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Strategic Marketing Plan:

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Stephen Hebert

on 4 December 2013

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Transcript of Strategic Marketing Plan:

December 2013
Marketing Management 6100
MARQUETTE UNIVERSITY

Collopy, Hebert, Kreeger, Liu
Strategic Marketing Plan
Flamin' Hot
Products
By Frito-Lay

EXECUTIVE SUMMARY
SITUATION ANALYSIS
MARKET DEMOGRAPHICS
MARKET COMPETITORS
SWOT ANALYSIS
Strengths
Weaknesses
Opportunities
Threats
OBJECTIVES AND STRATEGIES
RECOMMENDATIONS, TACTICS, AND MARKETING MIX
Product
Price
Promotion
Place/Distribution
FINANCIALS
Break Even Analysis
Sales Forecast
Expense Forecast
Expense Distribution
CONTROLS

Agenda

This line of products is manufactured and distributed by Frito-Lay Corporation, a division of Pepsi Co.

The snack food industry has grown 18% in the last five years and is projected to increase to $47 billion in sales by 2015.

Frito-Lay has become the country’s largest and most profitable snack food company, owning more than fifteen $100+ million brands.

The Flamin’ Hot snack food product line is an extension of existing snack food products designed to meet a growing niche market in the United States of people that prefer spicy snack foods.


Executive Summary
SITUATION, MARKET, AND COMPETITIVE ANALYSIS
Flamin’ Hot Brand Line:
The Company is without question still in its growth stage of the Product Life Cycle.

Therefore must continually evolve to remain new and exciting in order to avoid losing market share.

The Flamin’ Hot product line is one of the newest and most popular brand lines, however, this line of hot and spicy snack foods has come with its share of problems and consumer concerns.
Unhealthy brand perception
Growing competition

Frito-Lay needs to simultaneously improve brand perception and increase sales through market penetration and new growth.


Situation Analysis

A typical consumer of spicy snack foods consists of the following geographic, demographic, and behavioral characteristics:

Geographics
Flamin’ Hot brands of snack foods offered by Frito-Lay does not have a set geographic target area. By leveraging the expansive reach of social media and multiple delivery services, Frito Lay can serve both domestic and international customers. Using the Chain-Ratio Method demand estimation, we estimate that total targeted population is approximately 100 million.

Demographics
Men > Women
Ages 10-30, which a clustering around ages 15-24.
Adult users tend to have a median personal income of $35,000+.

Behavioral Factors
Busy lifestyles
Students



Market Demographics

Kellogg

Herr Foods

Pepperidge Farm

General Mills

Other Competitors: Walkers Snack Foods, Weaver Popcorn, Yamakazi Banking, Mission Foods, Kraft Foods, and Nestle.


Market Competitors

SWOT Analysis
Strong branding and visibility, appealing packaging
H.W. Lay & Company and the Frito Company merged in 1961 to become Frito-Lay Inc.
Now owns 59% of market share of U.S. snack foods
Recognizable logo and mascot that has produce a memorable brand

Strong parent company in PepsiCo
Through Frito-Lay, PepsiCo is the largest globally distributed snack food company in the world

Widespread distribution and availability
Frito-Lay products are exported to 79 countries around the globe.
Flavor expanded across product line to meet different customer needs


Strengths
Unhealthy perception
Potential customers may perceive the current snack foods as high in fat and sodium

Negative publicity
Numerous articles describing health concerns from eating Flamin’ Hot snack foods causing some schools and campuses to ban them.
General lack of nutritional value.
Research suggesting the snacks may create a brain response similar to individual addicted to illicit substances.
Mass consumption may lead to other health problems.

Weaknesses
Develop additional products or expansion on brands
Promote spicy flavor and gain new customers
Tabasco - hot sauce market
Tyson Foods – Flamin’ Hot Chicken Flavoring

Co-branding of flavor and naming
Team up with other popular brands
Buffalo Wild Wings
Taco Bell (spin-off of Doritos-Locos)

Improve brand perception, market to health-conscious consumers
Additional Baked or Reduced Fat product offerings
Increase marketing of PODs that highlight steps towards a healthier snack food
Market to the continually growing Gluten-Free market

Strengthen IMC
Consider opportunities to expand reach
Social media outlet – Facebook promoted events, Youtube channels.
Trial sample distribution at campuses, sporting events, target audience events.

Opportunities
Continued competition
Snack foods category is a highly competitive segment with highly competitive pricing and heavy reliance on price deals to attract customers.
Hundreds of snack chip products are introduced each year consisting mainly of new flavors for existing products with extremely high failure rate.
Competitors for the snack chips category
National brand firms (such as, Proctor & Gamble, RJR Nabisco, Keebler, etc…)
Regional brand firms
Private brand firms (i.e. Roundy’s, Kroger brands).

Consumer preferences change
Fads come and go - desire or taste preferences of the consumer will change.



Threats
Grow market share
Achieve steady increase in market penetration
Increase sales to current customer base and target market through increased advertising spending.
Grow market share from 60%-65% in 2014.
Strengthen Integrated Marketing Communications Push

Improve brand perception/Image
Develop PR initiative
Education?

New product development
Partnerships?
Additional package sizes
New formula


Objectives and Strategies
RECOMMENDATIONS, TACTICS, AND MARKETING MIX
Features:
Frito-Lay has enjoyed making the best snacks on earth
Meet the demand of customers – spiciness flavor

Competitive advantages
Well established brand in the global market.
Customer satisfaction is the top priority

Conduct different surveys to get the perception of the consumers about features design and quality level.
New production line – Unique in quality, flavor and taste

Product
Perceptual Map for Frito-Lay
Cost-plus strategy
Profit maximization
Market-share growth

Price-sensitive in snack industry


Price
Goal: Attract new customers but also retain existing ones.

Inform, create awareness and interest, and remind our consumers of our products in order to persuade customers and achieve repeat business

Advertising
Inform customers about new products by using IMC
Social media
Billboards
Popup advertisement on the internet
Increase advertising spending
Improve brand perception and image

Promotion
In-store displays
Encourage repeat purchases

Free samples
Attract new purchase

Retaining market share
Package coupon: Buy 2 get 1 free, or 2 for 1 to stimulate desire to buy more
Package tie- two different flavor snacks wrapped together to encourage consumer tasting new flavor

Gaining market share
Product demonstration – free samples
Trial taste test - free samples
Original Flamin’ Hot Cheetos vs. Healthier version of Flamin’ Hot Cheetos to demonstrate that the flavor is the same

Promotion
Main selling channel
Convenience stores and supermarkets, accounting for nearly 90% of sales.

Frito-Lay’s current channel of distribution




Intensive distribution
Aims to place products in as many outlets as possible which allows Frito-Lay to reach their customers.

Freight on board trucking
is the main form of transportation for Frito Lay which compared to other forms, is slightly higher in cost but more reliable, has shorter transit time and higher accessibility.


Place/Distribution
New Product

MANUFACTURER
RETAILER
CUSTOMER
FINANCIALS AND CONTROLS
Break Even Analysis
High fixed costs due to facility and equipment
Each additional unit after break even gives $0.1810 profit

Financials
Higher than industry growth – 5%
Room for direct cost reductions
Above average operating profit for industry

Financials
Expense Forecast
Goal: Increase to 18% of category sales by 2016
450 impressions for every 1% of population = 36,000 GRP
$5,000 for every 1% of population = $180 million

Marketing Mix
TV ads – after school programming and weekend sports
Online campaign
Print ads – Rolling Stone, Sports Illustrated, ESPN, People
Consumer and Trade promotions

Financials

Financials
Expense Distribution (thousands)

Financials
Financial Analysis
Monthly, quarterly, and annually
Revenue, expense and margin analysis

Market Studies
Reaching the target market
New customers purchasing the product

New customer surveys
Are we changing the belief that Flamin’ Hot Snacks are unhealthy and addictive
Promotion Lift
Measured and tracked to increase effectiveness of future promotions

Controls

QUESTIONS
Full transcript