Cracker Jack Case Analysis
Case Recap
The primary reason for the Borden Foods to divert itself from snacks is to emphasis its efforts and resources in the growth of their whole-wheat meal segments. Because of this valuation they had and a growth plan they had they decided to announce sale of Cracker Jack in 1997. The management team of Broaden also recognized that with the increase in competition they have not been able to successfully grow the sales figure in past five years. Also because the Cracker Jack brand has various packaging options and has been maintaining a huge product line of 32 Stock-Keeping Units (SKUs). However, currently Broaden production facility had only 32 percent of space allocated to Cracker Jack Products and has been operating at 32% of its full capacity. Cracker Jack Management believed that the broadened distribution was the most important element of their new strategy. They believed that Broaden sales force and broker/distributor network currently in use should be replaced by a direct-store-delivery sales force. It was believed that a DSD sales force would provide product placement in the grocery DSD snack aisles, which is the highest velocity snack aisles in supermarkets. However, a DSD sales force is more resource intensive than Borden’s present sales and distribution network. Borden Foods management was neither prepared to make the investment required nor equipped to handle a DSD sales force for Cracker Jack given the resource demands of other business opportunities.
Problem identification and root cause
Frito-Lay is the market leader in the salty snack food production having something different in their products will get a competitive advantage. Cracker Jack as a brand has a 97% awareness with people from the ages of 15 to 60 and a 95% awareness amongst the caramel popcorn users. This was a very well known brand even with a very few advertisements. There are other several reasons which is explained below why Frito-Lay decided to acquire the Cracker Jack.
The primary reason for the Borden Foods to divert itself from snacks is to emphasis its efforts and resources in the growth of their whole-wheat meal segments. Because of this valuation they had and a growth plan they had they decided to announce sale of Cracker Jack in 1997. The management team of Broaden also recognized that with the increase in competition they have not been able to successfully grow the sales figure in past five years. Also because the Cracker Jack brand has various packaging options and has been maintaining a huge product line of 32 Stock-Keeping Units (SKUs). However, currently Broaden production facility had only 32 percent of space allocated to Cracker Jack Products and has been operating at 32% of its full capacity. Cracker Jack Management believed that the broadened distribution was the most important element of their new strategy. They believed that Broaden sales force and broker/distributor network currently in use should be replaced by a direct-store-delivery sales force. It was believed that a DSD sales force would provide product placement in the grocery DSD snack aisles, which is the highest velocity snack aisles in supermarkets. However, a DSD sales force is more resource intensive than Borden’s present sales and distribution network. Borden Foods management was neither prepared to make the investment required nor equipped to handle a DSD sales force for Cracker Jack given the resource demands of other business opportunities.
Problem identification and root cause
Frito-Lay is the market leader in the salty snack food production having something different in their products will get a competitive advantage. Cracker Jack as a brand has a 97% awareness with people from the ages of 15 to 60 and a 95% awareness amongst the caramel popcorn users. This was a very well known brand even with a very few advertisements. There are other several reasons which is explained below why Frito-Lay decided to acquire the Cracker Jack.