Frito-Lay: Controversy and Innovation

Table of contents 

Background Information 
Marketing Mix and Target Market 
Controversy by Association 
Break down of Ads and Collaborations 
Recommendations 
References 

          Background Information 

            Frito-Lay is part of the snack food industry, it creates food items that are easy to grab with no preparation by the consumer. Although Frito-Lay is owned by PepsiCo it is still a major competitor. Each company owns competing products. PepsiCo on its own has Quaker oats, which creates snacks such as granola bars. PepsiCo also owns regional brands across the world not under Frito-Lay such as Chipsy in Egypt. Kellogg and Mondelez International are other competing companies. Mondelez has many snack foods. Its biggest brands are Oreo, Ritz, Toblerone, and Cadbury. Some of Kellogg’s largest brands that it competes with are Pringles, Cheez-it, and Pop tarts. Another competitor that Frito-Lay has is Utz. Utz creates potato chips and owns the rights for the TGI Fridays food brand sold in stores. Frito-Lay also has competition from store owned brands such as Great Value depending where the products are sourced from. 

            Frito-Lay is a snack food brand that has many different products under it. It is most known for its chips, although it has dipping sauces, popcorn, cookies, nuts, meat snacks, and pretzels. The parent company of Frito-Lay sells soft drinks, sports drinks, water, coffee, snack foods, juices, and cereals. 

            Frito-Lay was created by two men with very similar dreams. C.E. Doolin purchased a bag of corn chips and after learning the manufacturer wanted to sell his business Doolin bought the recipe. He then started making Fritos corn chips and sold them out of his car. Herman W. Lay created a snack food delivery company and bought out the same manufacturer. Eventually these two companies merged into Frito-Lay in 1961. Four Years later the company Merged with Pepsi-Cola to form Pepsi Co. 

            After Frito-Lay merged with Pepsi-Cola many events took place. The company found itself in legal trouble with the FTC. They had an antitrust law suit brought against them for planning to market the snacks and sodas together. This would have given them an unfair advantage. The ruling went against the company and they could not market their snack or drinks together. PepsiCo could also no longer acquire anymore snacks or beverage companies for ten years. In 1967 Doritos was introduced. It was wildly successful. In 1968 the company created an insensitive ad marketing Fritos. This ad contained stereotyped imagery of Mexicans and it drew a lot of well-deserved criticism. In 1981 Tostitos was introduced. The company did this after seeing increased interest by the public in Mexican foods. Sun chips launched in 1991 and was a massive hit. The company had issues with competition but, with each major victory they gained more and more market share. Currently they control 60% of the snack food industry (CNBC, 2021). 

                        Marketing Mix and Target Market 

            The products of Frito-Lay are both manufactured and distributed in by the company itself. Each product has many different varieties to suit the diverse needs of consumers. The company owns many different chip/snack brands besides the standard Lay’s: Doritos, Cheetos, Fritos, Sun Chips, Chester’s, Maui Style, Munchos, Ruffles, and Miss Vickies. There are also baked spin offs of their Lay’s, Doritos, Cheetos. The Doritos brand also spun off into “The Walking Taco” (its taco ingredients thrown in a bag of Doritos). The dipping sauces they sell are often branded Tostitos after their corn chips they own. They also own Santitas which is another corn chip that competes with Tostitos. Frito Lay's is in forty countries across the world. It has a large distribution network, but it is manly located in India and the U.S (Bhasin, 2018). The brand sells online and in stores. The brick-and-mortar locations they sell in are general, convenience, and grocery stores. The company uses Competitive pricing and tries to make their products affordable as possible. For products that are similarly priced to other brands they use the variety in the flavors to attract consumers. They use electronic (television, radio,), print (newspapers, magazines), billboards, and social media to advertise and promote their products. The brand uses celebrity endorsements, as well as collaborations, and effective ads to increase brand recognition. 

            Often many of the buyers of Frito-Lay products make under twenty thousand dollars a year (Numerator, 2021). Many of their customers are African-American and buy in bulk (Numerator, 2021). The price of the chips also contributes to the demographic they most often serve. Consumers are starting to migrate to heathier snacks that the company owns (such as the baked version of their famous snacks, popcorn, and sunchips). The company's target market is spilt. They are going for poor consumers and simultaneously going for higher end consumers (Strom, 2012). They have heathier higher priced options for higher end consumers, and they lower cost less healthy snacks for lower income individuals. They are trying to appeal to a wide demographic. 

                   Controversy by Association 

            Frito-Lay in recent years have created new products catering to a growing health-conscious audience. They recently said that they are wanting to do a top bottom approach (Strom, 2012). They are going for a snack market for wealthier consumers and poorer consumers simultaneously. Evidently the core of their business is not changing. These current efforts are to regain or increase the consumer base they lost to the health-conscious movement (CNBC, 2021). They are doing this largely preemptively to keep their market share because people are catching on to the negative health effects of their snacks. Flamin’ hot Cheetos was banned from some schools in three states because of nutritional concerns (CNBC, 2021). There’s a darker side of their products that’s not often addressed. Frito-Lay is quite predatory with making their products addictive. They take advantage of the sugar, fat, salt, artificial sweeteners, and carbs effect on the human body (Bastian, 2021). The chemicals they use are naturally addictive, therefore it perpetuates the purchase cycle for the product. The low prices paired with addictive ingredients cemented Frito-Lays large share in the snack food industry. For the longest time the consumers that bought their products were low-income workers that made 20,000 dollars or less a year (Numerator, 2021). A large number of whom are African American. African Americans and other minorities often live-in food deserts which are places that do not have access to fresh produce nor a grocery store (Brooks, 2014). Dollar stores often pop-up in these regions with packaged food. This is not necessarily the fault of Frito-Lay, but the ever-increasing obesity epidemic has managed to attract the ire of many consumers (CNBC, 2021). The addictive nature of their products cannot be ignored. “These foods affect the same area of the brain as drugs, alcohol, and behaviors such as shopping or gambling” (Virtua Health, 2020). 

            The snack industry took advantage of the low-fat craze to increase the sugar in their products. “On the basis of the information collected by the USDA, we found that the amount of sugar is higher in the low-fat (that is, reduced calorie, light, low fat) and non-fat than regular versions of tested items” (Nguyen, 2016). The nature of their products and the prices continue to attract consumers barely making ends meet. This company is only a small portion of the overall discussion on what should be in our food and our access to it. 

            The company said that they are going to create 50% of their product portfolio with all-natural ingredients (CNBC, 2021). Companies also use the excuse that they are merely creating what the consumers want. Overall, the approach to create healthier alternatives are great. 

            Frito-Lay’s products are used to satisfy a want. The company relies on reoccurring customers. They sell the highest amount of their goods in club stores and these shoppers often buy in bulk (Numerator, 2021). A lot of consumers buy in bulk because it is cheaper and less trips to the store. So often have budgetary concerns therefore they have to find ways to stretch their dollar. Bulk and prepackaged foods are beneficial to time crunched parents. They take advantage of the poor with their pricing and it shows in their target market. The problem solving used in buying their products are routine because people need food constantly. This product can be seen in the rational perspective because it is priced very low in comparison to other foods. It also can be behavioral, because people are so used to these foods that they don't want to quit. 

            I would say that external influences are strongest for this brand because of their ability to hook in the consumer by circumstances, taste, and marketing. Taste is an external force because, they are conditioned to like the taste of certain foods by repeat purchases. Circumstances affect the foods a person buy. If a person is a lower income individual, they will buy foods they can easily afford. Marketing often persuades consumers to try new products they haven’t before. Consumers get interested in the product because the ad is interesting. 

            Their earnings increased 5% in the 4th quarter of 2020 (CNBC,2021). More Americans are snacking and 50% of those polled by CNBC said that they are snacking on unhealthy snacks (CNBC, 2021). Even with consumers becoming more aware of the impacts the products that Frito-Lay’s produces they are still making money. They in 2020 launched a new site Snacks.com to sell their products (CNBC, 2021). Driect to consumer sales are increasing for the brand because of their new venture. 

          Break down of Ads and Collaborations 

Figure 1. Cheetos flamin' Hot TIE-DYE Girls T-Shirt 

This shirt was done in collaboration with Hot-Topic. Hot Topic is a store for teens and young adults. The shirt has Chester chetah on the front with the Cheetos branding. It also has tie die in the colors of red, white, orange, and yellow. 

Figure 2. Cheetos flamin' Hot BAG key chain. 

This key chain was done in collaboration with Hot-Topic. The key chain has a mini bag of Flamin’ Hot Cheetos. It has a clip to hook on to something like a back pack. The design on the little bag is the same as the design on the actual bag of chips. 

            The target audience for these promotions are young adults and teens. Hot Topic often sells memorabilia that relies on nostalgia and often is influenced by pop culture. These items act as wearable advertisements. Not to mention it is a constant reminder of the product the consumer likes. What would be on your mind more an ad on tv or a shirt you have in your drawer that you pass up every day while picking out clothes? It’s a novelty item that it functionable. The shirt is sold out except in 3x. I would venture to believe that this product was highly successful, because of brand reignition and curiosity. Not many people have a branded Cheetos shirt in their closet. The motivation for a consumer to buy a Cheetos T-Shirt or key chain would be because it’s fun and they like the product. They perceive the brand as something youthful fun and eye catching to wear. It’s also quite humorous. When someone wears the shirt, it advertises the product once again. This product might influence the consumer emotionally. Most people wouldn’t buy these items unless the love the product. The consumer has an emotional attachment to the brand because they associate that with positive memories. Examples are going to the beach or parties and having chips. Most likely the audience for the shirt and keychain are brand loyalists which are more likely to have an emotional tie to the product. I would say some of these buyers belong to brand communities. These communities are comprised of individuals who are loyalists to the Cheetos brand. They often attach themselves emotionally to the product. It speaks to them and makes them feel as if they are part of something larger. If someone was a part of a brand community, I would say that people are influenced by a membership reference group. Some people might buy these products to stand out.   

Figure 3. Cheetos flamin' hot X Riley Rose eyeshadow palette. 

This palette was in Forever 21 stores. It consisted of 6 shades. There was other make up products in this line. The colors in the palette are red, orange, yellow, black, burgundy, and gold. 

            The target market for this promotion was young adults to teens. Forever 21 was a store that catered to young adults. This item is a novelty item that is taking advantage of current trends. Makeup videos and reviews are popular right now. Consumers are venturing out with more exaggerated colors. This palette is taking advantage of that fact. Since this was the first Cheetos Flamin’ Hot collaboration with makeup it caught people’s attention. If a person likes a make-up look their friend did, the friend would tell the person what products they used. Since it is so unique and requires more personal interaction with the product it helps bring the consumer closer to the brand. The package has the signature Cheetos font, but I wouldn’t say it’s as branded as the T-shirt and key chain. It does keep a lot of the same elements the other promotions had. This appeals to the consumer’s sense of curiosity and brand loyalty. It influences the consumer more emotionally, because it is not a necessary item to have, but it makes one curious. The consumers who bought this are either makeup or (and) Cheeto lovers. Some of the consumers were a part of the Cheetos or Forever 21 brand community. In this promotion it takes advantage of people wanting to belong to an aspirational reference group. This is because they see their favorite make-up artist buying/trying this palette and they in turn want to purchase it to be like them. 

            All of these promotions fit well together and give a unified message of the brand. They are all going for the same target market and are all items that are useful to the consumer. They keep their colors uniform and use the same logos/branding. The brands promotion efforts are genius because they are useful two ways: The initial buyer is reminded of the product and secondly the buyer will wear the product furthering the advertisements reach. I would do this strategy for more items in the brand and possibly branch out to other branded merchandize. I would do more of the items as limited time collaborations so that people felt a sense of urgency to buy the product. 

Figure 4. Hand crafted bill board for Lay’s potato chips. 

The hand-crafted billboard is supposed to reflect the quality and artisanship of Lay’s Kettle Cooked chips. 

            The target market is wealthier consumers looking for a healthier more artisan option. This ad is unique because of its quality and creation methods. It is eye catching because it stands out in comparison to other billboards. Consumers have emotional ties to art and craftsmanship. People assume that when something is created like this, the artists put their soul into the project. The effort put into this could pique the consumer’s interest. The motivations for the consumer to buy this product could be experience based. They want to see if the time and effort for the sign was worth it. Some consumers would want to try the snack based off of the ads message of “All-Natural Ingredients” or “Crafted with Care.” People would most likely see this messaging as the company caring about the consumer and offering something that was truly meaningful. Many people identify with the All-Natural movement. This product with its messaging would attract these consumers. They are often are a part of communities that have similar beliefs, which makes them a membership reference group. People would see other members of their group buy the snacks and in turn be inclined to buy them as well. Perception of the brand is positive. Many consumers think of them as higher quality than the competitors. Care, artisanship, and natural are all positive keywords now associated with the brand because of their advertisement. 

                   Recommendations 

            Frito-Lay uses different mediums to convey messages about its projects. The above examples are the most innovative to date. The brand continues to pioneer new ways to reach out to consumers. The branded merchandize they sell are targeted towards younger people. This merchandize is sold under brands that’s main audience is younger people. I would continue this new strategy of creating products that advertise over a longer period of time than normal commercials. The products they create also drum up excitement and further the reach of the brand. Word of mouth advertising is important and using the strategy of collaborations they tap into this. Having a person wear these items not only suggests they like the product, but they have a high emotional attachment and (or) internalization. 

            The company should continue with their current efforts. They should release more branded items and take advantage of the cycle of hype. Frito-Lay could announce collaborations in advantage to drum up excitement for the launch. They should diversify the types of merchandize that is offered. The makeup palette they launched is a great example of this. People got very excited for it and it intrigued others. Since they are already in the makeup market, another way they could diversify is by marketing their healthy alternatives and other products into using collaborations. They could do a baked Cheetos bronzer, Lay’s concealer, Doritos Cool Ranch sunscreen, Flamin’ Hot lipstick, Sun chips sun tan oil, and Doritos Cool Ranch body misters. They need to keep these products fresh and edgy. They need to keep pulling in the younger market by doing things that are unique that other snack companies haven’t done. The company should go for more brand limited time collaborations because it gives the consumer a sense of urgency to get the product. Other products they could look into could be skins for tech devices, jewelry, and more articles of clothing. They should also tie in their collaborations with their traditional advertisements. Collaborations might be a newer concept, but they are a critical marketing tool in the age of the internet. 

References 

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For Figure 2. 

Cheetos flamin' Hot BAG key chain. (2020, December 09). Retrieved April 02, 2021, from             https://www.hottopic.com/product/cheetos-flamin-hot-bag-key-            chain/12511318.html#q=cheetos&start=3 

For Figure 1. 

Cheetos flamin' Hot TIE-DYE Girls T-Shirt. (2021, March 08). Retrieved March 19, 2021, from             https://www.hottopic.com/product/cheetos-flamin-hot-tie-dye-girls-t-shirt/13473082.html?mr%3AtrackingCode=12F0545E-B8D7-EA11-8109-0050569428E8&mr%3AreferralID=NA&mr%3Adevice=c&mr%3AadTy         pe=plaonline&mr%3Aad=119392120466&mr%3Akeyword=&mr%3Amatch=&mr%3Atid=pla-     489154307200&mr%3Aploc=9010450&mr%3Ailoc=&mr%3Astore=&mr%3Afilter=489154307200&cm_mmc=CSE-_-GGL-_-PLA-_-DMY-_- Everything&gclid=Cj0KCQjwl9GCBhDvARIsAFunhsneOXcHlpPEqBQRJlk6VwPee4xSG0xtxXbpIcXz_nejw4LfT5VH6xYaAufIEALw_wcB 

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For Figure 3. 

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            (I cross referenced this source with others I used.)

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