Frito Lay’s Dips
The Frito Lay’s Dips normally was divided into two segments based on the form of complimentary offerings viz. chips/crackers and vegetables/raw-veggies. The chips dip segment had 67% of sales while the remaining 33% was of the vegetable-dip segment. The estimated retail sales volume in 1985 was $620 million but the actual sales was amounted to be $135 million. The company were successful under ‘Cheese Dips’ and ‘Mexican Dips’ sales. Since they wanted to penetrate into the vegetable-dips segment due to increased pressure they took up the opportunity to introduce the ‘Sour-Cream Dips’ as a vegetable-dip whose sales were forecasted to be $10 million in 1986. This would increase the cost accordingly but the executive stressed to maintain the gross margin and profit contribution.
Distribution, Sales & Marketing
In 1985, there were 350,000 outlets to which Frito Lay distributes its products, in USA, among which 34,000 were supermarkets (majority sales), 47,000 were convenience stores and 20,000 were non-food outlets and the remaining were small grocery stores, liquid stores, service stations. Entire USA was divided into four geographical zones each of which contained distribution centres that composed of 10,000 sales representatives who made a total sales of 400,000 on an average working day. This showed that their distribution was perfect which reached each and every part of USA. The sales representative in stores was solely responsible to take orders, unload the products, stock and arrange the shelves, and handle in-store merchandising. Only from 1983 Frito Lay began to promote dips with the introduction of ‘Cheese Dips’. In 1985, the promotions narrowed down to consumer promotions in the form of samples and coupons. In 1986, they increased the advertising and promotion expenses due to their introduction of the new product coupled with the increased competition.
As we can see there were no patterns in the sales of the two...