Chip Dip

Alternative #1: Continue to Develop the Chip Dip Market

The first alternative suggested is for Frito-Lay to continue developing the chip dip market only, in an effort to expand the market and grow their market share. Currently, Frito-Lay offers a wide range of dip products. Where most dip competitors compete for shelf space near the salty snacks, Frito-Lay is already the major competitor in shelf-stable dips. Frito-Lay is then followed by regional manufacturers. In order for the dips to get into the shopping cart, it must be found in locations that make the purchase decision easier for the shopper. This can sometimes make dips more of an impulse buy. This is a noticeable advantage Frito-Lay has in their existing chip dip segment.

Research revealed that currently only 20% of chips were eaten with dips, and only 45% of all U.S. households used dips in 1985. However, research also indicated that 97% of all U.S. households used salty snacks. Because dips are a complimentary product and previous sales growth "occurred when [Frito-Lay's] dips were displayed in conjunction with a natural carrier" (124), it would suggest that Frito-Lay could capitalize on their current position in the salty snacks sections of supermarkets by pairing new or existing dips with some of their salty snack product lines. Since Frito-Lay's latest sales growth in dips was attributed to new products and it is not obvious that additional line extensions will create continued growth, Frito-Lay's could consider pairing existing dips with their salty snacks that have not been previously advertised or marketed in conjunction. Because their sour cream-based dips are already their most popular, this implies that the new sour cream-based french onion dip may be complimentary to one of Frito-Lay's existing chip products. The idea is to use the strengths of existing popular products to tap into those salty snack users who do not typically use dips.

In the past Frito-Lay