Cracker Jack
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In 1997, Frito-Lay acquired the 104 year old snack, Cracker Jack from Borden Foods Inc. Coupling its $10.9 billion in worldwide sales with the marketing power of parent company, PepsiCo Inc., and Frito-Lay clearly is king of the snack world. . The average American now eats nearly 22 pounds of snacks each year, according to the Snack Food Association. Frito-Lay, which controls two-fifths of the world market for salty snacks, generated more than half of PepsiCoÆs profits. Pepsi's recent acquisition of Cracker Jack gives a sense of the possibilities. The classic brand, which had annual sales of $40 million and was owned by Borden Foods Co., had not had serious advertising behind it since the late 1970s and had been losing money for five straight years when Pepsi picked it up in 1997. The acquisition was a perfect fit. PepsiCo left Cracker Jack's iconic box package but also developed 4-ounce bags. In response to consumer complaints, PepsiCo added 10 percent more peanuts, upgraded the prizes, and added a Web site. The company then used its vast Frito-Lay distribution network to roll it out. Cracker Jack turned a profit in its first year, and today has about $100 million in annual sales from the new four-ounce bags alone.Competition forces companies to invest intensively in brands in order to hold their market positions. Hence, a company's market competitiveness can be estimated based on an assessment of its brand equity. According to an article in the Journal of Comparative Int
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and was reluctant to invest money in a product they considered to be in either the maturity or decline phase of the product life cycle. Frito-Lay saw beyond these limitations. It believed that rather than following the traditional pattern of Introduction, Growth, Maturity and Decline that Frito-LayÆs business expertise could move the product from the Maturity phase into a rejuvenated phase. Frito-Lay also believed that this product complimented but would not cannibalize market share of any of its existing snack food products. In addition, Frito-Lay believed that its Direct-store Delivery system would enable the company to quickly rebuild demand and increase market share for Cracker Jack.
SWOT analysis for Cracker Jack:
Strengths:
Low operating costs.
Low production costs.
An established distribution and logistics infrastructure
The companyÆs DSD delivery method that can and should increase market share for Cracker Jack
Dedicated employees at Frito Lay that are incentivized to ensure that the companyÆs products receive prominent in store placement whenever possible.
Loyal customers of Cracker Jack, along with a large group of potential customers that might try the product
An acquiring company that is receptive to recommendatio
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Approximate Word count = 1763
Approximate Pages = 7 (250 words per page)
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