Frito-Lay’s: Company Introduction, Market Segmentation and Product Positioning

Frito-Lay’s Inc. is a division of PepsiCo which manufactures markets and sells a wide variety of snack foods. Frito-Lay’s history counts from 1930s when main products which belong to today’s product line were manufactured by two separate companies. The modern stage of the company’s development started in 1965 when the Frito Company and H.W. Lay&Company merged to form Frito-Lay Inc. The next merger took place in 1965 when the company merged with the Pepsi-Cola Company and formed the well-known PepsiCo.

Although Frito-Lay’s is now just a subsidiary of PepsiCo, the company still possesses some unique distinguishable features and its own strategic vision. In order to understand strategic goals of the company, it is required to thoroughly analyze company’s vision, activities, and current market position of its main products.

At the moment, Frito-Lay’s has a broad product line including potato chips, corn chips, tortilla chips, cheese puffs, pretzels and clips. In addition to the core product line, the company also manufactures peanut butter, crackers, processed beef sticks, snack bars and even brand cookies.

Despite the broad product line, the company mostly competes in the salty snack food market, capturing up to 30 percent of the segment in the United states with annual sales equaling 3 billion (Kerin). Chips and salty snacks have always been core products for the company. For instance, the company’s site in Topeka has 11 different product lines and makes 14 varieties of chips. All in all, the site produces up to 134 million pounds annually, which shows the overall potential of the company owning a number of such product sites.

At the moment the company continues its aggressive merger & acquisition strategy, namely by acquiring Stacy’s Pita Chip Company. Among the recent tendencies of the company’s development one can also notice that Frito-Lay’s has showed its firm willingness to produce snack foods with more natural ingredients. In particular, in 2010 the company reformulated its Lay’s Kettle and Lay’s chips into a completely new product labeled as being made with all-natural ingredients. This enabled the company to reach the impressive growth in potato chips sales by 8%. Due to recent successes, the company has announced its plans to convert approximately half of its products to all-natural ingredients.

Apart from product development, the company is particularly good in strategic planning of its long-term strategy and formulating corporate culture and vision. In order to fully cover the company’s progress in this field, it is important to analyze some strategic guidelines posted on its official website.

In particular, the website’s sub page reflecting the company’s vision starts with a statement underlying a number of the company’s employees – 48000. It is even more important that the same statement describes the company’s willingness to unite their employees with help of single vision and teamwork. Other important statements of the company’s vision include a strong focus on constant innovations and sustainable development. In particular, the company strives to improve taste of its products, in the same time conserving natural resources and harnessing renewable energy technology. This focus reflects the …
Posted by: Thersa Reale

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