Marketing Management ( Doritos) PDF

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This report thoroughly covers the current market situation of our brand Doritos specifically in Australia. The market growth in last four years for Savoury Snack food in Australia is briefly discussed to understand the prospective area of growth for our product.

Marketing Manageme nt Assessment - 1

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Tables of Contents Page I.

Introduction

a. Company Overview

II.

III.

Category Analysis

1

1

2

a. Levels of competition

3

b. Category size and growth

4

c. Channel analysis

7

d. Macro environmental analysis (PESTEL model)

8

e. Industry attractiveness analysis (Porter’s 5 forces framework)

9

Competitive Analysis

9

a. Product features matrix

9

b. SWOT analysis (TOWS)

10

IV.

Reference list

11

V.

Appendix

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Marketing Management I.

Introduction In Australian food industry, savoury snacks have been one of the leading products in

market. Research suggests that most of the health-conscious people prefer the savoury snacks over sweetened snacks; therefore in 2017 savoury snacks were the best performing product in the snacks category in Australia. Savoury snack food category includes nuts, popcorns, potato chips, pretzel products and other processed snacks. A lot of processed food manufacturing companies in Australia have entered in this category and overall market value grew by 5% and recorded 4% volume growth in the year 2017 for the savoury snacks. Reports suggest that market has been growing consistently from past four years and will accelerate till 2021 according to the forecast. For the savoury snacks, Smith’s Snack food is still the leading brand in Australia with a 25% value share in the country in 2017[ CITATION Eur17 \l 2057 ]. In this report our major focus is on understanding the market position of Doritos which falls under this category and is supplied and manufactured by Smith’s Snack food which is a subsidiary of PepsiCo Inc. in Australia.

a.

Company overview

According to MarketLine (2017) report Smith’s Snackfood Company is a subsidiary of PepsiCo Inc. which manufactures and distributes a wide range of products in Australian market. The food related products that lie under the PepsiCo brands are Frito-Lay, Doritos, Tostitos, Simba, Tropicana, Mountain dew, Pepsi and many more. The Smith’s snack food company’s headquarter is located in New South Wales. There are many products that belong to Smith’s snackfood company which are cheesy bacon balls, pretzels, twisties, mixed nuts, and other types of whole grain rice crackers. The Smith’s company markets their products through many sub-brands in all parts of Australia. Smith’s Snackfood profile includes brands like Smith’s, Nobbys, Parkers, Cheetos, Doritos, Twisties and also the Grain Waves.

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Figure 1: Brand under Pepsi-Co

Figure 2 : Brand list for Smith’s Snackfood Company

The Australian Doritos is one of most popular tortilla chips brands across the globe. Doritos is corn-based snack and has got its name from a Spanish word which translates to “little bits of gold”. It is made and processed by harvesting whole corn kernels but only the best is selected to be in the Doritos packet.

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II.

Category Analysis a. Level of competition

In regard to market share, the level one competitors of Doritos are Red Rock Deli, Woolsworths (Private Label), Coles (Private Label), Kettle (Snack Foods Ltd), and Nobby’s. In addition, the level two competitors are Jatz/Savoy (Campbell soup Co), Thins, Damora (Private level), and Sakata. The level three competitors include Peckish, Pringles, Macro, Twisties, and Sprinters. Moreover, the level four competitors are Forresters, CC’s, Salada, Sunrice Rice Cakes and Oh So Natural (Private Label). These are the closest product in the similar price range in between $2- $5. The diagram below shows the level of competition by referring to the Lehmann & Winer reading [ CITATION Don08 \l 1033 ]. Based on the annual report form the savoury snacks foods Australia, below is the closest competitor of our product within similar price range. (Passport, 2017)

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Figure 4 : Level of competition b. Category size and growth 

Total category level: Our product falls under salty snack category which has 5.5%

volume growth compared to Nuts, seeds and trail mixes that had the CAGR of 5.35% for the period of 2012-2017. In regard to CAGR for the period, the percentage value growth shows a broad gap between the competitors which are Pretzels (3.24%), Nuts, Seeds and Trail Mixes (8.91%), and Salty snacks (5.88%).

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Figure 5: % Volume Growth In addition, sales in volume for salty snacks in the past 4 years (2014-2017) increased up to 3.08% (Table -1). In the category of savoury snacks, the salty snacks contributed to 53% of the total savoury snacks category in 2014 which grew by 3% in 2017 resulting in 56.92% of shares by volume.

Figure 6:



Category Segments: In this category there are other salty snacks as well including

potato chips, puffed snacks, rice snacks, and Tortilla chips. However, vegetable, pulse and bread chips are also a part of the salty snacks and they are in the same category. Therefore, these are the competitors to Doritos especially the tortilla chips category. Based on the data 5 | Pa ge

from the year 2012-2017, the CAGR in terms of volume for tortilla chips has been in close competition with potato chips (5.55%), tortilla chips (5.14%), puffed snacks which is (5%) and rice snacks which falls in the same category to about (8.7%) over the same period of time.

% Volume Growth 2012-2017



% Value Growth 2012-2017

In addition to that, in the period of 2012-2017 the CAGR in terms of value growth for

rice snacks was (5.62%). If we base it on the percentage value growth of CAGR for the period of 2012-2017, the closest competitor for our product which is tortilla chips are potato chips (6.76%), puffed snacks (3.63%), and rice snacks (5.62%) while for the tortilla chips was ( 4.91%). In the category of savoury snacks, sales by volume of salty snacks increased by 4% from the period of 2012-2017. In the salty snacks category, the major contributor was potato chips for the increase of sales by volume which grew by 1.85% in the period of 2014201. However, our product category which is the tortilla chips declined in sales from 15.58% to 14.83% in the total volume sales. 

Brand level: Based on the Euromonitor International (2017) report the closest

competition in terms of market share for Doritos (PepsiCo) are Red Rock Deli (PepsiCo Inc), Woolworths (private label), Coles (private label), Kettle (Snacks food ltd), Nobby’s (Pepsico Inc) refer table-2 in appendix. This brand level competition is purely based on the percentage retail value of the products in this category. 

If we look at the forecast from the report Passport (2017) for next five years we

observed that in the category of Savoury snacks, only salty snacks has growth of 1.2% by 2022 in comparison to 2017, all other products is going to see decline. 

The forecast suggests that growth in sales of Salty snacks is mostly driven by Potato

chips which has a significant growth in the category (2.66%) whereas our product’s falls in Tortilla chips category which will see decline (-2.38%) by 2022 in comparison to 2017.

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c. Channel analysis

Figure 7: Channel Distribution

According to the Passport (2017) reports the retail value through different distribution channel has been changing over the last four years. Most of the distribution channel have had consistent share in the overall retail value rsp, important thing to note here is that the distribution through Internet retailing has increased significantly over the time. Digital marketing has impacted every product distribution around the world. The value proposition it brings for consumer is high and according to researchers it will even grow further in upcoming future.

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d. Macro-environmental analysis PESTLE model: According to Gupta (2013), the external business environment can be approached by the PEST analysis. The PEST analysis states the political, economic, social and technological factors used to scan the environment in strategic management. PEST Analysis includes the factors responsible for change in the external environment. Political factor revolves around all the aspect related to the possibility of change in power which may cause change in rules and regulations for business. The economic factor refers to labor market rate, exchange rate changes or other types of economic effects to the supplier. The social gives reference to effects of taste, habits and various concerns to the customers while the technological refers to the effect of technology to the product and process (Gupta, 2013).

Figure 8: PESTEL Model

Figure 9: Quantitative macro environmental analysis.

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e. Industry attractiveness analysis Porters Five Forces The five forces model developed by Michael Porter suggests that an evaluation of competition an essential foundation for a successful company [ CITATION Ell05 \l 1033 ]. Larger companies such as PepsiCo Inc. and Snack Brands Australia dominate the savoury snack market making it difficult for new entrants to enter. New entrants into the market are focusing more on health and environmental factors that consumers are showing concern for. However supermarkets depend on what is popular with the consumers and will tend to rely on well established brands instead of new unproven ones. There is a strong threat of substitution by products with a similar cost such as confectionary and beverages. Overall, the savoury snackfood industry is a moderately attractive industry. Competitive Analysis a.

Product Feature Matrix

In product feature matrix we have compared the product in hand with its closest competitors based on different characteristics like Physical Attributes, nutrient content, taste etc. Please refer to the attached excel sheet for details.

Product Features Matrix_Doritos.xlsx

Figure 9: Product feature/competitors

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b.

SWOT Analysis (TOWS)

Figure 10: SWOT Analysis

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References Elliot, P., 2005. The Valuation Profession in Australia: Profile, Analysis and Future Directions. [Online] Available at: https://espace.library.uq.edu.au/data/UQ_9955/PRRES_2005_Ellio.pdf? Expires=1521772716&Signature=PfdRDHWuOy6YtKZbXK0eBUxQGtv66io5wUnUjxh0YFSaEFFjH80AlqWEOTTRD~LOC5WiLyb9TNiYPF~wrgr8HjNqnDt4XBx7e kSfEzSbMhbUheYnhgO3qyemesiJqjCvKGj8cKegnhekIpD~8c8NRw6bzw00xR [Accessed 22 March 2018]. Gupta, A., 2013. Environment & PEST Analysis: An Approach to External Business Environment. International Journal of Modern Social Sciences, 2(1), pp. 34-43. Lehmann, D. R. & Winer, R. S., 2008. Analysis for marketing planning. 7th Edition ed. Boston: McGraw-Hill Irwin. MarketLine, 2017. The Smith's Snackfood Company Ltd, Australia: MarketLine. Passport, 2017. Savoury Snacks in Australia, Australia: Euromonitor International .

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Appendix Table -1: Sales in volume for Salty Snacks: 2014-2017

Table -2 Forecasts Sales of Savoury Snacks by Category: Volume 2017-2022

Table -3 Forecasts Sales of Salty Snacks by category: Volume 2017-2022

Table -4 Channel Distribution

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Table -5 PESTLE Analysis

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