CPGmatters: Frito-Lay Outlines ‘Extreme’ Shift in Marketing Approach

May 09, 2013

Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.

"We all look at trends on how to be predictive, but in this day and age, it’s not about trends. It’s about disruption."

That’s the view of Ann Mukherjee, SVP and chief marketing officer of PepsiCo’s Frito-Lay North America division, who spoke recently in a keynote presentation at the IRI Summit in Las Vegas. The executive was detailing the often unconventional and creative methods Frito-Lay uses to capture "pockets of demand" at the "tails" or extreme ends of the market.

Quoting Bob Johansen, a research fellow at the Institute for the Future, Ms. Mukherjee painted a challenging future for marketers: It will be a volatile, uncertain, complex and brutal world. All resources — whether people, environment, agriculture — will be stretched.

"But there is hope," she said, "because the next decade will also be defined by new technologies and new ways of connecting. It’s about understanding how to get to better insights to leverage growth. The smartest people who come up with the smartest solutions will make that happen. And in those new solutions will come new demand. The question is: Can you get out in front of it? Can you predict where the pockets of demand will come so you can take advantage of this new world?"

She offered a few examples of how Frito-Lay is targeting the "Young and Hungry," a group of younger males described as "promiscuous snackers," loyal to nothing and motivated by metabolism.

One success was Frito-Lay’s partnership with Taco Bell to create Doritos Locos Tacos, featuring a shell made of Nacho Cheese Doritos Chips.

"We understood that the true demand moment and one of the biggest places for demand was away from home," she said. "In a world when anyone can get anything they want when they want it, you got to disrupt."

Another involved a 56-foot-tall vending machine installed last year at the South by Southwest festival in Austin to debut Doritos Jacked Tortilla Chips. The contraption doubled as a stage for bands and a dispenser of samples and prizes. She said, "We needed a strategy that created context that was so cool. We telecasted it globally."

For more traditional marketing, Frito-Lay delivers a demand-based solution depending on the channel.

"So what we do in a Costco versus in a Kroger is driven by demand and how it is expressed in that channel," she said. "We also know that all these moments are not created equal. That’s because in today’s world we don’t live in a melting pot; we live in a mosaic."

She called for collaborating with trading partners to find solutions. "We have to disrupt together. We must learn as fast as the world is changing around us. Only then, will we be transformed."

Is “disruptive” the right term to describe the approach required by marketers in the years ahead? What can other brands learn from the increasingly unconventional marketing approaches taken by Frito-Lay?

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15 Comments on "CPGmatters: Frito-Lay Outlines ‘Extreme’ Shift in Marketing Approach"

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Richard J. George, Ph.D.

Disruptive in today’s environment will be more effective than incrementalism. Paradigms are shifting quickly, forcing everyone back to zero. The key is to stay close to the customer and communicate/market to them in their space. What worked yesterday may not work today. Look back and learn. Look ahead and design accordingly.

Zel Bianco
I was at the IRI and heard Ann’s keynote and beleive “disruptive” does describe what Frito Lay must continue to do to get through to the young and easily distracted consumer of their products. It makes sense that they need to identify areas of contact in and out of the store, much as spirits and beer manufacturers do. Although in-store is critical, what these brands do at clubs, bars,and other events is just as important to position the brand. I think that sometimes, it seems to go a little too far. A commercial (actually a short film that was also shown during the keynote) that is now running online for Pepsi Max shows a professional stunt driver, disguised as a meek car shopper, who is taking the car and salesmen for a test drive. He proceeds to drive the sales guy to a blubbering, cursing maniac due to the crazy stunts being performed. Yes, it’s cool to watch but where does “disruption” draw the line? Given that kids are driving 115 miles per hour and taking pictures of the speedometer as they do it seems a little crazy. This age group sees so many crazy videos, that I just wonder… Read more »
Ryan Mathews
Disruptive is exactly the wrong word to describe what’s needed. Radically adaptive seems much more appropriate. In my “day job” as a futurist I am routinely exposed to a deluge of what I call, “future porn,” — sloganeering, labeling, bizarre attempts to stretch the credible dimensions of demographics, research only drunk money could follow, etc., etc. Saying that the future will be, ” … a volatile, uncertain, complex and brutal world,” and that, “All resources whether people, environment, agriculture will be stretched,” is tantamount to saying that the future will look pretty much like the past and, for that matter, large sections of the present.” Nothing new here. Absolutely nothing at all. Defining technology as the “hope” for the future is also suspect—just as all the victims of the Industrial Revolution. Being “unconventional” only has meaning in a world dominated by convention. The future challenges to marketers is much more challenging than finding new ways to distribute Doritos at a music festival—it’s finding ways to communicate to an audience increasingly defined precisely by its lack of definition. It’s a human problem, a cultural problem, a communications problem—not a technology problem. Technology is an enabler, not a solution in and of… Read more »
Cathy Hotka

It’s all about the buzz, and marketers are bringing the product to the customer. Other examples are the Coke Freestyle machine, Red Bull’s sponsorship of rugby games, and McDonald’s many new snack products. It’s exciting to watch and there’s money to be made!

Dr. Stephen Needel

No. If her business is driven by demand then by definition, disruptive is not what they are doing. What F-L does well is create demand. They are one of the few companies that can do that because their best target is hormone-driven rather than habit or cognition driven. Do they come up with new ways to do things that catch the eye? Sure they do. Can other brands do it? Sure they can. Is it disruptive? No—it’s marketing.

Joan Treistman

I heard Ann speak and she is brilliant. The term, “disruptive” is used by many today…for marketing and for product innovation. We used (in covered wagon days I guess) the phrase “breaking through clutter.” How different is that terminology?

If I have to parse it out, I’d suggest that disruptive focuses on creating new behavior. While breaking through the clutter defines attention getting executions.

Trends (looking in the rear view mirror) don’t lead you to disruption. Creativity and taking chances makes for effective disruption.

Ann pushes the envelope by encouraging her managers to dig deeper and deeper into trends, but at the same time pay attention to the here and now…to recognize an environment where Frito-Lay’s target market assembles. Then she lets the creatives go wild.

Frito Lay has Ann Mukherjee and deep pockets. Other companies have to seek out those individuals with mind bending acumen and support their initiatives…all the way. I’m guessing that not every Frito-Lay attempt at disruption works. But I feel confident that with Ann’s support, the pursuit of disruption continues to bring many successes and overall corporate revenue and profit.

Mark Heckman

While brand and retailer loyalty is not yet dead, the whole premise of “loyalty” being the natural state of consumerism is certainly dying. Shoppers have too many choices, tools and incentives to stay fixed on just one or two brands or retailers.

That means brands and retailers must wake up everyday with new ideas as to how to “disrupt” a marketplace loaded with these choices and offers and emerge as the winner, knowing that only means the win the DAY, not the week, month or year. Frito Lay is doing just that.

Ian Percy

Absolutely ‘disruption’ is the right word, well the right ‘first’ word. You can’t go on a cruise unless someone unties the boat.

Because over 90% of our behavior is controlled by our subconscious programing, changing our worldview is very difficult usually requiring significant disruption. In other words the solutions and innovations we seek are ‘outside’ of our worldview which is why we need collaboration with other world views especially ones that clash with ours. This is why Ann says we disrupt “together.”

Ann also gives us the word that has to be paired with disruption. First you untie the boat but there is no point in simply being adrift. She brings up the word “transformed.” BINGO! The phrase that needs to become our MO if we want even a slight chance to lead our industry is “Disruptive Transformation.” Untie the boat and go somewhere new, exciting and profitable.

I don’t know of Ann Mukherjee, but she is one insightful executive. Good piece this morning John—thanks.

Ed Rosenbaum

Anne makes her point in an excellent manner. Whatever the right word is, be it “disruptive” or something else, Ann lets us know we have to start looking at new ways to attract the young spenders to bring the money our way. For me, I am not sure if “disruptive” will remain the new buzz word, but the envelope is being pushed. And that push has been created from the outside this time.

James Tenser

Brand marketers probably like the term “disruptive” because it implies that a carefully designed, novel campaign can cause target consumers to behave in unplanned, un-habitual ways.

This is a bit egocentric, I believe. Target consumers are already behaving in unplanned, un-habitual ways. Furthermore, the life-cycles of these behaviors get shorter and faster at an accelerating rate.

Big brands with enough resources can continuously put a variety of campaigns and product innovations in front of consumers — some edgier, some more conventional. If a highly inventive campaign correlates with a sales blip in a targeted group, we declare it “disruptive” and rev up the PR machinery.

Welcome to short attention span theater, folks. It’s a 30,000-act play where the audience has no viewing habits and only other marketers pay close attention.

Ryan Mathews

One more time: reality constantly disrupts — that’s its normal state — and we must constantly adapt or go extinct.

If disruption is the constant, it can’t be very disruptive, can it?

Lee Kent

For any marketing approach to work these days, it must first break through all the noise. I guess you can call that disruptive. However, I do not believe that “unconventional” is required for every brand.

Staying close to the customer is the key. How do they interact with the brand? What motivates them toward the brand? How does the brand speak to them? Therein lies the marketing approach.

Dennis Serbu
Dennis Serbu
4 years 6 months ago

Losing the herd because you are chasing a stray sheep is a strategy, I guess. Disruption brings to my mind wild and crazy stunts designed to bring attention to the same stuff in a different bag.

What is needed is honest innovation; new product concepts with actual features and benefits. We need to market to the masses with most certainly a different approach to channel and cluster. The disruption I see from marketers like this has a finite life that brings pleasure to the unimaginative (they are told they like it and they believe it) and disappointment to most. After all, is it not still the same product in a different bag? Sheeple or People? Lift or Loyalty?

Craig Sundstrom

I was not there, of course, to hear Ms. Mukherjee speak, and it’s entirely possible something was lost in going from speech into print, but judging from (many of) the comments here, this sounds like describing old concepts with new buzzwords and great enthusiasm, which, of course, is exactly what marketing itself is (so no surprise there), and an attitude-rich phrase like “disruptive” is well suited to a company that sells to “promiscuous snackers,” however much I might dislike the term.

Mark Burr
4 years 6 months ago

The correct approach is the two words described by Mr. Matthews — “adapt” or go “extinct”.

There is no question that Frito-Lay should be congratulated to be even able to continue to sell the majority of their products into a marketplace that is generally running as fast as they can away from this type of food. In that sense, Frito-Lay has been somewhat exempt and folks like McDonald’s take the heat for them.

Is that “disruptive” or beating the odds for as long as they can before going “extinct”?

In the years ahead, Frito-Lay may be using every unconventional means possible to convince the marketplace that their products are not what whey are. Otherwise, they will have to be “disruptive” inside themselves and figure out how they can actually deliver a product that consumers will want in an ever health-driven food market.


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