Report on
Lays Potato
History and
Marketing Strategy

GROUP 2, BATCH-1 (2009-11)


                 Submitted By:
                  GROUP 2
                   BATCH - 1

                 Guided By:
               (MBA, PGRM, PhD*)

               PGDM PROGRAMME
                 (Year 2009-11)



                                             Page | 2
Lay’s is a brand name for number of potato chips (crisp in British
English) varieties as well as the name of the company that founded
the Chip Brand in 1938. Lay’s chips are marketed as Division of
Frito-lay, a company owned by PepsiCo Inc. since 1965. Other
Brands in the Frito-Lay group include Fritos, Doritos, Ruffles,
Cheetos and Rold-Gold Pretzels.

      In 1932 salesman Herman W. Lay opened a snack food
operation in Nashville, Tennessee and, in 1938; he purchased the
Atlanta, Georgia potato chip manufacturer “BARRETT FOOD
COMPANY,” renaming it “H.W. Lay & Company.” In 1942 lays
introduced its 1st potato chip processor, resulting in the 1st large
scale production of the product. The Business shortened its name as
“the Lays company” in1944 and became the 1st snack food
manufacturer to purchase television commercials, with Bert Lahr as
a celebrity spokesman. His signature line, ‘’so crisp you can hear the
freshness,’’ became the Chips first slogan. In 1961, the Frito
Company founded by Elmer Doolin and lay’s merged to form Frito-
Lay Inc., a snack food giant with combined sales of over $127
million annually, the largest of any manufacturer. In 1965, the Frito
Lay merged with Pepsi-Cola Company to form PepsiCo.

                                                                Page | 3
         Four P’s Of Marketing
          1. Production Planning
          2. Price Planning
          3. Distribution Planning
          4. Promotion Planning

     That’s another reason to SMILE! Lay’s Potato Chips (2007)
      Food for the fun of it! (2007)
     Lays, Get your smile on! (2006)
     Betcha can’t eat just one (1960s-present)
     You can’t eat just one….Lagi Bet! (Lay’s India)
     HarProgrammeka main food...
     No one can eat just one.

     LAYS- STAX

                                                                  Page | 4
               Bag of Lays Baked Chips.

 As a snack food, the lays brands contain very few vitamins and minerals in
any variety. At 10% of daily requirement per saving vitamin C is highest. Salt
content is particularly high, with a serving containing as much as 380mg of

28 grams of lays regular potato chips has 130 calories and contains 10
grams of Fat, with three grams of saturated fat. Stax typically has 10 grams
of fat, 2.5 grams of saturated fat and 160 calories per serving. The various
Brands do not contain any Tran’s fat.

 Lays Classic Potato Chips are cooked in 100% pure sunflower oil. A one
ounce serving has 150 calories, 90 of which are from fat. 10 grams of fat
and 1 gram of saturated fat.


Like every company objective of Lays is to be flourishing and earn
more profits. Therefore they pursue following objectives:-
     Produce High Quality product at reasonable price
     Facilitate as maximum share of market as they can.
     Customer satisfaction is the top priority
     Acquire strong Distribution channel so the product is made
      available on the shelf.

                                                                        Page | 5

CONCEPT” to sustain itself in the market.

THE PRODUCT CONCEPT: -Lay’s is an extruded item which lies in the snacks
category is offered to market for consumption and it is much satisfying
consumer’s needs and wants.
For every product there are two levels of product:-

(Core Product): - Before introducing the Brand the LAY’S company conduct
different surveys to get the perception of the consumers about features,
design and quality level. Public want to buy the potato chips to remove their
hunger with little bit crunch and unique taste.

But mostly people are not ready to compromise on quality. In fact there is
no any basic necessity regarding snacks; however it plays a vital role to
fulfill that need.

(ACTUAL PRODUCT):- After a complete research LAY’S Company turns the
core benefits into the actual product and introduces Lays Chips which is
Unique in Quality, Flavor, Taste and Quantity. It’s totally fulfilling the
need of the people.
 There is balance in Consumers mind between the Price they pay and
the Quality of the product they purchase.

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MARKETING CONCEPT:-As far as LAY’S is concerned with the market in which it
deals is near to pure competition but due to certain factors it lies in Monopolistic
competition because every company is charging the Different prices according to
their quality and product features and as well as Target market .

E.g. of Marketing Concept: - recently the company has launched a new
marketing strategy to co-create their flavor ideas and get a chance to win
50lacs and 1% of sales turnover.

HOLISTIC MARKETING:-Dimensions of Holistic Marketing:
Internal Marketing, Integrated Marketing, Relationship Marketing,
Performance Marketing.

(Relationship      Marketing):-The four constituents of relationship
marketing are: Customers, Employees, Marketing, Partners (channels,
suppliers, distributors, Agencies, Dealers). The main objective of this is to
attract new customers and more importantly retain the existing one.
Here Company conducts not only Customer Relationship Management
(CRM), but Partner Relationship Management (PRM) as well. The
Company thinks of these intermediaries not as Customers but as
Partners in delivering value to final customers so that everybody is in
position to earn Profits. The Company provides Incentives to its
Partners, Retailers and employees from the profits earned.

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   CUSTOMERS: -The Customers Tastes and Preferences are given
     importance as their satisfaction is the main Objective of the Company.
     Earlier the Jumbo pack was been sold at Rs. 25/- but then Company
     reduced the price to Rs.20/- to make it affordable for every Income
     group People. Brand Conscious people like this product. It is made up
     of Grains (wheat, rice, etc.), so for short term hunger even health
     conscious people can consume it.

   RETAILERS: -The Company offers not only Incentives to retailers and
    employees but also take care of their needs so that they get
    motivation to work more efficiently for the organization. The Company
    arranges trips for employees and their families and also gives them
    chance to participate in sessions arranged by NGO’s and even arrange
    different competitions for encouraging employee’s children talents.

(INTEGRATED MARKETING):-Includes Four P’s of Marketing:

Product, Price, Promotion and Place.

1]QUALITY: -LAY’S CHIPS are following the concept of Siemens (quality is
when customer come back and our product don’t) as far as the Quality is
concerned. They also not neglect the two Dimensions of Quality
(performance and conformance) to gain the satisfaction of the consumer.

2]FEATURES: -All the features (like spiciness) and characteristics of LAY’S
are compiled by the Company on the need and want of the customer.

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3]DESIGN: -Style and Design matter a lot on the outcome and response of
the product (inside the pack and outside wrapper) has much attractive and
catchy colors style and design which attract customers. Different product
varieties have been given different Designs and Styles according to their
flavor and Ingredients.

4] BRANDING:-The Brand Name came from India from a Hindi word
Kurkura/kukuri means Brittle or Crispy. With the time being this Brand is so
familiar so its capture the mind of every person as a Unique, Quality, and
Tasty extruded with Lays Brand. Brand conscious people like this Product.

5]SIZE: -Lay’s     is availablein two different sizes one of …….100gms At
Rs.10/-and other of ……. 200gms At Rs.20/-

The pricing Strategy which is Lay’s is following, cannot be easily
evaluate because from Company has not mentioned clearly about any
system. However the Company is following the ‘’Cost-Oriented
Pricing’’. But a Company cannot follow a single strategy straightly
because in the FMCG’S product market their fluency of competitors
based pricing along with a bit effect of customer value.
Their cost includes:-

                  Manpower
                  Machinery
                  Electricity
                  Raw Material

                                                                      Page | 9
Price is set by keeping in view the Quality of the Product and price offered
by the Competitors. Lays has priced its product to achieve a certain
percentage return on its Sales.

Lays advertises through various channels:-

                   Media (Fm media, TV channels, Internet links etc.)
                   News Papers and magazines
                   Billboards and Banners
                   Sponsoring various and Matches
                   Free Samples

Lays does sales promotion in following ways:

               By launching any new product like Aquafina they get
                promotion in their business
               When Lays launched they offered a package of ‘’Buy 2 get
                1 free’’
               They decrease their prices to increase the sales to capture
                the market
               They decrease prices in winter too.

                                                                         Page | 10
Lays is available in countries like India, Pakistan, China, U.S, U.A.E.,
Australia, Russia, Romania, Poland, Argentina. It is also available in the
remote areas of the countries.

Internal Marketing is the task of Hiring, Training and Motivating able
employees who want to serve customers well. Since the Sales were
declining the authorities of Lays decided to conduct a survey so they
introduced a Campaign ‘’CHALO BAZAR, NOT TO SHOP BUT TO SELL’’ in
order to promote the sales of the product. All employees including the
Managing Director left their air-conditioned offices and were working in the
market place, talking to customers, checking the availability of the products,
discussing with stockiest, putting up racks, listening to shop owner’s
grievances, chatting with consumers and helping the sales guy’s load -
unload the stock.

80% of corporate office staff devoted 800 man-hours in a single day to meet
their day's target which was 4 times higher than of a normal day.

Every 5 minutes the cell phone would beep with a SMS flashing a victory
that an employee has made either to open a new account or moving up the
sales or to have introduced a new outlet to do away with the competition

  Employees were working with team spirit in order to boost up Company’s
sales, and to motivate the employees the top executiveswere also working
out with the employees and sweating out to sell their products.

                                                                        Page | 11
Understanding returns from Marketing activities and programs the
Company has broader concerns regarding ethical, legal, economic and
environmental issues.

In 2008, the Company came out with the marketing strategy of using Solar-
Power for production process in order to reduce their cost of production and
avoid harm to environment through harmful emissions.

From hard-bite kettle style to traditional chips, Heat and Control’s new
Universal Potato Chip system lets you create personalized snacks for each
customer using one economical continuous fryer. It can also be used for
plantain, malanga, multi-grain and other chips and snack products.

Now available after five years of development, UPC utilizes independent
fryer modules integrated into one compact, continuous frying system.
Adjust the frying time, temperature and oil flow in each module to produce
chips with specific texture, moisture and color qualities. An easy-to-use PLC
stores multiple recipes so you can change products in minutes.

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Economical and efficient, UPC costs less to operate than separate batch or
continuous fryers producing the same capacity.UPC uses about half the
energy of comparable batch fryers. And it can produce traditional style
potato chips with little or no water.
With patents granted and applied for, UPC is the world’s most versatile fryer
system for potato, plantain and similar types of chips.

The value delivery process consists of factors such as:-

1) Brand image.

2) Unique flavor.

3) Advertising & promotion of a particular flavor.

4) Medias and brand ambassadors.

5) Updating of technology.

6) Contribution towards social responsibility.

Lays is a commercial product basically for satisfying short term hunger. So
our target population is every human being, irrespective of caste, creed,
gender, age, locations etc. Despite of having a huge target population, it
becomes tough for Lays to come up with new innovative ideas since it has to
face increasing competition for surviving in the market for long term.

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Lays uses different media for advertising and promotion such as television, radio,
newspapers, hoardings, magazine etc

Customer delivered value:

           1) Image value: Lays is having good brand name in market all over
              the world.
           2) Personal value: Social value.
           3) Service value : Available everywhere.


Lays is all about good fun—doing good things when it comes to making snacks
and caring for the environment. A Company called Frito-Lay, a proud member of
the PepsiCo family. For more than 75 years, we have enjoyed making the best
snacks on earth, starting with simple, farm-grown ingredients. And we're not
stopping now. We continue to innovate, so we can provide tasty products that
are good as well as fun. And we're reducing our environmental footprint by
conserving natural resources as well as harnessing renewable energy technology
that reduces harmful emission.

A Marketing Information System can be defined as ‘’a system in which
marketing information is formally gathered, stored, analyzed and
distributed to managers in accord with their informational needs on a
regular basis.

                                                                          Page | 14
Recently the company has launched a new marketing strategy for
customers to co-create their flavor ideas with the Company and get a
chance to win 50lacs and 1% of sales turnover. The next step would be to
analyze the information collected and distribute the information analyzed to
the managers concerned, convert the flavor idea to its new product. The
information has to be collected at regular basis so that the company
remains aware of changes in taste and preferences of consumers, if any,
and make necessary modifications.

For improving Quality of its MIS company has taken following Steps:-

    Online feedback systems to collect competitive intelligence
    It purchases information from outside suppliers.
    The Company has trained the sales force to spot and report new
    It takes advantage of Government data resources pertaining
     information about population trends, demographic characteristics,
     agricultural production etc.

Environmental scanning is a process of gathering, analyzing, and
dispensing information for tactical or strategic purposes. The
environmental scanning process entails obtaining both factual and
subjective information on the business environments in which a
company is operating or considering entering.
                                                                       Page | 15
ANALYZING MACROENVIRONMENT:-To recognize and respond
profitably to unmet needs and trends.

Needs and Trends: - Lays tries to keep a check on the changing needs and
trends because it has a threat of new entrants which increases competition.
Competitors pricing policies, product quality and changing trends has a
great impact on sales of Lays.

Identifying the major forces:-These refer to ‘’NONCONTROLLABLES’’
which Company should monitor and respond. E.g. Recession bought a
steep decline in stock market, investments, employment which affected
Company’s sales directly.
Six major factors affecting Lays:-

 1] Demographic environment: - Population, Income, Age mix, cities,
regions, ethnic mix, educational level, household patterns and regional
characteristics and movements are the factors which affect the sales of Lays
directly or indirectly.

E.g. Increasing population does not mean growing markets, unless these
markets have sufficient purchasing power.

E.g. Age-mix: - During the campaign ‘’CHALO BAZAR, NOT TO SHOP BUT TO
SELL’’ one of the sales executive found that the father and the son were
fighting for purchase of two different flavors as father was fan of
M.S.DHONI (Cricketer) and son was of Saif Ali Khan (Bollywood actor) which
means that sales and demand of the flavor of Lays is also dependent upon
factor of Age mix.

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2] Economic Environment: -The available purchasing power in an
economy depends on current income, savings, and debt. Marketers of Lays
keeps track of changing trends affecting purchasing power like for E.g.
income distribution in India has been changing significantly over the time
which is result of economic growth.

3] Socio-Cultural Environment:-Marketing decisions of Lays takes into
consideration important factors of Social-Cultural Environment likeRegional
differences in Language, customs, values, habits, religions, consumption
behavior and caste system.

4] Natural Environment:-Production of potatoes is dependent mainly
upon climate (natural environment), further Lays includes raw materials like
infinite nonrenewable resources (oil, water) which is a depletion approach
for the country today so Lays is trying to avoid over-dependency over these
resources and adopt alternative forms of energy. E.g. currently some Plants
Company’s production process is carrying on production through Solar-
power due to which electricity consumption, emissions of harmful gases and
wastage of water can be reduced which affects the Ozone Layerotherwise.

5] Technological Environment:- Every new technology is a force of
‘’creative-destruction’’. Earlier the production process of Lays was manually
like peeling and boiling of potatoes was done manually and even packaging
process was done manually but now with the changing technology Lays has
adopted the whole manufacturing from peeling to packaging processes
done through machines which reduces time, cost and wastages during
production and shows that lays is making huge investments to adopt new
technology with the changing environment.

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6] Political-Legal Environment: -Two major trends of Political-Legal
Environment are: a) Increase in Business legislation which protects
consumer from unfair business practices and businesses from unfair
competition for economic growth and b) Growth of self Interests groups.

Lays is following Consumer Protection Legislation where it is mandatory for
packaged food products to make Red Dot for non-vegetarians and Green-
Dot for vegetarian Ingredients.

Consumer purchase is influenced strongly by the following three factors.

1. Cultural Factor.

         2. Social Factor.

         3. Personal Factor.

Above mentioned factors are explained in details as follows:-

Cultural Factors:-Cultural factors are fundamental determinants for
consumer needs and behavior such as values, perceptions, preferences differ
from family to family, region to region, country to country. Cultural factors
include three important factors which affect marketing decisions.

They are: -(i) Culture,

 (ii) Sub Culture,

 (iii) Social Class.

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Culture and subcultures factors as explained above also include social class
factors such as occupation, income wealth, education, brand preferences,
leisure activities/habits, and media preferences. All these factors affect the
buying decision of a buyer and marketing decision of marketer, as Lays is a
snack food product and there are huge varieties available in the market for
the customers.

SOCIAL FACTORS:-Social factors like reference groups, family, roles and
status affect consumer buying behavior.

Buying behavior of customers towards snack product Lays is affected
byPRIMARY GROUPS, as usually the buying of this product is influenced by
even interacting with family, friends, neighbors, co-workers.

Family is most important consumer buying organization in society, Number
of members constitute the most influential primary reference group, Age
group of members are all the factors to be taken into consideration by Lays
for Marketing its Product.

It is often seen that some people consume Lays product for show-off of their
status among friends and working group or in society as it is a Branded

PERSONAL FACTORS:-Personal factors such as Occupation and Economic
circumstances, Lifestyles and values affect buying of Lays.

Economic circumstances such as spendable income, savings, and market
situations i.e. like recession brought steep down in sales of the product
because people lost their jobs, cut-off in salaries so the buying decision was
greatly affected.

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Lifestyles is a pattern of living in the world as expressed in activities,
interests and opinions, price conscious shoppers. i.e. ‘’whole person’’
interacting with the environment, so the buying decision is affected greatly.

preferences changes very frequently. So it is very important for the lays to
meet the consumers day to day changing choices. Market demand for a
product is the total volume that would be bought by a defined customer
group in a defined geographical area in a defined time period. Snacks
industries have been grown consistency at around 10%every year for last
three years.


Total market potential is the maximum amount of sales that might be
available to all the firms in industry during given period, under given level of
industry marketing efforts and environmental condition. Available market is
a set of consumers who have interest, sufficient income, and access to
particular product.Qualified market is asset of consumers who have interest
income access and qualification for the particular market offer. Qualified
market eliminates the consumers who are not able to buy the product
because of their disqualification.

                                                                         Page | 20
Total population                    8, 00,000

Middle age & youth people           3, 50,000

AVAILABLE MARKET –                   2, 00,000(literate people)

POTENTIAL MARKET –                   1, 00,000

FIRST TIME CUSTOMERS -              60,000 (1 lac- 60%)

PENETRATED MARKET--                 48,000 (60,000-80%)

CLIENTS                             12,000(25% of 48,000)


Consumer perceived value is the difference between the total customer
benefits and total customer cost.

Total consumer value is the perceived monetary value of the bundle of
economic, functional and psychological benefit expects from product like
service, personnel and image involved.

Total customer cost is the perceived bundle of costs customers expect to
incur in evaluating, obtaining, using and disposing of the product.

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IMAGE VALUE - Image value refers to the brand value of the product. Lays is very old
and international brand which give consumers image value.

PERSONNEL VALUE- Social value given by product or brand to the consumers. Lays is
preferred as tea time snack. Brand ambassador of lays is MS Dhoni&Saif Ali Khan.

PRODUCT VALUE- Product value refers to the functionality of product and features of
product. Lays is available in lots of varieties like salted, tangy tomato, American flavor,
chat street etc.

MONETARY COST – Monetary cost refers to the price paid to buy a product. Lays is
available in Rs.5, 10, 20 so it is monetary cost for consumer.


Potentials: Those customers who are willing and have capacity to buy product. For lays
all are customer who can afford to buy.

Prospectus: As the price of lays are available in wide range, so it is rare that prospectus
are disqualified. They are accepted.

First time customer: As the person who are willing to have lays and trying for the first
time is first time customer for the company.

Repeat customer: Once the customer had started consuming the lays snacks and again
buys then he or she is repeated customer.

Clients: Towho lays give some special treatment are client of company.

                                                                                   Page | 22



                              of alternatives


                              Post purchase

Problem Recognition:
Here, the problem is how to satisfy short term hunger of consumers
through customized products and to find out number of potential buyers of
the product and the number of buyers consuming it to show-off their

Information Search: Information sources – Major information sources to
which consumers will turn fall into four groups:

                                                                  Page | 23
      Personal. Family, friends, neighbors, acquaintances.
      Commercial.        Advertising, web sites, salespersons, dealers,
       packaging, displays.
      Public. Mass media, consumer-rating organizations.
      Experiential. Handling, examining, using the product.

 Purchase decision is affected by personal factors more whereas the
 company tries to influence the customers through commercial, public, and
 experimental factors.

Search Dynamics - Through gathering information, the consumer learns
about competition brands and their features. The chart shown below shows
the total set of brands available to the consumers. The individual will come
to know only a subset of these brands, the awareness set. Some brands, the
consideration set, will meet initial buying criteria. As the consumer gathers
more information, only a few, the choice set, will remain strong contenders.
The consumer makes a final choice from this set which is refers as decision

Total Set      Awareness Set    Consideration Set    Choice Set     Decision Set

 Lays             Lays            Lays              Lays
 Balagi           Bingo           Bingo             Bingo

 Haldiram         Parle-smart     Parle-smart
                  chips           chips

 Parle –
 smart chips

                                                                      Page | 24
Evaluation of Alternatives:
The attributes taken into consideration while evaluation areAvailability,
Price, Quality, Quantity, Variety, Brand Name, Advertisements.

Expectancy-Value Model: {done in excel sheet}
In the above chart, the weightage is given to each criteria, in accordance to
the most preferences by the individual. In which weightage is described as
w and the total i.e. T1, T2… Is the total of the weightage and the rates given
to each attribute.

The weight assigned to quality of the product is 30% as most importance is
given to the quality of the product. In similar way, the weights are allocated
according to the importance of different attributes which are as follows:

30% to the QUALITY, 20% to the PRICE, 15% to the QUANTITY, 13% to the
VARIETY, 10% to the AVAIBILITY, 7% to the ADVERTISEMENT, and 5% to

In context to other products, lays should concentrate more on the quantity
provided and the price charged for the same. As found in report of
consumer feed-back forums, that there are many complaints received by
the company about the quantity with regards to its price.

Purchase Decision:
In purchase decision, as evaluated according to the attribute and the
weightage considered, lays is the best option to purchase for the buyer.

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Post purchase behavior:-
After the purchase, the consumer might experience dissonance, or may be
not happy with the product which he actually wants.

Here, we can say that the marketer’s duty doesn’t end with the selling of
the product only. They have to take into consideration the post purchase

As lays is aFMGC product, after sales services is not available for these
products but the company provides feedback forums and 24-hour consumer
care on toll-free number on which the consumer can present their views or
complaints regarding quality, price,packaging.And the company would be
able to come up withthe best product as preferred by consumers.

Mental Accounting:-
Introduction:Researchers have found that consumers use mental
accounting when they handle their money. MENTAL ACCOUNTING
refers to the way consumers code, and evaluate financial outcomes
of choices. Formally, it is “the tendency to catagorize funds or
items of value even though there is no logical basis for the
organisation, for example, individuals often segregate their savings
into separate accounts to meet different goals even though funds
from many of the accounts can be applied to any of the goals.

                                                                  Page | 26

This concept can be understood with the help of an illustration: if an
individual plans a budget for provisions and he has not included any
separate amount for purchasing lays and suddenly he happens to see lays
displayed at the store, the consumer is more likely to purchase the product
though he has not included any separate amount for the same.

On the contrary if he has planned and included separate amount for lays in
his budget and the product is not available at the store. In such a case, the
consumer is not likely to go to another store especially just for purchasing
lays and he may skip the product. There is no logical basis for taking such a
decision, but many a times this concept plays a vital role.

   Bases forSegmenting Consumer Markets, according to

Region              South, West, North, East
City                Class 1, class 2 cities, metro cities, cities with population
                    of 0.5 million-1million & over 1million population cities
Rural & semi-       semi urban areas, small towns (20,000-50,000)
urban areas

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Age                 6-11 yrs., 12-19 yrs., 20-34 yrs., 35-49 yrs.
Family size         Young, single; young, married, no children; young
                    married, youngest child under 6; young, married,
                    youngest child under 6 or over; older, married, with
                    children; older, married, no children under 18, older,
                    single, others.
Gender              Male, female
Income              Lower Middle (40,001-80,000 p.a.), middle (80,001-
                    120000 p.a.) upper middle (120001-160000 p.a),
                    high(above 160000 p.a.)
Occupation          Skilled workers, petty traders, shop owners,
                    businessman/ industrialist, professionals, officers.
Education           School b/w 5-9 yrs., SSC/HSC, non-graduate, graduate/

Lifestyle           Culture oriented, sports oriented, outdoor oriented
Personality         Compulsive, gregarious, ambitious.

Occasions           Regular, special.
Benefits            Quality, service (availability).
User status         Non-user, Ex-user, potential user, 1st time user, regular
Usage rate          Heavy.
Loyalty status      Strong
Readiness stage     Unaware, aware, interested, informed, intending to
Attitude(product)   Positive

                                                                       Page | 28
Market Targeting:-After the market segmentation opportunities has
beenidentified, the marketer decides next about how many and which ones
to target.

Segmentation of the market can be based on age of a person, lifestyle and
eating habits.Lays is mainly preferred by the youth is the part of their life
style and their eating habits; the market targeting is done accordingly. The
people who belong less than 6 yrs. and more than 50 yrs. are not taken into
consideration while targeting the market.

Single-segment Concentration: -Companies try to operate in super
segments rather than isolated segments.

   M1        M2      M3




This chart explains that the companies sell one product in one market.

                                                                       Page | 29
Selective Specialization: - A firm selects a number of segments, each
objectively attractive and appropriate. This multi segment strategy has
advantage of diversifying the firm’s risk.

     M1      M2     M3




This chart explains that Co. sells Different product in different market

Product Specialization: -the Co. makes a certain product that it sells to
several market segments. Lays comes under product specialization. Lays is a
potato chipselling Co. which sell different flavored chips in all the market
segments by developing a marketing strategy depending upon different
cultures, and other factors as discussed earlier. The co. has been able to
create a good reputation in the market and is currently a leading potato
chips seller internationally.

    M1      M2       M3




                                                                           Page | 30
Market Specialization: - the firm concentrates on serving needs of a
particular customer group; the firm gains a strong reputation in serving this
customer group and becomes a channel for additional products the
customer group can use.

    M1      M2      M3




This chart explains that the Co. serves 3 different products in one single

Full Market Coverage: -the firm attempts to serve all customer groups with
all products they might need. Large firms can cover whole market in two
broad ways i.e. Undifferentiated marketing and differentiated marketing.
PepsiCo. Covers full market coverage of non-alcoholic products.

    M1       M2      M3




                                                                        Page | 31

Competitive Rivalry within an Industry: - lays is already facing strong
competition from big players like Bingo, Haldiram, Parle-Smart Chips.
Competition leads to frequent price wars, Advertising battles, new product
& productions.

Threat of New Entrants: -Parle smart chips, Hippo, Aliva are the new threat
entrants for Lays. There are high entry & low exit barriers. These products
were launched under reputed brand elements.

Threat of Substitute Products:-substitute products of lays potato chips are
Kurkure, Biscuits, Namkeen products. If technology advances or
competition increases in these substitute products, prices and profits are
likely to fall.

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Threat of buyer’s bargaining power: - With the rise in substitutes and Co.
under competition, the buyers possess strong or growing bargaining power.
Earlier lays was as costly as Rs25/pack. But as the competition grew intense
lays sacrificed its profit margin to survive in the market.Here the buyer’s
switching costs are low, when buyers are price sensitive because of low
profits, or when they can integrate upstream. To protect themselves the
sellers might select buyers who have the least power to negotiate or switch
suppliers. A better defense consists of developing superior offers that
strong buyers cannot refuse.

Threat of suppliers growing bargaining power:- in context of lays, the co.
suppliers of potato and other spices may behave diplomatically since they
are able to raise prices or reduce the quality of the material supplied. The
suppliers tend to be powerful when they are concentrated or organized,
when there are few substitutes, when the product supplied is an important
input, when the cost of switching suppliers is high. Lays can adopt a
technique of having multiple supply sources.

                   CHOOSING BRAND ELEMENTS

BRAND ELEMENTS:-Brand elements are those trademark able devises
that identify and differentiate the brand. Unlike most strong brands lays
also employs multiple brand elements. Lays has a distinctive “lays” logo,
empowering currently the “be a little dillogical” slogan.

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The brand elements of lays provide a positive contribution to the brand
equity since it conveys certain valued associations and responses.

There are six main criteria for choosing brand elements. The first
three- memorable, meaningful and likeable are brand building. The
latter three- transferable, adaptable and protectable and deal
with how to leverage and preserve the equity in a brand element in
face of opportunities and constraints.

  1) MEMORABLE: how easily is the brand element recalled and
     recognized? Frito-Lay being a short brand name acts as a
     memorable brand element under Lays which was introduced.

  2) MEANINGFUL: It suggests whether the brand element is
     credible and suggestive of the corresponding category.

  3) Likeable: this relates the brand name aesthetically whether it
     is likeable visibly, verbally and in other ways.Fritolay is
     considered to be a renowned snack food Company. The
     slogans, logos, variety and the Qualitative products launched
     under it are enough to create an impact in customers mind.

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4) Transferable: It suggests whether any new product can be
   introduced in the same or different category. Frito-Lay has
   launched successfully products under the brand name
   ofPepsiCo.E.g. such asAliva has been newly launched. Different
   category introduced by the brand.

5) Adaptable: It suggests whether the brand element is
   adaptable and updatable. The brand element Frito-Lay keeps
   on updating the products packaging, color, size and
   introducing new products which are easily adaptable in the
   market. E.g. on failure of Uncle Chip’s product of Frito-Lay, the
   company changed its packing, shape, size, price and target
   market torelaunch the product in market again.

6) Protectable:It refers whether the brand element is legally and
   competitively protectable. Lays is a registered trademark of
   Frito lay which is protectable brand under PepsiCo.

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A product life cycle is distributed into 4 stages:

      1)   Introduction
      2)   Growth
      3)   Maturity
      4)   Decline

           INTRODUCION: a period of slow sales growth as the product is introduced in
           the market. Profits are nonexistent because of heavy expenses of the
           product introduction.

           GROWTH: a period of rapid market acceptance and substantial profit

           MATURITY: a slowdown in sales growth because the product has achieved
           the acceptance by most potential buyers. Profits stabilize or decline because
           of increased competition.

           DECLINE: sales show a downward drift as profits erode.

                          Pattern of proeduct life cycle in lays:
INTRODUCTION: lays has a product life cycle pattern of growth-
slump-maturity pattern.
The main characteristics of this pattern is sales grow rapidly when
lays was initially introduced in the market for the very first time.
Gradually the demand for lays decreased and has become stagnant
now reaching at its maturity stage.

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It can be said that demand fell into a “petrified” level is sustained
by buying the product the first time and early adopters replacing it.

CORE BENEFIT: - satisfaction of short term hunger.
BASIC PRODUCT: - flavored potato chips.
EXPECTED PRODUCT: - quality, quantity, taste.
AUGMENTED PRODUCT: -additional quantity, variety.
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Consumer goods classification: - it is done on the basis of
shopping habits. The goods are distinguished on the basis of
convenience, shopping, specialty and unsought goods.
   Impulse goods: -Lays potato chips fall in the category of
    impulse goods. These are those goods which are
    purchased without any planning or search efforts.
   Mostly FMCG products fall under this category.


    Form: -lays can be differentiated in shape, size, flavors,

    Features: - the Co. welcomes the feedback from the
    customers regarding their preference for new flavor to
    be launched in the market. Thus by surveying the recent
    buyers and then calculating customer value versus
    company cost or each potential feature. The Company
    should also consider how many people want

                                                          Page | 38
eachfeature, how long it would take to introduce it and
whether competitors could easily copy it.


Many marketers have called packaging as 5th ‘’P’’ along
with price, place, promotion, product. The packing of
lays is anelement of product strategy. Lays emphasis on
the color of the ingredient for packaging. E.g. Spanish
tomato chips are packed in light red colored pack
representing “tomato” flavor chips inside the pack.
Same is done for other flavors pack also.

Through packing customer can easily identify the brand,
quality etc. on the packing of lays we can get
information regarding company’s details, nutritional
information, price, ingredients, feedback numbers and
contests and schemes (if any), brand ambassadors,
patent-trademark details, date of mfg. & expiry.

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(KomalBharwani: 09013)

Price sensitivity:-first of all Lays is not a prestigious good. It is a
normal product. Here we assume that if price of Lays increases from
Rs.10/- to Rs.15/- the demand of product goes a little down i.e. from
105 to 100 the customer may switch over to competitor such as ‘Balaji’
but some way not switch over if they do not want to compromise with
Therefore, we can say that customers are less price sensitive towards
our product, lays. Hence, the demand is inelastic demand.

Selecting pricing methods:

1) Value pricing: lays charges fairly low prices for a high quality. Value
   pricing is not merely charging low prices. Producing high quality
   product at reasonable price. Facilitates maximum share of market
   as they can. Customer satisfaction is the top priority. Lays acquires
   strong distribution channel so the product is made available on the
2) Standard of living of the people: here the income of the people of is
   taken into consideration. High income group people prefer high

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Packaging, labeling, warranties & guarantees

Packaging: we define packaging as all the activities of designing and providing the
container for a product. There are three types of packing:

   1)   Primary package
   2)   Secondary package
   3)   Corrugated box
 Our product lays comes under ‘secondary package’ though it does not uses a
cardboard boxes but it uses a thick polythene which will be categorized under this

Factor that contribute growing use of packaging are as follows:-

   1)   Self service
   2)   Consumer affluence
   3)   Company and brand image
   4)   Innovation opportunity

        1) Self- service: 50% to 70% purchase are made because of effective package. It
           attracts attention as it is green in color which differentiates it from other
  contains the pictures of ‘Dhoni‘ & ‘saif’which attracts customers
        2) Company and brand image:- packages from brand can create a visible
           billboard effect.

           Our product has a brand name ‘lays’ which is attached to co. named ‘frito

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     3) Innovation opportunity: innovative packaging can bring large benefits to
        consumers and profit to producers.

             It has innovative packing style as it is mainly targeted to middle age
     group people who are mainly influenced by brand ambassador dhoni and saif.

     4) Consumer affluence: consumer is ready to pay a little more for convenience,
        appearance dependability and prestige of better packages.
              For our product ‘lays’ consumer is ready to pay for appearance and


        After designing the packaging, the co. should test it. 3 tests are conducted by
        lays such as

        Visual test: the script is legible and colors are harmonious.
        Dealer test: dealers find the packages attractive and easy to handle.
        Consumer test: the buyer will respond favorable.

        For growing environment safety concerns, it uses machines with solar energy

Labeling contains brand name and many information such as who made it?,

        How to use it safely?,

         Our product contains all such information such as:-

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     1)   Brand name
     2)   Manufacturer
     3)   Expiry date
     4)   Safety and sign of non-vegetarian.


                      VIKAS MAKHIJANI (9056)

                      DEEPIKA BHATIA (9014)

                     MANISHA DULGACH (9028)

                        RAJA GANWANI (9030)

                       SONAM BELLANI (9011)

                                               Page | 43

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