Research Methodology

Introduction

History: How it all began?

In 1932, C.E. Doolin entered a small San Antonio cafe and purchased a bag of corn chips. Little did he dream this savory chip would become one of the nation's most popular snacks.

Mr. Doolin learned that the manufacturer of the chips was eager to sell his small business, so he purchased the recipe, and began to sell FRITOS® Corn Chips from his Model T Ford.Meanwhile, that same year, Herman W. Lay began his potato chip business in Nashville by delivering snack foods. Not long after, Mr. Lay purchased the manufacturer, and the H.W. Lay & Company was formed.

The success of Frito-Lay is a tribute to two entrepreneurs' dreams.

H.W. Lay & Company became one of the largest snack food companies in the Southeast, and LAY'S® brand Potato Chips is still America's favorite potato chip.

Years later, in 1961, the Frito Company and the H.W. Lay company merged to become Frito-Lay, Inc. Today, Frito-Lay brands account for 59% of the U.S. snack chip industry.

These days, our founders' dream to be America's favorite snack food company continues to be fulfilled by more than 45,000 Frito-Lay employees in the United States and Canada who make, sell, and deliver a wide variety of fun and environmentally friendly foods for you to enjoy.

In the early 1980s, PepsiCo continued to grow its Frito-Lay brands in two ways—through international expansion and

acquisition. Through a joint-venture with Walkers, a UK chip and snack manufacturing company, Frito-Lay increased its distribution presence in Europe. Similar joint-ventures were arranged in other regions of the world in the 2000s, including Smith's in Australia, and Sabritas and Gamesa in Mexico. As a result of these international arrangements, some global Frito-Lay products (such as Doritos) are branded under the same name worldwide. Others maintain their original regional names. For example, Lay's chips are a similar product to Walkers Crisps in the UK and both share similar logo designs.

The Quaker Oats Company merged with PepsiCo in 2001, resulting in Quaker snacks products, including Chewy granola bars and Quaker rice cakes, becoming organized under the Frito-Lay North America operating division. This operating structure was short-lived, and in 2003, as part of a restructuring, the international operations of Frito-Lay (formerly Frito-Lay International) were brought within the PepsiCo International division, while Frito-Lay North America was maintained as its own division, comprising Frito-Lay business within the United States and Canada. Frito-Lay continued to experiment with changes to the composition of its products, introducing Reduced Fat Lay's and Cheetos in 2002. The "Baked" product line also expanded in 2002 to include Baked Doritos. In 2003, Frito-Lay introduced the first products in its "Natural" line, which were made with

ingredients that had been organically produced. The first of these included Organic Blue Corn Tostitos, Natural Lay's Potato Chips (seasoned with sea salt), and Natural Cheetos White Cheddar Puffs.

A new CEO, Irene Rosenfeld, was appointed in 2005. Under her management, Frito-Lay North America continued to expand its product lines with acquisitions such as Stacy's Pita Chip Company, which represented "Frito-Lay's desire to participate more broadly in the $90 billion macrosnack category", particularly involving snack foods made with more natural ingredients, according to reports from within its industry at that time. In 2010, Frito-Lay reformulated Lay's Kettle and Lay's flavored chips into a new variant labeled as being made with all-natural ingredients. Sales of Lay's potato chips grew by 8% following the change to all-natural ingredients. As a result, Frito-Lay announced in 2010 its plans to convert

approximately half of all Frito-Lay products, including Sun Chips, Tostitos, Fritos and Rold Gold pretzels, to all-natural ingredients in 2011.

Lay’s, the world’s largest and favourite snack food brand, has steadily established itself as an indispensable part of India’s snacking culture since its launch in 1995.With its irresistible taste, international and Indian flavours and youth-centric imagery, Lay’s has established itself as a youth brand and continues to grow in the hearts and mind of its consumers.Over the years, Lay’s has become known for its engaging and innovative promotions and campaigns. The brand

known for its ‘No one can eat just one’ campaign has moved its positioning to ‘What’s the programme?’ making Lay’s ‘the main food of every programme‘! Saif Ali Khan has been the face of the brand for over five years, and has recently been joined by the captain of the Indian cricket team M.S. Dhoni. Both embody the youthful energy and appeal of the brand.

In 2008, Lay’s launched the never-before ‘Fight for Your Flavour’ allowing consumers to vote for the flavour of their choice. The flavour with the maximum votes would continue in the market. The flavours have been

selected by the Lay’s brand ambassadors Saif Ali Khan and M.S. Dhoni with each celebrity rooting for the flavour of their choice.

In November 2008, Lay’s made yet another innovative breakthrough – the Chip-n-Sauce pack. This first-to-market pack has been launched for cricket lovers as they settle in their seats to savour the best sporting action of the season. The Lay’s Chip-n-Sauce large pack comes in two unique flavours – Chilli Chinese with a Schezwan Sauce sachet and Chatpata Indian with a Tamarind Sauce sachet inside the pack.

In June 2009, Lay’s launched its new positioning platform: ‘Lay’s – Be a Little Dillogical’. The new Dillogical concept makes an instant connect with youth caught between the desire to succeed and the desire to remain engaged with certain moments that offer a deep emotional fulfilment. This friction is like a game between the heart and the head, a struggle between what you want to do and what you have to do. It’s all about making things that matter to the heart, happen.

The new platform has been launched with a series of ads built around the universal consumer struggle between what the mind asks one to do and what the heart desires. A powerful 360 degree approach supports the new TVC, and has indeed prompted consumers to be a little Dillogical.

Lays International: World Wide Recognition!

The UK Lays is known as Walkers. Walkers products are distributed in the United States of America under the indigenous Lays label. Walkers flavors include Cheese & Onion, Ready Salted, Salt & Vinegar. Walkers also make Sensations-branded crisps in the UK. The logo for the British version is noticeably similar to the American brand, featuring a red ribbon around a yellow sun. The other Frito-Lay brands are also distributed through the Walkers label.

In the Benelux Lay's are sold in three varieties: Lay's, Lay's Light and Lay's Sensations (Thai Sweet Chilli/Red Paprika/Oven Roasted Chicken and Thyme). Lay's Super Chips (Heinz Ketchup/Mexican Pepper/Perfect Pickles/Salt 'n' Pepper (all through Delhaize) and Lay's Baked Chips (Mediterranean Herbs/through Delhaize). As with Doritos, Lay's are manufactured, distributed and imported in The Netherlands by Frito Lay's Benelux division, Smith's Food Group.

In Iran, Lay's products are distributed as Sensation by MAZ MAZ Company which is the Largest and fully armed by latest technology in the field of production of potato chips in the Middle East.

In India, Bollywood superstar Saif Ali Khan and Indian cricketer Mahendra Singh Dhoni endorse Lays.

In Argentina, Lays was commercialized before 2001 with the name Frenchitas and Chizitos for the Cheetos.

In Australia, PepsiCo acquired The Smith's Snack food Company in 1998 and marketed Frito-Lay products under that label, using the name Thins.

After Thins was sold to Snack Brands Australia (Owned by Arnotts), Smith's produced a line of potato chips under the Lay's brand for a brief period of time. The Lay's line was eventually

rebranded in 2004 as Smith's Crisps, while the traditional Smith's line was renamed Smith's Crinkles. This is still sold in Australia as a direct competitor to Smith's Crisps.

In Colombia, the chips are sold under the name Margarita. They are still commercialized under the label Lay's, however.

In Mexico, PepsiCo acquired Sabritas S. de R.L. in 1966. Lays along with other products such as Cheetos, Fritos, Doritos and Ruffles are marketed under the Sabritas brand. The logo for the Mexican company sports the red ribbon, but it has a stylized smiling face instead of the sun. It controls around 80% of the market there.

In Egypt, Lay's was once sold under its own label until it was merged with the local label Chipsy (شيبسى), which has since become the local unit of Lay's under much the same arrangement as Walkers.

In United Arab Emirates, Lay's and Walkers are sold as different labels.

In Pakistan, the Lays brand is endorsed by renowned pop star Ali Zafar. Lays has also introduced two new flavors 'Dahi Baray' and 'Mint

Chutney' in Pakistan with a campaign of 'Chaat Street'

In Israel, the Lay's label is distributed with the name Tapuchips ( יפס'תפוצ ) by Strauss-Elite.

In Brazil, products are distributed under the Elma Chips label.

In Vietnam, Lay's products are distributed as Poca.

From 2014, Lay's are distributed in Italy by Ferrero SpA

Nutritional Information

As with most snack foods, the Lay's brands contain very few vitamins and minerals in any variety. At ten percent of the daily requirement per serving, vitamin C is the highest. Salt content is particularly high, with a serving containing as much as 380 mg of sodium.

A one-ounce (28 gram) serving of Lay's regular potato chips has 160 Calories, and contains ten grams of fat, with one gram of saturated fat.

Kettle-cooked brands have seven to eight grams of fat and one gram of saturated fat, and are 140 Calories. Lays Natural has nine grams of fat, two grams of saturated fat and 150 Calories. Stax chips typically contain ten grams of fat, 2.5 grams saturated fat and are 160 calories per serving. Wavy Lays are identical to the regular brand, except for a half-gram less of saturated fat in some combinations. The various brands do not contain any trans fats.

A 50 gram serving of Lay's BarBQ chips contains 270 calories, and 17 grams of fat. It also contains 270 mg of sodium, and 15% Vitamin C.

The baked variety, introduced in the mid 90s, feature 1.5 grams of fat per one ounce serving, and have no saturated fat. Each serving has 110 to 120 Calories. Lay's Light servings are 75 Calories per ounce and have no fat.

Lay's Classic Potato chips were cooked in hydrogenated oil until 2003.[6] Currently, the chips are made with sunflower, corn and/or canola oil.

Baked Lays are produced in cheddar, barbecue, sour cream and onion, and original flavors.

Quality Standards

1. HACCP (Hazard Analysis and Critical Control Point).

2. Certification by TQCSI (Australia), which confirms that products are manufactured in a food safety environment and the manufacturing process has adequate controls to track products.

3. American Institute of Baking (USA), one of the best auditing bodies for confirming process and product safety.

4. Our Plants are ISO 14000 certified, which confirms that the manufacturing process ensures environmental safety.

5. Our plants are also certified to ensure that the safety of products, processes, environment and people is maintained at a very high level. This certification is issued by OHSAS 18001

(Occupational Health and Safety Assessment Series), USA.

The Production Process:

The production process begins on farms in select regions across India where the best potatoes are grown specifically for Frito-Lay. Upon the potatoes’ arrival at plants, it can take as little as 24 hours for the chips to be made. Lay’s chips are made using the following simple process:

Wash – the potatoes are thoroughly bathed in water.

Peel – next, we gently peel the skin off the potatoes, even as the flavour remains intact.

Slice – The potatoes are thinly sliced and rinsed again to remove any remaining starch.

Cook - The slices are cooked to a crispy crunch in edible vegetable oils.

Season – Finally, the chips are topped off with a mouth watering sprinkle of salt or seasoning

The potatoes have now become delicious chips and are packed and delivered to a store near you.

MARKET Analysis (1) : PLACE AND PRICE

The marketing mix is a business tool used in marketing and by marketers. The marketing mix is often crucial when determining a product or brand's offer, and is often associated with the four P's: price, product, promotion, and place. In service marketing, however, the four Ps are expanded to the seven P's  or eight P's to address the different nature of services.The concept is simple. Think about another common mix – a cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it. So for a sweet cake add more sugar!

It is the same with the marketing mix. The offer you make to your customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price.

Another way to think about the marketing mix is to use the image of an

artist’s palette. The marketer mixes the prime colours (mix elements) in different quantities to deliver a particular final colour. Every hand painted picture is original in some way, as is every marketing mix. Let’s look at the elements of the marketing mix in more detail.

PricePrice is the amount the consumer must exchange to receive the offering .

Solomon et al (2009).

The amount a customer pays for the product. The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as well. The marketer should set a price that

complements the other elements of the marketing mix.

The company’s goal in terms of price is really to reduce costs through improving manufacturing and efficiency, and most importantly the marketer needs to increase the perceived value of the benefits of its products and services to the buyer or consumer.

Lays come in many price variants. It has packets of Rs 5, Rs 10, Rs 20 and Rs 25. This shows that lays offer different packet sizes. Lays also started giving 20% extra on few of its packet.

Place

Refers to providing the product at a place which is convenient for consumers to access. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix

Place includes company activities that make the product available to target consumers.

Kotler and Armstrong (2010).

Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

The company functions over 40 distribution centers, serving more than 2,500 stockiest, reaching approximately 1 million retail stores that makes the product available on a mass scale and is easily available. And now they have plans to extend more the existing distribution network to reach out to 3 tier towns and villages in India.

Although figures vary widely from product to product, roughly a fifth of the cost of a product goes on getting it to the customer. 'Place' is concerned with various methods of transporting and storing goods, and then making them available for the customer. Getting the right product to the right place at the right time involves the distribution system. The choice of distribution method will depend on a variety of circumstances. It will be more convenient for some manufacturers to sell to wholesalers who then sell to retailers, while others will prefer to sell directly to retailers or customers.

Product

Product means the goods-and-services combination the company offers to the target market.

Kotler and Armstrong (2010).

For many a product is simply the tangible, physical item that we buy or sell. You can also think of the product as intangible i.e. a service.

In order to actively explore the nature of a product further, let’s consider it as three different products – the CORE product, the ACTUAL product, and finally the AUGMENTED product.

Lay’s target young generation and the brand have positioned itself as a youth brand. The major chunks of its consumer are of age between 13-18 and 18-26. The youth brand ambassador endorsing the brand carries the young imagery forward. Lays target the health conscious too. By its ‘snack smart’ program they are targeting the health and wellness area.

The product range and how it is used is a function of the marketing mix. The range may be broadened or a brand may be extended for tactical reasons, such as matching competition or catering for seasonal fluctuations. Alternatively, a product may be repositioned to make it more acceptable for a new group of consumers as part of a long-term plan

PromotionPromotion includes all of the activities marketers undertake to inform consumers about their products and to encourage potential customers to buy these products.

Solomon et al (2009).

Promotion includes all of the tools available to the marketer for marketing communication. As with Neil H. Borden’s marketing mix, marketing communications has its own promotions mix. Whilst there is no absolute agreement on the specific content of a

marketing communications mix, there are many promotions elements that are often included such as sales, advertising, sales promotion, public relations, direct marketing, online communications and personal selling.

Promotion is the business of communicating with customers. It will provide information that will assist them in making a decision to purchase a product or service. The razzmatazz, pace and creativity of some promotional activities are almost alien to normal business activities.

The cost associated with promotion or advertising goods and services often represents a sizeable proportion of the overall cost of producing an item. However, successful promotion increases sales so that advertising and other costs are spread over a larger output. Though increased promotional activity is often a sign of a response to a problem such as competitive activity, it enables an organisation to develop and build up a succession of messages and can be extremely cost-effective.

Lay’s focus is on consumer engagement modules and crowd sourcing strategy to promote our brands. Its various promotional strategy like “ Chala Change Ka Chakkar”, ”Fight For Your Flavor” and “ Campaign Dillogical” are all consumer interaction driven. All its campaigns are supported by mega 360-degree communication medium on TV, Radio, Print, Viral, Outdoor and Cinema.

Recommendations

Conclusion

Lay’s is not only competing head on with the branded-unbranded players in the market, it is competing even with the snacks from our own kitchen. It is interesting to see how this brand has succeeded in the commodity business. It followed all the rules to perfection. Based on the survey results we conclude that Lay’s is the leading Snack Product with Kurkure fast catching up. Lay’s still enjoys the Youthful image due to the Brand ambassadors and various promotional campaigns. By involving customer in co-creating the products Lay’s has achieved the goal of Consumer engagement. With a good brand awareness & recall, high customer & brand equity, it’s only poised to grow further in an ever-expanding and highly competitive market.

summary

The study helped us understand the patterns behind purchase of chips and what psychosocial benefits one derives from them. Also, it helped track where Lay’s stood in the eyes of consumers.