Homework for Consumer Behavior in Uni.

1. Case 2-3 Frito-lay's WOW! Chips By Kitty Wang 2003 As Homework for Consumer behavior

2. WOW!® brand Chips Rose and Fell with Olean®

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. 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

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. WOW!®: It means Olean® 1 2 3 4

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. 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

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. 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. 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. 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

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. 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

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," Ken Harris, partner at Cannondale Associates, said. "It cannot be marketed as an ingredient in a positive way." Epilogue 1 2 3 4