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FRITO-LAY TARGETS THE HISPANIC MARKET

C ASE – FRITO-LAY TARGETS THE HISPANIC MARKET
Frito Company was founded in 1932 in San Antonio, Texas, by Elmer Doolin. H. W. Lay &
Company was founded in Atlanta, Georgia, by Herman W. Lay in 1938. In 1961, the two
companies merged to form Frito-Lay, Inc., with headquarters in Texas. Frito-Lay produced,
distributed, and marketed snack foods with particular emphasis on various types of chips. In 1965,
the company merged with Pepsi-Cola to form PepsiCo, Inc. Three decades later, Pepsi-Cola
combined its domestic and international snack food operations into one business unit called FritoLay Company. Today, Frito-Lay brands account for 59% of the U.S. snack chip industry, and there
are more than 45,000 Frito-Lay employees in the United States and Canada.
In the late 1990s, despite its overall popularity, Frito-Lay faced a general lack of appeal to
Hispanics, a fast-growing U.S. market. In an effort to better penetrate that market, Frito-Lay hired
various market researchers to determine why Hispanics were not purchasing their products as often
as company officials had hoped and what could be done about the problem. In the studies, market
researchers discovered that Hispanics thought Frito-Lay products were too bland, Frito-Lay
advertisements were not being widely viewed by Hispanics, and Hispanics tended to purchase
snacks in small bags at local grocery stores rather than in the large family-style bags sold at large
supermarkets.
Focus groups composed of male teens and male young adultsa group that tends to consume a lot
of chipswere formed. The researchers determined that even though many of the teens spoke
English at school, they spoke Spanish at home with their family. From this discovery, it was
concluded that Spanish advertisements would be needed to reach Hispanics. In addition, the use of
Spanish rock music, a growing movement in the Hispanic youth culture, could be effective in some
ads.
Researchers also found that using a Happy Face logo, which is an icon of Frito-Lay’s sister
company in Mexico, was effective. Because it reminded the 63% of all Hispanics in the United
States who are Mexican American of snack foods from home, the logo increased product
familiarity.
As a result of this research, Frito-Lay launched its first Hispanic products in San Antonio, in 1997.
Within a few of years, sales of the Doritos brand improved 32% in Hispanic areas. In May 2002,
Frito-Lay teamed up with its Mexican affiliate, Sabritas, to launch a new line of products to further
appeal to Hispanic customers. Included in these offerings are Sabritas Adobadas tomato and chile
potato chips, Sabritones Churrumais fried corn strips with chile and lime seasonings, Crujitos
queso and chile flavor puffed corn twists, Fritos Sabrositas lime and chile chips, El Isleno
Plantains, and others.
More recently, Frito-Lay has been relying on input and guidance from the Adelante employee
network, which is a multicultural Latina/Hispanic professional organization associated with
PepsiCo. At Frito-Lay, the organization’s mission is to help develop a diverse, inclusive culture
accelerating growth opportunities for associates while providing a competitive advantage in an
increasingly diverse marketplace. As part of this effort, Adelante has been used to help develop
new flavors and advertising programs for Hispanics. Based on information gleaned from Adelante
members, new Frito-Lay snack products are being test marketed in several states, and guacamole-

flavored Doritos became one of the most successful new-product launches in the company’s
history.
Discussion

In the research process for Frito-Lay Company, many different numerical questions were raised
regarding Frito-Lay products, advertising techniques, and purchase patterns among Hispanics. In
each of these areas, statisticsin particular, hypothesis testingplays a central role. Using the case
information and the concepts of statistical hypothesis testing, discuss the following:
1. Many proportions were generated in the focus groups and market research that were conducted
for this project, including the proportion of the market that is Hispanic, the proportion of
Hispanic grocery shoppers that are women, the proportion of chip purchasers that are teens, and
so on. Use techniques presented in this chapter to analyze each of the following and discuss how
the results might affect marketing decision makers regarding the Hispanic market.

a. Suppose that in the grocery shoppers w changing cultural v Hispanic men are n randomly sample 6
shoppers from around are women. Does t
evidence to conclu
Hispanic grocery s
b. What proportion of
advertisements in S
says that in the pas
about .83. We wan
this figure is true. A
Hispanics is selecte
testing this hypothe
and explain this ou
this study using

2. The statistical mean can be used to measure various aspects of the Hispanic culture and the
Hispanic market, including size of purchase, frequency of purchase, age of consumer, size of store, and so on. Use techniques presented in this chapter to analyze each of the following and discuss how the results might affect marketing decisions.
a. What is the averag Doritos Salsa Verd
indicate that the me
really correct? To t
randomly contacts
Salsa Verde with re
Excel output. Discu
hypothesis test to d
age is actually 31.
of purchasers are n
population.

b. What is the averag
customer on chips
hypothesized that t
researcher who kno
believes that this fi
prove her case. She
Hispanics, has them
purchases for one y
following figures. A
techniques from th
Assume that expen
normally distribute

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