Case Study 1: Frito Lay’s Dips

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1. Given the nature of its products, Frito Lay Inc. competes mainly within the so-called ‘salty snack food’ segment. However, capturing the dip segment of the market seems natural as it is closely related to the salty snacks one, with 67 percent of all dip sales linked to salty snack usage. Frito-Lay is the major competitor in shelf-stable dips; with a total market share of 21.77%. According to Bell Ball, “Cheese dips were an extention of Frito-Lay’s tortilla chip business”. The Frito Lay’s Dips are a highly profitable product line of dips that show constant sales growth that reached $629 million net sales in 1985. Although the market for dips appears to be difficult to measure, 80 percent dip sales are recorded by the supermarkets. The Prepared Dips segment accounts for two thirds or $413.33 million of supermarket sales. The Dip Mixes segment accounted for the remaining one third or $206.66 million. The dip category became more popular due to the growing popularity of Mexican food, including nachos. This stimulated the trial and acceptance of Mexican-style dips. 2. The total dip market is divided in two product types, segmented depending on its usage; prepared dips (2/3 of total) and dip mixes for at-home preparation (1/3 of total). More than half of the prepared dips sold in supermarkets require refrigeration. The remaining 45% are "shelf-stable" as they are packaged in metal cans. These can be placed anywhere in the supermarket. Dips are segmented in four different flavor categories: sour cream-based dips (50%); cheese-based dips (25%); bean and picante dips (10%); and cream cheese-based dips (15%). The major dip competitor is refrigerated salad dressings, which are used to make homemade dips. The opportunity evaluation matrix is used in an opportunity analysis as a means to find markets that an organization can profitably serve. Opportunity evaluation has

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