Frito-Lay Company: Cracker Jack

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Table of Contents

Executive Summary
Problem Statement and Statement of Alternatives
Analysis of Alternatives
Plan Development
Works Cited

Executive Summary

The Cracker Jack has been experiencing low customer identification and satisfaction. The product has been facing competition from other fast food products like baked Tostitos, Pringles potato chips, and Fritos corn chips. Even though Frito-Lay frequently ranks among the leading national advertisers of products in the US, Cracker Jack has not received wide market attention as compared to some of the above products.

A study on the consumption rate and popularity among the US citizens revealed that the product was widely unavailable in the stores. Notably, over 15% of Cracker Jack purchasers said that the product was unavailable in their local shops; as a result, they easily purchased other products instead (Kerin and Peterson 244).

Among the non-purchasers, over 30% of the population has never seen the advertisement of the product on the local media. Cracker Jack consumption rate was at 7.1% among the US households. Interestingly, the 7.1% households who use the snack locally consume less than one pound of the product per annum.

Customers had withdrawn from purchasing the product citing several reasons including the high price of the product. The price was too expensive to some households who also viewed the product as a not at all “better for you” snack. Clearly, the product had a negative reception among a certain group of consumers.

The company can invest in production of several Cracker Jack with different flavors and low market prices. In this dimension, Frito-Lay will employ product differentiation strategy that will make the product unique in the market. This strategy coupled with cost cutting mechanisms will see the customers identify with the product.

An analysis of the Direct Product Contribution Income Statement of 1993-1996 reveals that the company spent low on technical research. For instance, between 1993 and 1996, the company channeled only $1.3 million towards technical research (Kerin and Peterson 241). The dynamic market requires a dynamic marketing approach that will be able to understand the customers’ tastes and preferences.

Evidently, the weak environmental scanning techniques led to the low customers’ satisfaction. Currently, customers tend to develop different tastes for a product in order to be loyal to their producers. If Frito-Lay can produce Cracker Jack of different tastes at affordable prices and distribute them to the local shops in the US, customers will develop loyalty to the snacks.

This occurs after the firm will have identified the nature of customers it is targeting with the products. Customer identification will assist the company to tailor the products towards satisfying the customers’ needs (“The Marketing Mix and 4 Ps” par. 4).

Problem Statement and Statement of Alternatives

The Frito-Lay Company should be strategizing on how to use its limited resources on increasing Cracker Jack’s brand image in the present dynamic market in order to regain its lost share of the market. Markedly, in 1980, the company spent $6 million on advertisement; this initiative made the product enjoy huge market presence. However, after 1992, Frito-Lay has never conducted a national advertisement of the product.

The move led to decline in Cracker Jack dollar sales to 9% and unit volume decline to 11.2 million pounds in 1996. Therefore, the Cracker Jack brand needs a new sales and delivery strategy in order to grow in sales and profitability of the products.

In 1997, Cracker Jack Fat Free, Nutty Deluxe, and Butter Toffee exhibited below 50% level of customer awareness even though the Cracker Jack name enjoyed universal awareness (Kerin and Peterson 249). This discloses the problem Borden Foods was experiencing albeit trade promotions in the US.

Frito-Lay can counter this challenge using a robust inclusive strategy that competitors like International Home Foods, Inc. that produces the Crunch and Munch brand uses. Customers opted for other snacks like the Crunch and Munch and other seasonal brands, which were in almost all shopping outlets.

The Frito-Lay Company should apply some of the following alternatives to get hold of the market. First, the company should produce a good variety of flavors. Customers will have a variety of options to choose from in the event that their tastes and preferences for a given product go down.

Moreover, the company ought to design the product in a manner that it becomes a snack that people can share and eat at all time, but not at specific times like mornings and evenings.

The other alternative is to use cost leadership approach that the PepsiCo Beverage Company applies; it involves lowering the prices of various quantities of Cracker Jack in order to gain competitive advantage over its competitors (“How do you think about your marketing strategy and strategic pricing?” par. 5). According to brand-tracking studies, Cracker Jack tends to elicit memories of childhood hence not contemporary.

This feature has made it experience low consumption among the grown-ups. The company can adopt the Crunch and Munch style of associating itself with all age groups, especially matching the products’ qualities to the needs of the contemporary society.

In addition to ensuring the product’s availability in major local shopping outlets, the company should conduct a health campaign to convince consumers who view the product as unhealthy to change their perceptions. These approaches will make the product appeal to customers.

Analysis of Alternatives

If the company can identify the needs of its customers and meet them successfully, it will be assured of uninterrupted high sales and profitability. For example, the production of different flavors will increase the number of consumers since people have different preferences. The Coca Cola Company is one of the companies that practice this approach in satisfying the needs of its customers.

For example, it has produced several brands of the coca cola drink, coke zero, and coke diet. Moreover, the company can adopt recent technological developments in ensuring that the brands have different flavors. Another innovative idea by Coca Cola is the introduction of the Coca Cola Free Style machine that assists consumers to mix and produce their own beverage of different flavors.

Therefore, Frito-Lay can borrow such ideas so that it positions itself appropriately in the market. In the technological aspect, the company can adopt the act of online shopping where customers can view the brands of the company, make an order for their desired products, and pay for them instantly on the internet (“How do you think about your marketing strategy and strategic pricing?” par. 7).

This will partially solve the issue of product availability in local shopping outlets.

Price reduction mechanisms require large-scale productions and supplies of Cracker Jack so that the company still makes profit. This idea involves selling of a packaged product at a low price to a similar quantity of the competitors’ product. PepsiCo practices this strategy in order to compete with Coca Cola. For instance, its 350ml Mirinda has the same market price as the 300ml Fanta of the Coca-Cola Company.

This strategy has assisted PepsiCo to remain relevant in the market that has a stiff competition from Coca-Cola. At the same time, Frito-Lay should not compromise on quality at the expense of price reduction as this may reduce its creativity in the market. Further, Frito-Lay can adopt product differentiation strategy.

Since there are several competitors that sell the ready-to-eat caramel popcorn category, this alternative will assist the firm to create differences on their products. This alternative involves producing unique products that are distinct from the competitors’ products. Customers will easily identify and differentiate the Frito-Lay brands of Cracker Jack from those of competitors.

The market performance of Cracker Jack has been wanting; therefore, Frito-Lay must change the perceptions of the customers towards the product. Frito-Lay’s great focus should be on the production techniques that Borden Foods has been using, as it has been the main producer of Cracker Jack brand.

Frito-Lay investment in advertisement can also enable it reclaim the dwindling market that Borden Foods was experiencing. From the case study, Crunch and Munch brand has been leading the category of ready-to-eat caramel popcorn snacks since 1993. Attempts by Frito-Lay Company to engage in mass advertisement of the product will cause positive impacts on its sales and profitability.

Products that enjoy wide market presence through advertisements tend to record high market share in terms of sales. For instance, in 1996, advertisement spending on Crunch and Munch was $4.44 billion while that of Cracker Jack was $188 million (Kerin and Peterson 232).

The recorded dollar sales during the same year were 32% and 19% for Crunch and Munch and Cracker Jack respectively. This shows that continuous advertisement of the brand will improve the sales.

Plan Development

This plan is going to specify the marketing mix that Frito-Lay Company ought to use in order to regain the dwindled market confidence on Cracker Jack. Since marketing involves selling the right product, at the right price, to the right people or place and at the right time, Frito-Lay must adjust these parameters to record growth.

According to the simulation test of the market, there were dissatisfactions among purchasers and non-purchasers on the unavailability of Cracker Jack in their shopping outlets. In addition, some customers held that the product was not appealing while the other group said that the pricing was expensive.

A cost effective alternative that the company can use is the distribution of the product to shopping centers that are accessible to all customers. This alternative increases the market coverage. The company must identify the places where the potential customers do their shopping.

Even if this remains the main alternative, the other alternatives must also adhere to the market conditions. For instance, it will be wrong to stock extremely expensive Cracker Jack in all shopping centers that customers can access, yet they cannot afford them. The high price will be a distracter for marketing. Cracker Jack will experience high sales if it is included among other fast food products.

Since Borden Foods, which is the main competitor, uses supermarkets as delivery points, Frito-Lay should strive to differentiate the outlets by concentrating in areas like business parks, restaurants and big hotels. This is similar to product differentiation that involves doing things differently from the competitors’ way.

The physical outlets require a reliable and convenient distribution channels that will ensure continuity in supply thereby minimizing situations of product unavailability in the stores (“The Marketing Mix and 4 Ps” par. 2). Moreover, the company can adopt virtual locations like e-mails and e-market.

The uniqueness in the delivery system will attract and retain customers due to curiosity of testing the new channels. Frito-Lay ought to make a quick decision on marketing of the product before launching it in the market hence successfully positioning itself for the market offers.

Works Cited

How do you think about your marketing strategy and strategic pricing?. Strategic Marketing Decisions. Strategic Marketing Decisions, n.d. Web.

Kerin, Roger A., and Robert A. Peterson. Strategic marketing problems: cases and comments. 11th ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2007. Print.

The Marketing Mix and 4 Ps. Mind Tools – Management Training, Leadership Training and Career Training. Mind Tools Ltd, n.d. Web.

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