Market Research

Businesses can either succeed or fail. Sadly, a lot of really good businesses fail because they failed to take any number of factors into account. What begins as a great idea soon gets lost in the unanticipated second and third orders effects of running a business. Proper market research may not eliminate all the pitfalls, but it can provide a clear and negotiable path for a business to make informed decisions. This paper will discuss one such company who has seen sales dwindle in one of its products and is looking for ways to bolster sales.

The Company

Frito-Lay North America, Inc. is experiencing a drop in product sales covering the last three quarters on their Tostitos Bite Size Tortilla chips. Tostitos have been on the market since 1990 and initially enjoyed tremendous success. At the present time there are 16 different types/flavors of Tostitos and Frito-Lay has over 30 separate products on the market. The other products range from tortilla chips to Cracker Jacks. “For more than 75 years, we have enjoyed making the best snacks on earth, starting with simple, farm-grown ingredients”

The focus of this market research was on the bite size chip due to its dwindling sales.

The Objective

The overriding objective of market research is to obtain data on customers and potential customers. The collected data will provide valuable information for business decision making. Thereby, reducing the risks involved in making these decisions. There were a number of factors we looked at; was taste an issue, did the size and type of ingredients of the chip cause the drop in sales, and was there a competitor’s brand tortilla chip people preferred? Individually, these factors might not cause a drop in sales. However, when combined with multiple factors a drop in sales could and has happened.

Research Method

“There are many types of studies which could be defined as observational research including case studies, ethnographic studies, ethological studies, etc. The primary characteristic of each of these types of studies is that phenomena are being observed and recorded. Often times, the studies are qualitative in nature. For example, a psychological case study would entail extensive notes based on observations of and interviews with the client. This measure of time would be qualitative” ("Research Methods", 2012). For this research a taste test was used in a grocery store followed with a short thirteen question survey. Personnel placed Tostitos Bite Size Tortilla chips on a table and allowed any customer who wanted to taste them do so. After tasting them, the customer was asked to fill out the previously mentioned survey. The questions ranged from the sex of the participant, how many times they purchased this type of chip. The taste, texture, color and size of the chip were among a few of the questions asked. One of the questions also asked was, what other competitor’s brand of chips the participants buy and how often they purchase tortilla chips. Once all the participants had completed the survey, the data was gathered and the result grouped by question.

The Data

There were 13 questions asked on the survey. Gender, primary shopper, purchasing regularity, and tortilla chip preference (including packaging, size, shape, taste, texture, and color). Favorite brand, whether the chip was round, triangular, square, or scoop type chips. The final question was, if you had to make changes to the chip what would it be? Customers were allowed to make comments in response to the final question. Nine males and four females participated in the research. Ten of the thirteen participants were the primary grocery shopper in the household. Six of the participants buy tortilla chips 1-2 times a month, with the next closer being 3 who buy them 3-4 times a month. Nobody surveyed preferred flavored tortilla chips. The packing was rated “5” on a scale of 1-5 by 5 participants, as a “4” by 5 other participants, and 3 rated it as a “3”. Pertaining to the size of the chip the same number of participants (4) rated them as “4” and “5” respectively. The shape reviewed different results. Five of the 13 thought the size was a “3” and “5” rated it as a “5”. The taste question reflected 7 participants thought the taste was worthy of a top rating; while only one person rated it as a “2”. The texture of the chip was rated a “4” by 9 participants, with 7 people rating the chip as a “5”. The color of the chip received “middle of the road” responses. Four people each rated the color are either “3” or “4”. Concerning the competitor’s brand of chips, Tostitos received the highest number of votes, with the next high with being Doritos with 4 votes. A triangular chip was the best shaped chip with 7 participants selecting it over round, square, or scoop shaped. The final question was what you would change about the chip. There was no overriding response. Some of the responses were less air in the bag. More flavor, slightly bigger bag, more product and less air, less salt, and create a bag that seals were some of the responses received.

Data Importance

The most important data gathered was that most of the participants thought Tostitos were a good product. There was no one survey question where Tostitos was rated low by a majority of the participants. Therefore, the question arises whether the slump in sales is because there is something about the chip or is there another reason? Had the survey resulted in a clear indication about the taste, size, or shape of the chip, all signs might point to changing the chip in some fashion. The data gathered was important; however, rather than look at the chip itself, maybe focus should be redirected internally to another factor.

Recommendations

At the beginning of this paper, mention was made about the initial success of Tostitos and how there are 16 types/flavors of Tostitos on the market now. A recommendation should be made to hold further market research where all 11 varieties of Tostitos are used on a taste test. From the data gathered, a reason to eliminate certain types/flavors might surface indicating a need to be discontinue production. Additionally, I would recommend a larger sampling of people, possibly using multiple grocery stores at the same time. The survey would not ask questions about competitor’s brands, but would concentrate on Tostitos brands in an attempt to determine if the market is over saturated with Tostitos brand chips.

Competitive Intelligence

Competitive intelligence means numerous things to people. A scientist sees it as a heads-up on a competitor's research and development project. A salesperson might think of it as an insight on how the company should vie for a new order. The manager believes intelligence to be a long-term view on the market and its rivals. Competitive intelligence is a process where data is gathered and refined so it can be used to make informed business decisions. “Competitive intelligence essentially means understanding and learning what's happening in the world outside your business so you can be as competitive as possible” ("Entrepreneur", 2013). Had no market research been conducted and instead decisions made based on what others thought, Frito-Lay might never addressed the correct issue with Tostitos.

In conclusion, market research is a must if a business intends on improving its bottom line. To act on emotion rather than ethical data is a recipe for disaster.

References

Entrepreneur. (2013). Retrieved from http://www.entrepreneur.com/encyclopedia/competitive-intelligence Frito-Lay. (2013). Retrieved from http://www.fritolay.com/about-us/our-company-vision.html Research Methods. (2012). Retrieved from http://www2.webster.edu/~woolflm/statmethods.html