I was reading some of the news stories about the success of
the new “Doritos Locos Tacos” product from Taco Bell and reflecting that there
were at least two things worth considering about this report – depending on how
one happens to feel about fast-food operations, product development, and
possibly business reporting or history. There may even be a few points here
about expert knowledge, really bad logical fallacies and demographic research,
which struck me as being quite a lot to say about a food product so
preposterous on the face of it that it could be (and occasionally was) mistaken
for a Saturday Night Live skit when
it first appeared…
First of all, there’s the performance of the product. The “Doritos
Locos Tacos” are actually just Taco Bell’s standard crunchy taco product served
in a flavored shell – in this case, the flavoring used on Frito-Lay’s popular “Nacho
Cheese Doritos” corn chip product. It’s one of those concepts that is so simple
it probably took a genius to think of it in the first place, and it has
resulted in the company’s most successful product in its 50-year history: Taco
Bell is claiming to have sold over 100 million of the things in the first ten
weeks they were on the market – or roughly as many hamburgers as McDonald’s
sold in the first 18 years they were in operation, according to the OrangeCounty (California) Register. Surprisingly, this isn’t quite as impressive as
it sounds…
Consider the difference between the two firms during the
periods indicated: Taco Bell has been in operation for fifty years, and has
been a franchised fast-food operation for most of them; at the time of product
launch three months ago it had more than 6,000 locations world-wide, serving
more than 2 billion customers a year and bringing in somewhere on the order of
$1.9 billion in revenue annually. By contrast, in 1958 there were only 34
McDonald’s locations extant, all of them in the United States; Ray Kroc had
started the franchise/expansion program that would build it into the dominant
brand we know today, but comparing the two organizations is silly, and so is the
fact that the Register is just printing that claim without fact-checking
anything. Whether the fact that Taco Bell is headquartered in the same
community as the Register (and purchases a lot of advertising space in the paper)
had anything to do with this report is something you’ll have to judge for
yourself, of course…
I think the most important point to this story, though, is
the reaction I noted in a lot of people when the product was first tested last
year. People in either of the primary demographics (Doritos or Taco Bell) went
for it like the proverbial pack of rats, while everyone outside the primary
demographics (most people over 30, in fact) thought it was the stupidest (and
most nauseating) idea they had heard in years. Fortunately for their
profitability, the senior management team at Taco Bell decided to try the
concept out on customers in the appropriate demographic groups and probably
realized that they had a winner on their hands before the first focus-group
study was half-finished. If the product development team has just dismissed the
thing as “something I’d never want to eat” they’d have missed out on selling
100 million products at $1.29, which by my count is $129 million in sales on
one product alone, in just ten weeks…
That sort of failure of imagination – making decisions about
a product based on what you want, rather than what your customers actually want
– is sometimes called the “I Am The World” fallacy, and it remains one of the
easiest ways to destroy a good company that doesn’t involve hiring your brother
in law to run your operations. So the next time somebody brings you an idea
that sounds like a stoner made it up late at night after a trip to the
fast-food stand, you might want to hear them out before you make any decisions…
Or at least run the thing past a panel of probable customers…
No comments:
Post a Comment