Herman W. Lay

C.E. Doolin

EVOLUTION OF LAYS• The Frito Company In 1932, Elmer Doolin entered a small San Antonio

cafe and purchased a bag of corn chips to eat with his sandwich.• Doolin initially made chips in the mothers kitchen and then sold it in

the Ford T model car.• Doolin’s kitchen Garage San Antonio Dallas• Prototype for The Frito Company's "store-to-door" distribution system.• After the world war II Frito Sales Company was formed the sales

Engineering division which was charged with analyzing the sales potential of different trade areas and designing the routes accordingly.

• This outstanding distribution system, which is still in use today, allowed each truck to service a route and deliver Fritos directly to customers.

• Frito National Company in 1945 has the six franchise company • Three years later, in 1950, FRITOS® were sold in all 48 states, and,

by 1962, they were sold in 48 countries. • At the time of his death in 1959, The Frito Company produced over

forty products, had plants in eighteen cities, employed over 3,000 people, and had sales in 1958 in excess of $50 million

• At the time of his death in 1959, The Frito Company produced

over forty products, had plants in eighteen cities, employed over

3,000 people, and had sales in 1958 in excess of $50 million

• In 1932 salesman Herman W. Lay opened a snack food operation

in Nashville, Tennessee and, in 1938, he purchased the Atlanta,

Georgia potato chip manufacturer "Barrett Food Company,"

renaming it "H.W. Lay & Company."

• In 1944 became the first snack food manufacturer to purchase

television commercials, with Bert Lahr as a celebrity spokesman.

His signature line, "so crisp you can hear the freshness," became

the chips' first slogan along with "de-Lay-sious!"

• In 1961, the Frito Company founded by Elmer Doolin and Lay's

merged to form Frito-Lay Inc., a snack food giant with combined

sales of over $127 million annually, the largest of any

manufacture

• In 1965, Frito-Lay merged with the Pepsi Cola Company to form

Pepsico, Inc.

Simple Magic

WASH

SEASON

PEEL

SLICECOOK

• Today, FRITOS® Corn Chips rank among the top 10 salty snacks in the United States

Lay's second logo used from the late-90s to Sept. 2007. This logo can still be seen on Baked! Lay's packages.

Lay's current logo (September 2007-present), a slight variation on the late-90s logo

• Frito lays introduced so many product line the customers is not loyal to particular variety , people identify only by tahe colours

• southern Asia is called "Magic Masala• Russia has "Lay's MAX" chip• In Poland Kebab, Pepper and Cheese, Onion and

Cheese • IN USA include sour cream & Onion, Barbecue, cheddar

& sour cream, Hidden Valley Ranch, salt & vinegar, salt & pepper, Flamin' Hot, dill pickle, limón (Lime) and a thicker "Deli style" chip

• Despite an explosion of new flavors, the unadorned original is still the selection of 81% of consumer.

• Frito-Lay has learned that the best managers are often locals who know the market and culture well.

• Regional managers are encouraged to look for new "occasions" to increase sales in their specific areas.

• Lays was ranked 12th, which left PepsiCo India with three winning food products in the top 15 Most Trusted Food Products Category. Phew!

• In Holland, where the Dutch tend to eat potato chips only at night, as an after-dinner snack, manager Eugene Willemsen focused his efforts on changing their habits by distributing free samples on the streets during the day.

• In South Africa, national sales manager Arnold Selokane boosted sales in native townships by hiring local drivers to make deliveries, making the product seem less foreign.

• In China, sales director Jackson Chiu raised sales by 57 percent in one year, in part by focusing on girls and young women. "We market to girls and the boys follow," he said.

• The executives behind Frito-Lay's global expansion acknowledge that they try to swing national eating habits to a food that was created in America, but they deny that amounts to economic imperialism

• We're making products in those countries, we're adapting it to the tastes of those countries, building businesses and employing people and changing lives," said Steve Reinemund, PepsiCo's chief executive.

• One thing the lays did was it had the store delivery system ,route density ( how many retail outlets), system efficiency .

• Hence it had more profit than the competitors which they made use to invest in quality and consumer advertising

• Next thing is that the lays sales representatives got their products the most favourable placement in the asile

• They popped the bags so that the frito-lay looked more applealing than the competitors

• The company could afford to dedicate a full-time sales rep to each store to ensure the shelves were always properly stocked and merchandised

• LAY'S® Barbecue Flavored Potato Chips• LAY'S® Cheddar & Sour Cream Artificially Flavored Potato

Chips• LAY'S® Chile Limon Flavored Potato Chips• LAY'S® Classic Potato Chips• LAY'S® Classic Potato Chips 6 Count Singles• LAY'S® Dill Pickle Flavored Potato Chips• LAY'S® FLAMIN' HOT® Flavored Potato Chips• LAY'S® Hot & Spicy Barbecue Flavored Potato Chips• LAY'S® Light Original Potato Chips• LAY'S® Limon Tangy Lime Flavored Potato Chips• LAY'S® Natural Sea Salt Flavored Thick Cut Potato Chips• LAY'S® Salt & Vinegar Artificially Flavored Potato Chips• LAY'S® Sour Cream & Onion Artificially Flavored Potato Chips• BAKED! LAY'S® Barbecue Flavored Potato Crisps• BAKED! LAY'S® Cheddar & Sour Cream Flavored Potato Crisps• BAKED! LAY'S® Original Potato Crisps• BAKED! LAY'S® Sour Cream & Onion Artificially Flavored

Potato Crisps• LAY'S® Cracker Crisps Delightfully Crispy Original Baked Snack

Crackers• LAY'S® Cracker Crisps Smooth Cheddar Flavored Baked Snack

Crackers

• LAY'S® Cracker Crisps Zesty Herb & Parmesan Flavored Baked Snack Crackers

• LAY'S® Kettle Cooked Jalapeno Potato Chips• LAY'S® Kettle Cooked Maui Onion Potato Chips• LAY'S® Kettle Cooked Mesquite BBQ Potato Chips• LAY'S® Kettle Cooked Original Potato Chips• LAY'S® Kettle Cooked Reduced Fat Original Flavored Potato

Chips• LAY'S® Kettle Cooked Sea Salt & Vinegar Potato Chips• LAY'S® STAX® Cheddar Flavored Potato Crisps• LAY'S® STAX® Hot'n Spicy Barbecue Flavored Potato Crisps• LAY'S® STAX® Salt & Vinegar Flavored Potato Crisps• LAY'S® STAX® Original Flavored Potato Crisps• LAY'S® STAX® Mesquite Barbecue Flavored Potato Crisps• LAY'S® STAX® Ranch Flavored Potato Crisps• LAY'S® STAX® Sour Cream & Onion Flavored Potato Crisps• LAY'S® Wavy Au Gratin Flavored Potato Chips• LAY'S® Wavy Hickory Barbecue Flavored Potato Chips• LAY'S® Wavy Original Potato Chips• LAY'S® Wavy Ranch Flavored Potato Chips

PRODUCT SALES

s

Frito-Lay is a manufacturer and marketer of salty snack foods, which is nationally recognized. The net sales of Frito-Lay in 1985 approached $3 billion. The dip business is part of the Frito-Lay Company. There were three dips sold by the company until 1983. During 1983 and 1984, there were a number of cheese-based dips introduced by the company. All the dips were displayed in the salty snack section of supermarkets, where 80 percent of dip sales are made. There are many internal factors of the company, which affect their strengths and weaknesses. The company does have a well-experienced marketing department but they have a weak leader. A well developed line of salty snack foods are offered by the company, which can help the sales of the dips. The dips are displayed besides the salty snack food section. Whenever a person buys some chips they will also be heavily inclined to buy a dip to go with it. This can helps to increase sales of the dip. The company does try to offer more choice of dips but is still not enough. People need different taste and more choice. People are loyal but still want to try new tastes sometimes. Frito-Lay recognizes the up and coming health consciousness of Americans and is considering the expansion into the vegetable dip niche. The Frito-Lay Company has national awareness and has distribution center across the U.S. The company has 350,000 outlets that distribute the products nationally. They have many kinds of distributors throughout the states but the majority of Frito-Lay dips are sold through supermarkets. There are four geographical zones that organize the distribution system and cover the entire United States. Thirty-three percent of salty snack food tonnage sold in the United States was captured by Frito-Lay. This will also help a brand recognizing by the customers. Cheese dip was introduced and it has a good initial penetration of the market. This can also shows that a different kind of dip will catch people's eye and get interest in buying it. The Cheese dip sales have tapered off because the novelty of shelf-stable cheese dips has passed. The company is organized around four geographical zones and each zone contains distribution centers to provide inventory for the sales force. During an average day, the sales force makes 400,000 sales and delivery calls. Each salesperson has their own route for selling the company products. Frito-Lay uses a "front-door store" delivery system that is suited the 270,000 non-chain outlets. The supermarkets, which are chain-store accounts, were not favored by the front-door store delivery system. A Frito-Lay region or division manager always required participating. This is necessary because the chain-store buyers responsible for the outlets in the chain also approve in-store merchandising plans as well. Frito-Lay has the opportunity to capitalize on their present commanding position in the dip market by expanding their product line to include vegetable dips that will complement their successful cheese and picante (Mexican) dip lines. With the correct launch and positioning, Frito-Lay, Inc. could penetrate and stake a claim to a large and undefined, yet extremely viable, vegetable dip market. This is a market which does not have a major competitor in a strong competitive position, there isn't a shelf-stable sour cream-based dip offered by anyone (Frito-Lay has one ready to be released), and consumers are becoming more concerned over the content of the food they eat and buying enough "substitute dip" (salad dressing) to support growth in this market at an astonishing 18% compounded rate per annum. This growth rate has been sustained since 1978. The vegetable dip market is estimated at $23 million in sales per year Further, sour cream dips are the most popular flavor, accounting for about 50% of dip sales in the salty snack dip segment of the market. Combining this prior information with the additional fact that after cost analysis, the gross margin on the sour cream dip will be a healthy 45% and you have all the makings of a cash cow product line. Now if Frito-Lay can muster the resources and intestinal fortitude, they could really start working on the next billion in sales for the company in '87. Naturally, in a free market, there are always risks that are associated with any undertaking. The company faces several threats from the market that must be objectively weighed when conducting the planning for expansion into a new market segment. Principally, as the new sour cream dip will be positioned in a different part of the supermarket, away from the rest of the Frito-Lay salty snack food products, the normal front-door delivery system will need to be changed. New contacts with the produce managers in each store will have to be developed so as to get proper positioning and exposure for this new dip. The company sales force will need additional training and marketing expenditure at the supermarket level to capture interest and assist in the placing of the new product. If the stores can't or won't make space in their produce sections, then this venture faces the possibility of a very limited lifespan. Perhaps the marketing department could develop new display racks that would attach to the top of produce bins and offer supermarkets additional marketing space without sacrificing floor space.