Healthy Cheetos?: Balancing Nutrition and Taste at Frito-Lay

This summer, I will be working at Frito-Lay in Dallas. When I was applying to internships and thinking about the type of work I wanted to do post-MBA, the food industry was a natural choice. I love food-I love cooking, baking, going to restaurants, and trying new and unusual foods. But beyond that, I am fascinated by the food production process, and the politics of food in America, where we increasingly struggle to balance nutrition with our long-entrenched habits of eating mass-produced, often low-quality food.

Pepsico, Inc., is one of the world’s largest food and beverage companies. It is a company with vast global reach, and with an incredibly diversified portfolio of food and beverage brands. Its four main subsidiaries are Frito-Lay, Gatorade, Tropicana, and Quaker, though for this project, I would like to focus on Frito-Lay in particular. This is interesting to me one the one hand because I am going to be working for the company, but on the other hand, because like me, and like many Americans, Frito-Lay is struggling right now to figure out how to balance customer’s desires to be more “natural” and “nutritious,” with their identity as a snack food, whose customer base is driven primarily by taste. The question they are trying to answer is can snack food be healthy and enjoyable? And if they can be both, should they? Do snackers really want both, or does one group of snackers want a healthy snack, and another a delicious snack, regardless of its nutritional quality?

In 2010, Frito announced that was going to use only natural products in its chips by the end
of 2011. This move, which was meant to capture consumers who were becoming more health-conscious, has recently come under fire, as 2011 annual performance, released just weeks ago, was quite poor, and led to almost 9,000 layoffs at the company globally. In a recent article in the New York Times, the CEO of PepsiCo., described how 2011’s disappointing performance was caused by an attempt to expand too far into healthier products, at the expense of its score offerings. While this may be true, it doesn’t answer the question of how Frito can best appeal to both health-conscious snackers and taste-seeking snackers, without alienating either. That is what I would like to explore in my paper.

Right now, some of the questions I have are (and these would ideally be answered by actual
consumers):
- What are the most appealing features of Frito’s products? Taste? Convenience?
Nutrition?
- Do Frito’s core customers want a snack that is more natural or nutritious? Is Frito alienating people by moving in this direction?
- Are there consumers who are currently not customers but who would be if Frito offered even healthier offerings?
- Has the switch to natural ingredients appealed to any group of consumers? Who? Why?
- Are there other elements of health that the company could go after that would drive
more sales? For example, instead of using all natural ingredients, maybe they should be cutting calories, or reducing sodium.
- Is it possible to appeal to both segments simultaneously? (healthy and taste-seekers)
- As a by-product of the healthier tastes of American consumers, is snacking declining in general?
- How do people use these products? Are they meal replacements? When are they consumed during the day? Are they incorporated into meals?

I found the following two articles to be very useful in beginning to think about the current challenges the company is facing, and how they have attempted to deal with this dilemma in the past year or two. The first article gives a nice overview of the brand and their foray into natural foods, and the New York Times article gives a great explanation of how they have evaluated their attempts to move into more natural foods, and what this has done for the company and their customers.

-“Company Spotlight: Fritolay, Inc.” MarketWatch May 2011 (on Business Source Complete)
-“Pepsico to cut 8700 Jobs in a Revamping” New York Times, 2/9/2012
http://www.nytimes.com/2012/02/10/business/pepsico-to-cut-8700-jobs-in-a-revamping.html?_r=1&ref=pepsicoinc

As far as the format of the paper goes, I think I would like to take the approach of analyzing the current situation and making recommendations about how the company should proceed. However, I would like to draw on some of the concepts we learned in class to gain insights into
who their customers are and what they want since I think this will inform my recommendations.
I would like to come up with several personas to help me conceptualize the FritoLay customer
base, and additionally, I would like to try to rank each persona in terms of how important they are to the business. I would like to estimate the size of each persona’s segment, and then really
zone into what each group’s snacking priorities are.

Another concept from class that I would like to use in my analysis is using generative research
to gain insights. I think it will be really important to get a feel for what current consumers of Frito want in their snack, and I think the best way to get this will be by researching actual
behavior. I would want to survey, interview and potentially go into the pantries of current customers.

Finding Qualitative Data on Social Media

One thing I might look at is trending topics on twitter. I think by looking at what topics are trending in a certain geographic area, you could begin to categorize them by interest or type, and that was you can begin to gauge what twitter users are interested in. For example, just looking at what the top trending topics are on twitter right now, and I set the location to be Austin, the top 10 trending topics: (see above)

This could be done for anywhere in the US, the whole US or world, and might, as it did in my case, require some reading to figure out what the topics are actually discussing.

The data listed in the table obviously is small sample size, and ideally you would want to collect data over a long period of time and sort it under a large number of categories. Then, once you had a significant sample size, you could begin to see trends in what twitter users in a particular area are interested in. By categorizing not only the topic of conversation, but also, the nature of the conversation (funny, ironic, silly, respectful,etc.), you would also be able to understand how they like to communicate, and what styles of communication appeal to them. Looking at the sample from today, if we wanted to use this data for marketing purposes, we might suggest an ad campaign for example that had endorsements by popular musicians and employed a quirky style of humor. Just knowing what I know about Austin, this seems like a fairly strong match for the type of campaign that would appeal to Austinites, but again, we would want to use a much larger sample size.

Another way you could use twitter to get descriptive data, and you could also use facebook here as well, is to look at the “about me” section at the top of each user’s twitter page. You could then aggregate the data based on location and start to look at adjective and interests that users find appropriate to describe themselves. For example, my about me section reads: “MBA student, raveler, runner, baker, food-lover.” An advertisement that was food-related would be much more likely to appeal to me than something weight-loss related, which it what the ads that are targeted
towards me on facebook relate to. This is probably because I haven’t described myself as a food-lover on facebook, and it probably targets all women in my age group for weight-loss ads. However, facebook has lots of other useful data, which would allow segments to be identified more easily, like network the user is on, birthday, education, job, etc. With all of this information, you would be able to identify your target segment more easily than you would be
able to on probably any another social media, and then you could look at things like the facebook groups they belong to, and the pages they have liked, and the articles they have posted to get a more accurate understanding about the types of things they are passionate about.

Meet Matt!

Meet Matt. Matt is a 37 year-old married male who lives in Davenport, Iowa. Matt loves football, his wife Angie, his daughter Molly, and fixing cars in his garage. His biggest concern is being able to send his daughter to college, and being able to support his family now that there is another daughter on the way. Matt doesn’t have a lot of knowledge of finance, but he has been saving in a college fund little by little from his paycheck as a floor manager in a local food packing plant. Matt hopes to one day become the regional manager for the three warehouses in his company’s Iowa region, but he sees this as 10 years down the road at least, and of course only if the company can stay in business that long. He wants his daughter to go to the Univesity of Northern Iowa like he did, or maybe even the University of Iowa. He dreams of her becoming a doctor or a lawyer.

Matt lives in a two-flat with his wife Angie. They have two cars: one Thunderbird, which Matt spends time fixing up on the weekends, and one Ford Escape, which Angie uses to take Molly to dance class, run errands, and drive to her job as an office manager at a local real estate office. Matt grew up in Davenport and has a few of the same friends that he had in high school. Most of his friends stayed around Davenport for their whole lives, though some moved regionally to go to college, for a couple of years at least. His friends are loyal and hard-working family men who enjoy good football, a Budweiser, and barbequing in the summer. They are generally handy and enjoy fixing things and being self-sufficient. They are not particularly interested in fads, though some of them do have the latest smartphone. They all have fantastic TVs and full cable packages with the extra sports channels. Primarily, Matt’s money is spent on food for the family, the mortgage, car payments, dance classes and other expenses for Molly, and the occasional splurge on power tools, or details for the car.

Matt is about 5’9, and maybe 15 lbs. overweight. He is not particularly worried about his appearance; he still has some of his boyish good-looks, and even though his belly is a bit larger than he’d like it to be, and his hairline an inch or two further back than he wishes, he still knows he is fairly attractive. He still thinks his wife is sexy and she does a fair amount to maintain her appearance. She jogs with friends in the neighborhood, and belongs to a local gym called “Fitness Gal.” Matt is generally a respectful person and has good manners. He is laid back and non-confrontational in public settings, and doesn’t get too frustrated by waiting in traffic or getting caught in line at the grocery store. He thinks that it feels good to be kind to others and so he tries to do so whenever he can, and he appreciates it when others return the favor. Then again, he has been known to get a little rowdy and even rude when he has had a few too many at Jack’s, his favorite bar, and his team-he roots for the Bears- is losing.

Matt and his friends are somewhat conservative, though he generally considers himself a moderate. Matt and his friends sometimes talk about immigration laws and other political issues, but are really only concerned with the ones that they see as directly impacting their lives or jobs. His friends discuss local political issues as well, but usually just to reaffirm each other’s beliefs and sometimes to make fun of the insincerity or appearance of some of the usual suspects on the local political scene. Matt’s boss is a much older man with whom he is very friendly. Neither are
exceptionally motivated, but both work hard and usually meet their quotas. Matt’s boss gives him positive affirmations for his good work and occasionally asks about Angie and Molly. His boss is rarely critical, but Matt believes that that is due to his lack of interest in his job. Matt watches the local news and programs like “Deal or No Deal,” “Lost,” and “Dexter.” His wife watches “Grey’s Anatomy,” “The Bachelor” and “Biggest Loser.” Matt listens to talk radio on the way to work, which is how he gets most of his national and world news. This is usually on AM and includes reports about the traffic and weather. He plays in a local bowling league with some guys a bit older than him who have lived in Davenport for even longer than he has, and he often finds himself listening to their political conversations. They tend to be a little more conservative than he is, but he often finds himself sympathizing with their point of view.

Matt feels somewhat trapped in his life, but doesn’t see much of a way out, and generally feel fairly happy, so doesn’t feel a strong impetus to make big changes. He wishes his job paid more (he makes $47,000/year) and that he could have a nicer house and better cars. He attends a Lutheran church a few times a year, and feels slightly guilty about not being more committed, and not raising his daughter to be a person of faith. He wishes he had a job that offered him more opportunities, and he feels somewhat uninspired by the work, but at the same time, he feels lucky to have a steady job, as many of his friends have been unable to hold onto theirs through the recession. He gets jealous of his friends and neighbors when they purchase something more exciting or flashy than what he owns. He gets slightly annoyed when one of his friends get promoted- even if the job in a completely different line of work. He wishes he got a little more recognition for everything he does for his family and for all of his hard work at the plant. He’d love to sit behind a desk someday instead of having to spend his days walking the floor and tiring his feet. But as long as he’s in a limited job market, with limited skills, he’ll take what he can get.