Chips, chips, and even more chips! This might be the mantra for Frito-Lay salespeople as they carry out their daily assignments. Although it may not seem like it on the surface, it is a challenge to be effective in the salty snack sales environment. As with most forms of selling, the secret to success lies in finding ways to be both efficient and effective. There is only so much shelf space for all those tempting crunchy bags in grocery and convenience stores, and lots of manufacturers that want their products to be on them. The salty snack industry includes potato chips; tortilla chips; snack nuts and seeds (including corn nuts); popcorn; pretzels; extruded cheese; snacks; corn snacks; and other. Total retail sales in the United States totaled over $17 billion in 2009.
Frito-Lay is one of the world's leading producers of salty snacks. Frito-Lay North America is a division of PepsiCo, Inc. Based in Plano, Texas, the company's most popular brands include Fritos, Lay's, Doritos, Cheetos, and Tostitos. In 1932, C. E. Doolin purchased the recipe for Fritos and began to sell corn chips in San Antonio from his Ford Model T. In the same year, Herman W. Lay began his potato chip business in Nashville by purchasing a snack food manufacturer. The Frito Company and the H. W. Lay Company merged in 1961 to become Frito-Lay, Inc. Eventually, in 1965 Frito-Lay, Inc. and the Pepsi-Cola Company combined and created PepsiCo, Inc.
Today, PepsiCo is organized into four divisions: Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International, and Quaker Foods North America. In the retail atmosphere, Frito-Lay faces competition from many sources. This includes large multinational companies such as ConAgra (DAVID Seeds, Crunch ‘n Munch, Orville Redenbacher), Kraft Foods (Nabisco, Honey Maid), and Procter & Gamble (Pringles). In addition there are numerous regional manufacturers such as Cape Cod Potato Chip (chips, popcorn), Snyder's of Hanover (chips, pretzels), and Jay's Foods (chips, popcorn). Relationships with retailers are critical as all these formidable competitors jockey for limited shelf space. The leadership of Frito-Lay's sales organization believes that knowledge management is the key to success so that salespeople in the field can constantly update what they know about each store and tailor their offerings accordingly.
The challenge is that important information must be captured in many different places and systems. This can inhibit the sharing of knowledge across members of the sales organization. Frito-Lay's solution was to develop a knowledge management portal on the company's intranet. The portal provides a central point of access to the database that integrates customer and internal corporate information. The goals for the Frito-Lay portal are to provide knowledge that is more efficient, make use of customer-specific data, and promote team collaboration.
Given the company's size, this is no easy task. During the mid-2000s, the salty snack market grew slowly, and changes in consumers' eating habits might provide an even slower future. A trend toward healthier snacking and concerns about weight loss will increase the competitiveness among the different snack food sales organizations. Salespeople have to continue to develop customer loyalty as consumers experiment with new products to enhance the at-home experience. FritoLay needs to decide just what pieces of information its sales force needs to know while not burdening them with too much data to be effective. You Make the Call
1. What is the decision facing Frito-Lay?
2. What factors are important in understanding this decision situation?
3. What are the alternatives?
4. What decision(s) do you recommend?
5. What are some ways to implement your recommendation?