NEW APPROACH TO MEASURING CONSUMER BEHAVIOR

Group Members

Akanksha Shrivastava (10IB-)Neerav Harsh (10DM-192)

Rohit Mantri (10DM-126)Satya Bharadwaj (10DM-128)

Sameer Wahie (10DM-133)Sanjay Rughwani (10DM-137)

AGENDA

• Consumer Research Methods

• Frito Lay - Background

• Potential Issues

• Realization through Observational Research

• A New Line of Inquiry

• Outcomes of the New Approach

• Creating the Demand Landscape

• Frito Lay’s Actions (Marketing Mix)

• Selecting the Best Research Methods

CONSUMER RESEARCH METHODS

Consumer Research Methods

Primary Methods

Qualitative

Depth Interviews Focus Groups Discussion

guidesProjective

TechniquesMetaphor Analysis

Quantitative

Observational Research

Experimentation

Survey Research

Secondary Methods

Internal(In-house

Information)

External(Business journals,

consumer panels)

FRITO LAY - BRANDS

FRITO LAY - 2005

Market Leader • 65% share of the salty snacks• 15% of the “Macro Snack” Category

Health and Wellness• Smart Spot Initiative• Launch of Natural Brand – Trans Fat Free Snacks• Switch to 100 % Sunflower Oil

Sustainable growth of Top Line• Model of Weighting Up and Sizing up not sustainable• Unit Volume sales on the decline• Eroding Consumer Base due to variety ?

POTENTIAL ISSUES

• Strong Capabilities• Main Focus

Distribution

• Neglected• Lack of data tracking from point of sale• How to Why Consumers Consumed Frito-Lay.Consumer

Behavior

REALIZATION

Snack is Impulse Purchase• Never tested and age old belief• The marketing strategy was based on this assumption

Conduction of test• Installation of video cameras in selected stores• Monitoring tapes for hrs to understand consumer

behavior in the stores.

Impulse Buy Idea was Dead Wrong• Is the buying behavior planned?• Existing Marketing Strategy needs to be discontinued• Move from How to Why Consumer Buy

A NEW LINE OF INQUIRY

• New Approach

• Shifted its focus from sizing and pricing

•Outside-In perspective instead of usual Inside-In

• Greatest concern is plumbing the depth of 3 Us- usage, users, use

A NEW LINE OF INQUIRY

Old Method New line of Enquiry

Purchase behavior Consumption context

Brief contact with statistically significant sample

Deep contact with a few dozen

Asked shopkeepers about how they felt about broad category of snacks

Understood how people interacted with snacks and how snacking became part and parcel of activities, goals, contexts and situations

Research Method – Questionnaire Research Method – Dairy

People were asked to respond to the given questionnaire

35 selected people were given cameras and dairies and asked to record their activities, episodes and moments, thoughts, and feelings around framing question of food consumption for 30 days

Respondents were statistically significant

Activities are statistically significant

A NEW LINE OF INQUIRY – FOLLOW UP

• Journals illuminated wide range of associations & attitudes that exist around the consumption

• Respondents were asked the following questions based on journals:

― Tell me about this moment, just this particular episode in your life

― What is so special about it?― What happened before this episode and afterward?

• The above led to deeper exploration of consumer needs and emotions

• After a break, the respondents were asked to fill a questionnaire exploring their emotions and perceptions.

• Then they were asked specifically about Product portfolio of Frito Lay

• Data was analyzed to understand relevant dimensions

KEY INSIGHTS FROM DEMAND LANDSCAPE

• How different brands in a company portfolio link to different behaviors

• How these behaviors invoke certain needs and wants

• The contexts in which these behaviors are combined with complex emotions, urges, and passions

OUTCOMES

• Opportunity to combine direct and indirect methods of research

• Increased the reliability & validity of data and structured existing data in new ways

• An outside-in perspective by observing consumers

― First at Point of Purchase― Then at Point of Purpose

• Observed and reported CB more reliable than direct inquiry

CREATING THE DEMAND LANDSCAPE

Step 1

•Identifying the basic elements of the demand landscape

Step 2

•Group into demand clusters- use goals or activities or context as means of clustering

Step 3

•Complete demand clusters through adding existing research (saturate)

Step 4

•Evaluate the demand clusters with respect to their strategic usefulness

Step 5

•Evaluate how a brand “fits into” or plays out in a demand landscape

IDENTIFYING BASIC ELEMENTS

Develop a broad matrix of use and consumption situations E.g. Diary method used by Frito-Lay

One-on-one discussions or interviews with respondents to explore in greater depth the contexts in which activities take place, goals are realized, and

priorities are established

Start exploring the purchase processE.g. Secondary part of the interview for Frito-Lay

Result: Information that would help the company move into second piece of the DIG model and to begin to reframe its opportunity space

GROUPING INTO DEMAND CLUSTERS

• Grouping through similarities of the activities, common themes emerging from the goals and customer’s priorities for these goals.

• Frito-Lay took into account 10,327 activities, 33,000 goals, and several hundred “use” contexts.

• Ultimately narrowed the analysis down to just 15 goals associated with several hundreds of activitiesE.g. Functional goals- “to correct poor health”, Emotional goals- “ to treat or to indulge”

• Result: Frito-Lay could see how its products fit into the lives of people over the broad range of activities and goals associated with consumption

SATURATING

• Using secondary/existing traditional research to saturate

• Frito-Lay used its own extensive research (iTrac) & syndicated World of snacks study of Landis

• World of snacks study provided customer information across 250 attributes.

• These attributes were mapped into demand clusters

• Landis also provided product-category-level data, such as the percentage of customers who consider potato chips to have nutritional value.

• Through this crossing of existing data with the demand clusters, the size of the demand in each cluster was determined.

STRATEGIC USEFULNESS OF CLUSTERS

• Frito-Lay used three levels of criteria to evaluate the clusters

1. The relative priority that customers place in their lives on particular goal or activity or cluster.

2. Channel Fit- To what extent a particular demand cluster was compatible with the IC channel?

3. Was the market attractive?

• Some highly valuable demand clusters were also highly competitive and over targeted by alternative product offerings, E.g. Beef jerky or cookies

EVALUATING BRAND w.r.t. DEMAND LANDSCAPE

• To understand whether the difference in use and consumption of a particular brand is due to

― Product itself or ― The way it has been traditionally positioned

• Important insights for Frito-Lay:― Each product played a different role in customers lives― Customers associated Lay’s with specific use contexts, activities,

and goal achievement that had more to do with emotions surrounding these contexts than with potato chips

― Activities were moments of simple joy that often invoked inner-directed feelings, their meaning to oneself

― Intersection of health and wellness with comfort and reassurance was a place where it could become most relevant

• Frito-Lay decided to refocus the positioning to stress “moments of simple pleasure”

FRITO-LAY’S ACTIONS (MARKETING MIX)

• Promotion― Away from the product quality to it’s inherent goodness,

wholesomeness, authenticity, realness, genuineness and the values of home intersected in those moments that matter to consumers

― Advertisements used genuine people instead of actors. Asked customers to take a smile break, read a funny comic strip

• Place― Places of relaxation like picnic spots, and not at places of formal

meetings, bars or formal events

• Price― Not tweaked

• Product― Not tweaked

FRITO LAY – POST RESEARCH

• FRITO LAY and Decision Insight won American Marketing Association EXPLOR Award for Innovation.

•Capture the Smiles of Summer - with Kodak

• Lay’s Puts an End to Naked Sandwiches

SELECTING THE BEST RESEARCH METHODS – DIG MODEL

• Development Firs, Innovation and Growth Model – Focus on finding ways to create a transformational change in consumers’ everyday life.

• How do I leverage the opportunity

• I know consumer landscape but where is the opportunity

• I know what to innovate, but what is the consumer landscape

• How do I refine or test my innovation to exactly fit into consumer’s life.

Enrich Define

ExploreRefine

SELECTING THE BEST RESEARCH METHODS

Enrich

• Confessional Interviews• Consumer Stories• Mind Mapping

Define

• Day Reconstruction Method• Photo Observation• Written Journals

Refine

• Archetypal Research• Focus Groups• Metaphor Elicitation

Technique

Explore

• Day Reconstruction Method• Un-focus Groups• Talk-through Research

Focused Broad

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THANK YOU