UNIVERSITI TEKNOLOGI MARA

MKT 750: MARKETING MANAGEMENT
FINAL EXAM: CASE STUDY – FRITO – LAY, INC; SUN CHIPS TM MULTIGRAIN SNACKS

PREPARED FOR ASSOCIATE PROF. DR. FAIZAH ABD RAHIM

PREPARED BY FATIN HUSNA SUIB 2010241764

DATE OF SUBMISSION 1st November 2010

QUESTION 1 Using the “DECIDE” Formula, analyze the above case. The decision making process describe as the DECIDE Formula which:

1. Define the problem 2. Enumerate the decision factors. 3. Consider relevant information. 4. Identify the best alternative. 5. Develop a plan for implementing the chosen alternative. 6. Evaluate the decision and the decision process.

Step 1: Define the problem.

The problem of Frito Lay, Inc face is to determine the continuously marketing strategy for Sun Chips Multigrain Snacks for future, how they need to retain and when they need to take action on future action pertaining to the brand. The objective of this company is 1. To create a sustainable competitive advantage 2. Maximizing business performance. 3. Increase sales of the brand. 4. To examine the nature of the US market; whether Frito Lay, Inc should consider venturing into healthy snacks industry. 5. Lower the risk of introducing their new product, Sun Chips TM Multigrain. 6. Ensuring that this product been recognized (brand awareness) by their consumer and target market.

there are two sets of decision that must be enumerated in decision making process. Product First. product. the product itself should be evaluated based on its added value and uniqueness. price. 7 and 11 oz. It had two different tastes: Natural and French Onion. iii. It had been packages in two sizes: 2 ¼ . so that it could attract consumers to buy. rice and oat flours with a lightly salty multigrain taste chips and is made with canola or sunflower oil which represent a healthier snack for the consumer. place. Price Frito Lays. ii.Step 2: Enumerate the decision factors. The details about the product are as follow: i. These are controllable decision factors which include the marketing mix. The product that the company wants to introduce to the market is the Sun Chips TM Multigrain Snacks. Is it worth for their money or otherwise. Sun Chips TM Multigrain Snacks is a crispy. Inc should consider the amount consumers pay for the product. which are: a) Alternative changes of action. textured snack chip consisting of a special blend of whole wheat. corn. which differs it from others. and promotion strategy. In enumerate the decision factors. The prices of Sun Chips TM Multigrain Snacks when the company introduces in their test – market plan are as follows: .

240 0.0 : SunChips TM Multigrain Snacks Price List For the selling prices.69 $ 1.732 Table 1.1711 $ / oz 15 % (2.385) 15 % x 0.39 $ 0. Place Place is the location where the product can be purchased or distribution channel also important for availability of the product.1575 $ /0z 38 % (11/1. This location had been chose due to its high population volume.0257 $/0z 47 % x 0.25 / 0.7004 7 $ 1. Minnesota for their product‟s test market.1688 2. Inc had chosen Minneapolis – St.0599 $ /oz 0.385 0.Package (ounce) 2¼ 7 11 Size Suggested Retail Price Frito – Lays Selling Price to Retailer $ 0.1711 = 0.240 $ 1. Paul.732 0.385 $ 1.0832 $/oz 38 % x 0.69 $ 2. here is the calculation: Product (ounce / oz) 2¼ size Selling price Price per ounce % of purchase Average per ounce price $ 0.1575 = 0. Frito Lay. which Minneapolis is a metropolitan area that could give them sufficient information to test the .1711 $ / oz 47 % (7 / 1.1711 = 0.732) Average Price per oz Average Price per The price that ad been introduce by the company for the product were consistent with customer reference prices for snack chips and represented a good value.240) 11 $ 1.

in store displays. (2. 6. Inc been distributes this product to: 1. 2. Create new products to meet changing consumer preferences and needs. These include advertising. 4. Retail stores.2 % of the 90 million snack chip user households in the United States). Grow established Frito – Lay brands through line extension. Reproduce Frito – Lay successes in the international market. free samples in supermarkets. 3. Television advertising. 4. Ages 34 – 49 (demand for healthier snacks).food categories. trade allowances given to retailers. public relation.98 million households that were identified as users snack chips. Convenience stores. Develop products for fast – growing snack . personal selling and promotions strategies. Frito Lay. Television advertising had successfully gain several groups of target market: ages 19 – 34 (primary users). Grocery stores. . The population of consist of 1. 2. 3. The company had introduced the product marketing strategies to pursue growth opportunity: 1. Inc may use in the market place chosen. The company also makes advertising and merchandising strategy: 1. Supermarkets. Promotion Promotion is all the communication. coupons in newspaper FSIs 5.product. 3. which Frito Lays. free standings inserts (FSIs) in newspaper 4. Ages under 18 years and below (in – home usage) 2.

Buyer response. . Inc. Weaknesses. Opportunities. The third step in the decision-making process is Consider of Relevant Information that relates to the alternatives identified by the company as being likely to affect the future events. positive consumer response had been recognize by an independent marketing research firm towards the product concept and brand name of Sun Chips TM Multigrain Snacks. Charles Chips) private brands ( Kroger and Safeway). Uncontrollable factors that face Frito Lays. Their competitors are: national brand firms (Borden. Step 3: Consider of Relevant Information. Procter & Gamble. The table below shows one of the relevant information in terms of Strengths. 2. Competitors. and Threats (SWOT) Analysis. RJR Nabisco. In this case. the company has several consideration of relevant information which will influence the decision-making. Inc are: 1. Refer to First In Show Pet Food. Eagle Snacks) regional brand firms (Synder‟s. The company cannot control their buyer‟s response of the Sun Chips TM Multigrain Snacks that represents a healthier snacks compared to other competitor‟s products.b) Uncertainties in competitive environment. Mike Sells. The company cannot control the existence of competitors in snack food industry.

Inc. Weaknesses 1. the failure is caused by chips. in the United States snack – food industry Frito – Lay. Established distribution strategy. PepsiCo. distribution strategies to make sure that their product could be finally reached to . Inc face the problem of weak which consists of nearly one – half from management team in the mid – 1980s due retail sales in the snack food category. Inc and a worldwide leader in the multigrain snack chip called Prontos was manufacturing and marketing of snack introduced in 1974. to staff changes and other responsibilities Eight of Frito – Lay‟s snack chips also are of project team members thus cause in among the top ten best selling chips in the change in top management and corporate U. Plenty of capital available. Weak management team. Capture of nearly one – half of retail and a product that generated appeal among sales for snack chips.S Supermarkets.8 billion company give them difficulties to compete in 1990 which could provide enough with other competitor‟s prices which quite capital to the Frito-Lay.Strength 1. 2. Inc recorded net income of $ The prices that had been introduced by the 1. The company also uses an independent marketing research to monitor potential customer response. Established company name. Inc face the problem of high company name due to it is a division of new product rate failure that happens on a PepsiCo.077 billion on net sales of $ 17. Inc accounts for 13 % of sales 2. 4. too narrow target market. 3. Competitive pricing. The company has effective Research and Development Department to test their new product in the market. “noncommittal” copy . 5. Frito – Lay. 3. Test market research ability. objectives. High new product rate failure Frito – Lay already has an establish Frito – Lay. The company has several effective similar with them. a confusing name.

Opportunities 1. The strategies include using store – door delivery system that will be sold to supermarkets. 6. to develop their new product introduction to the market. Dr. Inc plan. 3. have the ability to manage the test market. Riskey is the vice – president of marketing research and new business at Frito – Lay. Inc a chance Sun Chips become harder. Fast growing snack food categories. convenience stores and retail stores. . Inc introduction program of This situation gives Frito-Lay. international marketing of products. been Increase number of competitors makes increasing due to the customer demands. Copying similar products. 2. more nutritious snacks. Inc. Competitors.customer. Frito – Lay. Brilliant president in managing the test market. Positive customer response towards a technology and products like Frito – Lay. Frito – Lay‟s corporate marketing research 3. Other competitors could copy similar 2. The snack food industry had Threats 1. change in consumer preferences. grocery stores. Dwight R. had indicate that consumers were looking for nutritious snacks in the early 1970s thus open up the opportunities to introduce the Sun Chips TM Multigrain Snacks which had been claimed as a healthier snacks.

2. population advantage.Step 4: Identify the best alternative. Cons accurate 1. key 3.S. Continue the Test Market to collect more data 2. . National introduction of Sun Chips. Expand the Test Market 3. Original test market may have been accurate. Eliminate the Sun Chip project 4. Lowers risk by performing 2. more research 3. May be more representative 1. Allows competitors time to develop a similar product. Could provide develop products. There are four alternatives that could be choose by Frito – Lay. Inc: 1. flavor). which consist of: • • • • Use Test Market strategy Increase Advertising and Merchandising spending Add larger package size Add additional flavor The pros and cons of each alternative have been show in the table below: Pros Continue the test market to 1. Risk losing first to market of the entire U. Obtain more information. Lost revenue and market niche. Risk losing first to market more research advantage. Allows competitors to 2. 3. collect more data. Expand the test market 1. demographic information for products (size. Lowers risk by performing 2.

Eliminate the Sun Chip 1. which is National introduction of Sun Chips. National Sun Chips. introduction of 1. we had identified the best alternative. there are some pros and cons when they increasing the expenditure on Advertising and Merchandising campaign: . After choose this alternative. 3. Huge potential profits 2. Risk of potential losses. Segment of market may not be profitable. Not pursuing would violate company strategies. 2. Portray healthier image 3. 3. product-marketing potentially growing and uninhabited segment of the market. Risk of losing access to a expenses. profits. First to market advantage 4. Brand awareness would increase with additional spending and felt that spending the national introduction equivalent of $30 million could stimulate brand trial as well. Step 5: Develop a plan for implementing the chosen alternative From step 4. However. Limit risk and potential 1. losses. Company‟s superior image will remain in tact. Potential damage to company image. 2. Eliminate project‟s future 2. Gain access to new segment of market 1. Easy to add to distribution strategy 5. Frito-lay must increase advertising and marketing expenditures to create brand awareness. 3. Risk of losing potential product.

Once product has foothold in market . They can develop 4 package sizes of 2¼. Pros . there are some pros and cons to be considered when add larger package size 1.Reduced 1st year profits . Pros . Flavor extension could increase the „repeats per repeater‟ to an average of 3.Trial rates are projected based on PMT data Second plan to be developed for the launching of Sun Chips is to add larger package size.5 times per year.Additional purchase options .1. 7. A fourth.Limits marketing efforts Third plan to be considered is to add new cheddar flavor (mild cheddar). larger package could add about one-half ounce to the average annual purchase amount per repeat (and repeater) purchase occasion.Increase volume . However. which are Natural and French Onion. 11 and 15oz. Cons .Increases volume and profits . .Increases number of SKU‟s .Consumer survey indicates demand for larger size 2. Cons . In addition. Frito-lay also can introduce new two flavors.Increase brand awareness and trial rates .Larger sustained profits 2.Stretches production capacity . of another flavor could increase the cannibalization rate to 35%.Increases inventory .

it also is involved in aggressive cost cutting measures. Investments in improved distribution channels.”i Frito-Lay has also patented a process that intensifies flavoring by coating both sides of its potato chips. Cheetos. This strategy effectively creates a competitive advantage. In order to increase the consumer‟s willingness-to-pay. increasing the consumer‟s willingness-to-pay while maintaining or decreasing costs. These products are comparatively high-priced. Premium products such as Frito-Lay Doritos. Cons . Pros . While Frito-Lay works to differentiate its products by adding value. such as through the merger with Quaker Oats.Large scale production not perfected Competitive Positioning PepsiCo‟s Frito-Lay division focuses on product innovation to differentiate its snack foods from those of other producers in the market. to find the perfect “chipping” potato Frito-Lay develops “thousands of proprietary potato seed varieties not available to other manufacturers.More consumer options .Increases number of SKU‟s . offering more than just a typical salty snack.Perfect large scale production of new flavors 2.Higher cannibalization rates .May not be popular with consumers .Expensive to produce . will reduce lead times and inventory carrying . For example.Increase “repeats per repeater” . Frito-Lay focuses on adding product value through product innovation. and Sun Chips demonstrate this differentiation strategy.1. Both of these examples show efforts to differentiate potato chips (an unlikely candidate) in order to increase prices.Increase sales and profits .

Proctor and Gamble. In these companies. uses a similar differentiation strategy to position its Pringles potato chip line. operational efficiency and high capital investment are critical for Sun-Chips™ Multigrain snacks to take advantage of first markets. . Frito-Lays largest competitor. competitive advantage will be gained through the efficient operation of their production and distribution facilities Step 6: Evaluate the decision and the decision process. Alternatively. The innovative Pringles round cylinder packaging adds customer value by improving quality (less broken chips) and increasing product awareness (branding). The recommendation to increase the expenditure for advertising and merchandising will help to create brand awareness. generic chip producers pursue a low cost position. Sun-Chips™ will be supported by television advertising so that people will aware about this product. Frito-Lay considers timing and competitive the big strategic issues so that quick decisions.costs. Maintaining or lowering product costs allows PepsiCo/Frito-Lay to further gain a competitive advantage and increase operating profits. The primary target of Sun-Chips™ is people between the ages of 18 and 34 because they represent the principal purchasers and heavy users of snack chips. It does not charge a premium price in order to be consistent with consumer reference prices for snack chips. The secondary target is people who bracket to 49 years old. Frito-Lay has to explore additional markets (International) to grab more variety of clients. Competitors in the salty snack foods industry use a variety of positioning strategies. FritoLay introduces two package sizes with distinctive package design for each flavor. These generic products come in plain packaging and are sold at a discount. Introduction of Sun Chips Multigrain Snacks in other states of America would expand the product distribution channel and cater more customers which would lead to greater market share instead of take more time doing test market.

(2) development. gathering consumer understanding with the help of formal consumer research methods has the advantage that the results can more easily be disseminated across departments in an organization. carrying out consumer research in this stage is inexpensive compared to the risk of product failure. how their needs are shaped and influenced and how they make product choices based on them. (3) testing. which typically involve the unmet needs and wants of consumers. it helps to avoid working on a new product that has a low probability of success in the first instance. it guards against potential winning product concepts being overlooked. As a result. when it comes to successful new products it is the consumer who is the ultimate judge. In this way. The goal of this phase is to search for new areas of opportunities. helps to increase the probability of success in the market. Even though consumers may not always be able to state their wants.QUESTION 2 Test market is critical prior to new product introduction versus consumer research and launching. Consumer research. in order to develop successful new products. Moreover. . and (4) launch. New product development (NPD) can initiate from new technology or new market opportunities. Companies use consumer research to verify that consumers will accept a new product when it will be launched at the market. But irrespective of where opportunities initiate. it is important to understand how they recognize products. testing and launch stages. Consumer research is often considered difficult during this stage because it is unsure what to ask consumers at this point. Discuss. Additionally. however. Successful NPD strongly depends on the quality of the opportunity identification stage. It is most widely applied during the development. So. companies should gain a deep understanding of their consumer. Consumer research can be taken during each of the basic phases of the NPD process: (1) opportunity identification.

The simple go or no-go decision. what is planned to occur in a national launch. is a geographic region or demographic group used to gauge the viability of a product or service in the mass market prior to a wide scale roll-out. so that they can be extrapolated to projected national results. is normally the main justification for the expense of test . A test market. Large parts of the conducted research in NPD consist of focus groups. Since this review is focusing on the opportunity identification stage. The technique replicates.on a smaller scale. typically in one area. Unfortunately. 1 shows the four typical major stages in NPD along with representative consumer research methods. surveys and the study of demographic data. only examples of methods are being listed under the other phases.promotion and distribution as well as 'product' .Fig. despite the large number of available methods and techniques to be used in the NPD process. in the field of business and marketing. and the results are very carefully monitored. This is considered to be one of the reasons for the relatively low new product success rates. The criteria used to judge the acceptability of a test market region or group include a population that is demographically similar to the proposed target market and relative isolation from densely populated media markets so that advertising to the test audience can be efficient and economical. together with the related reduction of risk. The test market ideally aims to duplicate 'everything' . the majority of them are not used by companies or mostly applied in an ad-hoc manner.

Although the main objective of test markets is to reduce the amount of investment put at risk. The risk levels may be much reduced. one day the old product will be coming off the production line. at least for some time. Effectiveness . all test markets provide additional information in advance of a launch and may ensure that launch is successful. since there is an existing user base to underwrite sales (as long as the new product doesn't alienate them . is that of replacement of one product by a new one. Therefore. by changing their promotional activities (usually by massively increasing them) to the extent that your results are meaningless. 3. One form of `new product launch' which is little discussed.markets. They may also interfere with your test. and not worth the delays involved. they may still involve significant costs. all test markets do suffer from a number of disadvantages: 1. Replicability . In this case.as `New Coca-Cola' did in the US and `New Persil' did in the UK).and hence most important . Such an introduction will be complicated by the fact that. Cost. and the next day the new . and the smaller ones may introduce gross distortions. However. there will be two forms of the product in the pipeline. 2. it is reported that. All test markets give competitors advance warning of your intentions. and the time to react. however. several `matched' test markets (usually small ones) may be used. but is probably the most prevalent . At the same time. such test markets can be used to test specific elements of a new product's marketing mix possibly the version of the product itself. the reduction in risk may be minimal. the distribution channels and the price.Even the largest test market is not totally representative of the national market. for example) before the `product' is ready to be test marketed. in exactly the same way as other market research. each testing different marketing mixes. Clearly. They may even be able to go national with their own product before your own test is complete. Test market results therefore have to be treated with reservations. even at such a late stage. 'Competitor warning'. half the products entering test markets do not justify a subsequent national launch.of all.In many cases the major part of the investment has already been made (in development and in plant. usually an `improved' version. the promotional message and media spend. Some firms may opt for a straight cut-over.

it is important to understand how they perceive products. however. In this way. Knowledge obtained through formal methods is generally used to a greater extent. Moreover. it guards against potential winning product concepts being overlooked. because they do not know what they want. carrying out consumer research in this stage is inexpensive compared to the risk of product failure. when it comes to successful new products it is the consumer who is the ultimate judge. . Consumer research. companies should gain a deep understanding of 'the voice of the consumer. Even though consumers may not always be able to express their wants. Consumer research is often considered difficult during this stage because it is unsure what to ask consumers at this point. most likely through its verifiability and credibility. and it may reveal that both can run together. This ensures that the new really does. it helps to avoid working on a new product that has a low probability of success in the first instance. gathering consumer understanding with the help of formal consumer research methods has the advantage that the results can more easily be disseminated across departments in an organization. So. helps to raise the odds of success in the market. Additionally. how their needs are shaped and influenced and how they make product choices based on them. As a result. The risk to reveal a new product design too early is another concern for companies in fast moving and highly competitive markets. eventually. Most will favor parallel running for a period of time. even if only because this is forced upon them by their distribution chains. But irrespective of where opportunities originate. The considerable amounts of time and resources necessary to conduct test markets restrict the amount of test markets which can be conducted by companies. An often-heard argument is that asking consumers what they want is useless. in order to develop successful new products. replace the old. which is independent from any cost & time considerations.product.

it must make sure that each one has a specific and unique market segment to serve. though. If it offers two similar products. tortilla. middle and downscale market. The 30 percent cannibalism rate was not uncommon in new product introductions in the snack food industry.QUESTION 3 Cannibalism effect for Sun Chips TM and calculate the effect based on incremental Gross Profit effect. The research firm‟s tracking data indicated that 30 percent of Sun Chips Multigrain Snack pound volume resulted from consumers switching from Frito-Lay‟s potato. east and west. making sure there is no cannibalism whatsoever. being similar in function. About one third of the cannibalized volume from Frito-Lay‟s products came from Doritos brand tortilla chips. when Frito-Lay introduced O‟Grady‟s brand potato chips. sales revenue. And one-third of the cannibalized volume from Frito-Lay‟s products came from Doritos brand tortilla chips. and corn snack chips. This aptly refers to cannibalism in that two offerings from the same manufacturer would compete head on for revenue. one third of its pound volume came from its Ruffles brand . Because of that. Cannibalization refers to a reduction in the sales volume. 30 percent of Sun Chips Multigrain Snack pound volume comes from consumer switching from Frito-Lay‟s potato. Based on the result. To address cannibalism. For example. The independent research firm also identified the incidence of product cannibalization. the gross profit for Sun Chips Multigrain is higher than other snacks chips. market and other attributes. etc. there is such thing as inside product competition. tortilla and corn snack chips. The entire market can be divided into different categories: upscale. In the world of business. Cannibalism is common among conglomerates and empires that produce several brands under the same line. Effect of cannibalism made Sun Chips Multigrain Snack sales rapidly increase in a short period of time. The company needs to carefully examine its offerings regularly. men and women. or market share of one product as a result of the introduction of a new product by the same producer. a company must carefully plan out the marketing of its product or service. Below show the calculation based on incremental Gross Profit effect. kids and adults. young boys and young girls.

968.0257 $/oz 7 oz $1.985 291.460.1711 $/oz 15% % of Purchases Average Price Per Ounce 15% x 0.385 0.8% x (19.0832 $/oz 11 oz $1.0599 $/oz .25 oz $0.1771 $/oz 47% 47% x 0.000 SELLING PRICE CALCULATION Product Size Selling Price Price Per Ounce 2.760 31.0rep x (41.8% x (19.322.240 0.000)) x 13oz Total Volume (oz) Total Volume (lbs) 496.1771$/oz =0.000.000.000 x 6oz Total Ounces 107.and Lay‟s brand potato chips. Even though cannibalization was an issue to be considered in evaluating test market performance.732 0.751. INDUSTRY ANALYSIS VOLUME CALCULATION Purchase Amount Trial Volume (6 oz) Repeat Volume (13 oz) Repeater Volume (13 oz) 41.000) x 13oz 3.820 97.1575$/oz =0.9% x 90.9% x 90.1575 $/oz 38% 38% x 0.046.940 Volume Calculation 19. Frito-Lay executives noted that the gross profit for Sun Chips Multigrain Snacks was higher than for its other snack chips.000.9% x 90.1711$/oz =0.

046.732.046.985 lbs = 9.344 Gross Profit = 1.314.7004 Similar calculation yields Average Retail Price = 3.985 lbs Average Selling Price = 2.1688 2.278 Projected Retail Sales = $120.30 $/lb x 31.081 Cannibalization Analysis Gross Margin Sun Chips = 1.839.30 $/lb x 21.8726 $/lb Projected Sales & Gross Profit Total Volume = 31.231.524 Incremental Profit Analysis Sun Chips Incremental Volume = 70% x 31.890 lbs Incremental Profit = 1.096 lbs Profit Increase = (1.328.046.314.30 $/lb Gross Margin Others = 1.1.524 .756 Cannibalization Profit = $2.7004 $/lb Projected Sales = $83.985 lbs = 21.096 lbs = $2.046.732.328.890 lbs = $28.361.30 $/lb .05 $/lb) x 9.05 $/lb Cannibalization = 30% Cannibalization Volume = 30% x 31.252.985 lbs Gross Profit = $40.Average Price$/oz Average Price $/lb 0.

330* *not including Advertising and Merchandising spending .248.692 Retail) Sustained Gross Profit = $23.037 ($70.248.051 lbs Average Price = 2.974.248.25) = $17.467 Sustained Profit Increase with 30% Cannibalization = (70% x 18.722.87 $/lb Retail) Sustained Sales = $49.666.7004 $/lb (3.277.581.280* *not including Advertising & Merchandising spending Sustained Sales & Profit Repeater Volume = 18.1st Year Profit = $30.051 lbs x $1.30) + (30% x 18.051 lbs x $.

Competitive rivalry is likely to be based on dimensions such as price. a) The threat of the entry of new competitors The snack industries main threats is on the its brand identity. The switching may need new advertisement or branding cost and also the product research and development. Customers maybe switch to eat snack as light food to fast food. quality. c) The threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Buyer inclination to substitute product. Next is access to distribution channels. . The brand identity of the products must merge with current customers needs. The snack industries growth rapidly and generate a huge profits. the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. b) The intensity of competitive rivalry For most industries. and innovation.QUESTION 4 Analyze the Snack Industry using the Porters Five forces model. There need to be well known through advertisement. Capital requirements can be a threat of the snack industries because to market the snack need cost for advertisement and marketing expenses. Michael Porter provided a framework that models an industry as being influenced by five forces. Some of the snack products need to switch their products lines to compete with other products. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. The snack products need to supply easily and in large supermarket. The cost for switching the product lines can be a biggest threat to the industries.

d) The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs. labor. . the ability of customers to put the firm under pressure. and services to the firm can be a source of power over the firm when there are few substitutes. Suppliers of raw materials. The volume of products supply to the supplier should high and consistency to ensure consistent profits. The buyer volume play an important roles in determine profits to the company. which also affects the customer's sensitivity to price changes. So products in snack industries need to compete in price and product identity. components. e) The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. In the snack industries. the most important is to get the supplier concentration so that they will always to get our products. Product differentiation will resulting the success of the company.

Solid marketing strategy is the foundation of a well-written marketing plan. A marketing plan may be part of an overall business plan. an interest in out-sourcing certain aspects of production. the trend suggests that the changing market conditions now require firms to meet more refined and personalized customer tastes. competition and customer demands. to function on global markets by establishing alliances and joint ventures with other key players in both similar and disparate markets and greater attention to social and environmental responsibility. resulting in a shift of enterprise focus to vertical and horizontal integration across organizations. Overall.QUESTION 5 How would you answer the criticism that it is impossible to plan given how fast today’s market condition are changing? With competition arising from diverse and unexpected sources enterprises can no longer be confident about their market shares: they must constantly innovate to compete. In this new business environment the following key drivers have been gaining in importance: a focus on improving the productivity of knowledge and service workers (rather than industrial productivity). a focus on quality in both products and service. It can be for a product or service. operations and competition. with a rising need to react rapidly to changing market conditions. sales service and support functions. Interaction between producers and these more demanding and better informed customers is an essential factor for growth and competitiveness. as expressed through a wide range of democratic and associative mechanisms. with productivity programmes shifting from culling costs to improving organizational performance and effectiveness. with quality programmes moving from manufacturing operations to knowledge and service operations and firms building a corporate culture around quality the challenge of responsiveness. the globalization of markets. as well as society's collective needs. written marketing plan is . While a marketing plan contains a list of actions. A formal. partnering. Marketing plans cover between one and five years. or a product line. a brand. distribution. a marketing plan without a sound strategic foundation is of little use. A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives.

a forum. Marketing planning is also important since it is often a prerequisite for obtaining funding whether one is a marketer in a large corporation seeking additional money for his or her department or is part of a small startup company looking for initial funding. shifting market conditions. perhaps the most important benefit of these plans is the planning process itself. we focus attention on the importance of marketing planning with special attention given to the role marketing strategy plays in the planning process. Even five year marketing plans should be revisited periodically . However. offering data showing investors how the company will grow and most importantly. . even for those not described in the plan itself. marketing plans are included in business plans.at least once each year to address changes in market conditions. including changing customer needs and competitive threats. As we will see. almost always insure that what worked in the past will not work in the future. Like a business plan. a marketing plan is an important document that needs to be updated on a regular basis. for information-rich and productively focused discussions between the various managers involved. This typically offers a unique opportunity. how they will get a return on investment. etc. pricing issues. For marketers planning is an essential task that must be continually undertaken. Additionally. In particular.essential in that it provides an unambiguous reference point for activities throughout the planning period. thus requiring revisions in how a product is marketed. demand. then provides an agreed context for their subsequent management activities. The plan. together with the associated discussions.

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