Frito Lay - Cracker Jack Case Analysis

1546 words 7 pages
Frito-Lay Company - Cracker Jack 1. Why has Borden Foods decided to sell Cracker Jack?

Borden Foods is in the process of divesting of snack and non-food products in order to focus efforts and resources in growing their pasta and grain based meal segments. Borden management has also recognized the value and equity in the heritage Cracker Jack brand. The Cracker Jack brand currently (1996) sits in the number two position in terms of Ready-To-Eat (RTE) caramel popcorn product category market share with approximately $192 million in retail sales. With increased competition, Borden has unsuccessfully attempted to grow sales in the past five years, with the introduction of new flavor offerings. The Cracker Jack brand offerings is comprised of
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Borden has not invested in expanding CJ product offerings from original formula.OfferingsFL has branding expertise holding #1 market position for salty snack products, and represent 9 of the top 10 brands.32 different stocking options

4. How should Cracker Jack be marketed as a Frito-Lay brand?

Should Frito-Lay proceed with acquiring the Cracker Jack brand, I recommend the following mix of marketing activities.

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. An additional benefit would be improved manufacturing efficiency gained by standardization.

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. The additional revenue generated from increased sales will assist in maintaining profitability and sales margins.

Promotion: The first year promotional efforts should focus on overall awareness of newly developed products, which were lacking in exposure according to preliminary market