3. Supplier
SABRITAS Past Strategy and Environment
•Growing need of raw
material
•Potato Seed Improvement
program
•Food and feed Grains
•Sugar
•Cooking Oil
•Corn
•Packing Material
4. Competitors
SABRITAS Past Strategy and Environment
• Kellog and Del Monte left
the market when there
market share dropped
below 10% in 1968.
• Bimbo’s Barcel subsidiary
entered the snack market in
1978.
• Barcel adopted the similar
Distribution strategy as of
Sabritas
5. Govt
SABRITAS Past Strategy and Environment
• Potato improvement centre
• Under potato partnership
program with Govt, Sabritas
gave improved seed stock to
selected producers.
• Companies less than 51%
mexico owned were
required to negotiate entry
• Created employment with
new plants
6. Distribution and
Marketing
SABRITAS Past Strategy and Environment
• Advertising on TV was the
major marketing activity.
• Brand recognition was
developed via Sabritas logo
and brightly colored
packages and delivery vans.
• Maintain a dominant
market share through
creative merchandizing
techniques emphasizing the
Sabritas brand image and
the :small bags into small
stores
• Store-door direct delivery
7. Customers and
Quality Product
SABRITAS Past Strategy and Environment
• Superior product
• Independent test to confirm
that our products are the
quality leaders in Mexico.
• Addition of Nutritional
snacks and fortified product
8. Strategy Summary Before 1980
• Rapid expansion of Mexican Snack Market.
• Maintain a dominant market share through
creative merchandizing techniques
emphasizing the Sabritas brand image and
the:small bags into small stores,”
• Store-door (Direct-deliver system)
9. Successful strategy Indicators
Successful Strategy Indicators
• Expected to double its volume
every 5 years
• In 10 years - half a billion $
company.
• Consistent Profit Margins 14.5
%
• Net Operating profit after tax -
28 % increase
• Return on assets 20 %
• Balance sheet and income
statement
• Net Income of 7.5 M $
• Large Market Share
10. Barcel’s competitive threat –
Copying Sabritas distribution
strategy
Mexican Government's
increasing pressure to
contribute to its
development objectives
for permission to pursue
companies objectives.
Increasing difficulty
in obtaining needed
quantity and quality
of raw materials.
Government price controls
Restriction on
advertising “Junk food”.
New Threats and Changes in Strategy
12. GENERAL ECONOMIC CONDITION
•Differential between Mexican
and US inflation rates
•Record high inflation in US
Strategy Points
• Profit Margin should be maintained by Keeping
price ahead of Inflation
• Introduction of new nutritious product
13. R
E
G
U
L
A
T
I
O
N
S
•Need for another plant in Mexico
city for future expansion
•Mexican government expected all
divisions of same corporate entity to
behave in coordinated manner
Strategy Points
• Negotiate with government to establish new
plant at Nezahualcoyotl providing new job
opportunities and reducing unemployment
14. Sabritas
Balance of Payment Problem
Options Available
•Reduced imports of goods and services, exports of some
traditional product lines.
•Government encouraged Sabritas to export sporting
goods.
•Other export alternative was supplying Frito Lay with
products made in Mexico
Strategy Points
Reduce the import contents of sporting goods and
began to sell to the Mexican market while continue
to export enough to cover Foreign Exchange cost
15. Raw Material Supplier
Strategy Points
Take fuller advantage of commercial
expertise and combine it with organizational
commercial research rather continuing
agricultural research by Sabritas.
16. Learning Objectives?
• Marketing in the developing countries faces many
challenges due to the distinctive environment.
• Rapid urbanization
• Deficiencies in infrastructure, institutions and
information
• Because of these deficiencies and political salience of
marketing activities, government often intervene in the
market.
• Nature and significance of government interventions
• Infrastructural and organizational problems in
distribution channels.
17. Way Forward
• More focus on profitability and customer satisfaction
rather than market share for sustainable competitive
advantage.
• Exit from products of low volumes and dependent on
imported raw material.
• Improved marketing strategy with more focus on
nutritional aspect & product differentiation.
• Pricing needs to be adjusted and charge premium.
• Preparation of local Managers for Top Positions and
creating more middle management jobs.
