Frito Lay New Product

Essay by gabyborjaUniversity, Master'sA, October 2014

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This is an individual assignment. Read the Frito-Lay case carefully and then answer the following questions. Clearly state all the assumptions that you need to make to answer these questions. Figures in brackets indicate the points for each question.

Please note that the Honor Code is in effect. Any indication that you have not worked independently will result in an automatic fail.

Compare the approach to new product introductions between the Snack industry and the Pharma industry that you studied in the Rogaine case.

The Pharma industry approaches new product introduction by doing R&D for new products and line extensions that must be submitted for regulatory approvals from the FDA this is a lengthy process that follows the acquisition of patents that expire after a given amount of time, during the patent protected period firms enjoy little or no competition. After the patent expires the drug can move to the non-prescription sector if it passes FDA approval or it faces competition by generic drugs.

The way their products are marketed and sold depends on whether the product is prescription or non-prescription. If the drug requires a prescription then the sales and marketing efforts are directed to the health care providers directly. In the case of nonprescription drugs, where competition is intense and new product development and introduction is paramount, marketing and sales efforts are directed to consumers and trade promotions provided to retailers.

The Snack industry on the other hand, is a very agile industry that allows firms to react quickly to competition by rapidly placing similar products in Supermarket shelves. This is a fast moving industry where as many as 650 snack chip products are introduced each year, mostly new flavors of existing snack chips. The new flavor introduction failure rate is high where fewer than 1 percent...