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Wow Chips Analysis

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Homework for Consumer Behavior in Uni.

Wow Chips Analysis

  1. 1. Case 2-3 Frito-lay's WOW! Chips By Kitty Wang 2003 As Homework for Consumer behavior
  2. 2. WOW!® brand Chips Rose and Fell with Olean®
  3. 3. <ul><li>1 Introduction of WOW!® and Olean® </li></ul><ul><li>2 Analysis of the fell of WOW </li></ul><ul><li>3 Possible countermeasures </li></ul><ul><li>4 Epilogue </li></ul>
  4. 4. Introduction of WOW!® and Olean® Rich taste Low fat Taste + health =? Good taste Low fat Original taste Fat free Original taste + Fat free =? Good taste Low fat With Olean® Success of WOW! 1 2 3 4
  5. 5. Introduction of WOW!® and Olean® Olestra was discovered by accident by Procter & Gamble in the 1960s, P&G invested more than half a billion dollars to develop it. FDA approval took over 9 years and was the most rigorous review of any food additive in history. Olestra's safety was validated by over 150,000 pages of studies conducted over 20 years. Facts about Olean® 1 2 3 4
  6. 6. Introduction of WOW!® and Olean® Facts about Olean® <ul><li>Olestra is made from vegetable oil and sugar put together in such a way that it is bigger than a normal fat molecule. </li></ul><ul><li>it cooks like regular vegetable oil and the products made with it taste exactly like the delicious full-fat versions that are cooked in regular vegetable oil. </li></ul><ul><li>While it is made starting from natural ingredients, our bodies can't digest this bigger olestra molecule because of its size. </li></ul>1 2 3 4
  7. 7. WOW!®: It means Olean® Frito-lay’s non Olestra product line Lays Mesquite BBQ Doritos Cooler Ranch Doritos Nacho Cheesier Ruffles Ruffles Cheddar & Sour Cream Tostitos 1 2 3 4
  8. 8. WOW!®: It means Olean® 1 2 3 4
  9. 9. Rose and fell of WOW!® 96 Approved by FDA 2000 Jun. 2000 Sales kept falling and use of Olestra was banned in Canada 02 close to 20,000 `complaints to the FDA more complaints than all other food additives in history combined. P&G sold the plant that makes olestra to Twin Rivers Technology L.P 03 Aug . FDA agreed to remove warnings - E N Q U I R E R   B U S I N E S S   C O V E R A G E Jun,2000 98 distribution around the country. Until June 80 million+ bags were sold. Dec. 1998 More than 15,000 `consumers have filed complaints about olestra. 1 2 3 4
  10. 10. Demographic features of target market Relatively young, with higher education, affluent and open to new things. 1 2 3 4 3+ 30,000+ Profession, Managerial/administrative, Technical/clerical/sales, Precision/craft high school/ college ? WOW! Olean Attributes ? Household structure 30,000+ Household income Profession, Managerial/administrative, Technical/clerical/sales, Precision/craft Occupation high school/ college Education 18-45 Age
  11. 11. Innovation analysis of WOW!® <ul><li>Continuous innovation </li></ul><ul><li>dramatically continuous innovation </li></ul><ul><li>discontinuous innovation </li></ul>Degrees of innovation and importance are determined by the consumers Categories of innovations 1 2 3 4
  12. 12. Innovation diffusion analysis of WOW!® Factors affecting the spread of innovations 1 2 3 4 Fulfillment of felt need compatibility Marketing effort Type of decision Type of group Trial ability Perceived risk Observability Complexity Relative advantage Fast Diffusion Fast Diffusion
  13. 13. Analysis of reference group influence High relevance of product to group Visible usage Individual purchase confidence low High Individual commitment to group Low necessity Chips Olean Conclusion: Reference group Influence on Chips = 8/5 = Low Olean= 12/5= High With moderate=2 1 2 3 4 3 4 3 1 2 1 3 1 1 1
  14. 14. Analysis of information flows Purchase involvement Influences from pinion leader 1 2 3 4 moderate     Low Low High   Moderate   High Low High   Product knowledge    
  15. 15. Analysis of information flows Marketing activities Marketing activities Other Information Relevant market segment Opinion leader Opinion leader Relevant market segment Direct flow Multi step flow 1 2 3 4
  16. 16. innovation features Problems with WOW! target market features reference group relatively young , higher educated, affluent and open consistent, obvious and easy to try, with high perceived risks the influences of reference groups go two extremes; though largely informational. But concerning olestra, consumers are likely to follow WOM information and opinion leaders. <ul><li>Complaints increase with diffusion </li></ul><ul><li>label increases perceived risk </li></ul>1 2 3 4 <ul><li>high concern about health; </li></ul><ul><li>knowledge based judgment; </li></ul><ul><li>market inconsistent with target </li></ul>
  17. 17. Problems with WOW! complaints complaints Target market Target market: common chips market Effective market: market consistent with Olestra 1 2 3 4 WOM & Opinion Leader WOM & Opinion Leader Effective market Effective market
  18. 18. Possible countermeasures Highlight the competitive advantage of WOW!, i.e. original taste+ fat free Investment into R&D, try to collect evidence of safety of olestra use and fight back negative voices in time. Narrow target market, and promotion and ad campaign should focus on young people, highlight youth, vigor, health, fun, fashion and perfect- shaped bodies. Invite celebrities as opinion leaders (sport stars, e.g.) 1 2 3 4
  19. 19. Epilogue <ul><li>2002: close to 20,000 complaints to the FDA; more complaints than all other food additives in history combined. </li></ul><ul><li>2002: P&G sold the plant that makes olestra to Twin Rivers Technology L.P </li></ul><ul><li>2003 Aug . FDA agreed to remove warnings </li></ul>Among customers, there are two sides 1 2 3 4 1997- Aug. 2003
  20. 20. (Products with Olean®) More companies may now use olestra in their products, one consultant said. But they are not likely to be able to use it as a major marketing tool like other additives. They lost that, they will never get it back,&quot; Ken Harris, partner at Cannondale Associates, said. &quot;It cannot be marketed as an ingredient in a positive way.&quot; Epilogue 1 2 3 4