Country Market Analysis: Frito Lay in Morocco

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20th Apr 2020 Business Assignment Reference this

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Abstract

This country market report was written to research the Moroccan market, creating a successful strategy for Frito-Lay to enter by creating a Lay’s potato chip that fits their culture. It is the objective of the writer to educate the reader on the Moroccan culture, and by discussing the concept of market entry, internal and external factors affecting the entry mode as well as promotional activities such as trade, and the Moroccan food culture. Using many methods of research such as books, websites, press articles, and the Davenport University research library.  The paper will discuss and answer a few key questions such as “What are the actions to set a successful strategy to enter the Moroccan market?” “Will the introduction of Lays potato chips appeal to the people who live there?” “What flavor profile would stand out most?” and last but not lease “What would the name of the Lay’s chip be?”

Country Market Analysis: Frito Lay in Morocco

Executive Summary Frito-Lay is a well-established company in the United States that produces snack foods such as potato chips and pretzels under the parent company of PepsiCo, Inc. Frito-Lay has adapted its marketing strategy both globally and locally to meet the needs of consumers who wish to have a variety of snack foods, with the option to make more healthy choices. The low cost to consumers coupled with the large market share has enabled Frito-Lay to become the most popular brand of snack foods in the United States while gaining momentum in other countries. Morocco is the most westerly of the North African countries known as the Maghreb – the “Arab West”, The culture is a blend of Arab, Berber, European and African influences.

Moroccan cuisine is famous around the world for its fragrant spices and unique cooking methods. Currently, there isn’t any Lay’s being sold in Morocco, and the market for snack and variety foods is open.  There are Lay’s that are sold in Africa by the PepsiCo company but none in that country. The cuisine in Morocco contains spices that are known around the world to be pungent and appealing, making Lay’s a good opportunity to enter the Moroccan market. Creating a potato chip that is centered around their spices would not only be creative, it would be a first in the country. The proposed market is an attractive market due to it being untapped, and the rich seasonings that the area has to offer, making the chip business

Market Entry

Market Entry is defined as the starting of actions and efforts to sell a product or service to different groups of consumers not previously targeted by a company or organization. Lay’s is a company that makes some of the best-known and top selling snacks. PepsiCo, Inc. is an American multinational food, snack, and beverage corporation. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. (Wikipedia, 2019) The market entry modes in Morocco include airplanes, agents, joint ventures, and strategic alliances. Lay’s acquired Chipsy, flavors include cheese (most likely based on Rumi cheese and the most popular flavor), tomato (a ketchup-based flavor), kebab on charcoal, and chili & lime, and peri peri flavor. What type of flavor would stand out among the local people in this country? Could it be spices known to the country? Famous flavors that are known in the United States? Market size and rate of country growth are key parameters to determine the mode of entry. The total market volume for a concrete market or country per year is calculated as follows

Environmental Review

A large part of Morocco is mountainous.  The Atlas Mountains, run from the southwest to the northeast, and are mainly located in the center and south of the country. The country is made up of warm and dry summers with mild winters. The country has a constitutional monarchy, and the King’s decision overrides the government and legislative power. Morocco is divided into regions and is subdivided into provinces. Each province is partitioned into districts, municipalities or urban municipalities.

Morocco has a population of over 32 million people. It was found that in rural areas, girls were 33 per cent less likely to attend school than boys, indicating a preference towards educating sons over daughters. Morocco has taken measures to eradicate poverty. The objective of reducing poverty is to provide support and improve purchasing powers. In 2010, Morocco was the fifth-largest economy in Africa. The unemployment rate has been on a consistent decline since 2003.

The Kingdom of Morocco

  • Population 35 million
  • Area 710,850 sq km (274,461 sq miles) (including W Sahara)
  • Major languages Arabic and Berber (official), French, Spanish
  • Major religion Islam
  • Life expectancy 74 years (men), 77 years (women)
  • Currency Dirham UN, World Bank
  • Capitol: Robat

Morocco is a kingdom situated in North Africa. It is a parliamentary constitutional monarchy where the Prime Ministers also the head of government and of a multi-party system. Executive power is done by legislative power is set by the government and the two chambers of parliament. Morocco is one of the only African countries that it is not a member of the African Union, and it is located between Europe and Africa. Having strong ties with Spain, the Moroccan government import export system goes through Casablanca. (Chipsy 2014).

Social and Cultural Environment

It is very important to be able to speak fluently the language of the target market in order to conduct business negotiations. The language of the country is Arabic, and most countries are Islamic countries so changing the way that negotiations, ingredients, etc. will be the same in Morocco as it would be in Egypt. Having insight into the relevant culture is an important bargaining piece. Every country isn’t the same as far as the cultural environment, Morocco is known more for French and Spanish languages as well as the Arab language, so there should be a negotiator who is fluent in all those languages when the bargaining begins. Religion is extremely important in Morocco. It is the very foundation of the government and the religious beliefs influences political, educational and business decisions. Religious customs are considered as a major factor in marketing.

Buyers and Competitors

There are a few companies that are in competition with Frito Lay and those are ConAgra, Diamond Foods, Snyder’s-Lance, Pringles and Great Value. Tariffs on the import of foreign products and services could be a problem for the impact on bringing Lay’s to the country. The brand would be under the name “Chipsy” which is the name of the Lay’s company in Africa Chipsy for Food Industries is a snack foods manufacturer and marketer based in Egypt. It markets its products under the brand names of Chipsy and Chipsy Max. The company has operations in Saudi Arabia, Kuwait and Lebanon. Chipsy is headquartered in Giza, Egypt.

Bringing the chip to Morocco should exceed customers’ expectations. Market size and rate of country growth are key parameters to determine the mode of entry. Import and export, production, changes in stocks and bonds, and neighboring competition are all factors in any industry. In Morocco, there isn’t a snack company currently and there are no chips being sold so the market for the product will be new which makes the possibilities endless. There can be different flavor profiles to fit the country, social media marketing to enhance the sales of the chips to the country as well as radio and television that can showcase the Chipsy brand. Foreign markets are riskier than the domestic market.

Global Participation Strategy

Frito Lay’s is the parent company and the brand Chipsy is already in the country so the risks although there is a low one a risk analysis should still be done when planning their method of entry. Global sweet and savory snacks market provides information regarding the revenue for the period 2014 to 2021. (PR Newswire Association LLC 2016) The flavor profiles could be different the country of Morocco could like bolder, strong flavors due to being known for the Moroccan cuisine that has a strong influence of Spanish and French cuisines. “Potato chips currently represent a predominant part of the snack food and convenience food market in countries across the globe.” (Global Potato Chips Market, 2019)

In 2012, Frito-Lay launched the “Do Us a Flavor” campaign for Lay’s potato chips. A 12-week period where participants can propose their favorite flavors through the brand’s Facebook page. After which, three flavors are selected, which will be produced and made available in stores, so that consumers can vote for the best tasting one. The winner will be one million dollars richer once the verdict is reached. This contest is held worldwide and in different markets around the globe. Unique flavors for its potato chips, and promotions that are ran for the international markets are not only catchy, they have gained the momentum of social media, and Lay’s fans are now looking forward to the brand opening up the contest so that consumers can have a chance to get away from the common chip flavors. In certain markets like China they have their own flavor due to the market. Emulating memories as like the fresh buttered popcorn and hotdogs, to sushi the flaor market could be a wide range of things to use for chip profiles.

Marketing Strategy

International Market Adaptation

Localization helps many foreign brands, especially in an North African country. The company relies marketing teams, to help with product success. Lay’s focuses on the taste and quality of its ingredients, instead of the satisfaction it can offer its customers.

References

  • Salamie, D. (2015). Frito-lay north america, inc
  • PepsiCo. (2019, August 05). Retrieved August 08, 2019, from https://en.wikipedia.org/wiki/PepsiCo
  • Chipsy food industries co. S.A.E – company capsule. (2014). (). Basingstoke: GlobalData plc. Retrieved from Entrepreneurship Database; ProQuest Central Retrieved from http://search.proquest.com.proxy.davenport.edu/docview/1552784671?accountid=40195
  • Global sweet and savory snacks market 2014 – 2021 – kellogg company, frito lay & proctor & gamble. (2016). PR Newswire Europe Including UK Disclose,
  • By. (2019, May 02). Global Potato Chips Market: Market Drivers, Restraints and Opportunities, Market Size & Forecast 2016 to 2022. Key Player are Lay’s, Pringles, Ruffels, Kettle, Herr, Intersnack Group, PepsiCo, Snyder’s-Lance, UTZ, Burtschips, Golden Flake Snack Foods. Retrieved from https://www.marketwatch.com/press-release/global-potato-chips-market-market-drivers-restraints-and-opportunities-market-size-forecast-2016-to-2022-key-player-are-lays-pringles-ruffels-kettle-herr-intersnack-group-pepsico-snyders-lance-utz-burtschips-golden-flake-snack-foods-2019-05-02?siteid=bigcharts&dist=bigcharts

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