I need Pricing and distribution strategies and marketing communication plan to go with the attachment.
Running head: NEW PRODUCT LAUNCH MARKETING PLAN, PART II
New Product Launch Marketing Plan, Part II
Marcae Riggs, David Blaska, Amanda Davis, Ryan Gomez, Debbie Gongola
MKT 571
March 14, 2016
Karlene Swalley
1
NEW PRODUCT LAUNCH MARKETING PLAN, PART II
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New Product Launch Marketing Plan, Part II
Introduction
Frito-Lay wants to establish a ranch chip flavor that is not available in the kettle potato chip
market. The Frito-Lay Company will need to evaluate several key areas in a market segmentation. These
areas include target market profiles, product life cycle, and a product offering. Frito-Lay intends to attract
young families with the assistance of well-known mascots in the marketing plan.
Target Market Profiles
The target market for this new ranch flavored kettle style chip will be similar to other
existing products. Families with children are targeted for purchasing Frito-Lay chips using
advertising and recognizable mascots that appeal to a youthful audience. Existing partnerships
with other companies can be used to market to kids and teens (Capozzi, 2016).
Geographic concerns also matter when marketing to a target audience as each region has a
certain taste for different style flavors. People all across the country have shown a love for the
kettle style chip it is important to focus on the market that want ranch flavored chips most like
the southwestern market that enjoys their bold spicy flavors (Kayal, 2012) while expanding into
the markets of people who enjoy both Lay’s chips and Kettle cooked chips but did not previously
have a kettle cooked ranch flavored Lay’s chip to choose.
Convenience is another deciding factor for those who purchase chips. Potatoes chips are a
convenience item that can be purchased and eaten on the move. This makes product placement in
vending machines and prominent placement on store shelves important so that people who are
traveling can see and purchase this new chip flavor ("What Are Convenience Foods?", 20032016).
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Product Life Cycle
According to Boundless (2016), the four stages of the product life cycle are: introduction,
growth, maturity, and decline. Each stage of the lifecycle requires different price, promotion,
and placement strategies to meet consumer needs while maximizing value and profitability.
The marketing approach for ranch flavored kettle chips must be adapted to coincide with the
product lifecycle stage.
The first stage of the lifecycle is introduction and products typically suffer from low sales
as the market takes time to accept the new product. During the introduction phase, the ranch
kettle chips will be launched into the market with a low price to quickly gain market share.
Emphasis is placed on developing brand awareness through promotion and educating
customers about the new ranch flavor of kettle chips. The ranch kettle chips will be placed on
the end-cap in the grocery store to increase visibility because most people assume anything on
the end-cap is a bargain (Heather, n.d.).
As the ranch flavored kettle chips enter the growth stage, they are accepted into the
market, gain popularity, sales momentum builds, and profits increase. During the growth stage,
the pricing strategy is stabilized to ensure the cost/price relationship is valid and supportable by
the market (What is Your Product Life Cycle, 2014). Focus is placed on branding, ensuring
product quality, and growing market share. In this stage, the ranch flavored kettle chips are
introduced into additional markets where they will gain acceptance quicker due to recognition.
Promotion materials are adapted to appeal to the larger market with an increase in television
advertising, print ads, and discounts/coupons to incentivize consumers to purchase more ranch
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kettle chips. The increased emphasis on advertising will help the brand to expand and build a
larger customer base.
The third phase of the product lifecycle is maturity. During this phase, ranch flavored
kettle chips have reached market saturation and competition becomes fierce as other
competitors enter the market. These changes in market conditions require modification of
strategy to lower price, improve the product, add additional products, differentiate the product,
lower per unit costs, and re-position to regain market share. Promotional materials are
adapted to focus on value, features, and benefits of ranch flavored kettle chips. Emphasis is
placed on holding on to distribution outlets, retaining shelf space, and securing even more
intensive distribution.
According to Levitt (1965), a product begins to lose customer appeal and sales drift downward
in the decline stage of the product lifecycle. Demand for ranch flavored kettle chips will
eventually dwindle requiring a switch to less-expensive production methods and cheaper
markets. Eventually, revenues will drop to a point where it is no longer profitable to continue
making ranch flavored kettle chips (Boundless, 2016). At this point, a decision will have to be
made to either discontinue the ranch flavored kettle chips or sell the rights to product to
another company.
Product Offering
The company will market this new chip under the ‘Kettle Cooked’ marketing arm. This
flavor will offer the company the ability to attract new customers, and it will help retain
customers that may move elsewhere for their products. This product will offer customers a
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healthier, more flavorful ranch potato chip. It will allow customers the ability to purchase a
variety of chips within the product line. As of right now, there are no direct substitutes for this
flavor. This will allow the company to have an exclusive item, with no substitutes. However, as
with all types of chips, there is a myriad of competing flavors and styles, and that is why new
flavors, like this one, are developed frequently. This, and others similar, allow the company to
stay at the front of the pack in comparison with private labels and competing name brands. The
packaging of this flavor will fall in line the other kettle cooked chips, and it will have bright ‘New
Flavor’ advertising on the packaging. Along with the other chips from the company, we will offer
a like it or your money back guarantee.
Positioning Statement & Justification
For positioning Lay’s brand in STP market, Concept can be applied effectively. STP stands
for segmentation, targeting and positioning; Lay’s products in the minds of the customers. Lay’s
product market can be segmented by geographical, demographical, psychographic and
behavioral aspects. Lays brand can segment its brand in-terms of demographic issues such as
age, income, family size and status. The youth age group from demographic segment can be
targeted who have better income with status in society. Positioning can be done by Lays brand
by creating a space at top ladder position of customer minds with the support of promotional
strategies such as advertisements, campaigns, sales promotion and public relations (Priya, P.
2010).
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Conclusion
Frito-Lay has established segmentation, targeting, and positioning as they prepare to launch a
new ranch flavor of potato chips. The customer base, young families, has been defined as well
as where the chips will be placed in the stores for marketing impact, on an end cap for quick
visibility. The product life cycle, introduction through maturity, demonstrates introducing the
ranch flavor to the market through market saturation. The healthier chip permits Frito-Lay to
have an exclusive item on the kettle chip market. This is a marketing edge that will permit FritoLay to continue its strong influence in the snack industry.
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References
Boundless. (2016). Stages in the Product Life Cycle. Retrieved from
https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/integratedmarketing-communications-12/selecting-the-promotion-mix-for-a-particular-product-84/stagesin-the-product-life-cycle-420-896/
Levitt, T. (1965). Exploit the Product Life Cycle. Retrieved from https://hbr.org/1965/11/exploitthe-product-life-cycle
Capozzi, C. (2016). What Are the Marketing Goals for Frito-Lay? . Retrieved from
http://www.wisegeek.com/what-are-kettle-chips.htm
Kayal, M. (2012). Potato Chip Trends. Retrieved from
http://www.foodmanufacturing.com/news/2012/08/potato-chip-trends
