Lay's Potato Chips: Strengths, Weaknesses, Marketing Strategies, And Pest Analysis Essay. (70 Characters)

Strengths and Weaknesses

Packaged food item are one of the most popular FMCG products that are in the market. Lay’s has over the years gathered a brand image and goodwill among the stakeholders as well as in the market. So much so that Lay’s has also become a generic name for potato chips for many. The aim of the company is to provide the consumers with fun foods which is tasty and relatable at an affordable price in a walking distance reach.

Internal Analysis

Strength: The tradition, culture and the goodwill that the company has accumulated over the period of time that it has been operating is the biggest strength of the company. The cost of production juxtaposing the revenue earned is low which gives the company opportunity to earn a lot of profit. The value based pricing strategy follows this objective and helps the company earn revenue.

Weakness: The biggest weakness of the company is that the product that the company sells is deemed by many as unhealthy and is popularly categorized as junk food. Fried potato chips are also medically restricted to people who are suffering from cholesterol issue or digestive problem (Hill et al., 2014).  

IMC Resource Capabilities 

The company has a large market share in the global front of over 35% of market share. The revenue earned by the brand is utilized in further expansion and product development, the company has the resource to involve media planning third party companies to organize the communication process. Medium of mass communication has evolved and has enabled companies to promote and communicate in an easier and hassle free manner. There are organizations that are dedicated to the various medium of mass communication techniques that a company can employee to promote the product or services. For example: there are advertising agencies to help companies with the traditional and modern medium of advertising like television, radio as well as social media. Media planning agencies organize the medium that the company will invest in order to reach to the target market. They ensure that this investment is highly effective in terms of achieving the goals of the company. Lay’s has the capacity to hire third parties in order to effectively incorporate the marketing communication plan the revenue of the company is directly responsible for this position that the company has gathered.

Lay’s implement advertising, public relations as well as sales promotion extensively to promote the products. The company always keeps up with the culture and tradition of the country where the promotional activities are taking place. For example: advertisement in India will be different from the advertisement in Canada. Lay’s also collaborate with celebrities and popular personalities of specific country to promote the product and to feature in the advertisement. Simplicity and clear message has always been one of the essences in the promotional and mass communication tactics of the company, simple instances of life are highlighted in the advertisements to identify the spicy lay’s potato chips can add to such simple moments. To deal with the brand image and to keep up with the young and fresh appeal of the brand young personalities who influence the younger generations are used by the company.

Marketing Strategies

Sales promotion techniques are also highly implemented by the company. Family packs, value offer packs, festive offers etc are some of the usual strategies of sales promotion and sales maximization.

The idea that the company has to put across while planning an integrated marketing communication strategy is to position the product as “fun food” item. The image of the brand that has been established is fresh and young, the names of the company use for the flavor is quirky and is on the lines to attract the young customers.

Lay’s is a brand that identifies itself being in a matured stage, the company uses innovation and product development as strategies to keep the brand young and fresh for attracting new customers as well as retaining the old ones. The company is focused on the consumer’s interest while taking any policies and decisions of the company. In order to understand the situation lay’s potato chips is Pest Analysis can be used. In this method the external business environment that affects the operation of the business are analyzed, this attributes are not under the control of the company and hence it has to be monitored form time to time in order to keep up with the dynamics of the market. It allows a macro perspective of the brand. Lay’s is a multinational company and has its operations on a global basis. The company boasts 35 percent of the market share on the global front and leads the market value with 60 percent in the United State (Grant, 2016).  

In the FMCG segment of products a company can focus on the consumer behavior and launch and become successful. Analyzing the buying tendencies of the customers is essential for a brand. The quality of the product and the advertisement of the item have an effective influence on consumer preference of brand Lay's. The consumers also relate to the personalities that endorse the brand (Hanssens et al., 2014).

Herr’s potato chips and Pringles are identified as the primary and direct competitors of lays along with the local brands.

Attributes	Lay’s	Herr’s potato chips	Pringles	local brands
Packaging	Simple and clear maintaining a color scheme based on the flavor	Packaging depends on the category of products	Available in containers unlike the other competitors	Simple and minimal
Flavor choice	high along with seasonal additional flavors	Plethora of choice in not only potato chips but also other snack items	Limited compared to the competitors	Very limited
Price	Moderately priced at value pricing strategy	Moderately priced at value pricing strategy	High price	Lower than the competitors
Availability	Strong distribution network	Distribution network is widespread in the US	Only in department stores and hypermarkets	Available in the local market
Quality	High	Medium	Premium	High
Brand Image	Young and fresh	Tasty and hassle free	Premium snacks	No Brand

Political: Political stability in a country ensures the success of a product or service especially of a product that is not a necessity like potato chips. The company is bound by all the regulations of the country of operation that are related to the company, it is essential for the company to abide by the rules of the country in order to continue operation that is legal and also enjoy rights that come along with the rules.  Restriction in the packaging material and Trans fat usage in the food items are some of the guidelines that the company must follow. For example: the calculation of the GST on the item should e in accordance with the tax law of that country.

Pest Analysis

Economical: the rate of inflation directly affects the business and hence it should be taken into consideration while making decisions regarding the price of a new product or while coming up with new packs. The company has to understand the competitors in the economy and the competition for lay’s being a potato chips market is large and stiff. To keep up with the dynamic of the market place the management of Lay’s also have to be at par with the economies of the market. Not only that lay’s have their own production units in the countries of operation and hence should abide by the labor laws of the country (Gupta, 2013).

Social: Lay’s is a brand that is famous for being experimental in the flavors based on the cuisine preference of the country of operation.

Technological: The production units of Lay’s are all technologically advanced and have large capacity of output thereby increasing the productivity. The company not only encourages innovation in the product development front but also encourages technological advances (Hollensen, 2015).

Product: The product that is being sold by the company is marketed as a fun food item. As discussed in the strength of the company the cost of production is low considering the scale of operations of the organization. Hence the product is more focused on the flavors and the innovations in the taste that the company brings in order to gain consumer attention and understand the consumer preference. It has been noticed that the company usually comes up with a certain flavor and then discontinues it due to lack of popularity.

Price: The pricing strategy of the company that has been analyzed is value based and hence the revenue earned in comparison to the cost is large. The price is what the company views to be justified as the customer is also paying for the brand and the flavor which is exclusive for the Lay’s. The resources of that the organization are recognized as one of the major strengths firstly the goodwill of the company helps the company build the value based pricing strategy tactfully (Mintz & Currim, 2013).

Place: The organization abides the policies and rules of the country of operation and hence it has been able to build a strong distribution network. Starting from the local corner store to the super markets and hyper markets Lay’s potato chips are available everywhere. The company follows the trade and tariff laws effective in each country where Lay’s Classic chips are sold (Huang & Sarigöllü, 2014).

Product Attributes

Promotion: The Company always takes aid form the cultures and traditions in developing marketing strategies and planning the growth of the company. For example: In India the company comes up with family value pack offers during Diwali or Holi. The company has also used famous personalities to endorse the brand and gain popularity among the target market (Peppard & Ward, 2016).

Identifying the target market is regarded as one the most essential part of marketing. When a company is manufacturing a product then it is important to understand who the people are going to invest in the product or service. By understanding the target market the company can develop an idea about the needs and the requirements of the product and on the basis of that the pricing and the innovation policies are undertaken. The Market segmentation includes dividing the population in four divisions: demographic, behavioral, psychographic and geographic. By analyzing these attributes the company will know the target market and hence target the communication towards this group of people. Promotional activities that are undertaken by a company are basically the brand trying to communicate with the target market. For example: the target market of a mobile phone company will be different from the target market of stationery goods. On the basis of the identified population selection of the medium which can be employed in order to reach the target market is determined. A fertilizer brand will communicate with the people who are related to the agriculture industry rather than the mass in general. Hence community radio for farmers would be appropriate for a fertilizer company to advertise than being on the hoarding on the highway.

The company initially focused on teens and young adults as their target market, but the company soon realized that a product like potato chips do not have any set boundary as per the age is concerned. People who are not allowed to eat fried food due to medical reasons are the ones who are excluded from the population of the target market. The next exclusion are of the people who are health conscious and do not like to indulge in package fried food. To combat the requirement of this section of people the company has also come up with low calorie baked chips which are equally tasty and crunchy.

The product itself is not a necessity and also it is not a food item which will help consumer to be fully satisfying hunger hence the people from the lower income group also do not fall under the target market (Cross et al., 2015).

Conclusion

The company keeps up with the laws and policies of the operating country and the strong distribution network is built on the basis of this. This strong distribution network of the product makes it available for anyone who has the potential to buy and the urge to consume the product.

The primary target market that is analyzed is:

Demographic: Age (6-60)

Behavioral: The people who like munching on snack items during the tea time or party or even casually.

Psychographic: People who has the means to buy a bag of chips to much on to have fun as the company categories the product as fun foods.

Geographic: The country where lay’s and PepsiCo has operation ensures that the distribution network is strong so that the product is available even in the unlikely places. Hence people who are living within the walking distance of the corner shop where lay’s is available are a part of the target market.

The most important characteristic that is being identified in this segment of people is that the casual approach to the product, the company also wants the consumer’s think of this product as a fun item and not something that will be used to satisfy hunger or be staple food item (Firat et al., 2014).

The secondary target market:

Demographic: College and school students (millennial and boomers)

Behavioral: Impulse buying and impulse carving for something that is not filling but is tasty as flavor is one of the reasons why a consumer opts for the brand.

Psychographic: Enjoys food items that is not heavy on the appetite yet is fun and satisfying in its own way. These groups of people have a higher to medium standard of living and are mostly monetarily dependent on the parents.

Geographic: That is available locally.

The people in this segment are characterized as impulse buyers, these people hardly think before they buy a pack of chips the company distributes the product in every corner of the locality to make the availability more feasible. Another characteristic of this group is that these people are mostly loyal customers and buy lay’s potato chips because they may be like one particular flavor among the wide range that is available (McAlexander et al., 2016).

External 

Opportunity: As a multinational operation the organization has set opportunities for it to expand in the locations where there is target market. The company has expanding in developing economies which means that there is an increase in the disposable income of the people which is an opportunity for lay’s. Owing to the resource strength of the company there is a wide opportunity for the brand to experiment with the flavor and come up with flavors which are unconventional as well as contemporary to attract the attention of the people.

Threat: Local chips producing companies pose the biggest threat to the company as they are more cost effective as well as easily available. There are also new brands that are coming up in the international market making the competition intense and tough. Herr’s potato chips in the US and Pringles all over the world are considered to be primary competition (Bohari et al., 2017).

Internal 

Strength: Over the year Lay’s have gathered goodwill and reputation for the brand which is one of the biggest strength of the organization, the other resources that the company have in terms of technological advances and revenue give the company support to innovate and to develop new product as well as build a strong distribution unit so that the products can be made available to every potential consumer. The presence of the company on the global market gives it an opportunity to explore new market possibilities.

Weakness: Highly criticized by healthy food eater and nutritionist the fried snack department has a tag of being unhealthy and this is the biggest weakness of the company. The company has also received criticism on the amount of product that is available for the price that is being paid the company faces disapproval from the consumers for having “air inside the packet” more than the product. The value based pricing of the company is another weakness (Bull et al., 2016).

The objectives of the IMC of Lay’s potato chips are:

• To maintain the brand image of being young and fresh and to uplift the goodwill associate with the brand

This is a communication objective as the company has to constantly communicate with the consumers in order to keep the brand fresh in the minds of the people. The image of the brand is something that the consumers relate and this is done with the help of communication process employed by the brand. The resource of the company is analyzed as one of the most relevant strength. Though the demography identified earlier is 6-60 years but the company maintains its image as of being young and fresh to keep up with the crisp and fresh nature of the potato chips an attribute which is a consumer favorite.

• To change the perception of the people from being unhealthy food item to a fun foods item

This is a behavioral objective as the behavioral pattern of the consumers in thinking that this food item is unhealthy develops a bad reputation for the company as well hence communicating the product as “fun food” is important to maintain. This is associated with the major weakness of the brand that it has been criticized over and over again by food critics and nutritionist that fried potato chips are bad for health and is one of the reasons for increased cholesterol and obesity among the youth (Percy, 2014). 

• To make the consumers aware of the availability of the product or new product developments

Lay’s is a brand that is popular for experimenting with the flavors and coming up with tastes which is contemporary and unconventional. Thus prioritizing innovation and creative has always been the object of the company this has also been identified as one of the opportunities of the brand. This is a communication objective as the company want to let the consumers know there is a new flavor (Blakeman, 2014).

• To identify the impact of communication  on target market

With the help of IMC a company can also understand the effect the communication processes have on the target market through feedbacks and sales. Hence this is a behavioral objective.

• To understand the need and requirement of the consumers

This is also a behavioral objective and it is connected to the previous objective as the feedbacks will also help gather an understanding about the further needs and requirements of the consumers (Belch et al., 2014).

Conclusion  

Lay’s is a brand which has been under the PepsiCo more than a decade, over the years the company has built a worldwide brand image of being young and fresh. Along with the resources the company has a strong distribution network which enables the target customers to get the product easily. The internal and external analysis that has been conducted in the report suggest the positives and the negative that surrounds the company, the major weakness that the company needs to combat is the name of unhealthy food items which is associated with fried packed foods. Healthy food eaters all over the world heavily criticize the brand. The company can focus on the low fat, baked chips that have been launched to combat this stigma of selling unhealthy food items. The IMC that the company plans in the future should revolve around promoting the low fat chips as that is the prime concern of the hour, the company can collaborate with celebrities who are known for being fit and has been vocal about being healthy and fit.

Reference List: 

Belch, G. E., Belch, M. A., Kerr, G. F., & Powell, I. (2014). Advertising: An integrated marketing communication perspective. McGraw-Hill Education.

Blakeman, R. (2014). Integrated marketing communication: creative strategy from idea to implementation. Rowman & Littlefield.

Bohari, A. M., Hin, C. W., & Fuad, N. (2017). The competitiveness of halal food industry in Malaysia: A SWOT-ICT analysis. Geografia-Malaysian Journal of Society and Space, 9(1).

Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C, & Carter-Silk, E. (2016). Strengths, weaknesses, opportunities and threats: A SWOT analysis of the ecosystem services framework. Ecosystem services, 17, 99-111.

Cross, J. C., Belich, T. J., & Rudelius, W. (2015). How marketing managers use market segmentation: An exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer, Cham.

Firat, A., Turker, G. O., & Metin, i. (2014). Specification Of Target Market In Small And Medium Scale Accomadation Businesses: a Study On Boutique Hotels Operating In City Of Mugla. International Journal Of Academic Research, 6(1).

Grant, R. M. (2016). Contemporary Strategy Analysis Text Only. John Wiley & Sons.

Gupta, A. (2013). Environmental and pest analysis: An approach to external business environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.

Hanssens, D. M., Pauwels, K. H., Srinivasan, S., Vanhuele, M., & Yildirim, G. (2014). Consumer attitude metrics for guiding marketing mix decisions. Marketing Science, 33(4), 534-550.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Huang, R., & Sarigöllü, E. (2014). How brand awareness relates to market outcome, brand equity, and the marketing mix. In Fashion Branding and Consumer Behaviors (pp. 113-132). Springer New York.

McAlexander, J. H., Koenig, H. F., & DuFault, B. (2016). Millennials and Boomers: increasing alumni affinity and intent to give by target market segmentation. International Journal of Nonprofit and Voluntary Sector Marketing, 21(2), 82-95.

Mintz, O., & Currim, I. S. (2013). What drives managerial use of marketing and financial metrics and does metric use affect performance of marketing-mix activities?. Journal of Marketing, 77(2), 17-40.

Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

Percy, L. (2014). Strategic integrated marketing communications. Routledge.