Chippin Away Like Frito-Lay - Environmental Factors
While thinking about what to write for my next post, I sat here finishing my last chip of Doritos "Cool Ranch" and thought that it would be great to find out what makes Doritos so successful. After further research, I was amazed at what I discovered about this unbelievable brand, hence why I've decided to share my findings with everyone. Frito-Lay is a renowned conglomerate in the snacking industry and the owner of the Doritos brand chips. As one of the largest snack food companies in the United States, part of the company's success is attributed to the firm's effective marketing strategies and tactics. Not only is the company involved in domestic and global marketing but also understands the influence that environmental factors could have on the success of any product or service. Environmental factors such as global economic interdependence, trade practices, demographics, physical infrastructure, ethics, culture, technology, and even political systems influencing international relations affects the company's marketing strategies.
To illustrate, here are some examples of internal and external environmental factors that could affect the marketing decisions and strategies for organizations:
Internal Environmental Factors
Organizational resources
Existing product line(s)
Management and Support
Capabilities and philosophies
External Environmental Factors
Technological
Political and legal
Economy
Social and cultural
By having a general understanding of environmental factors, we could now examine how it relates to the marketing decisions at Frito-Lay. As a proud member of the PepsiCo family, the company comprehends the importance of demographics and physical infrastructure and effectively incorporates this into the firm's marketing strategies.
With an abundant supply of resources and a reputable brand name on the line, Frito-Lay has to ensure that all employees remain ethical and socially responsible in daily activities. Not only does the firm require annual re-certification on ethics courses for all employees but also the management team constantly preach ethics and social responsibility. For instance, Frito-Lay has a 'zero landfill' initiative where the company partners with TerraCycle for recycling purposes. Customers are encouraged to collect, and send, used bags of chips to TerraCycle for recycling after consumption. In exchange, they'll receive $0.02 for each bag of chip sent in that'll be donated to a school, or non-profit organization, of their choice. This is a very clever marketing strategy on behalf of Frito-Lay because the company lowers the cost of production for products because of recycling, along with helping the environment and society in parallel.
In addition, the firm also offers exceptional training programs for all stakeholders. The company's website aids with ensuring that stakeholders are kept up-to-date on the latest news affecting products, technology, quality, ethics, marketing, etc. For instance, customers could visit the company's website to find the latest updates on new Frito-Lay products and provide crucial feedback on those new products through customer surveys. This in turn would enable the company to review the market research data obtained and adjust the company's marketing strategies accordingly. These are just some examples showcasing how Frito-Lay continues to understand how internal environmental factors could affect the company's marketing strategies and image. Therefore, the firm continues to demonstrate a strong organizational culture acting ethically and socially responsible in an effort to improve on products, services, training, society, and the environment.
Frito-Lay has also leveraged the external environmental factors listed above to provide the firm with a competitive advantage. From a technological standpoint, Frito-Lay has incorporated the latest technologies to aid with online marketing and promotions for products offered. For instance, the company's website is filled with flash media and other marketing tactics that aid in highlighting the delectableness of the variety of snacks offered at Frito-Lay. The website allows customers to navigate to any product of choice in an effort to gain more details about that particular product prior to purchase. Details such as calories, price, and even promotions relating to those goods are listed daily to consumers online. In addition, Frito-Lay also uses technology to strengthen the company's brand name. By using renewable energy, such as bio-fuels, solar power, recycled heat and steam from plants, the company is estimating that it'll use 45% less energy per chip bag by 2017.
Personally, what I found most interesting is the company's effective understanding of social, demographics, and cultural environmental factors and using the market research data obtained to produce certain products tailored for specific target markets. For example, Frito-Lay conducted market research on the external environmental factors listed above and determined that the Japanese people had a distinct taste. To please this specific target market, Frito-Lay began producing a variety of different flavored Doritos corn chips specifically for Japan. Flavors, such as coconut curry, wasabi mayo, tuna mayo, and even sausage flavored Dorito chips.
To me, this is very smart on behalf of Frito-Lay, especially with global economic interdependence and trade because organizations could reach new target markets in an effort to promote and sell their products to different end-users. As we're aware, international trade creates opportunities for businesses and exposes consumers to products and services that may not be available in their own country. International trade also provides consumers with more options in terms of price and the quality of goods offered because of multiple producers. With international trade, companies such as Frito-Lay, have a competitive advantage because products or services are offered globally. Therefore, the increase in consumer demand could assist the firm because the cost of production is lowered as a result of economies of scale.
Although I have consumed Frito-Lay products for decades, I've never done the research to realize the company's uncanny ability to analyze internal and external environmental factors and create marketing strategies and products tailored to customer needs. Whether satisfying the marketing mix domestically or internationally, Frito-Lay ensures that proper market research is conducted that takes into account environmental factors such as culture, ethics, technology, physical infrastructure, demographics, and the legal environment. Doing so would enable the firm to continue improving on products offered because of the market research data obtained.
David Ogilvy, an advertising guru, wisely stated to "never stop testing, and your advertising will never stop improving." Frito-Lay continues to test markets in an effort to produce products tailored for specific cultural tastes and preferences. This would enable the firm to satisfy current markets, along with reaching new global markets, hence the company's astronomical success.
Continue to chip away Frito-Lay - Bravo!
