The segmentation and marketing strategy of Frito-Lay Dips represents a turning point in dip and segmentation and marketing strategy history. Advertising and merchandising budgets will not see an increase for the current year. Further, total dollar sales of dips declined last year and sales of cheese dips, a huge success, will remain constant for the upcoming year. However, prior to 1983 marketing strategy for the dip line enjoyed a basically “nonpromoted profit producer” (Frito 35). It is time marketing perspective changed with respect to the Frito-Lay Dips line of products. Over the past two years the company has begun promoting its dips line of products more aggressively. These efforts include consumer promotions such as sampling and couponing and television and radio advertising.
There are current challenges facing the company that must be considered with respect to segmentation and marketing strategy. The first is the fact of increased competition, particularly large well-financed companies who are beginning to actively pursue the dip market. The second is the projected growth in Mexican dips projected for the upcoming year. The third is that based on the experience with the discontinuance of Enchilada Dip, it appears customers who buy dips do not regularly switch-over to other varieties. The fourth consideration is a flat advertising budget. The fifth consideration is the nature of dip sales and distribution networks within the company. The sixth consideration revolves around the fact that while only 45 percent of U.S. households used dips last year, 97 percent used salty snacks.
In addressing each of these considerations, we will see why Frito-Lay Dips must abandon the Vegetable Dips opportunity in favor of potentially more lucrative expansion in the salty snacks dip market segment. Frito-Lay Dips already enjoys 33% of the salty snack food tonnage sold in the U.S. (Frito 34). Further, the company has exp...