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BUSN CASE - FRITO-LAY TARGETS THE HISPANIC MARKET

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Question;C ASE - FRITO-LAY TARGETS THE HISPANIC MARKETFrito Company was founded in 1932 in San Antonio, Texas, by Elmer Doolin. H. W. Lay &Company was founded in Atlanta, Georgia, by Herman W. Lay in 1938. In 1961, the twocompanies merged to form Frito-Lay, Inc., with headquarters in Texas. Frito-Lay produced,distributed, and marketed snack foods with particular emphasis on various types of chips. In 1965,the company merged with Pepsi-Cola to form PepsiCo, Inc. Three decades later, Pepsi-Colacombined its domestic and international snack food operations into one business unit called FritoLay Company. Today, Frito-Lay brands account for 59% of the U.S. snack chip industry, and thereare more than 45,000 Frito-Lay employees in the United States and Canada.In the late 1990s, despite its overall popularity, Frito-Lay faced a general lack of appeal toHispanics, a fast-growing U.S. market. In an effort to better penetrate that market, Frito-Lay hiredvarious market researchers to determine why Hispanics were not purchasing their products as oftenas company officials had hoped and what could be done about the problem. In the studies, marketresearchers discovered that Hispanics thought Frito-Lay products were too bland, Frito-Layadvertisements were not being widely viewed by Hispanics, and Hispanics tended to purchasesnacks in small bags at local grocery stores rather than in the large family-style bags sold at largesupermarkets.Focus groups composed of male teens and male young adultsa group that tends to consume a lotof chipswere formed. The researchers determined that even though many of the teens spokeEnglish at school, they spoke Spanish at home with their family. From this discovery, it wasconcluded that Spanish advertisements would be needed to reach Hispanics. In addition, the use ofSpanish rock music, a growing movement in the Hispanic youth culture, could be effective in someads.Researchers also found that using a Happy Face logo, which is an icon of Frito-Lay's sistercompany in Mexico, was effective. Because it reminded the 63% of all Hispanics in the UnitedStates who are Mexican American of snack foods from home, the logo increased productfamiliarity.As a result of this research, Frito-Lay launched its first Hispanic products in San Antonio, in 1997.Within a few of years, sales of the Doritos brand improved 32% in Hispanic areas. In May 2002,Frito-Lay teamed up with its Mexican affiliate, Sabritas, to launch a new line of products to furtherappeal to Hispanic customers. Included in these offerings are Sabritas Adobadas tomato and chilepotato chips, Sabritones Churrumais fried corn strips with chile and lime seasonings, Crujitosqueso and chile flavor puffed corn twists, Fritos Sabrositas lime and chile chips, El IslenoPlantains, and others.More recently, Frito-Lay has been relying on input and guidance from the Adelante employeenetwork, which is a multicultural Latina/Hispanic professional organization associated withPepsiCo. At Frito-Lay, the organization's mission is to help develop a diverse, inclusive cultureaccelerating growth opportunities for associates while providing a competitive advantage in anincreasingly diverse marketplace. As part of this effort, Adelante has been used to help developnew flavors and advertising programs for Hispanics. Based on information gleaned from Adelantemembers, new Frito-Lay snack products are being test marketed in several states, and guacamole-flavored Doritos became one of the most successful new-product launches in the company'shistory.DiscussionIn the research process for Frito-Lay Company, many different numerical questions were raisedregarding Frito-Lay products, advertising techniques, and purchase patterns among Hispanics. Ineach of these areas, statisticsin particular, hypothesis testingplays a central role. Using the caseinformation and the concepts of statistical hypothesis testing, discuss the following:1. Many proportions were generated in the focus groups and market research that were conductedfor this project, including the proportion of the market that is Hispanic, the proportion ofHispanic grocery shoppers that are women, the proportion of chip purchasers that are teens, andso on. Use techniques presented in this chapter to analyze each of the following and discuss howthe results might affect marketing decision makers regarding the Hispanic market.a. Suppose that in the grocery shoppers w changing cultural v Hispanic men are n randomly sample 6shoppers from around are women. Does tevidence to concluHispanic grocery sb. What proportion ofadvertisements in Ssays that in the pasabout.83. We wanthis figure is true. AHispanics is selectetesting this hypotheand explain this outhis study using2. The statistical mean can be used to measure various aspects of the Hispanic culture and theHispanic market, including size of purchase, frequency of purchase, age of consumer, size of store, and so on. Use techniques presented in this chapter to analyze each of the following and discuss how the results might affect marketing decisions.a. What is the averag Doritos Salsa Verdindicate that the mereally correct? To trandomly contactsSalsa Verde with reExcel output. Discuhypothesis test to dage is actually 31.of purchasers are npopulation.b. What is the averagcustomer on chipshypothesized that tresearcher who knobelieves that this fiprove her case. SheHispanics, has thempurchases for one yfollowing figures. Atechniques from thAssume that expennormally distribute

 

Paper#53569 | Written in 18-Jul-2015

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