• Innovation: Frito-Lay has developed the ability to rapidly replicate new flavors introduced by Kettle and Cape Cod that it would not have considered offering in the past (for example, jalapeño and sun-dried tomato and Parmesan).
• Route to market: Frito-Lay sells primarily through grocery and supermarkets rather than restaurants and boutique markets. Lay’s Kettle Cooked leverages Frito-Lay’s extensive direct-store-delivery network to penetrate key channels.
• In-store marketing and merchandising: Lay’s “category captain” position in traditional flat potato chips gives Frito-Lay the power to influence, if not set, category shelf plans. That sway over product placement is a key advantage.
An Opportunity for Growth
Large companies should view small players not simply as a threat or nuisance, but as valuable working examples of how they might recharge their own growth. Whether a large company decides to acquire small players or to compete with them head on, it needs the right capabilities system. An acquirer must have the people, processes, and tools in place to leverage its scale and strength without snuffing out the new brand’s innovative spirit and upstart image. And a builder needs these elements in place to innovate quickly in response to small players and to reinforce the new brand through in-store marketing and merchandising.
Careful attention to building or buying the right capabilities will allow large companies to leverage the winning strategies of small players for their own growth ambitions.
Reprint No. 00197
- Elisabeth Hartley is a principal with Booz & Company’s consumer and retail practice, and is based in New York.
- Steffen Lauster is a partner with Booz & Company based in Cleveland. He leads the firm’s consumer and retail practice in the United States.
- J. Neely is a partner with Booz & Company’s consumer and retail practice, and is based in Cleveland.