Borden Foods is attempting to unload of snack foods, most notably ready to eat food products; in order to focus efforts and resources in growing their pasta and grain based meal segments. Borden has recognized that the market for ready to eat caramel popcorn is growing in size, and while they are number two in market share with $192 million in retail sales, they do not feel they have the resources or time to compete in this market anymore. Current Borden production facilities have only 32% of space allocated to Cracker Jack products, and operate at 33% of capacity.
Finally, Borden is struggling to deliver Cracker Jack to consumers at a competitive price, driving the brand down. 2. Why is Frito-Lay considering the purchase of Cracker Jack? Frito-Lay has designed a “New Ventures Division” with a mission to “to drive significant Frito-Lay growth by seeking and creating new business platforms and products…” Frito-Lay, a division of PepsiCo, recorded an operating profit of $1. 63 million on net sales, which represented 31% of PepsiCo sales. Frito-Lay is hoping to leverage their strong resources and captures new markets.
Frito-Lay currently is the market leader in salty snack food products and of the brands represented nine hold positions in the top ten performers. The New Ventures Division utilized ongoing internal research and development to identify three broad opportunity growth avenues for achieving meaningful future growth. Borden’s announcement to sell Cracker Jack comes at an opportune time for Frito-Lay and is a potential fit with all three-growth avenues. 3. What might a SWOT analysis for Cracker Jack look like based on an assessment of the Ready-to-Eat caramel popcorn category, Borden’s experience with the brand, and Frito Lay’s own research?
Ruthie & her Cracker Jacks:'s o they got mad. An' one kid grabbed her Cracker Jack box... So Ruthie got mad an' chase 'em, an's he fit one, an' then she fit another, an' then one big girl up an' licked her... So then Ruthie cried, an's he said she'd git her big brother, an' he'd kill that big girl... An' then- an' the, Ruthie said our brother already kill't two fellas... .' (455) Today at camp ...
What are the implications for Frito-Lay? SWOT Analysis Strengths: – Frito-Lay has strong strong-door-delivery sales force. – Management is very clever and detailed in initiatives they take on. – Frito-Lay’s manufacturing facilities are top notch. – Very strong advertising, and willing to spend on advertising. – Frito-Lay’s brand name reputation and its strong presence in consumer food business. Opportunities: – Adding to the product mix will attract new customers to all Frito-Lay products. – Frito-Lay will strengthen there relationships with retailers.
Frito-Lay can utilize Cracker Jack’s history and heritage, especially in ballparks. – Extend Cracker Jacks current target market, and make the snack more common for more consumers. – Eventually introduce new flavors of Cracker Jack and health conscience options, and heavily advertise all new brands. – Take over the top spot in the ready to eat caramel popcorn market. – Extend Frito-Lay brand presence in vending machines. – Stop the increase in price. – CJ to reduce the # of SKUs – Cracker Jack brand awareness.
Cracker Jack brand is considered traditional and old fashioned. – Cracker Jack is premium priced brand and its price has risen by 5 to 6 percent per year since 1993. – Frito-Lay’s inexperience in RTE caramel popcorn product category. Threats: – Strong competition and experience in this category from International Home Foods. – Competitors could outbid Frito-Lay to acquire Cracker Jack. Increase in health consciousness among consumers could impact Cracker Jack sales. – How retailers will perceive Cracker Jack under the Frito-Lay umbrella.
Let’s look at how the potato chip came to be. In 1853 the first potato chip was invented by a chef at the Saratoga Springs New York resort in 1853. It was created because one of the customers at the resort keep sending them back because they were too thick, soggy and had no taste to it. Crum then decided to fry them and sprinkled them with salt for taste. They were soon a regular item on the menu. ...
After conducting a SWOT for Frito-Lays potential purchase of Cracker Jack, we notice there are a lot of opportunities with little threats and weaknesses. I believe the biggest threat to all of this is that a bidding war will commence with other potential buyers, which would not be ideal for Frito-Lay, but they can prove there power if this happens. Furthermore, there are a lot of opportunities for Cracker Jack if under the guidance and resources of Frito-Lay. If Frito-Lay does get this product, we could see a reemergence of such a historic American snack.
Borden is making the right move in letting go of its famous product for they cannot achieve the potential opportunities for the snack. 4. How should Cracker Jack be marketed as a Frito-Lay brand? Marketing Mix: Product Price Promotion Place Product: Reduce the number of SKUs by 50% to 16, primarily by standardizing on two packaging sizes (8-oz flex bags and individual serving boxes).
This step would allow the flexibility of introducing additional flavors without cannibalizing existing products. Price: It is suggested that in the first year the price of the product remain the same and focus should be directed to achieving cost reduction.
Cost reductions can be achieved by capitalizing on the extensive distribution and sales network of Frito-Lay and the reduction of trade promotion expense. Promotion: The first year promotional efforts should focus on overall awareness of newly developed products, which were lacking in exposure according to preliminary market research. A significant amount of advertising and promotional dollars (approx $15 mil- $0 for consumer advertising, 8 in consumer promotion) should be planned. It is important Frito-Lay sends messages that stick with the heritage of the Cracker Jack Brand when promoting the product.
Frito-Lay should earn baseball related sponsorships to keep with the anthem, “buy me some peanuts and cracker jacks,” and at games individual sized boxes would be for sale with high margins. Next, Frito-Lay should promote families eating Cracker Jacks together to get parents the sentimental feeling reminding them of their childhood, and wanting to buy the product for there families. Frito-Lay should offer family size bags with smaller margins in grocery stores. They can leverage their relationships with retail stores for shelf space. This would also lead to repurchasing.
... Cracker Jack brands generation gap. This strategy will focus on Product prices and product locations or places. Frito-Lay’s manager will target retailer stores and convenience stores. ... Frito-lay’s well-known brands are: lay’s Doritos, Tostitos, Ruffles potato chips, Fritos corn chips, Santitas tortilla ... developing the chips. These chips were baked Lay’s potato crispy, Rold Gold pretzels, and baked ...
Place: Frito-Lay should continue Cracker Jack’s distribution for the early years. Most of the product should be offered to warehouse stores. Next, Frito-Lay needs to fight for shelf space in the leading grocery stores. In order to combat cannibalization, it is recommended that Frito-Lay do monthly promotions where Cracker Jack earns prime shelf space, but not stay there year round. Also, Frito-Lay needs to offer smaller size packages in the check out lines at grocery stores so it can be presented as a healthier alternative to traditional candy bars.