Final Year Project

Lays Marketing Strategies by Pepsi in Pakistan

Supervisor
Sir Qalab e Abbas

Submitted By
Faisal Waris

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 B-19302

THE EXORDIUM

Nothing is deserving worship Almighty Allah, the most Merciful, Compassionate and Gracious.
All praises for him because he is the creator of this mysterious universe and guides us with the
Holy Prophet Mohammed (Peace be upon him) and Holy Quran to explore it. I supplicate that
Allah grant me serenity to accept the things I cannot change, courage to change the things I can,
and wisdom to know the difference

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 ACKNOWLEGMENT

All praise to my Allah for giving me strength to undertake this task.

I want to express my gratitude to my supervisor (Mr. Qalab e Abbas) for providing valuable
guidance during the thesis period. He has been an excellent guide and mentor in this journey. I
am deeply grateful for his help, professionalism and valuable guidance throughout this research
and trough my entire program of study that I do not have enough words to express my deep and
sincere appreciation.

I also owe gratitude to the faculty of University of South Asia Main Campus Lahore for great
atmosphere, competent personnel and providing life-altering courses offered during my study.

Finally, I must express my very profound gratitude to my family and friends for providing me
with unfailing support and continuous encouragement throughout my years of study and through
the process of researching and writing this thesis. This accomplishment would not have been
possible without them. I also send my great thanks to anyone who has helped me during
conducting this research that I forgot to name them. Thank you

(Faisal Waris)

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Table of Contents
Chapter 1....................................................................................................................................................... 8
Executive Summary....................................................................................................................................... 8
1.2 INTRODUCTION ....................................................................................................................................... 9
1.3 HISTORY ................................................................................................................................................ 10
2.5 Vision Statement ................................................................................................................................... 13
2.6 Objectives.............................................................................................................................................. 13
Brands of PepsiCo ................................................................................................................................. 15
3.4 Nutritional information ......................................................................................................................... 17
3.5 Bag of Lays Baked Chips ............................................................................................................... 18
3.6 Slogans .................................................................................................................................................. 19
3.7 Flavors ................................................................................................................................................... 20
Everybody realizes lobster rolls are related with Maine and profound dish pizza calls its home Chicago,
however what happens when those flavors go into a potato chip? .......................................................... 20
Frito-Lay has propelled eight new provincially enlivened flavors under its Lay's brand. ........................... 20
The Tastes of America seasoned chip lineup incorporates Cajun spice; Chile con queso; crab spice; deep
dish pizza; fried pickles with ranch; lobster roll; pimento cheese; and Thai sweet chili. ........................... 20
Each flavor was picked dependent on customer criticism in various districts, said Tina Mahal, ranking
executive of showcasing at Frito-Lays. ....................................................................................................... 20
Chapter 4..................................................................................................................................................... 21
Marketing strategy in Pakistan ................................................................................................................... 21
Chapter 5..................................................................................................................................................... 24
PEST ANALYSIS OF PEPSICO ........................................................................................................................ 24
5.3 Social Factors ........................................................................................................................................ 24
Social factors greatly affect Pepsi, as it's a non-alcoholic beverage that deals worldwide it has kept in
mind strict differences of cultures the worldwide. Mostly, the social implications are seen in advertising
campaigns like some countries have religious festivals. So Pepsi has to keep in line with all these festivals
and design advising campaign accordingly to cash upon the opportunity to the fullest. .......................... 25
The solid waste management program affects the operations at Pepsi. Pepsi has to be extra careful
when it comes to waste disposable in order to maintain its image of a socially responsible. ................... 25
5.4 Technology ............................................................................................................................................ 25

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With the new technologies coming in, companies have changed their strategies and operations
accordingly. A recent trend that has been seen and something that almost every company is inclining
toward is Social Media ................................................................................................................................ 25
The social media outburst has led to progressively interactive engagement with the buyers with
continuous comes about so Pepsi has to be aware of all the development that take place with keeping in
mind the increased use of technology by youth for their benefit how can PepsiCo use this to maintain
and increase its customer's loyalty. ............................................................................................................ 25
Chapter 6..................................................................................................................................................... 25
SWOT Analysis of Lay’s ............................................................................................................................... 25
6.1 Strengths .......................................................................................................................................... 26
6.2 Weaknesses ...................................................................................................................................... 27
6.3 Opportunities................................................................................................................................... 28
6.4 Threats ............................................................................................................................................. 29
MARKETING STRATEGY AND FOUR PEES ............................................................................... 30
7.1 Products in Marketing Mix of Lays........................................................................................................ 30
Levels of Products ............................................................................................................................. 31
1. Core Benefit ............................................................................................................................... 31
2. Actual product ........................................................................................................................... 31
3. Augmented Product .................................................................................................................. 31
4. Consumer Product .................................................................................................................... 31
5. Convenience Type of Product .................................................................................................. 31
Product Attributes ................................................................................................................................ 32
1. Quality........................................................................................................................................ 32
2. Features...................................................................................................................................... 32
3. Style & Design ........................................................................................................................... 32
Design and design matter a lot about product results and responsiveness. LAY'S Like the product
(inside packaging and outer file) features attractive design, attractive design and attractive colors
attracts customers a lot. ....................................................................................................................... 32
4. Branding .................................................................................................................................... 32
The Indian brand name came from the Indian word Kurkure / Kurkure meaning crisp or crispy and to
avoid anti-nationalism that decided to choose the color of its packaging. .......................................... 32
Market of LAY’S ........................................................................................................................................... 32
7.2 Price in the Marketing Mix of Lays........................................................................................... 33
Pricing Strategies .............................................................................................................................. 33
Profit Maximization:......................................................................................................................... 34
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 7.3 Place in the Marketing Mix of Lays .......................................................................................... 34
7.4 Promotions in the Marketing Mix of Lays.................................................................................... 35
NATURE OF THE BUSINESS .......................................................................................................................... 36
8.1 Key Objectives................................................................................................................................. 36
8.1.1 Therefore, they pursue following objectives .......................................................................... 37
8.2 Level and Type of Competition ............................................................................................................. 37
Competitors ........................................................................................................................................... 37
Competitors’ Products & Activities ................................................................................................ 37
Chapter 9..................................................................................................................................................... 39
MARKETING ENVIRONMENT....................................................................................................................... 39
9.1 MICROENVIRONMENT.............................................................................................................. 40
Research & Development ................................................................................................................. 40
The company has established its own factory in Plot No. 413, Sondar Industrial Estate, Raiwind
Road, Lahore. Its work and effectiveness are under study. Experts are present to watch and control
machinery as well as production unit. It also ensures that their production meets the requirements in
a timely manner. Experts make sure they produce high quality products........................................... 40
Production ......................................................................................................................................... 40
The company imported KURKURE from China and Lys Chips from Saudi Arabia through its
supplier Saudi Snack Food. The company started production at its new plant on Raiwind Lahore
Road on August 14, 2006. This improves the company's performance. The time period for product
import is eliminated. Raw materials can be available in the domestic market, which reduces the
budget of raw materials. The period of time from production to distribution will be reduced and
efficiency will be enhanced................................................................................................................. 40
Suppliers ............................................................................................................................................ 40
The company imported Lays from Saudi Arabia as of June 1, 2005 through its supplier "Saudi Snack
Food" and has a strong bond with them but now LAY'S CHIP'S are produced in Pakistan. ............. 40
Marketing Intermediaries ................................................................................................................ 40
Customers .......................................................................................................................................... 41
Public.................................................................................................................................................. 41
9.2 MACRO ENVIRONMENT ........................................................................................................... 41
Demographic ..................................................................................................................................... 41
Economic............................................................................................................................................ 41
Increased government intervention (political) ............................................................................... 41
Natural ............................................................................................................................................... 41
Cultural .............................................................................................................................................. 42

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 Technological ..................................................................................................................................... 42
Marketing Objective ......................................................................................................................... 42
Chapter 10................................................................................................................................................... 42
Inside PepsiCo’s snacks strategy ................................................................................................................. 42
10.1 Frito lays expending market and investment 2018 ............................................................................ 47
Lay’s Potato Chip bags use smile power to help kids in need .................................................................... 48
When consumers buy a bag of Lay's Potato Chips printed with smiling faces, PepsiCo will make a
donation to the Operation Smile charity. ................................................................................................... 48
PepsiCo’s Frito-Lay division is putting smiles on bags of Lay’s Potato Chips as part of its limited-time
“Smile with Lay’s” campaign. For each purchase of one of the specially designed bags—which are
printed with the smiles of real consumers—the brand is making a donation to Operation Smile, an
international charity that helps young people who need surgery to correct cleft conditions. .................. 48
The packaging design, which incorporates a diverse assortment of smiling faces, rolled out across the
United States in February. Fourteen of Lay’s potato chip flavors are available in the grin-inducing food
packaging. Sizes include 2.88-oz (three-serving) and 10-oz family-size bags. ............................................ 49
In addition to buying Lay’s Smile bags in-store, consumers can go online to order a bag of Lay’s Classic
Potato Chips printed with their own smile. Sarah Guzman, senior director of marketing, Lay’s, answers
some questions about the packaging and the campaign. .......................................................................... 49
How did Lay’s decide how many different smiles to print on bags of the various flavors? ....................... 49
Guzman: The bags showcase 40 different smiles from real people across the country. Lay’s is on a
mission to spread smiles nationwide, so as part of the selection process, we tried to find a wide variety
of smiles that would bring the most smiles to others. Fans can also have their own smile featured on a
custom Lay’s bag by visiting the website. ................................................................................................... 49
Examples of smiling faces on bags of different flavors of potato chips. .................................................... 49
How do you handle distribution? ............................................................................................................... 49
Guzman: All 40 of our Lay’s Smile bags are available at retailers nationwide, wherever Lays are sold, for a
limited time: Feb. 12 through Apr. 7, 2018. ............................................................................................... 49
How will the bags communicate the campaign for Operation Smile? What other information about this
campaign is on the packaging, including the back of the bag? .................................................................. 49
Guzman: For every purchase of Lay’s specially designed bags, a donation will be made to Operation
Smile. Information about the donation is included on the back of the bag, in addition to steps on how
fans can get involved with the campaign. .................................................................................................. 49
How have consumers responded to Lay’s Smile bags? .............................................................................. 49
Guzman: Fans have had an overwhelmingly positive response to the Lay’s Smile bags, showing their
support on social media by sharing images with their bags using #SmileWithLays. By engaging with our
fans to play a significant role in supporting Operation Smile, we are creating an inclusive and

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empowering environment for consumers to celebrate the power of a smile—while at the same time
giving a forever smile to children in need................................................................................................... 50
How much has Lay’s raised for Operation Smile? ...................................................................................... 50
At the end of the program, we will be donating a total of $1 million to Operation Smile. ........................ 50
Chapter 11................................................................................................................................................... 50
Study of Selected research Problem ........................................................................................................... 50
11.3 Conclusion ........................................................................................................................................... 51
11.4 Findings ............................................................................................................................................... 51

Chapter 1

Executive Summary

The purpose of the project is to research, analyze and decipher the satisfaction level as well as the
preferences of consumers related to the trends in appetizers section of the industry and the various
flavors of Lay's a new range of savory snacks launched by Pepsi Co. The aim is to analyze the
success, marketability and future growth prospects of Lay's. In other words, the purpose is to find
out the perfect combination. The brand Lays have used in the market from the sampling of new
flavors to reviewing of the consumer trends and towards different snacks.

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Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack can be described as
a small quantity of food eaten between meals or in place of a meal. Snack food generally comprises
of bakery products, ready-to-eat mixes, chips, and other light process foods. Snacks as such are, a
very minor part of the food processing industry. Snacks are mostly preferred by children and
youngsters to fulfill their appetite for the time being. At the same time, it is also being preferred
by the group of society which are conscious of their dietary plans.

Of the wide range of snacks available, potato chips represent a significant segment of the Pakistani
snack food industry. Majority of all potato chip snack products are manufactured and sold locally.
Furthermore, the high standard for packaging is not being met by the manufactures of potato chip
products. These poor packaging process has not been checked as compared to the manufacturing
companies in Europe, United States and other developed regions. Many snack foods are sold
unpacked or packaged in poly-pouches, which may only be fold., or in some cases, stapled closed.

As the economy of Pakistan continues to grow, and production standards improve, many snack
food companies are making significant investments into plant equipment and packaging machinery
as well as the quality standards of the product.

Pepsi Foods Ltd., also known as Frito-Lay Ltd, produces Pakistan's largest snack food
manufacturer's brands, including Kurkure, Cheetos and Lay's. Frito Lay's story is an example of
how American recipes were adjusted according to the preferred tastes buds of the local society.

To study the consumer preferences towards snacks and the favorability of Lay's chips, a survey
was conducted where respondents were requested to fill a questionnaire.

The data was then collected and analyzed to obtain results which represented the preferability of
the costumers. Additionally, the report carries an introduction of the company profile as well as
the details of the research methodology which is followed by the detailed data analysis and the
results obtained.

1.2 INTRODUCTION

Lay's is the brand name for several potato chip varieties as well as the name of the company that
founded the chip brand in 1938. Lay's chips are marketed as a division of Frito-Lay, a company

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owned by PepsiCo Inc since1965. Other brands in the Frito-Lay group include Fritos, Doritos,
Ruffles, Cheetos and Rold Gold pretzels. Frito-Lay, Inc. is an American subsidiary of PepsiCo that
manufactures, markets, and sells corn chips, potato chips, and other snack foods. The primary
snack food brands produced under the Frito-Lay name include Fritos corn chips, Cheetos cheese-
flavored snacks; Doritos and Tostitos tortilla chips; Lay's and Ruffles potato chips; Rold Gold
pretzels; and Walkers potato crisps (in the UK and Ireland). Each brand has generated annual
worldwide sales over $1 billion in 2009. Frito-Lay began in the early 1930s as two separate
companies, The Frito Company and H.W. Lay & Company, which merged in 1961 to form Frito-
Lay, Inc. Four years later in 1965, Frito-Lay, Inc. merged with the Pepsi-Cola Company, resulting
in the formation of PepsiCo. Since that time, Frito-Lay has operated as a wholly owned subsidiary
of PepsiCo. Through Frito-Lay, PepsiCo is the largest globally distributed snack food company,
with sales of its products in 2009 comprising 40 percent of all "savory snacks" sold in the United
States, and 30 percent of the non-U.S. market. In 2018, Frito-Lay North America accounted for 25
percent of PepsiCo's annual sales.

Reference https://www.fritolay.com/get-to-know-us/company

1.3 HISTORY

Native American chef George Crum invented potato chips in 1853 while working in a New York
hotel. The snack food became popular during the1920s following the mechanical potato peeler. As
distribution increased, a number of small companies began manufacturing and selling the product.
In 1932 salesman Herman W. Lay opened a snack food operation in Nashville, Tennessee and, in
1938; he purchased the Atlanta, Georgia potato chip manufacturer "Barrett Food Company,"
renaming it "H.W. Lay & Company." Lay crisscrossed the southern United States selling the
product from the trunk of his car. In 1942, Lay introduced the first continuous potato processor,
resulting in the first large-scale production of the product. The business shortened its name to "the
Lay's Company" in 1944 and became the first snack food manufacturer to purchase television
commercials, with Bert Lahr as a celebrity spokesman. His signature line, "so crisp you can hear
the freshness," became the chips' first slogan along with "de-Lay-sious!" As the popular
commercials aired duringthe1950s, Lay’s went national in its marketing and was soon supplying
product throughout the United States. In 1961, the Frito Company founded by Elmer Doolin and
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Lay's merged to form Frito-Lay Inc., a snack food giant with combined sales of over $127 million
annually, the largest of any manufacturer. Shortly thereafter, Lays introduced its best-known
slogan "batcha you can't eat just one." Sales of the chips became international, with marketing
assisted by a number of celebrity endorsers. In 1965, Frito-Lay merged with the Pepsi Cola
Company to form PepsiCo, Inc. and a barbecue version of the chips appeared on grocery shelves.
A new formulation of chip was introduced in 1991 that was crisper and kept fresher longer. Shortly
thereafter, the company introduced the "Wavy Lays" products to grocery shelves. In the mid to
late 1990s, Lay's modified its barbecue chips formula and rebranded it as "K.C. Masterpiece,
“named after a popular sauce, and introduced a lower calorie baked version and a variety that was
completely fat-free (Lay's WOW chips containing the fat substitute olestra).In the 2000s, kettle
cooked brands appeared as did a processed version called Lay’s Stax that was intended to compete
with Pringles, and the company began introducing a variety of additional flavor variations. Frito-
Lay products presently control 55% of the United States salty foods marketplace.

Reference : https://en.wikipedia.org/wiki/Lay%27s

Chapter 2

PEPSICO
To perform with PepsiCo's purpose is to deliver high-level financial performance by improving
the products we sell and acting responsibly to protect our planet and empower people around the
world. There are over 260,000 PepsiCo employees around the world. Consumers enjoy PepsiCo
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products more than a billion times a day. Its products are sold in more than 200 countries and
regions around the world. PepsiCo has a portfolio of $ 22 billion worth of brands, which has
earned over $ 1 billion each annually

2.1 PepsiCo Sustainability Vision

PepsiCo's duty is to persistently improve all parts of the world where we work nature, the social,
the monetary - making a superior tomorrow than today "

PepsiCo makes delicious foods and drinks - from delicious foods to nutritious foods. They are
committed to a business approach that not only generates high-level financial returns, but also
responds to the needs of more than 200 countries and regions serving them around the world.
This commitment - reflected in a philosophy that has been defined as "performance with
purpose" - involves expanding its nutritious product portfolio, reducing its environmental
footprint as a good global citizen and working to raise people and families by expanding
opportunities to provide relief in times of need. They also strive to promote sustainability and
profitability side by side - and they believe that in the twenty-first century, this is more important
than ever

2.2 PERFORMANCE WITH PURPOSE

We are committed to delivering top-tier performance while being responsive to the needs of the
more than 200 countries and territories we serve around the world.

That commitment — what we call Performance with Purpose — is about expanding our portfolio
of more nutritious products, with the aim of shrinking our environmental footprint as a good
global citizen and working to lift up people and families, from widening the circle of opportunity
to providing relief in times of need.”

2.3 Goals

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Performance efforts aim to deliver first-class performance while responding to world needs.
Through their 2025 agenda, they are making progress in achieving their goals, which aim to
achieve change in the company, the value chain, the industry and the world.

2.4 Mission Statement

As the world's leading consumer products company focused on food and beverage
comfort, they continue to strive to generate healthy financial rewards for investors, providing
opportunities for growth and enrichment for their employees, business partners and communities.

In addition, in everything they do, they strive For honesty, integrity and integrity.

Ruffles chips comprise Ruffles Classic Hot Wings and Ruffles All Dressed

Tostitos tortilla chips comprise, Tostitos original and Tostitos Bite Size

Walker’s potato chips

Rold Gold pretzels comprise, Rold Gold Tiny Twists and Rold gold Crunch Clusters

2.5 Vision Statement

To make a number one potable company in Pakistan, delighting shoppers by meeting their
everyday potable desires, and stakeholders, by delivering performance with purpose, through our
gifted folks.

2.6 Objectives

Consumer Targeting. Frito-Lay attracts consumers through extensive advertising targeted to

specific groups

Product Adaptation:

Companies must be adaptable to suit the changing tastes of their consumers.

Market Penetration

Overcoming barriers.
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2.7 Products
Through product goals, they continue to improve their food and beverage choices to meet the
changing needs of consumers by reducing added sugars, saturated fats and salt, by developing a
wider range of product choices, and reaching underserved communities and consumers.

Every day around the world, millions of people enjoy snacks. In PepsiCo, the global scale means
that small changes can make a big difference. As a result, they innovate to reduce the added
sugars, sodium and saturated fats in many of their products and make them more nutritious in
response to changing consumer preferences. The goals for their products are informed by and
aligned to the UN’s “Good Health and Well-being” and “Zero Hunger” Sustainable
Development Goals.

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 Chapter 3

Brands of PepsiCo
The PepsiCo product mix, from 2015 (based on net revenue worldwide) , is 53 percent of foods
and 47 percent of beverages. On a global basis, the company's current product lines include
hundreds of brands estimated in 2009 to have generated about $ 108 billion of cumulative annual
retail sales.

The main identifier of the main brand of the food and beverage industry is the annual sales of
more than one billion dollars. As of 2015, PepsiCo has achieved 22 brands for this brand,
including:

3.1 All brands of PEPSICO

 Pepsi  Aquafina

 Diet Pepsi  Naked

 Mountain Dew  Kevita

 Lay's  Propel

 Gatorade  Sobe

 Tropicana  H2oh

 7 Up  Sabra

 Doritos  Starbucks (ready to Drink Beverages)

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  Brisk  Pepsi Max

 Quaker Foods  Tostitos

 Cheetos  Mist Twist

 Mirinda  Fritos

 Ruffles  Walkers

3.2 Environment

Helping to create a more fit relationship among human beings and food includes shielding the
environment and locating sustainable approaches to provide more food..

PepsiCo's development and achievement relies upon the accessibility of the common assets
expected to make their items. Agriculture uses the vast majority of the world's available fresh
water at the same time that water availability is becoming increasingly limited. As the world's

16
population grows, the demand for water and energy will also increase. Leading global
organizations expect that greenhouse gas (GHG) emissions will also increase in the coming
years, further accelerating climate change and putting crops at potential increased risk.

PepsiCo will keep on attempting to diminish their effect on the planet.

3.3 People

Economic well-being and respect for human rights are essential to a healthier relationship
between people and food.

Today, hundreds of millions of people live in poverty, and significant economic disparities and
gender inequalities persist around the world. As addressed in the UN Sustainable Development
Goals, unemployment, particularly among youth, also remains a key global economic challenge.
At the same time, employees' technical skills do not currently match employers' needs. In the
agricultural sector, which employs one in three of the world's workers – over half of whom are
women in some countries – working conditions remain difficult and incomes low.

3.4 Nutritional information

As a snack, the Lay's brands contain only a few vitamins and minerals in any selection.
At ten percent of the daily requirement per serving, vitamin C is the highest. Salt content is
especially high, with a serving containing the maximum amount as 380 mg of salt. A one
ounce(28gram) serving of Lay's regular potato chips has 130 calories and contains 10 grams of
fat, with 3 grams of saturated fat.
Kettle toasted brands have seven to eight grams of fat and one gram of saturated fat.
Lays Natural has 9 grams of fat, 2 grams of saturated fat and a hundred and fifty calories.
Stax typically contain ten grams of fat, 2.5 grams saturated fat and are 160 calories per serving.
Waylays are identical to the regular brand except for a half-gram less of saturated fat in some
combinations. The various brands don't contain any trans fats. The baked selection feature 5
grams of fat per one ounce serving, and have no saturated fat. Each serving has 110 to 120
calories.

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Lay's lightweight servings area unit seventy five calories per ounce and don't have any fat.
Lays Classic Potato chips area unit toasted in 100 percent pure sunflower-seed oil (originally
change oil till January first, 2007). A one ounce serving has 150 calories, 90 of which are from
fat, 10 grams of fat, and 1 gram of saturated fat. They have several flavors within the baked lays
likewise. Baked lays made in cheddar cheese, barbecue, and original.

3.5 Bag of Lays Baked Chips

Nutrition Facts
Serving size 1 package
Amount Per Serving
Calories 160 Calories from Fat 90
% Daily Value

Total Fat 109 16% 16%

Saturated Fat 1.5g 8%
Trans Fat 0g
Cholesterol 0mg 0%
Sodium 170mg 7%
Potassium 350mg 10%
Total Carbohydrate 15g 5%
Dietary Fiber 1g 5%
Sugars than 1g
Protein 2g
Vitamin A 0% • Vitamin C 10%
Calcium 0% • Iron 2%
Vitamin E 6% • Thiamin 4%
Niacin 6% • Vitamin B6 10%
Magnesium 4% • Zinc 2%
Percentage daily values are based on 2000 calories
diet. Your daily values may be higher or lower
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 depending on your daily needs:
calories 2000 2500
Total fat Less than 65g 80g
Sat fat Less than 20g 80g
cholesterol less than 300mg 300mg
Sodium Less than 2400mg 2400mg
Total 300g 375g
carbohydrate
Dietary fiber 25g 30g
Calories per gram
Fat 9. carbohydrate 4. protein 4.

3.6 Slogans

•That's another reason to smile! Lay's Potato Chips (2006)

•Food for the fun of it! (2008)

•Lay's, get your smile on! (2006)

•Lay's. Want some?

• Betcha can’t eat just one (1960s-present)

•Lays ka maza lo (Lay's Pakistan) meaning-Have fun with Lay's

•You can't eat just one.... Lage bet!

•Har program ka main food (Lay's Pakistan) meaning- The main food for every program

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3.7 Flavors

Everybody realizes lobster rolls are related with Maine and profound dish pizza calls its home
Chicago, however what happens when those flavors go into a potato chip?

Frito-Lay has propelled eight new provincially enlivened flavors under its Lay's brand.

The Tastes of America seasoned chip lineup incorporates Cajun spice; Chile con queso; crab
spice; deep dish pizza; fried pickles with ranch; lobster roll; pimento cheese; and Thai sweet
chili.

Each flavor was picked dependent on customer criticism in various districts, said Tina Mahal,
ranking executive of showcasing at Frito-Lays.

 Lays Barbecue Flavored Potato Chips

 Lays Chile Limon Flavored Potato Chips
 Lays Deli style original Potato Chips
 Lays Classic Potato chips
 Lays Cheddar & Sour Cream Flavored Potato Chips
 Lays Wavy milk Chocolate Covered Potato Chips
 Lays Wavy Ranch Flavored Potato Chips
 Lays Wavy Cheddar Flavored Potato Chips
 Lays STAX Xtra Flaming ’Hot Flavored Potato Chips
 Lays STAX Sour Cream & Onion Flavored Potato Chips
 Lays Dill Pickle Flavored Potato Chips
 Lays Flaming’ Hot Flavored Potato Chips
 Lays Honey Barbecue Flavored Potato Chips
 Lays Lightly Salted Potato Chips
 Lays Limon Flavored Potato Chips
 Lays Pico de Gallo Flavored Potato Chips
 Lays Salt and Vinegar Flavored Potato Chips

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 Lays Southern Biscuits and Gravy Flavored Potato Chips
 Lays Kettle Cooked Jalapeno Flavored Potato Chips

They have flavors in the baked lays also. Baked lays include cheddar, barbecue, and original
flavors.

Chapter 4

Marketing strategy in Pakistan

The food sector in Pakistan is changing dramatically with changing lifestyles and traditional
eating habits. Retail sales of processed foods are expanding. Demand for international high-
quality snacks is increasing, particularly among educated, middle- and high-income urban
consumers due to changing lifestyles, changes in consumer taste, the impact of foreign media,

21
and increased awareness. Other factors influencing demand are population growth, rising
incomes and improving living standards. The ad also helps stimulate demand for potato snacks.
The only major factor currently affecting the Crisps and Savory Snacks market is the public's
tendency towards health issues.

Pakistan is experiencing an annual growth rate of 20-30% per year. Children, adolescents and
young people represent the target market for this product, and given the changing eating habits of
the target market, the tendency is more towards eating snacks. Potato and sorghum meals were
described as an alternative to meals and light snacks became popular.

Lays has been the largest company in this sector since its entry into the market in 2007. By
offering innovative, innovative and world-class flavored potato flakes, Lays has become a
growth catalyst for the natural potato chip category.

The following are the main producers of potato chips in Pakistan:

4.1 Brands in Pakistan

Chaat street :

Lays Dahi Baray & Mint Cutney

Lays yogurt and herb

Lays Wavy

Lays masala

Lays salted

Lays French cheese

Other chips competitors in Pakistan

 Oye Hoye by United Snacks

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 Kolson by Consolidate
 Krincles by Trading Enterprises
 Golden Chips by Standard Foods (Pvt.) Limited
 Super Crisps by Tripple EM (Pvt.) Limited
 Smiths by Kohinoor Smith (Pvt.) Limited

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 Chapter 5

PEST ANALYSIS OF PEPSICO

5.1 Political Factors

PepsiCo is non alcoholic drink and needs to pursue managed by FDA with consistency. Also it
deals in different markets and every market has its own policies and procedures are either stringent
or either relaxed. Particularly, cross border situations are unalike and Pepsi has to make adaptations
accordingly.

PepsiCo's competitors use competitive pricing strategy and Perisic has to always keep this in mind.

PepsiCo has to al. deal with government's focus on sMcter water pollution norms and land
acquisition for new factories in different countries.

5.2 Economic Factors

Usually whenever there is an economic downturn faced by the economy. Companies deals are
seriously influenced and they need to rebuild their procedures. Also due to declining of profits
companies sometimes have to undergo downsizing. Economic structure has a huge effect on any
business. The economic in 2008 was in Pepsi's favor. It resulted in increased sales of its beverages
as people were jobless and were sitting at home, spending more time with family and friends.

Employment availability is another very important economic factor. While in some countries
labors are very expensive and if they are inexpensive they are not properly trained.

5.3 Social Factors

24
Social factors greatly affect Pepsi, as it's a non-alcoholic beverage that deals worldwide it has
kept in mind strict differences of cultures the worldwide. Mostly, the social implications are seen
in advertising campaigns like some countries have religious festivals. So Pepsi has to keep in line
with all these festivals and design advising campaign accordingly to cash upon the opportunity to
the fullest.

The solid waste management program affects the operations at Pepsi. Pepsi has to be extra
careful when it comes to waste disposable in order to maintain its image of a socially
responsible.

PepsiCo operates almost in every country. Pepsi introduced plastic bottles and cans and
developed innovative and innovative designs.

5.4 Technology

With the new technologies coming in, companies have changed their strategies and operations
accordingly. A recent trend that has been seen and something that almost every company is
inclining toward is Social Media

The social media outburst has led to progressively interactive engagement with the buyers with
continuous comes about so Pepsi has to be aware of all the development that take place with
keeping in mind the increased use of technology by youth for their benefit how can PepsiCo use
this to maintain and increase its customer's loyalty.

Chapter 6

SWOT Analysis of Lay’s

Lay’s is a multi-billion-dollar brand from the armory of PepsiCo. Lays is a brand of 80-year-old
potato chips that has gained credibility and popularity around the world. Lay’s is particularly
famous for its advertising commercials which have created a distinct identity for the brand.
25
6.1 Strengths
Strong Brand Name: Lay’s has been able to create a strong brand name itself with popular
advertisements and celebrity associations. Lay’s is an 80-year-old brand and it has gained
credibility and trust around the world. In the potato chips segment, Lay’s is one of the most popular
brands around the world.

Strong Global Presence: Lay’s drives on PepsiCo’s global presence and is present in over 100
countries and has a strong presence in the Americas, Europe, Asia-Pacific, Middle East and Africa.
The strong global presence has helped in building a multi-billion-dollar company. In SWOT
Analysis of Lay’s one of the strongest points is distribution.

Strong Distribution Network: Lay’s has an advantage in terms of distribution since it drives on
PepsiCo’s distribution system, which is one of the strongest in the world. The strong distribution
allows Lay’s to be available and accessible and to have a large customer base.

PepsiCo as a parent company: Lay’s has a competitive advantage being a brand from the armory
of PepsiCo. PepsiCo is one of the largest FMCG companies in the world and thus managing capital
and high investment for a brand is possible for the company.

Good Positioning: Lay’s has made sure it reinvents itself as per the choices of its target group
and has positioned itself well amongst the youth. Through its advertisement campaigns, it has
positioned itself as an evening or party time snack which attracts its target base.

1. Almost all income level especially below 5000 and even above 10000 can buy and
consume LAY’S.

2. Brand conscious people like it most.

3. LAY’S being the multinational company having the huge investment spending massive
amount on advertising campaigns to aware the customer towards LAY’S

4. People are comfortable with the Price of LAY’S.

5. Placement is becoming a plus point it means company is emphasizing on its distribution

and placement strategies.

26
 6. LAY’S chips have a strong brand image at their back like Lay’s and also PEPSI
International.

7. LAY’S is the blend of maximum satisfaction at minimum price that’s why customers are
much satisfied by LAY’S chips. We can say it that

Value = Satisfaction

8. LAY’S chip is such kind of product which has no any restriction of age or gender.

9. LAY’S being a new product in snacks which is also useful for health-conscious people
because it is made of grains (wheat, rice and many others).

10. LAY’S chip is such type of snacks which is always ready to consume.

11. They also give incentives to retailers

12. Human Capital is the main strength of LAY’S.

6.2 Weaknesses

High-calorie content: Lay’s has been tagged as a product with high-calorie content considering
its constituents, especially potato wafers which include high fat and cholesterol.

Less localized flavors: Lay’s has focused on its successful global flavors around the world and
has not introduced many local flavors. This proves to be a disadvantage when compared to other
local competitors.

Brand Cannibalization: Lay’s also has to compete with other PepsiCo brands worldwide such as
Doritos, Cheetos, Fritos and Kurkure etc. This creates a dent in market share of Lay’s.Labelled as
“Nothing More than Chips”: Lay’s is positioned as a tea-time/party-time snack and thus it is
considered as nothing more than chips, this leaves a market which is looking for a part time meal.

Air in packets: It is the brunt of all jokes that there is a lot of air in a packet of Chips. Although
there is scientific reasoning for the same, Lays, being one of the most famous brands around, has
seen most of the jokes played with the background being the packet of Lays chips.

1. Facing the enormous competitors prevailing in the market.

27
2. Competitors like Kolson and Triple M are investing heavily in branding.

3. Although they are trying to make their efforts best to make their supply excellent but still they
are not reached to the rural areas of Pakistan.

4. In some areas like Highways (especially on Motorway) and other areas exist in Pakistan where
LAY’S still cannot control to fulfill their demands and also where the products of competitors
are present.

5. Elite class of your society are not consuming too much as compared to the middle and others
due to the price as we can say the status problem

6. At that time LAY’S only offering four flavors.

7. LAY’S are not providing any extra facility or benefit to the customer.

6.3 Opportunities
Increasing Disposable income: Disposable income of people in emerging nations is increasing
quickly and thus it will have a positive impact on demand for food and beverages. Lays can take
advantage of this situation with its strong distribution channel.

Rural Penetration: Rural market in countries like India, Pakistan and other emerging nations can
be explored more by Lay’s which can increase its customer base and revenues.

New Localized Flavors: Taking the queue from Kurkure, one of PepsiCo’s brands, Lay’s should
also look to bring out localized flavors which can attract a number of people and thus can increase
sales.

Brand Extensions: Lay’s is a very popular brand and thus PepsiCo can look out to extend the
same brand with other snack related products. This will help enhance customer base and increase
revenues.

1. Supply of this product in the remote areas of Pakistan.

2. Improvement in its Quality as there is always room for the improvements in anything.

3. Addition of new local flavors helps a lot to sustain in the market.

4. Sponsoring major events and festivals for huge awareness campaigns.

28
5. Try to make supply in all the areas where the other competitors are existing already.

6. Design such strategies and advance planning to become the market leader in the smallest span
of time.

7. Provide family and economy package to serve large families that cost you also less expensive
and eventually accepted by the consumer

8. Try to serve the elite class according to their status and requirement.

9. Make advertisement in suburban and rural areas and give incentives to the shop personals so
that also motivate towards it.

10. LAY’S has an opportunity to introduce a less spicy or light flavor to increase their consumer
ship and target market.

6.4 Threats
The abundance of Local substitutes: Local substitutes of Lay’s are present in abundance in all
market. These local products are according to the tastes of the market and thus give high
competition to branded products like Lay’s. In India itself, there is Balaji and Diamond which are
strong competitors.

Increasing health awareness: Health awareness is increasing amongst the target group, which is
a threat to the brand as people are moving away from high-calorie products to healthy products.

1. Competitors like kolson and Tripple M are the biggest threats to our product.

2. Indirect competitors are also contributing in the same way.

3. BUSCUITS and NIMKO hold major share of Market.

4. New entrants can also the threat for the LAY’S chips and may create hurdles in the growth.

5. Small companies that are not a problem at that time may become the main competitors or
threats to LAY’S chips.

6. On arrival of LAY’S Kolson introduced a new flavor in their brand Shanty which may divert
the attention of consumer towards them from LAY’S chips.

7. There are many substitutions in the case of snacks which is the great threat for LAY’S chips.
29
8. People usually like variety in flavors which is the upcoming threat to the LAY’S because they
have only four flavors.

9. Govt. policies might have an affect on the growth of the lay’s chips.

10. Oye hoye is a big threat for lays.

Chapter 7

MARKETING STRATEGY AND FOUR PEES

7.1 Products in Marketing Mix of Lays

LAY is presented as an extruded item in the snacks category of the market for consumption and
meets the needs and needs of the consumer.

LAY’S Target Markets

LAY'S is a type of product designed for the South Asia region and especially the sub-continent
(Pakistan and India) where people like hot foods and snacks including urban areas and their
suburbs.

LAY is not concerned with any religion, race, job, family cycle or sex, and has a target market in
each social class. The main part concerned is young people who have experienced high
consumption of products. But they also target families, as they understand this factor of influence
in this region.

With the exception of lower classes in our society, each social class has an appropriate income
level for the company.

30
LAY'S usually consume intermittently, providing better quality at an economical price as well as
convenience for consumption. We focus deeply on non-users, potential users and first-time users
in the standby phase who are not aware, interested, interested and intend to purchase. LAY'S
expects positive response from customers.

Levels of Products

For all products there are three levels of product.

1. Core Benefit
Before presenting the brand, LAY'S conducts various surveys to identify the consumer
about features, design and quality. The public wants to buy potato chips to remove their
hunger with a little taste and unique taste. But most of them are not prepared to
compromise on quality. In fact, there is no essential need for snacks, but they play a vital
role in meeting this need.

2. Actual product
After a full search, LAY'S transfers the core benefits to the actual product and offers
LAY chips that are unique in quality, flavor, taste and quantity. It fully meets people's
need.

3. Augmented Product
Since we know that LAY is a good convenience at the consumer level, they do not
provide any direct consumer services, i.e. after sales, user manuals, but they offer
retailers benefits in the form of more profits. Stands LAY'S

4. Consumer Product
Consumer products are those products that consumers buy or purchase for personal use or
consumption. Therefore, LAY is the consumer product because it is mainly used at the
end of the consumer.

5. Convenience Type of Product

Snacks in LAY are a kind of convenience product where consumer buying behavior is
frequent purchase, little planning, comparability and low price. LAY is believed to be a
broad distribution channel.
31
Product Attributes
1. Quality
Tracking LAY'S CHIPS The concept of Siemens (quality is when the customer returns
and does not conflict with our product) in terms of quality. They also do not neglect the
quality dimension (performance and matching) for consumer satisfaction.

2. Features
All features (such as condiments) and LAY'S properties are collected by the company
based on the consumer's need and desire.

3. Style & Design

Design and design matter a lot about product results and responsiveness. LAY'S Like the
product (inside packaging and outer file) features attractive design, attractive design and
attractive colors attracts customers a lot.
4. Branding
The Indian brand name came from the Indian word Kurkure / Kurkure meaning crisp or
crispy and to avoid anti-nationalism that decided to choose the color of its packaging.

 French Cheese
 Barbeque
 Masala
 Salted

At the moment, this brand is very familiar, so it captures everyone's mind as unique, quality and
delicious with LAY'S.

Market of LAY’S

As far as LAY'S is concerned, the market is about pure competition, but because of some factors,
lies in monopoly competition because each company imposes different prices according to its
quality and product features as well as market objective. Lies impose relatively high prices for
other prices in potato chips. If we talk about Pringles, they serve the elite class with quality and
32
style. That's why they get very high prices that do not approach any company that deals with
snacks.

7.2 Price in the Marketing Mix of Lays

Pricing strategy is a vital part of every company and as Frito Lay’s faces stiff competition in the
consumer market it has adopted a competitive pricing policy. Its prices are similar to those of its
competitors but it has taken special care to launch diversified variants and qualitative products to
attract its customers at same base prices.

Products are available in packets of diverse price range like Rupees 25, 20, 10 and 5 in
PAKISTAN. Frito Lay’s believes in economic pricing and hence its prices are very reasonable and
affordable. A person can easily purchase a packet whenever he/she feels like and this is the reason
that the company generates good revenues through high volumes.

Lays have adopted several pricing strategies to satisfy its price-conscious customers. Company’s
value-based prices are the reflection of its position as a brand with distinctive features like
effortless accessibility, easy affordability, great taste and high quality.

Lays remain wary of its competitors and have reserved competitive pricing plan to keep its product
prices at par with rival companies to maintain customer loyalty. It also uses a promotional pricing
plan at regular periods to increase its short-term sales volume. The company offers several
incentives like bulk deals, discounts and price packs. This helps in maximum sales in minimum
time and garners extra profits.

Pricing Strategies
The pricing strategy that follows LAY cannot be easily assessed, because the company has not
clearly stated which system. However, most companies including cost-tracking pricing. But the
company cannot follow one strategy directly because it is in the FMCG product market

Pricing based on competitors is affected with little impact of customer value.

It is already clear-cut between Kolson and Lays about their price strategy.

1. They have reached an agreement that their prices will remain unchanged.
33
2. They also decide the price of their packages. They also put their strategy on cost + price.

3. Cost includes:

• Man power

• Group machines

• Electricity

• Raw materials

• employees

Determining the right price is the most important thing, good performance. The price is
determined by taking into account the quality of the product and the prices offered by the
competitors.

Profit Maximization:
Pepsi priced its products to achieve a certain percentage of its sales revenue. You have set the
price of its products so you can reap net profits from its net sales.

Consumer Satisfaction

There is a balance in the mind of the consumer between the price paid and the quality of the
product they buy.

Affordable Price

Lays affordable price for middle income groups. The price is adjusted according to the product
request. When the Lays Jumbo package was launched, it was priced as high as Rs. 25 now
reduced by @ Rs.20, causing an increase in demand for the product.

7.3 Place in the Marketing Mix of Lays

Lays have gained international recognition and its products are easily available in most countries
of the world. Its founder started snack-food operations from Dorset in the United States and with
time expanded to include most global countries like Australia, Argentina, Brazil, Colombia, Egypt,
34
India, Indonesia, Italy, Mexico, Pakistan, UAE, Canada, United Kingdom and South Africa. Lays
have a strong distribution network that includes services of manufacturers, distributors, retailers
to reach consumers via corner shops, discount stores, convenience stores, hypermarket and
supermarket.

Frito Lay’s has spread its network in nearly forty countries in the world. Frito Lay’s products are
diversified in two categories, one for North America and other to suit the needs of places outside
North America.

Its headquarters base is in Plano in the United States and it serves places in North America through
its extensive distribution network that includes fifty-five manufacturing plants, one thousand eight
hundred and thirty centers for distribution, regional offices and several warehouses.
Its operations are also spread in South and Central America, Europe, Africa, Middle-East and Asia.

7.4 Promotions in the Marketing Mix of Lays

Lays are one on of the companies who realized the importance of advertising at its onset. In the
year 1944, it bought television commercials and appointed Bert Lahr as its celebrity spokesman
and became the first manufacturer of snack-food items to do so. Currently, it has utilized every
possible advertising tool to create brand visibility. Its ads are funny and attractive with catchy
taglines. Ads are shown in popular television channels, radio, magazines, newspapers, hoardings
at popular places and on sides of several vehicles like bus, tram and auto-rickshaws.

In order to move with changing times, it has started campaigning in social media portals via
Twitter, Facebook, Blogs and YouTube. Lays have realized the importance of celebrity
endorsement and have roped in several famous personalities to act in its ad campaigns. In India
actors Ranbir Kapoor and Saif Ali Khan along with cricketer Mahendra Singh Dhoni endorse Lays.
In Pakistan, the product is endorsed by Ali Zafar, pop star. Several popular taglines are associated
with lays like betcha can’t eat just one and be a little dialogical.

1. Advertising:

Lays advertises through various channels

35
 Media (Fm media, TV channels, Internet links etc.)
 News Papers & Magazines
 Billboards & Banners
 Sponsoring various Shows and Matches
 Free samples
2. Sales Promotion:

Lays made sale promotion in the following ways:

 By launching any new product like Aquafina, they get sale promotion in their business.
 When Lays was released, they introduced a promotion "Buy two , Get One Free".
 When Mountain Dew was launched, they offered free drinks to people to develop the taste.
 They have a deal with KFC and Pizza Hut where they offer drinks to their customers.
 They decrease their prices to increase the sales to capture the market.
 They also decrease their prices in winter too.

Chapter 8

NATURE OF THE BUSINESS

There exist two types of snacks. Extruded and Potato Chips.

“KURKURE” belongs to extruded products and it comes under FMCG Products

(fast moving consumer goods).

8.1 Key Objectives

Like all businesses, the primary goal of LAY'S is to be prosperous and earn more. But this is
possible only when the company understands the market environment, where:
36
1. Different types of customers in this area who consider low price but still wish to get high
quality.
2. Competition is currently weak for a multinational company with regard to quality with price.
3. The handsome share of the market is still vacant.
4. Company profit direction by mass production and cost reduction.
5. Powerful distribution channels are useful in distribution and sales quickly and can generate
high turnover.

8.1.1 Therefore, they pursue following objectives

1. Produce high quality products at affordable prices.
2. Facilitating the largest possible share of the market.
3. Customer satisfaction is the top priority.
4. Get a strong distribution channel so that the product is provided on the shelf.

8.2 Level and Type of Competition

Their competition strategies depend on the competitor's strategy. They do not follow a competitive
price war strategy. They track product level and quality in competition. Their competition type is
oligopolistic.

Competitors
One can not imagine working without competition. Also puts some competitors. The main threats
facing Lays are Pringles, Kolson, Golden and Tripple Em, which own about 45% of the market
share. But since product quality plays an important role, it does not live up to competitors. So, the
Lays is wonderful in all ways for competitors such as quality, quantity, price and variety of
products etc.

Competitors’ Products & Activities

i. Competitors' products are sold on the market but their product availability is not good. The
only reason for their existence is credit facilities and high margins.
ii. Niralla

37
 iii. Smith
iv. Bunny
v. Sherry
vi. Sadiq Dry Fruit
vii. PACE (Rancher)
viii. Golden
ix. Pak Food (Maxo)

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Lays Kolson Golden Smith Tripple Others
45% 15% 8% 5% Em 15% 12%

percentages:

Lays 45%

Kolson 15%

Golden 8%

Smit 5%

Tripple Em 15%

Others 12%

38
 Chapter 9

MARKETING ENVIRONMENT

39
9.1 MICROENVIRONMENT
Research & Development
The company has established its own factory in Plot No. 413, Sondar Industrial Estate, Raiwind
Road, Lahore. Its work and effectiveness are under study. Experts are present to watch and
control machinery as well as production unit. It also ensures that their production meets the
requirements in a timely manner. Experts make sure they produce high quality products.
Production
The company imported KURKURE from China and Lys Chips from Saudi Arabia through its
supplier Saudi Snack Food. The company started production at its new plant on Raiwind Lahore
Road on August 14, 2006. This improves the company's performance. The time period for
product import is eliminated. Raw materials can be available in the domestic market, which
reduces the budget of raw materials. The period of time from production to distribution will be
reduced and efficiency will be enhanced.
Suppliers
The company imported Lays from Saudi Arabia as of June 1, 2005 through its supplier "Saudi
Snack Food" and has a strong bond with them but now LAY'S CHIP'S are produced in Pakistan.

Marketing Intermediaries
To carry out a variety of functions necessary to deliver the product to end customers, there is one
major distributor, Shahbaz Brothers in Pakistan.

Brothers Shahbaz have the maximum goal and maximum margin is 14% are the main
distributors covering them in the region of Gulberg, Defense, Can not, Sadar, Taj Bagh, Taj Pura
and Jalo ect.

Purchase order to Main Depot, located at Gulberg II, Pepsi office is weekly, and within 48 hours,
supplies from Main Depot reach Depot distributors from where they are distributed to different
retailers. Distributors cover 70 to 100 stores a day to achieve their goal at the end of the month.
For distribution available vehicles are trucks, Suzuki and Shahzors (only for Shahbaz Brothers).

40
Customers
The company's strategic focus or marketing plan is that it targets young people, girls and
housewives (opinion leaders).

The company needs to study five types of customers such as consumers, business, distributors,
and international government. But in the case of ordinary consumers only.

Public
All public groups have an impact on ordinary people, the banks from which they got loans, and
the advertising agencies that ran their advertising campaigns. Will also because they have a
chance to collect taxes and also employees because they have to earn from this.

9.2 MACRO ENVIRONMENT

Demographic
Does not specifically care about any religion, race, job, family or sex life cycle and has a target
market in each social group. The main part concerned is girls, housewives and young people.
Who suffered from high consumption of products? But they also target families, as they
understand this factor of influence in this region.

Economic
All categories of income are favorable to Lai's business, although these are not working class
(workers).

Increased government intervention (political)

"KURKURE" is a legally registered company and applies labor laws and market laws in
Pakistan. But it is known to them that government interaction has taken on great importance in
every business, and if there are some restrictions on it, it may be an obstacle to their success. For
this reason, some harsh government rules may have an adverse effect on the company's goals and
achievements in the future.

Natural
It is an emulsified substance, made of vegetables, although it is natural resources but still
harmless to nature. There is a rare opportunity for a shortage of raw materials in this case.

41
Cultural
Lay's is not a product that can be affected by changes in culture and traditions (primary and
secondary). Infects, and is based on the culture of South Asia (Sub-Continent) and Pakistan

Technological
Lai is the product of PEPSI International and has a good reputation in the international market
and already uses modern technology to improve production and quality.

Marketing Objective
The company has a very clear perception of the target market and is described as follows:

• The Company wishes to obtain as many shares as possible so that the Company increases its
market share.

• Attracting customers towards the product is very important and without these phenomena the
company can not achieve its objectives.

A strong distribution channel is the most important element and is more needed when the need
increases, so the company should also focus on it and give it certain advantages as well as
retailers.

• Profit maximization is always the previous benchmarks for each company for this purpose they
reduce the cost of production to enhance the company's sales.

Chapter 10

Inside PepsiCo’s snacks strategy

42
PURCHASE, N.Y. — The secret to Frito-Lay’s success in the competitive snack market is its
versatility, said Indra Nooyi, chairman and chief executive officer of PepsiCo, Inc.

“The overall macro snacking category is probably growing

somewhere in the 3% to 4% (range), and the reason Frito does as
well as it does is because it takes occasions from all other macro
snacking categories,” Ms. Nooyi said during a Feb. 10 earnings call
with financial analysts. “Frito is able to go after crackers, able to go
after sweet occasions through interesting products that comes from
a salty heritage. We have a frying platform, we have a baking
platform, different sort of baking platforms. And we leverage those
Indra Nooyi, chairman and platforms to go after all of those occasions.”
c.e.o. of PepsiCo
With a broad portfolio that includes such brands as Cheetos,
Doritos, Lay’s, Cracker Jack, Rold Gold and Stacy’s, Frito-Lay follows a simple strategy of “grow
the core and add more,” Ms. Nooyi said.

“We’re looking at the demand of consumers and wondering how we can serve that demand with a
Frito-Lay option,” she said. “And whether it’s Cheetos, Fritos or it’s the chocolate-covered Lay’s
that we offered or all the new products on slate for next year, I think we’re just going after other
macro snacking occasions. And that’s why other companies are hurting and Frito-Lay is doing so
well.
43
“And you combine that with our (direct-store delivery) system… we can really get tremendous
advantage with customers.”

The business unit also has benefited from the addition of smaller packaging options to increase
penetration in smaller household sizes.

“The objective was to get a package that smaller households would

find attractive as the primary promotional package,” said Hugh
Johnston, vice-chairman and chief financial officer. “In that regard,
the strategy has actually been quite successful, and I think gotten
our volume rebased in a good spot from the standpoint of how we’re
managing the Lay’s business.

“More broadly in terms of Frito-Lay performance, you saw 1%, 3%,

7% last year in terms of volume, revenue and profit. If you look at
Hugh Johnston, vice-
Frito’s performance over the last four or five years, it has been
chairman and c.f.o. of
remarkably consistent. Volume has been around 2%, revenue has
PepsiCo
been around 4%, and profit has been around 6%, plus or minus 1
point, for quite a few years. I think you can continue, even as we invest and make changes in Frito,
you can expect to see that type of performance going forward.”

For the fiscal year ended Dec. 26, 2015, net income attributable to PepsiCo was $5,452 million,
equal to $3.67 per share on the common stock, which was down 16% from $6,513 million, or
$4.27 per share, for the prior year. Net revenue for the year fell 5% to $63,056 million from
$66,683 million.

“I’m particularly pleased to note that we achieved these results in the face of a challenging macro
external environment,” Ms. Nooyi said. “Over my several decades in business I have never seen
this combination of sustained headwinds across most economies, combined with high volatility
across global financial markets.”

44
Productivity gains and lower commodity costs helped PepsiCo achieve fourth-quarter income of
$1,718 million, or $1.17 per share, up 31% from income of $1,311 million, or 87c per share, for
the comparable period. Net revenue declined 7% to $18,585 million from $19,948 million.

PepsiCo posted organic revenue growth of 4% for the quarter and 5% for the full year.

Operating profit for the Frito-Lay North America segment advanced 6% to $4,304 million for the
full year, driven by productivity gains and lower commodity costs that were partially offset by
operating cost inflation and higher marketing expense. Net revenue for the segment was $14,782
million for the year, up 2% from the prior year.

“Frito-Lay North America once again delivered consistent results, while continuing to transform
its package architecture in potato chips and its go-to-market system through further expansion of
the (global enterprise system) program,” Ms. Nooyi said.

45
Quaker Foods North America operating profit for the year declined 10%.

Quaker Foods North America operating profit for the year declined 10% to $560 million, and
revenue slipped 1% to $2,543 million. Weighing on results were impairment charges related to
PepsiCo’s dairy joint venture, operating cost inflation, higher marketing expense and the lapping
of a gain associated with the sale of a cereal business in the prior year. These factors were partially
offset by productivity gains, lower commodity costs and favorable product mix.

“Quaker Foods North America began a turnaround in 2015, delivering positive organic revenue
results for the first time in several years, and gaining value share across the breakfast categories of
hot and ready-to-eat cereal and Aunt Jemima syrup and mix,” Ms. Nooyi said.

For the North America Beverages segment, operating profit advanced 15% to $2,785 million for
the full year, as productivity gains and lower commodity costs offset operating cost inflation and
higher marketing expense. Sales increased 2% to $20,618 million.

For the North America Beverages segment, operating profit advanced 15%.

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“North American beverages had its best financial performance in recent memory, benefiting from
the continuation of improved industry pricing dynamics, a broad product portfolio and continued
positive innovation performance,” Ms. Nooyi said.

Performance in PepsiCo’s international markets reflected the positive impact of productivity gains
and, in some regions, lower commodity costs, which largely were offset by macroeconomic
challenges and the unfavorable impact of foreign currency exchange. Latin America posted an
operating loss of $206 million, which compared with profit of $1,636 million the year before, and
full-year sales of $8,228 million, down 13% from the year before. The Europe Sub-Saharan Africa
segment saw operating profit fall 22% to $1,081 million and full-year sales decline 22% to $10,510
million. Operating profit for the Asia, Middle East and North Africa segment for the full year fell
4.5% to $941 million as sales declined 4% to $6,375 million.

Looking ahead to 2016, executives expect to achieve organic revenue growth of approximately
4%, excluding the impact of the 53rd week, and growth in constant currency core earnings per
share of 8%, excluding the company’s deconsolidation of its Venezuela operations at the end of
the third quarter of fiscal 2015. The company also expects to generate approximately $1 billion in
productivity savings during the year.

10.1 Frito lays expending market and investment 2018

Frito-Lay is expanding several snack manufacturing plants in Indiana.

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Food and beverage giant PepsiCo will invest $159 million to expand two Frito-Lay snack
manufacturing plants in Frankfort, IN, adding 210,000 sq ft of space and new manufacturing
capabilities, the local officials announced in a press release.

The company plans to install two production lines for snack products and build additional
warehouse space at its Frankfort plants. About 50 new jobs will be created as a result of the
expansion project.

“Frito-Lay’s significant financial investment and desire to create more jobs are shining examples
of their continuing commitment to thrive and succeed here while strengthening our local economy
and enhancing our industrial workforce and their employees’ quality of life,” Frankfort Mayor
Chris McBarnes said in a statement.

In operation for more than three decades, the Frito-Lay plants in Frankfort have a combined
headcount of 1100 workers. The Indiana Economic Development Corporation (IDEC) is providing
$500,000 in conditional tax credits to the snack maker in connection with its plan to create new
positions at the facility.

3.2 Bestselling season Lay’s raised for Operation Smile

Lay’s Potato Chip bags use smile power to help kids in need

When consumers buy a bag of Lay's Potato Chips printed with smiling faces, PepsiCo will make
a donation to the Operation Smile charity.

PepsiCo’s Frito-Lay division is putting smiles on bags of Lay’s Potato Chips as part of its
limited-time “Smile with Lay’s” campaign. For each purchase of one of the specially designed
bags—which are printed with the smiles of real consumers—the brand is making a donation to
Operation Smile, an international charity that helps young people who need surgery to correct
cleft conditions.

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The packaging design, which incorporates a diverse assortment of smiling faces, rolled out
across the United States in February. Fourteen of Lay’s potato chip flavors are available in the
grin-inducing food packaging. Sizes include 2.88-oz (three-serving) and 10-oz family-size bags.

In addition to buying Lay’s Smile bags in-store, consumers can go online to order a bag of Lay’s
Classic Potato Chips printed with their own smile. Sarah Guzman, senior director of marketing,
Lay’s, answers some questions about the packaging and the campaign.

How did Lay’s decide how many different smiles to print on bags of the various flavors?

Guzman: The bags showcase 40 different smiles from real people across the country. Lay’s is on
a mission to spread smiles nationwide, so as part of the selection process, we tried to find a wide
variety of smiles that would bring the most smiles to others. Fans can also have their own smile
featured on a custom Lay’s bag by visiting the website.

Examples of smiling faces on bags of different flavors of potato chips.

How do you handle distribution?

Guzman: All 40 of our Lay’s Smile bags are available at retailers nationwide, wherever Lays are
sold, for a limited time: Feb. 12 through Apr. 7, 2018.

How will the bags communicate the campaign for Operation Smile? What other information
about this campaign is on the packaging, including the back of the bag?

Guzman: For every purchase of Lay’s specially designed bags, a donation will be made to
Operation Smile. Information about the donation is included on the back of the bag, in addition
to steps on how fans can get involved with the campaign.

How have consumers responded to Lay’s Smile bags?

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Guzman: Fans have had an overwhelmingly positive response to the Lay’s Smile bags, showing
their support on social media by sharing images with their bags using #SmileWithLays. By
engaging with our fans to play a significant role in supporting Operation Smile, we are creating
an inclusive and empowering environment for consumers to celebrate the power of a smile—
while at the same time giving a forever smile to children in need.

How much has Lay’s raised for Operation Smile?

At the end of the program, we will be donating a total of $1 million to Operation Smile.

Chapter 11

Study of Selected research Problem

In the snacks market, there are lots of snacks’ brands. Out of these snacks (Oye Hoye) is a new
entrant in the market, which has launched in a wide variety of flavors and formats, ranging from
potato chips to finger snacks. Because of its different and catchy advertisements Oye Hoye
(UNITED SNACKS) has created a buzz in the market. Therefore, our aim was to find out the
most popular flavors of Lays among all the offerings.

11.1 STATEMENT OF RESEARCH OBJECTIVES

The main objectives of our research were as follows:
1. To find out what percentage of population likes to eat snacks.
2. To find out which flavor of Lays is most preferred.
3. To analyze the reason for the popularity of the most preferred snack.
4. To know the satisfaction level of people who eat lays.
5. To find out how much people spend on snacks weekly.
6. To find out the preferences of people for different brands

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11.2 RESEARCH DESIGN & METHODOLOGY
In this research project we have used the survey method of data collection, to be more specific
questionnaire method. We conducted a survey in Lahore. We began our analysis by dividing
people into those who like to eat snacks and those who don’t. We based our study on the survey
of people who like to eat snacks. This survey was conducted in Lahore. To collect the data,
we designed questionnaire. Out of the university of 500 our sample size is 50. Respondents in the
sample size were asked to fill the questionnaires.

11.3 Conclusion

Nearly 90% of people like to eat snacks. I knew that people love to eat potato chips during the
evening. They also love branding on all other brands, but Lays has strong competition in the
market of Oye Hoye and many other brands. The most popular flavor of people is salted classic.
According to my survey, the maximum is sold in places where young people go more than
anywhere else, because the latter comes in food on the go, so it's easy to eat on the go.
The quality of lays has been constant over the years, attracting consumers to buy places. Nearly
60% of people consume puts on a frequent basis. The RS20 package is preferred by people. The
survey also shows that places are very popular among all age groups of people, from children to
the elderly or grandparents. There are many types of flavors available in the market, which
satisfy the consumer. Even if it lies in fast food people love to eat it. It also tries to provide
consumers with a healthier snack in the form of bread flakes that do not contain any amount of
oil or fat.

11.4 Findings

Lays makes a great addition to any portfolio; the non-cyclical nature combined with strong cash
flow provides the investor security and a sizeable/growing dividend. As Pakistan grows to full
force over the next decade the world will come to know, love, and buy many Lays products. Iconic
in nature, and international in reach, Lays brand look poised to grow and return value to
shareholders for years to come. If you believe in the brand above, Lays shares are for you.

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