Frito-Lay'S Dip
Frito-Lay’s Dips
Dip Category and Segmentation
Dips are typically used as an appetizer, snack, or accompaniment to a meal. The market for dips is highly fragmented and difficult to measure. According to industry estimates, upward of 80 percent of dip sales are accounted for by supermarkets. Total dip retail dollar sales volume through supermarkets was $620 million in 1985. That $620 million can be broken down into prepared dips ($420 million), which includes refrigerated dips and shelf-stable dips, and dip bases ($200 million). Even though the market for dips is large, it is estimated that about 20 percent of all dip volume consumed by households in the United States is homemade. In addition, many consumers use refrigerated salad dressings as dips, especially for vegetables. Industry research indicates that dip dollar sales are growing at a 10 percent rate each year.
As for flavor, sour cream-based dips are the most popular and they account for 50 percent of total dip sales. Cheese based dips are in second and account for about 25 percent of the total dip sales. Bean and picante dips account for about 10 percent of total sales and cream cheese-based dips account for the remaining 15 percent. Dips are most frequently used with salty snacks and about 67 percent of total chip sales are linked to salty snack usage. Many of the dip mixes are therefore located adjacent to the salty snack foods in supermarkets.
Frito-Lay’s Competitive Position
Frito-Lay competes primarily within the salty snack food segment of the snack food market. In 1985, they captured about 33 percent of the gross salty snack food merchandise sold in the United States. Since the company has such a firm stronghold in the industry, they have a large amount of sales revenue to put towards advertising and marketing expenditures.
Frito-Lay’s distribution system is organized around four geographical zones that cover the entire United States. Each zone contains...
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