Sunchips Snacks Case Analysis
Sunchips Snacks Case Analysis
Sunchips Snacks Case Analysis
2. Frito-Lay’s last multigrain snacks program failed, the insights can be drawn from
that experience are:
• Choose a right name
The failed multigrain product called Prontos®, which is hard for people to link
to the healthy, nutritious snacks. However, SunChips has a very positive image
and this name is the result from the brand name testing.
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• A broader target market
Prontos® was first introduced in 1974, when the wholesome snacks market
was not yet fully formed. But later this concept was perceived as a “healthier
product”, the market was mature.
• Manufacturing technology available
The other reason led to the failure of Prontos® is the difficulties of
manufacturing. But now this is no longer an obstacle for SunChips multigrain
snacks.
4. The results from the in-market testing conducted in the Minneapolis-St. Paul
showed some differences from those of the pre-market test.
• Trial and Repeat Rate
The first-year trial and repeat rate from the simulated test-market was 25%
and 57%, however, the trial and repeat rate of the first month reached almost
20% and 42%. These data showed that the market accepted the product very
well, and the SunChips® was ready to be launched nationally.
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• Depth of repeat rate
The depth of repeat rate of Sunchips® was 2.9 times, however the recently
most successful O’Grady’s® depth of repeat rate was only 1.9 times.
• Product Cannibalization
The cannibalization rate of SunChips® was only 30%, which was much lower
than the forecast in the pre-marketing test, 42%. That cannibalism rate was
common, and the gross margin of SunChips® was higher than that for Frito-
Lay’s other snacks. Frito-Lay can afford that cannibalization and SunChips®
was a profitable product.
5. Frito-Lay should launch the SunChips® nationally using the strategies adapted in
the test market to ensure its first-to-market position in the new snack chips
category.
Most of the strategies applied in the test market would still be used in the national
launch, some of adjustments would be considered:
• A&M Strategy
In order to reach the goal of high brand awareness, Frito-Lay should consider
invest more money on marketing and advertising. A budget of $30 million
would be a proper amount.
• Product Strategy
At the beginning of the introduction, the SunChips® will provide customer with
two flavors (Natural & French onion), in three sizes (2 ¼, 7, 11 ounce). A new
flavor of mild cheddar and a larger size of 15 ounce are under consideration.
However the decisions would be made according to the performance of the
initial flavors and packages, more marketing research would be required.