Frito-Lay's O'Grady's Case Study: Marketing Recommendations Report

This case study analyzes the test market results of Frito-Lay's O'Grady's potato chips, focusing on the period up to June 1983. The assessment evaluates whether the $100 million sales target is achievable, considering factors like customer preferences and market share gains from competitors such as Lays and Ruffles. The analysis suggests that O'Grady's has the potential for a successful national launch due to its distinctive features and strong customer retention rates, even in the trial period. The study also explores O'Grady's potential to achieve market leadership in the United States. Finally, it examines the recommendations Mr. Shirley should make to Ms. Barnes, concluding that a commercial launch is the most viable option, given the positive test market data and the associated costs of further testing. The case study emphasizes unique market positioning, customer retention and the potential for O'Grady's to capture a significant share of the potato chip market.

Running head: MARKETING MANAGEMENT
Marketing management
Name of the student
Name of the university
Author note

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Question: 1
As per the assessment on test market results of O’Gradys as of June, 1983, the sales
target of $ 100 million can be achieved. This is due to the reason that in the case study it is stated
that in the further period of the test marketing; more than 80 percent of the sales came from
larger and standard packets and less than 20 percent is coming from the trial packs. This denotes
that customers are having genuine preferences for the new brand and they are not just buying
O’Gradys for trial purposes. This is referring to the long term potentiality of the brand in the
market. On the other hand, it is also being identified that about 33 percent of the sales of
O’Gradys are coming from the existing customers switching from Lays and Ruffles. This should
be noted that both these brands are already established in the market and they are in the market
from long time. Thus, capturing the customers from the existing brands by more than 30 percent
is also denoting the well acceptance of O’Gradys among the customers. This should also be
considered that within the trial period only, if a new brand such as O’Gradys can capture 33
percent of the customers from the established brands, then it is can be concluded that national
launch of the product will be a profitable venture (Webster et al. 2014). Thus, the target sales of
$ 100 million can be achieved by O’Gradys. One of the major critical success factors for the new
products to gain momentum in the market is their distinctiveness and differentiated features. In
the case of O’Gradys, it is stated that it is having thicker ridges and richer taste over their
competitors and thus it will be able to gain the positive and favorable market share in the case of
national launch.
Question: 2

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It can be concluded that O’Gradys will be able to gain the market leadership position in
the market of the United States. This is due to the reason that it is expected that O’Gradys will
have more 50 percent of the targeted market share within the first year of commercial launch.
There are number of reasons, which are denoting that O’Gradys will be able to achieve this feat.
One of the reasons is distinctive positioning in the market. In the case study, it is stated that
O’Gradys is being positioned in unique market position compared to the existing players such as
Lays and Ruffles. O’Gradys is positioned in the market in terms of more taste and thick and
crunchy. Thus, unique positioning in the market will help O’Gradys to gain the new customers
along with tapping the customers of the existing brands. Moreover, it is also being discussed in
this case study that potato chips are the largest segment and revenue generators in the salty
snacks. This denotes that among all brands available in the market, O’Gradys will operate in the
potato chips sector and thus will be able to tap the largest customer segments. Gaining the
market leadership position is also depends on the retention ratio of the existing customers. In the
case of O’Gradys, retention ratio is favorable even in the trial run (Tripathi 2014). This is due to
the reason that it is stated that more than 40 percent is the retention ratio of O’Gradys. This can
be further reflected in the actual sales. Thus, tapping the new customer segments along with
retaining the existing customers will help O’Gradys to gain the market leadership status in the
market of the United States.
Question: 3
It is expected that Mr. Shirley will ask Ms. Barnes to initiate the commercial launch in of
O’Gradys in the market. This is due to the reason that there are only three options available
including killing the entire test marketing plan, continues the test marketing plan and approving
the commercial launch. However, as the data available from the assessment for the test

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marketing, it is expected that commercial launch will be approved. In the test marketing, it is
identified that O’Gradys is being able to create positive image in the market with distinctive taste
and texture and even it went to capture a significant market share from the established players.
Moreover, it is also identified that retention ratio the customers is also positive in the trial period
of O’Gradys. Thus, there are no reasons of killing the test marketing. However, on the other
hand, it can also expect that Mr. Shirley will opt for continuing the test marketing. This is due to
the reason that expanding the area of the test marketing will help to determine more diverse
customer taste and preference patterns. In addition, the current test marketing is being
implemented in a particular location in the United States and thus the result from the single area
cannot be considered as the preference pattern and trend of the entire country (Harmeling et al.
2017). Thus, it can also be recommended by Mr. Shirley that the test marketing should be
continued and expanded in newer regions to determine more diverse customer knowledge and
data.
However, the probability for approving the commercial launch is more over continuing
the test marketing. This is due to the reason that continuing the test marketing will involve more
cost and in the case study it is already stated that the allocated budget for the text marketing is
equaled to the entire cost of distribution for Frito lay. Thus, further continuing the test marketing
will incur more cost for the company and it will be difficult to recover that cost in the short time.
Hence, the only viable option available is initiating the commercial launch of O’Gradys. With
the quick initiation of the commercial launch, the cost of test marketing will be limited and it is
can be recovered in short time. Therefore, it can be concluded that Mr. Shirley will recommend
for commercial launch of O’Gradys in the market.

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Reference
Harmeling, C.M., Moffett, J.W., Arnold, M.J. and Carlson, B.D., 2017. Toward a theory of
customer engagement marketing. Journal of the Academy of Marketing Science, 45(3), pp.312-
335.
Tripathi, M.N., 2014. Customer Satisfaction and Engagement-Customer Retention strategies for
brand manager. Vilakshan: The XIMB Journal of Management, 11(1).
Webster, J., Trieu, K., Dunford, E. and Hawkes, C., 2014. Target salt 2025: a global overview of
national programs to encourage the food industry to reduce salt in foods. Nutrients, 6(8),
pp.3274-3287.