From fat-free chips to flavor contests, market research has both failed and supported the well-known potato chip brand, Lay’s, in their product development process. The Wow! “healthy” chip disaster shows that promising market tests don’t always spell success. Crowdsourcing campaigns, while beneficial for increasing customer engagement and boosting short-term revenue streams, can provide inaccurate insight into long-term consumer preferences. This year, Lay’s has released a new product line, Lay’s Layers, but only in two flavors presumably as a large-scale market test for their brand-new chip design.
In the 1990’s, Procter & Gamble developed “olestra, a synthetic fat molecule under the brand name Olean.” 1 The idea was to provide an alternative to unhealthy snacks to cater to trends for healthier food. Market tests are used to forecast the performance of a new concept with prototypes or models presented to target customers either individually or in focus groups with the hope that the sample results will depict the overall market reaction. In this case, “Frito-Lay began experimenting with [olestra] in Lay’s, Ruffles, Tostitos, and Doritos that same year. Early word was encouraging, and all products went on to a national rollout in 1998.” 2
While initially successful, “Wow! brands, which cost 40% more than regular chips, may also be too expensive, and Frito-Lay hasn’t offered many incentives for consumers to try them.” 3 Additionally, customers were “scared off early by warnings from consumer activists that the fake fat can cause, among other things, abdominal cramping and loose stools.” 4 Issues with pricing and unpleasant physical reactions did not bode well for the new product line.
Part of market testing involves estimating the cost of a failed product launch, which can be more costly than the research and development of the product. Companies have to take this risk into account during this phase of product development. Unfortunately for Lay’s customers, the fat-free chips were launched when they probably shouldn’t have been. Perhaps Lay’s should have conducted further research, or the concerning results in the research were not given enough weight in the decision to release the new chips.
While market research appeared to indicate strong performance for fat-free chips, Frito-Lay ultimately had to withdraw Wow! products for several years until a more recent re-release with a different ingredient list under the branding of “better for you” and “lightly salted” chips. 5
Most product development and market research happens behind closed doors, but Lay’s found a way to involve consumers with their “Do Us a Flavor” campaign between 2012 and 2017. 6 In the idea development process, resources and a budget are allocated to creating the product and testing it. Crowdsourcing allows companies to outsource the ideation process to the public.
Crowdsourcing involves presenting a problem or challenge to the consumer market and gathering the best ideas and feedback from consumers. 7 According to marketing research, “crowdsourcing provides organizations enhanced innovation performance, increased sales, and better customer engagement.” 8 Lay’s “Do Us a Flavor” campaign is an example crowdsourcing. This tactic is useful to CPG brands because when consumers see that companies are “committed to listening, embracing and delivering their precise requirements, the more they want to be involved in that organization.” 9
“People are inherently creative and want to shape their own experiences.” 10
The Lay’s flavor contest provided customers with “a new fun activity in brainstorming flavor ideas and feeling like they are contributing to America’s favorite chip brand.” 11 Frito-Lay publicized the idea generation, product prototyping, and market testing process normally done without public input. 12 Doing this involved the customers in the creative process of developing products and, most importantly, allowed Lay’s “to gain insights into consumer preferences and behaviors.” 13
Crowdsourcing can have great benefits, especially because customer engagement and digital strategies are essential to branding and product success. However, it’s important to keep in mind that crowdsourcing has downfalls. In the same way that focus groups may not be able to perfectly predict the market, crowdsourcing can provide an inaccurate representation of the market’s reaction to a product. Lay’s “Do Us a Flavor” campaign, for example, saw “many of the winning chip flavors in various countries … discontinued due to weak or inconsistent sales. This may suggest that the flavors that win are more of a novelty and do not specifically align with long-term consumer interests.” 14
Lay’s continues to release innovative and competitive new products like Lay’s Layers.
This year, Lay’s released Layers, probably after years of product development and testing. Despite the lengthy process it takes to release a new product into the market, Layers is only available in two flavors: three cheese and sour cream & onion. 15 Why not provide a more diverse range of flavors?
Even though Layers probably performed well in market tests, that does not mean it will perform well in real life as exemplified by Wow! and the short-term success of flavor competitions. Providing only two flavors to start allows Lay’s to perform a large-scale market test, so to speak; they likely want to see how receptive the market will be to the new product before pouring resources into developing new flavors.
The new chips have been described as follows: “Bite-sized, flavorful and unlike anything Lay’s has unveiled before, they deliver a truly new snacking experience.” 16 It’s no wonder Layers are only available in two flavors. Any time an original product is released, there is no telling how the market will react; even products with precedence can have unexpected results. The popular, somewhat standard flavors allow Lay’s to see if the unconventional and first-of-its-kind chip design will be successful enough to continue developing the product line. Wacky flavors like Wasabi or Southern Biscuits & Gravy, reminiscent of their “Do Us a Flavor” days, would not be the best flavors to test this new chip.
Questions marketing managers would consider:
- Can you think of other examples of crowdsourcing? What successes and failures can be learned from those examples?
- Under what circumstances would crowdsourcing be a helpful resource?
- Why is thorough market research essential to product development and launch?
- If you were a marketing manager, how could you minimize the risk of failed product launches?
1 Rossen, J. (9 April 2020). May Cause Anal Leakage: The Olestra Fat-Free Snack Controversy of the 1990’s. Mental Floss. https://www.mentalfloss.com/article/619261/olestra-fat-free-snack-controversy-1990s
2 Rossen, J. (9 April 2020). May Cause Anal Leakage: The Olestra Fat-Free Snack Controversy of the 1990’s. Mental Floss. https://www.mentalfloss.com/article/619261/olestra-fat-free-snack-controversy-1990s
3 Deogun, N. (14 September 1998). Customers Aren’t Screaming Wow Over Frito-Lay’s Fat-Free Snacks. The Wall Street Journal. https://www.wsj.com/articles/SB905730946910550500
4 Deogun, N. (14 September 1998). Customers Aren’t Screaming Wow Over Frito-Lay’s Fat-Free Snacks. The Wall Street Journal. https://www.wsj.com/articles/SB905730946910550500
5 Lay’s. (2022). Lay’s Better For You. Frito-Lay North America, Inc. a Division of PepsiCo. https://www.lays.com/product-category/lays-better-for-you
6 Frito-Lay North America. (10 January 2017). Get Your Pitch On! Lay’s “Do Us a Flavor” Seeks America’s Next Great Potato Chip Flavor and Celebrates the Stories Behind the Flavors with $1 Million Award. Frito-Lay North America, Inc. a Division of PepsiCo. https://www.fritolay.com/news/get-your-pitch-on-lay-s-do-us-a-flavor-seeks-america-s-next-great-potato-chip-flavor-and-celebrates-the-stories-behind-the-flavors-with-1-million-award
7 Dahl, D.W. & Hofstetter R. (17 November 2021). Crowdsourcing for Marketing Success. American Marketing Association. https://www.ama.org/2021/11/17/crowdsourcing-for-marketing-success/
8 Dahl, D.W. & Hofstetter R. (17 November 2021). Crowdsourcing for Marketing Success. American Marketing Association. https://www.ama.org/2021/11/17/crowdsourcing-for-marketing-success/
9 Crandell, C. (10 June 2016). Customer Co-Creation Is The Secret Sauce to Success. Forbes. https://www.forbes.com/sites/christinecrandell/2016/06/10/customer_cocreation_secret_sauce/?sh=2a23b255b6dc
10 Ramaswamy, V. & Gouillart, F. (October 2010). Building the Co-Creative Enterprise. Harvard Business Review. https://hbr.org/2010/10/building-the-co-creative-enterprise
11 KatFranklin. (26 March 2018). Lay’s Increases Sales by Asking Customers to “Do Us a Flavor.” Harvard Business School: Digital Initiative. https://digital.hbs.edu/platform-digit/submission/lays-increases-sales-by-asking-customers-to-do-us-a-flavor/
12 Frito-Lay North America. (10 January 2017). Get Your Pitch On! Lay’s “Do Us a Flavor” Seeks America’s Next Great Potato Chip Flavor and Celebrates the Stories Behind the Flavors with $1 Million Award. Frito-Lay North America, Inc. a Division of PepsiCo. https://www.fritolay.com/news/get-your-pitch-on-lay-s-do-us-a-flavor-seeks-america-s-next-great-potato-chip-flavor-and-celebrates-the-stories-behind-the-flavors-with-1-million-award
13 W. B. (24 March 2018). Crowdsourcing Your Next Chip Flavor: Lay’s “Do Us a Flavor” Campaign. Harvard Business School: Digital Initiative. https://digital.hbs.edu/platform-digit/submission/crowdsourcing-your-next-chip-flavor-lays-do-us-a-flavor-campaign/#:~:text=Pepsico%20first%20launched%20the%20%E2%80%9CDo,for%20new%20potato%20chip%20flavors
14 W. B. (24 March 2018). Crowdsourcing Your Next Chip Flavor: Lay’s “Do Us a Flavor” Campaign. Harvard Business School: Digital Initiative. https://digital.hbs.edu/platform-digit/submission/crowdsourcing-your-next-chip-flavor-lays-do-us-a-flavor-campaign/#:~:text=Pepsico%20first%20launched%20the%20%E2%80%9CDo,for%20new%20potato%20chip%20flavors
15 Lay’s. (2022). Lay’s Layers. Frito-Lay North America, Inc. a Division of PepsiCo. https://www.lays.com/product-category/lays-layers
16 Frito-Lay North America. (5 January 2022). Lay’s Kicks Off 2022 with a First-Of-Its-Kind Snacking Experience: Lay’s Layers. Cision PR Newswire. https://www.prnewswire.com/news-releases/lays-kicks-off-2022-with-a-first-of-its-kind-snacking-experience-lays-layers-301454373.html