TO Dr Dwight R Riskey FROM Chris Sato RE Sun Chips Marketing Plan Introduction After reviewing the data and information you provided on your current situation I am submitting the following recommendations regarding your introduction of Sun Chips into the market I recommend that you adopt the plan of flavor extension to increase the repeats per repeater to boost profits but in a slightly alternative manor I believe that my recommendations will suit your company well as it is in line with your objectives and may benefit your financial position in the snack food market Background Dr Dwight R Riskey has a few different suggestions to improve the Sun Chips sales and introducing them into the market to compete with the other chips already in the market First there was the problem of competitors If they continued to test the product competitors might launch a similar product regionally or even nationally to out due Frito Lay and the opportunity to be first to market would be lost so these plans must be quick to assure that production would move efficiently to beat out the competitions His first recommendation was to expand the manufacturing capacity of Frito Lays to have a high production of this new product And with that in motion they could spend more on advertising for the product if it was to be launched nationally add a bigger size for the same price because another size could add more to the average annual purchase amount per consumer without effecting the brand s gross profit and adding a flavor extension for more variation of the product Recommendation With that being said I believe that my recommendation could help further integrate the test market with the product they are consuming in three parts First take into action Dr Riskey s plan to expand the flavors of the sun chips Second produce multiple flavors to be released into a small market and let the consumer decide which new flavor they like call it Flavor X More there could be an increase in the cumulative trial that more by having more people initially try the product and become a repeater because they feel apart of the process Exhibit A Finally after careful consideration of each flavor produce the one that the consumers enjoyed the most and turn it into a permanent flavor with natural and French onion to be packaged together in 3 flavor x 4 sizes like Dr Riskey proposed Right now 45 of the market enjoys the natural flavor while 55 enjoy the french onion so why not add in a new flavor that could boost sales and distribute the percentages between the three so you have less of a chance of wasting product because you will be producing less of each but offering a bigger selection Exhibit B So while your busy trying to figure out a way to create a better cheddar you could be experimenting with other flavors and let the consumers do all the work for you This allows for more people to join the test market to choose the flavor that they like and eventually boost sales once the chips become public Exhibit C Basis for Recommendation Dr Riskey s projections Increasing advertisement could result in an increase of sales of 30 million when the chips are introduced into the market and adding in Flavor X after the Adding another size run to the chips could add about one half ounce to the average annual purchase amount per consumer Adding another flavor could increase the repeats per repeater on average 3 5 times per year given a greater variety of flavors for the consumer History Some companies fail because they change what they originally set out to do Their current goals are not the ones that they set out for when the company was first founded and in most cases it turns the consumer off FritoLays wants to offer a healthier option to regular chips especially for the baby boomers which they originally marketed to Because they are getting older they are adopting a healthier lifestyle and in order to keep their business Frito Lays produced the sun chips so they could continue to provide for them Now what better way to maintain a consumers business by putting the power in their hand Let them decide what stays and what goes based on what they want to taste in a chip Alternatives Risks and Assumptions One alternative would be to continue to expand on advertising This may not be a good recommendation because Frito Lays still only has two sun chip varieties due to mild cheddars problems So if you choose to advertise more make sure your ready to produce Next Steps Start finding more flavors to release to the market and let the consumer do the rest Once the product has been out for a considerable amount of time capitalize on your findings to produce the right chip for the right consumer EXIBIT B OLD 45 40 35 Cumulative Trial for Sun Chips Cumulative Trial for O Grady s Potato Chips Cumulative Repeat for Sun Chips Cumulative Repeat for O Grady s Potato Chips 30 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 NEW 50 45 40 Cumulative Trial for Sun Chips Cumulative Trial for O Grady s Potato Chips Cumulative Repeat for Sun Chips Cumulative Repeat for O Grady s Potato Chips 35 30 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 EXIBIT C OLD Sales French Onion 55 00 Natural 45 00 NEW Sales Natural 30 00 Flavor X 40 00 French Onion 30 00