Analysis of Frito-Lay Dips1. SWOT Analysis Highlights: § Frito-Lays was a very profitable product line and showed phenomenal sales growth over the past five years. § “Shelf stable” dips can be displayed virtually anywhere in a supermarket. § Frito-Lay is a nationally recognized leader. in the manufacturing and marketing of savory snacks.§ In addition to savory snack products, the company also markets a line of nuts, peanut butter crackers, processed beef sticks, cookies and snack bars. the Grandma's brand, as well as other assorted snacks.§ In 1985, Frito-lay captured approximately 33 percent of the tonnage of savory snacks sold in the United States. § For Frito-Lay cheese dips, Frito-Lay chose to retain the Frito-Lays name to trade the company's equity into savory snacks and capitalize on the company's strengths in marketing and distribution.§ The phenomenal success of Frito-Lays Dips was due to two factors: the cheese dips were new and the Frito-Lays flavors were innovative, and they had the right merchandising placement next to savory snacks.§ The penetration of household consumers increased from 12 percent in 1983 to 20 percent in 1984, largely due to the placement of cheese dips near savory snacks. The association between chips and dips was conveyed in promotions and shelf placement. Weaknesses: § Frito-Lay's Enchilada Bean Dip was removed from the Mexican dip line in mid-1985 due to declining sales. § Discontinuing the enchilada bean dip had an unexpected effect. Consumers were expected to gravitate toward Frito-Lay's other Mexican dips; but they did not do so and turned to competitors. § Total dollar sales of dips for Frito-Lays declined in 1985 and projected sales of cheese dips would be unchanged from the previous year. § By 1985, consumer household penetration flattened, indicating a need for consumer-driven marketing. § Funds for advertising and merchandising are unlikely to be increased in 1987 beyond the $4.73 million budgeted for 1986. Opportunities: § The popularity of the drop has increased in recent years due to the convenience of use, multiple users, and "grazing" trends in the United States.§ Sour cream-based dips are the most popular in terms of flavor and account for 50% of total dip sales. Frito-Lay therefore has an opportunity to gain market share with sour cream-based dips. § Sales trends indicate that Mexican dips would show a 4 percent sales increase in 1986. So Frito-lay may want to re-enter this market since they discontinued the enchilada bean dip..