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Dip has become increasingly popular in recent years due to its convenience and “grazing” trends in the United States. The dip category in general is substantially fragmented and hard to measure, but 80% of dip sales are made through supermarkets, estimating $620 million in 1985. Out of this dollar volume, two-thirds was accounted for by prepared dips and the rest for home-made dips. Approximately 45% of prepared dips were “shelf-stable,” meaning that refrigeration wasn’t required. Frito-Lay’s was the major competitor in the shelf-stable dips. The other 55% of prepared dips required refrigeration. According to industry research, there has been a 10% growth rate in the dip market but this growth is mainly due to inflation.
Since sour cream-based dips are the most popular flavor, it accounts for about 50% of total dip sales. The second most popular is the cheese-based dips making up about 25% of total dip sales. Bean and picante dips make up 10% of total dip sales and cream cheese-based dips make up the remaining 15%. While 67% of total dips sales are correlated to salty snack usage, about 33% are associated with vegetable usage. There has been growth in cheese-based chips due to the recent popularity of Mexican food. Even though the dip market is large, 20% of all dip volume consumed by households is home-made and 35% of refrigerated salad dressing volume serves as a substitute for dips. Refrigerated salad dressings sales have been growing at 18% every year since 1978.
Within a span of two years, 1984 and 1985, competition has increased in the dip market. New products have been introduced and firms are spending more in advertising these products. There are large, well-financed firms that have started to aggressively pursue this market.

SWOT Analysis

Internal Factors Strengths Weaknesses
Offerings Offers a wide range of products in the dip category. Introduction of cheese based dips boosted sales....