! Tostitos!and!FritoDLay!have!had!several!product!recalls!over!the!past!years.!This! diminishes!the!brands!credibility!with!consumers.!To!combat!this!problem!in! conjunction!with!state!and!federal!legislation!enhancing!food!safety!laws,!Tostitos! should!incorporate!educational,!training!seminars!to!its!employees.!This!will!not! only!help!establish!a!stronger!employee!engagement,!but!in!effect!reduce!costs! associated!with!lawsuits!and!lost!revenue!in!the!future.!! ! Tostitos!and!FritoDLay!are!major!players!in!the!highly!competitive!snack!food! industry.!In!order!to!stay!at!the!top,!the!company!must!invest!resources!and!money! into!product!development!and!advertising.!! ! Tostitos!has!brought!back!their!campaign!which!brands!them!as!the!feel!good,!party! favorite!snack!chip.!This!campaign!has!deemed!successful!for!Tostitos,!their!online! presence!is!highly!established!on!social!media!networking!sites!such!as!Facebook,! Twitter,!MySpace,!and!LinkedIn.!! ! In!addition,!Tostitos!prices!their!products!in!accordance!with!market!trends!and! consumer!abilities.!The!reasonable!cost!of!Tostitos!has!allowed!them!to!thrive!in! this!economic!recession!due!their!low!cost,!indulgence!factor.!This!helps!customers! establish!an!emotional!connection!to!the!brand!by!having!the!ability!to!treat! themselves,!which!as!a!result!makes!them!happy.!! !
! Lastly,!Tostitos!and!FritoDLay!are!industry!leaders!in!food!labeling,!nutrition! content,!and!sustainability.!! ! They!are!able!to!convey!this!message!to!consumers!through!their!website,!which! promotes!reducing!their!carbon!footprint!and!investing!in!research!and! development.!! ! When!visiting!their!website,!consumers!may!take!a!look!at!their!green!initiatives,! join!their!snack!blog,!sort!through!hundreds!of!healthy!recipe!options,!and!voice! their!opinion.!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
! Situation$Analysis$–$Keys$to$Success$$ $ Tostitos!and!FritoDLay!operate!in!a!highly!competitive!market.!The!ever!changing! needs!and!wants!of!their!customer’s!impacts!their!ability!to!grow.!! ! In!order!for!Tostitos!and!FritoDLay!to!continue!in!their!success,!they!must!focus!on! the!main!priorities!needed!for!success!in!the!future.!! ! There!are!two!main!factors!that!will!impact!Tostitos!and!FritoDLay!success!in!the! market,!each!combine!customer!needs!and!industry!needs.!! ! 1. Sustainability$–$FritoDLay!North!America!has!researched!and!developed!a! series!of!tactics,!which!are!currently!redefining!the!industry.!! ! Focusing!on!their!production!facilities,!FLNA!has!managed!to!create!a! manufacturing!plan!that!features!advanced!solar!power!capabilities,!reuse! process!water,!which!runs!almost!entirely!on!renewable!energy!and!produces! nearly!zero!waste!(FLNA).!! ! FritoDLay!North!America!has!a!plan!called!“Net!Zero”.!This!plan!is!aimed!at! utilizing!the!technology!to!bring!sustainable!manufacturing!plants!from!40! current!locations!to!over!400!facilities!in!the!future.!In!conjunction!with!PepsiCo,! FLNA!is!forging!ahead,!using!green!concepts!such!as!solar!power!to!reduce!their! carbon!footprint.!! ! In!addition,!FLNA’s!ability!to!help!shape!the!more!ecoDfriendly!planet!also!helps! create!a!cleaner,!more!efficient!work!environment.!This!helps!eliminate!product! recalls!and!costs!associated!with!tainted!products.!! ! ! ! ! ! ! ! ! ! ! ! ! ! Engineered!by!FLNA,!this!Quick!Coat!machine!is!ecoDfriendly!and!helps!keep! products!from!contamination.!This!is!just!another!way!Tostitos!and!FLNA!are! sustainably!moving!into!the!future.!! ! !
! FritoDLay!and!Tostitos!believe!that!eating!well,!means!living!well.!This!why!their! next!initiative!for!success!is!critical.!Today’s!consumer!is!health!conscious,!aware! of!trends!in!different!industries,!and!is!very!well!informed!through!the!news!and! internet.!Tostitos!has!a!plan!to!keep!their!market!presence!strong!in!conjunction! with!FritoDLay.!! ! 2. Evolution$of$healthy$snacks:$Healthy!snacks!are!on!the!rise.!This!trend!is! not!going!to!fade!away!anytime!soon.!It!is!important!to!meet!the!needs!of! FLNA’s!and!Tostito’s!customers!by!giving!them!products!they!want.!$ ! Tostitos!and!FLNA!have!performed!extensive!market!research,!conducted!focus! groups,!and!used!their!online!presence!to!measure!consumers!wants.!! ! Moving!forward,!the!success!of!their!brand!will!depend!on!their!ability!to!adapt!and! meet!the!needs!of!the!market.!!Today,!Tostitos!and!FLNA!have!proved!to!be!industry! leaders!in!nutritional!content!labeling!and!using!methods!to!reduce!fat!and!trans!fat! in!their!products.!! ! This!is!a!great!achievement!for!the!company,!but!their!efforts!cannot!be!stopped! there.!Innovations!in!the!category!are!a!must,!which!the!company!realizes!and!plans! to!invest!their!resources!and!money!into!further!production!enhancements.!! ! To!capitalize!on!the!healthy!snacking!trend,!Tostitos!will!team!up!with! supermarkets!to!launch!a!healthier!lifestyle!series!of!campaigns.!! ! Through!these!campaigns,!Tostitos!will!periodically!launch!a!new,!enhanced!version! of!their!tortilla!chip.!The!enhancements!will!meet!the!growing!customer!want!for! glutton!free,!nonDfat,!organic!tortilla!chips.! ! Research!has!proven!that!the!healthy!snacks!food!category!is!relatively!small!in! comparison!to!the!overall!category.!The!interest!has!peaked!though!on!consumers,! with!44%!indicating!their!shift!towards!healthier!snack!foods.! ! This!means!that!Tostitos!has!a!growing!market!of!consumers!who!they!must!keep!as! loyal!customers.!The!company!must!meet!their!demands,!which!will!play!a!huge!role! in!this!category!over!the!next!few!years.!! ! Eating!healthy!snacks!offers!the!consumer!a!variety!of!benefits,!such!as!increased! energy!and!feeling!fuller!longer,!there!is!a!big!opportunity!here!for!Tostitos!and! FritoDLay!to!leverage!these!connections!to!maximize!health!positioning.!$