THE PENNSYLVANIA STATE UNIVERSITY SCHREYER HONORS COLLEGE

DEPARTMENT OF MARKETING

Utilizing Logical Creative Thinking Methods to Innovate within the Consumer Goods Sector

SHANNON HARNEY SPRING 2021

A thesis submitted in partial fulfillment of the requirements for a baccalaureate degree in Marketing with honors in Marketing

Reviewed and approved* by the following:

Min Ding Smeal Professor of Marketing and Innovation Thesis Supervisor

Jennifer Chang Coupland Paiste Fellow in Teaching and Learning Clinical Professor of Marketing Honors Adviser

* Electronic approvals are on file. i

ABSTRACT

Innovation is vital to the salty snack industry. However, it is usually associated with unstructured methods of brainstorming, leading to wasted time and resources. Logical

Creative Thinking Methods use logical processes to develop creative and useful innovations. While Frito-Lay is the industry leader in the salty snack category, innovation is essential to continued growth, especially new product innovations. Additionally, consumer trends are calling for healthier snack options with bold flavors. This utilization of Logical Creative Thinking Methods pitches an innovative new product to satisfy the need for healthier snack foods in the salty snack category.

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TABLE OF CONTENTS

LIST OF FIGURES ...... iii

ACKNOWLEDGEMENTS ...... iv

Chapter 1 ...... 1

Overview of Logical Creative Thinking Methods ...... 1

Doctrines of Prolific Explorers and Intelligent Search ...... 1 Application Guidelines ...... 3 Overview of Relevant Methods ...... 5 T1M.Replacement ...... 6 T2M.Abstraction ...... 7 T3M.HorizontalExtension ...... 7

Chapter 2 ...... 11

Frito-Lay Competitive Analysis ...... 11

Frito-Lay Overview ...... 11 Kellogg Company Overview ...... 13 Campbell Snacks Company Overview ...... 15 Utz Overview ...... 17

Chapter 3 ...... 19

Salty Snack Category Forecast and Trend Analysis ...... 19

COVID-19 Market Impact ...... 19 Innovation Drivers ...... 22 Health and Wellness Trends ...... 22 Low-Calorie Offerings ...... 23 Low-Carbohydrate Product Trends...... 26 Cheese Products Gain Popularity...... 29

Chapter 4 ...... 30

Application of Logical Creative Thinking Methods ...... 30

Innovation through Replacement ...... 30 Applying Abstraction Methods ...... 32 Horizontal Extension ...... 34

Chapter 5 ...... 36 iii

Product Innovation Recommendation...... 36

Working Title ...... 37 Rationale ...... 38

Chapter 6 ...... 40

Product Analysis ...... 40

Proposed Price Point and Product Size ...... 40 Overview of New Ingredients ...... 41 Overview of Production Processes ...... 45 Vegetable Dehydration ...... 45 46 Vegetable Lyophilization ...... 46

Chapter 7 ...... 49

Conclusion ...... 49

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LIST OF FIGURES

Figure 1: A Single Replacement Chemical Reaction ...... 6

Figure 2: CheezIt Flavor Varieties ...... 8

Figure 3: Oreo Cookie Varieties ...... 10

Figure 4 Consumer Reasons for Eating More Salty Snacks ...... 21

Figure 5: Hilo Life Packaging ...... 27

Figure 6: Hilo Life Nutrition Facts ...... 28

Figure 7: Garden Salsa Sun Chips Packaging ...... 31

Figure 8: Fresh Gourmet Crispy Jalapenos Nutrition Facts ...... 42

Figure 9: Karen's Naturals Just Tomatoes Packaging and Nutrition Facts ...... 43

Figure 10: Fresh Gourmet Romano Cheese Crisps Packaging and Nutrition Facts ...... 44

Figure 11: Dehydrated Jalapenos ...... 46

Figure 12: Lyophilized Tomato Slices ...... 47

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ACKNOWLEDGEMENTS

First and foremost, I would like to thank Professor Min Ding for his continued support during this process. He has greatly impacted the way I view innovation and his book is a great guide for anyone seeking novel and valuable innovations in any field. Also, his radiant personality and positive energy served as motivators throughout the research, writing, and editing processes. Professor Jennifer Chang Coupland has also been an immense pleasure to work with. By always assisting in any way possible, she ensured that the thesis process was enjoyable for all of the students under her supervision.

Thank you to Penn State University, as a whole. Attending such a remarkable university has been one of the greatest decisions I have made thus far and it has had a major impact on who

I have become in the last four years. I would also like to extend my gratitude to the Schreyer

Honors College. I am immensely grateful for my experience and the connections I have made throughout my time in Schreyer. With the support of Schreyer’s faculty, my questions never went unanswered.

Furthermore, I would like to thank my parents and sister for their unwavering faith throughout my college experience. With their love and support, all things are possible. Greatest appreciation to the rest of my family and friends for their encouragement. I am especially grateful for my roommates for keeping me company throughout this process. My overwhelming support system helped me along every step of the way. 1

Chapter 1

Overview of Logical Creative Thinking Methods

Logical Creative Thinking Methods use innovation as a search process to identify novel, non-obvious, and valuable concepts. By treating innovation as a search process, the innovator can solve real and important issues with logic without resorting to unstructured processes.

Instead of brainstorming sessions, which are often daunting and inefficient, the innovator is able to apply logical methods to transform starting points into innovations. To utilize Logical Creative

Thinking Methods, or LCT, one must assume that every innovation in the future already exists in theory, but has not yet been discovered. By putting logical processes at the core of innovation, innovators become explorers instead of inventors. Logical Creative Thinking Methods can be used both defensively and offensively. The concepts are simple enough to be learned by many, but broad enough that people from different disciplines can derive benefits.

Doctrines of Prolific Explorers and Intelligent Search

In order to apply Logical Creative Thinking Methods, one must first develop skills as a prolific explorer. In the foundational chapters of Logical Creative Thinking Methods, there are several doctrines included to better define the qualities of a prolific explorer. In order to utilize

LCT to its full potential, one must first ensure that they have a high level of motivation. To be adequately motivated to use LCT, it is important to spend time cultivating curiosity. In the book,

Logical Creative Thinking Methods, by Min Ding, it suggests that those looking to become an 2 explorer complete an exercise to spark their creativity. For example, a person with limited knowledge of explosives and chemical reactions can research how fireworks function. The process of learning about the science behind fireworks sparks curiosity, an essential element of utilizing Logical Creative Thinking Methods.

Prolific explorers also are noted as having big dreams and charting their own courses. In these doctrines, the responsibilities of these roles are defined as looking past minor issues to determine major issues and ignoring others’ views on the best path forward. LCT users must also be willing to challenge assumptions. Everyone has innate implicit assumptions that have been acquired through evolution, like being able to recognize a facial expression. People have also acquired implicit assumptions that have been learned throughout their lives. For example, the notion that one should not trust a stranger. It is important to evaluate the implicit assumptions we have and determine their legitimacy. Any of the implicit assumptions that we base much of our daily life on could be untrue. Evaluating these heuristics before beginning to apply LCT will ensure that personal biases and the opinions of others do not deter the search process.

Prolific explorers are also perceptive, patient and optimistic. Advanced perceptual abilities ensure the ability to determine what areas are worth exploring. Additionally, these qulaities are vital to including all key details in the search process. Patience is important throughout the Logical Creative Thinking process to ensure willingness to explore many areas and evaluate all of them. One also must be optimistic to make sure the risk of giving up in the midst of the LCT process is minimal. As noted in the sixth doctrine of Logical Creative Thinking

Methods, many of the things people now take for granted used to be impossible. Therefore, perceptive skills, patience, and optimism are of the utmost importance. 3 Intelligent search is one of the cornerstones of Logical Creative Thinking Methods. It can involve closed or open exploration. Closed exploration seeks to find something for a specific need and open exploration starts with an innovation and then evaluates it to see if it can address a need. Intelligent search is a logical process. LCT draws from science and math to develop innovation models and, therefore, does not require creativity or sudden discovery. Diligent employees can use LCT to address challenges within their companies. Replicability is also essential to Logical Creative Thinking Methods. Therefore, brainstorming and other free- thinking tools are excluded from LCT because they cannot be replicated.

Intelligent search is efficient and comprehensive. Its goal is to efficiently search as much space as possible. When LCT is applied, a stopping rule defines success (when a good solution has been discovered) and failure (when it is time to stop trying). The new solution should not be obvious and must be valuable. That is why the stopping point must be very demanding, it demands a novel and groundbreaking solution. Stopping too soon could inhibit the search for useful innovations.

Application Guidelines

It is important to be aware of application guidelines when utilizing Logical Creative

Thinking Methods. Since LCT treats innovation as a search process, it is important to determine a starting point, or SP. Starting points are usually pre-existing solutions that are relevant to the task at hand. There can be multiple starting points that must be evaluated to ensure that the best one is being used. Once the innovation process is completed, an ending point, or EP, will be left.

These are then evaluated for newness, non-obviousness and value. 4 There are two search methods available for innovation with Logical Creative Thinking

Methods. Forward Search, or FS, is one of the two search approaches. This process begins with a starting point that needs to be improved and stops at an ending point. Once the starting point is identified, a search must be conducted using an LCT method. The search does not have to follow a single path, as multiple paths can lead to a multitude of outcomes. When using the Forward

Search approach, it is important to remember that a search from one starting point should lead to multiple ending points. The search should be repeated for the same starting point using multiple

LCT methods. Also, the search should be repeated with different starting points. The final step in the Forward Search process is to screen for only the most promising ending points. The other search approach is Reverse Search, or RS, which begins with an existing solution, which is usually owned by another entity. This pre-existing solution qualifies as an ending point because it is an innovation, but since it is used as a starting point it is consudered a starting ending point, or SEP . From this point, the LCT process can be reversed to identify potential starting points and LCT methods that could be used to find this innovation.

As a guideline for innovating with Logical Creative Thinking Methods, it is important to remember that search is iterative. A search does not end after a single Forward or Reverse

Search. One can continue to use ending points from previous rounds as new starting points, or use a different method entirely. This process iterates until the explorer is satisfied with the outcome. It is also important to note that LCT search can lead to one starting point ending in multiple ending points, or multiple starting points leading to the same ending points. One starting point can also lead to multiple ending points when using the same method.

When using Logial Creative Thinking as a method for innovation, it is often helpful to screen ending points based on preset rules. The majority of ending points will not be valuable 5 outputs. Therefore, identifying ending points is only a first step in the innovation process. One must then enrich and test these ending points to ensure that they are novel, non-obvious, and valuable. Additional stopping rules can also be added in the search process. For example, the process can stop when an ending point exceeds a certain cost, when it surpasses the technology available, or for other specific instances to the situation. It is worth noting that ending points do not need to be the most well-liked or consistent with expert opinion, either. Also, compromising solutions should not be selected because they are often good on all aspects and excellent on none.

As an additional guideline, Logical Creative Thinking Methods can be used in both group and individual formats. If a group is utilizing LCT, it is vital to start with individual sessions first. After each individual ends their own search, then group sessions can build upon these searches. In this case, it is helpful to set quantitative goals for each individual. Individuals and teams should be rewarded for both the quality of ending points and scope of their searches.

Overview of Relevant Methods

When discussing Logical Creative Thinking Methods, it is important to note the classification and notation of each method. As a brief overview of the LCT Methods, there are three tiers of methods. Each method has a conceptual framework with underlying logic and general protocols for usage. There are three Tier 1 Methods, notated as T1Ms, each with multiple

Tier 2 Methods, or T2Ms, and each T2M has multiple Tier 3 Methods, or T3Ms.

Periods are used in between the tier number and the tier name in notation. For example,

T1M.Reconfiguration is a T1M called Reconfiguration. The shorthand notation of LCT Methods 6 would be written as T3M.PurifiedCore, which is a T3M called Purified Core. Longhand notations are written out in a chain of the entire hierarchy of methods used, like

T1M.Reconfiguration.T2M.Reduction.T3MPurifiedCore.

T1M.Replacement

In terms of the methods used for this innovation, it is important to understand the Tier 1

Method of Replacement. T1M.Replacement is based on single replacement chemical reactions and substitution mutation in biology. Ending points are created by replacing one component with a different component that was not present in the original solution, or starting point.

T1M.Replacement identifies appropriate starting points, deconstructs them, and replaces one or more components in the starting point to generate a new solution, or ending point. The final step in the method is to evaluate any additional value generated from replacing the original component with the new component. T1M.Replacement introduces a fundamentally different new element to a starting point to create a new, valuable ending point.

The method of replacement is best illustrated by single replacement chemical reactions and substitute mutation in biology, as shown in the figure below.

Figure 1: A Single Replacement Chemical Reaction

Source: Logical Creative Thinking Methods, by Min Ding 7 T2M.Abstraction

Within T1M.Replacement, I used T2M.Abstraction. Abstraction is a second-tier method used to examine replacing components of a starting point with similar components to produce higher value or efficacy. In replacing a component with a similar yet different component, one can identify new solutions. Usually, abstraction leads to ending points that satisfy the same customer needs as the starting point, but without undesirable side effects. In this case, there are three steps of the search algorithm: addressing omissions, backward generalization, and forward selection.

The first step is to deconstruct the starting point into its components, then explicitly state the implied components, and describe them in a statement. If possible, using mathematical symbols can help with this step. This step helps to identify all of the components of a given starting point in order to ensure that you are not overlooking anything that can be omitted to form a more valuable ending point. In order to backward generalize, one must abstract a major component backward to a more general concept, of which the original component is a special case. For forward selection, the explorer selects another special case within the parameters of the first. By substituting this new component for the original, you create a new solution.

T3M.HorizontalExtension

Of the seven current Tier 3 Methods that fall into the category of abstraction, I used the method that aims to extend a product non-functionally in an alternative embodiment.

T3M.HorizontalExtension aims to replace a component of a starting point with a different, yet essentially equivalent component. Horizontal Extension is used to create an alternative 8 embodiment by substituting one of the starting point’s original components with an alternative component, thus creating slightly different ending points. Horizontal extensions are a type of product line extension, using an established product brand name for a new item in the same product category. It is important to note, however, that these ending points have essentially the same functionality. The search algorithm for this T3M involves the deconstruction of a starting point, with careful evaluation of which components could be substituted. The substitution switches out a component with a similar functionality that differs on some non-functional dimensions. Using this method, ending points do not differ in quality or price from the starting point.

This method often works well in innovating consumer products. It allows a firm to create variety and access different consumer segments. As discussed in the Logical Creative Thinking

Methods book, Kellogg’s Company serves as a great example within the salty snack category.

The company offers 18 different varieties of CheezIt crackers that range from traditional cheddar, swiss and Colby cheese flavors to less common flavors like hot and spicy. The brand’s cheezit.com website also allows users to find their ideal CheezIt snack for different occasions.

Figure 2: CheezIt Flavor Varieties

Source: Meijer.com 9

Similarly, the method of horizontal extension is exemplified through Mars Company’s

M&Ms brand. The original M&Ms candies are made of milk chocolate surrounded by a candy shell. However, the company extended its product line by replacing the milk chocolate inside with various alternatives. First, the company added peanuts to the interior, then other popular candy ingredients like peanut butter, dark chocolate, pretzels and caramel. M&Ms also release limited edition fillings from time to time.

Nabisco’s popular Oreo brand cookies have also extended horizontally. Along with the typical product, which consists of a vanilla cream filling between two chocolate wafers, Oreo also began to release many additional product variations. The company has launched multiple different filling flavors instead of the typical vanilla cream, like mint, birthday cake, and peanut butter. However, the product variations extend further than simply replacing the cream center.

The popular cookie brand also sells products with vanilla-flavored wafers instead of chocolate, with an array of cream flavors, like strawberry, fruit punch, and pumpkin spice. The company often introduces seasonal Oreo cookies, like candy corn and peppermint bark. However, these offerings are usually in stores for only a limited amount of time.

Oreo even debuted Hot and Spicy Cinnamon Oreos for a limited time, giving consumers the option to try an outrageous version of their favorite cookies. Additionally, Oreo cookies have expanded nature of its cookies. The company has played with the sizing and dimensions of its cookies, introducing Oreo Thins and mini Oreos, as well as Double Stuf Oreos and The Most

Stuf Oreos that contain more of the cream center. The company has even introduced Gluten-free

Oreos recently and sell 100-calorie snack packs. 10 These horizontal product line extensions reinvigorate products, allowing even the most basic, “old” products to become new again. This method of innovation allows brands to adapt to consumer preferences and trends and keep their products exciting in even the most competitive of markets.

Figure 3: Oreo Cookie Varieties

Source: soyummy.com 11

Chapter 2

Frito-Lay Competitive Analysis

In order to identify competitive threats in the market, companies must conduct competitive analyses. Without properly researching and recognizing the actions of other firms within a given market, it is difficult for a firm to succeed. Furthermore, Logical Creative

Thinking Methods require thorough research as a form of preparatory work in order to use its methods as a means of innovation. Competitive analysis is one of the most important methods to gain insights into competitors and customers in the market. Likewise, as my goal is to propose a useful innovation for Frito-Lay, it was important for me to understand the nature of the company and the pre-existing products, revenues and competitive advantages of the company.

Frito-Lay Overview

Frito-Lay North America, or FLNA, is the convenient foods business unit of PepsiCo.

The company was founded in 1961, as the result of a merger between The Frito Company and

H.W. Lay & Company. The company later became a subsidiary of PepsiCo in 1965 and is headquartered in Plano, Texas. Frito-Lay produces many popular brands in the salty snack industry today, including Lay’s and Ruffles potato chips, Doritos tortilla chips, Cheetos cheese- flavored snacks, Tostitos tortilla chips and branded dips, Sun Chips multigrain snacks and Fritos 12 corn chips. Altogether, Frito-Lay produces 1,100 different snack foods. As the world leader in the salty snack category, controlling more than 35 percent of the world market in this industry and over 60 percent of the market in the United States. The company also owns five well-known brands that generate annual sales of $1 billion each: Lay's, Doritos, Ruffles, Tostitos, and

Cheetos.

Revenue

Frito-Lay North America generates half of PepsiCo's annual operating profit. Frito-Lay’s

CEO, Steven Williams, is currently the CEO of PepsiCo Foods North America. He leads the $18 billion snack and convenient foods business that make up Frito-Lay North America and Quaker

Foods North America. The company’s brand value is estimated to be $16.3 billion, with $12.2 billion in sales as of July 2020. Frito-Lay leads the salty snack industry, with around 60 percent market share. Frito-Lay continues to lead the salty snack category, with annual sales of $4.8 billion, a 3.7 percent increase from last year. Frito-Lay’s top two brands both saw growth for the year, as well. Lay’s increased 7.2 percent to $2.4 billion and Ruffles increased 2.7 percent to

$1.1 billion. A new product innovation, Ruffles Double Crunch chips, launched in early 2019, saw sales of $61.1 million for the year.

Competitive Advantages

The company’s main competitive advantages are its well-known and popular brands, as well as its product innovations. Doritos, Fritos, Cheetos, and Tostitos are widely recognized as the most popular chip brands in North America. Additionally, Frito-Lay’s use of innovation to target new and existing customers has proven profitable for the company. Frito-Lay has been 13 driving growth for PepsiCo with innovative flavors and product designs like Lay’s Poppables,

Cheeto’s Mac n’ Cheese, and new and exciting flavors of their popular Smartfood popcorn brand. Jennifer Saenz, Chief Marketing Officer of Frito-Lay North America, told media outlet,

Digiday that “innovation in keeping consumers’ attention is more important than ever. It’s really about how we can interact with consumers in new ways and retain them.”

Frito-Lay also has the largest direct-store-delivery, or DSD, system in North America, delivering products directly to stores, saving customers the trouble of merchandising. This distribution method allows retailers to reduce operating costs associated with distribution centers.

Instead, Frito-Lay’s products travel directly to the retail store, shaving time and money off of the company’s customers’ bottom line. Frito-Lay’s DSD network also allows the company to remain flexible and responsive, as they are able to adjust deliveries to meet the dynamic wants and needs of their customers.

Kellogg Company Overview

Background

Kellogg Company manufactures, markets, and distributes ready-to-eat cereal and convenience foods. The company is led by chief executive officer Steven Callihane and has sales topping $123.5 billion. Kellogg is based out of Battle Creek, Michigan. Although the company is well-known as a cereal company, with popular brands like Kellogg's Corn Flakes, Frosted

Flakes, Froot Loops, Special K, and Rice Krispies, Kellogg Company makes more profits from its snacks and convenience brands. Kellogg was founded in 1906 and owns many popular snack brands, including Pringles, Cheez-It, Kellogg's, Kashi, Keebler, Murray, Austin, and Famous 14 Amos. Though many Kellogg’s products are sold on a global scale, the company generates around 60 percent of its revenue domestically.

Revenue

Kellogg Co. trails well behind Frito-Lay North America, but stands as a very successful company in the salty snack category. According to IRI data for the 52 weeks ending May 17,

2020, Kellogg earned $933.6 million in sales for an increase of 4.4 percent. Its core brand,

Pringles, grew 4.1 percent to $825.0 million. Pringles Grab & Go Stacks grew 4.0 percent to

$59.4 million and Pringles Snack Stacks grew 11.9 percent to $49.2 million. After declining in

2016 and 2017, Kellogg's revenue increased dramatically in 2018, continuing to grow in 2019.

The company’s annual revenue grew even more in 2020, ending the fiscal year with $13.77 billion.

Competitive Advantages

One key advantage of Kellogg is their ability to adapt to shifts in consumer tastes. As cereals began to become less popular with Kellogg’s key consumer demographic, the company switched to more on-the-go breakfast foods. Then, sensing a trend in snack foods, Kellogg acquired and launched snack products, as they were enjoying strong growth at the time. Kellogg has also adapted their portfolio to collected healthier foods, following health-conscious consumer trends. By collecting a lot of healthier snacks and foods, Kellogg was able to tailor their product portfolio to follow what consumers were looking to buy, using brands like FiberPlus and Garden

Burger. Kellogg has also invested a substantial amount of money into developing new products to meet the needs of health-conscious shoppers, diversifying their brand further away from cereal. The company has already spent over $140 million in research and development in 15 healthier snacks in the last three years. Overall, Kellogg aims to grow profits in the long-term by revitalizing its core brands, creating new and innovative products and, also, pursuing expansion overseas.

Campbell Snacks Company Overview

Background

Campbell Soup Company is a global producer and marketer of soups, sauces, cookies, beverages, crackers and prepared foods. Founded in 1869 by Joseph A. Campbell and Abraham

Anderson, the company is currently headquartered in Camden, New Jersey. In fiscal 2020, the company earned a total revenue of $8.7 billion globally. Campbell has three different operating segments: simple American meals and beverages, global biscuits and snacks, and Campbell fresh. The company’s snack sector is a major competitor in the salty snack industry. Some of their most competitive brands include Kettle Brand Chips, Cape Cod Chips, Goldfish Crackers,

Pretzel Crisps, Late July Tortilla Chips, and Pop-Secret Popcorn. Campbell Soup Company is run by chief executive officer, Mark Clouse, who took over the role recently in 2019.

The company’s snack sector is led by Valerie Oswalt, executive vice president of

Campbell Soup Co. and president of Campbell Snacks. Campbell Soup Company’s 2018 acquisition of Snyder's-Lance for $6.1 billion is the largest deal in the company's history and added Snyder’s brand pretzels to the company’s portfolio. Snyder's-Lance, formed by the 2010 merger of Lance and Snyder's of Hanover, is large and powerful salty-snack producer in the country.

Revenue 16 Due to the acquisition of Snyder’s-Lance, Campbell's has experienced robust growth fiscally. The company’s 2019 revenue began to include Snyder’s-Lance; therefore, their industry-relevant revenue grew 25.4 percent to $1.8 billion over the five years to fiscal 2021. The acquisition of Snyder's-Lance increased the company’s revenue 135.9 percent in fiscal 2019.

Campbell Snacks saw growth for two of its top potato chip brands. According to IRI data for the

52 weeks ending May 17, 2020, the company’s popular brand, Cape Cod Potato Chips grew 7.9 percent to $282.4 million. Its Kettle Brand grew 10.6 percent to $234.9 million.

Competitive Advantages

A major competitive advantage for Campbell’s is their push toward transparency at a time when consumers crave honesty and openness from companies. The company highlights transparency about Genetically Modified Foods, or GMOs, in their products as a major commitment of the company. Campbell’s even has a website dedicated to explaining all of the ingredients in their food and snack products, whatsinmyfood.com. The company’s real food philosophy is helping to restore consumers’ connection to food. Campbell’s aims to set the standard for transparency in the food industry.

“We believe real food should be made with recognizable, desirable ingredients from plants or animals. It should be responsibly crafted using ethical sourcing and sustainable practices that safeguard natural resources. Lastly, it should always be delicious, safe and available at a fair price, all three without compromise,” said Denise Morrison, president and chief executive officer of Campbell Soup Company from 2011 through 2018. Additionally,

Campbell’s has a wide Direct Store Delivery distribution system that benefits both the company and its customers. 17 Utz Overview

Background

Utz Brands, Inc. is another snack food competitor of Frito-Lay. It is based in Hanover,

Pennsylvania and produces a wide variety of salty snacks. Founders William and Salie Utz began making and selling potato chips in 1921, creating the company. Utz’s major brands include

Bachman Popcorn, Zapp’s, Dirty, Golden Flake, Good Health, Snikiddy, Boulder Canyon, TGI

Fridays Snacks, and TORTIYAHS. Utz chips are not available in all 50 states. They are primarily available along the East Coast and in the Southeast. In the Northeast, Utz chips can be found in New Hampshire, Massachusetts, Maine, New York, Connecticut, Rhode Island,

Pennsylvania, New Jersey, and Delaware. In the Southeast, shoppers can find Utz chips in

Maryland, West Virginia, South Carolina, Georgia, Alabama, and Louisiana. There are also parts of Ohio, Vermont, North Carolina, Tennessee, Mississippi and Florida where Utz chips are available, but they are not as wide-spread. Utz’s CEO is Dylan Lissette. He has been serving as chairman and chief executive officer of Utz Quality Foods, Inc. since 2012.

Revenue

Utz is the fourth largest salty snack provider in the United States. The company’s earned

$972 million in salty snack retail sales according to IRI MULO-C data for the 52-week period ended December 29, 2019. This counts for around 4 percent of the total salty snack category in the United States, according to an investor presentation for Utz Brands. The company ranks highly in the pork skins category, with a 12 percent market share in this area. Utz’s potato chips brand grew 10.8 percent for the year, up to $253.4 million. The company’s Zapp’s brand grew

30.4 percent to $50.5 million. 18

Competitive Advantages

As far as competitive advantages, Utz also has a large direct-store-delivery system of distribution. According to the company’s investor presentation from 2020, Utz aims to ramp-up in cost savings and margins. By improving their procurement and manufacturing processes and distribution, Utz plans to drive productivity within the company in the coming years. They also improve their margin mix by growing higher margin-power brands and de-emphasizing lower- margin private label and partner brands. In 2019, Utz spent around 1 percent of its sales on advertising expenses. In the coming years, the company plans to increase this budget to around 4 percent of its sales. 19 Chapter 3

Salty Snack Category Forecast and Trend Analysis

Through comprehensive market research, I identified several trends and forecasts of the salty snack category that would impact any product innovations proposed to the industry. Logical

Creative Thinking Methods require a substantial amount of preparatory research before the innovation methods can actually be utilized. A major impact to all industries in the last year has been the on-going COVID-19 pandemic, which has greatly influenced the salty snack category.

Furthermore, innovation has always been a driving factor for consumers as they purchase snack foods, which is important to consider when proposing potential new products. There has also been a drive in the market for snack offerings that are healthier for consumers than a typical bag of chips. Health trends and better-for-you brands have seen an increase in sales that is forecasted to continue for the foreseeable future. Within these health trends exist many profitable product characteristics, like low-calorie, plant-based and low-carbohydrate offerings. Careful consideration of all prominent trends in the salty snack category are key to successful new product innovations.

COVID-19 Market Impact

Many consumers have turned to salty snacks as an indulgent treat and a sense of comfort during the coronavirus pandemic. Panic-stocking, or buying an unreasonably large amount of a product out of fear or uncertainty, at the onset of the pandemic renewed consumer interest in many classic brands of salty snacks. The nostalgia and great taste of familiar snack products 20 brought a sense of comfort to many consumers. Furthermore, many consumers sampled new brands they had never tried before due to limited or unavailable stock from many consumers panic-stocking. Kara Nielsen, director of WGSN Food and Drink, said “this unprecedented pandemic has created a unique opportunity for producers to emphasize their brands and reach consumers in new ways”.

According to IRI data, salty snacks have been the second category of food items contributing to dollar growth at retailers since early March 2020. Frito-Lay’s U.S. Snack Index consumer survey reported that 85 percent of national respondents say eating their favorite snack makes them feel a sense of normalcy during the current crisis. The salty snack industry reported a 9.4 percent growth in earnings with $21 billion in sales for the 52 weeks ending June 14, 2020, according to IRI data. The COVID-19 pandemic has caused an increase in sales in the salty snack industry in the past year. The potato chips segment increased by 4.6 percent, with total sales of $8 billion according to IRI data for the 52 weeks ending May 17, 2020. Furthermore, the salty snack industry is expected to continue to grow. Although indulgence is still a key driver in the salty snack market, consumers are also exhibiting a push toward healthier options, indicating a major U.S. trend.

One of the largest impacts of the pandemic has been its impact on on-the-go formats of snacks. Small, convenient formats have been popular and extremely profitable for brands for the past few years, but now, with so many consumers spending time at their homes, there is less of a need for convenience. Simon Gunzburg, Euromonitor International research analyst, said that consumers will continue to purchase larger pack sizes to share among family members, roommates, and close friends. “While the current degree to which consumers are ‘staying put’ is 21 expected to be temporary, some aspects of this trend may remain as factors, like working from home becoming more commonplace,” Gunzburg said.

As Americans panic-stocked their pantries with comfort foods and snacks during stay-at- home orders, salty snack sales increased dramatically for all pack sizes. However, larger package sizes spiked the most during the period ending March 15, compared with the same period in

2019, according to IRI data. The 10 to 16-oz pack sizes experienced an 87 percent increase in dollar sales, with 4.5 to 8-oz and larger than 16-oz sales also increasing by double digits. As grocery stores struggled to keep up with the ramped increase in bulk purchases, even the smallest pack sizes posted 22 percent growth. Other consumer reasonings for eating more salty snacks are outlined in the infographic below.

Figure 4 Consumer Reasons for Eating More Salty Snacks

Source: LIGHTSPEED/Mintel Data Report on Salty Snacks: Incl Impact of COVID-19 - US - April 2020

22 Innovation Drivers

Despite the pandemic, innovative and flavorful offerings remain a leading driver for snack choice. According to Mintel research, the top motivators for snacking are the taste of products, followed by the feeling of treating oneself. A survey from Mintel found that 79 percent of consumers find flavor to be more important than brand names. Among the drive for tasty snack foods, consumers are also looking to discover bold, new flavors. Tom Vierhile, vice president, strategic insights of North America for Innova Market Insights said that these bold flavors can appear in a variety of different flavor profiles. “Bold can mean sour, not just hot, such as with Lay’s Kettle Cooked Flamin’ Hot Potato Chips and Blue Diamond Almonds Bold

Spicy Dill Pickle,” said Vierhile.

Parallel to the trend for bold and flavorful products, American consumers are also seeking global and regional flavors, according to Packaged Facts. As consumers’ access to restaurants remains limited due to COVID-19, experts expect many will try to imitate the exciting flavors of eating out through their snack choices. This push for bold, exciting, and innovative products should be heard by companies in the salty snack category in order to foster new and exciting innovations.

Health and Wellness Trends

Recently, consumers have been more attentive about health and wellness, due to trends toward well-being and healthy living. According to a report from the National Center for

Biotechnology Information, approximately two-thirds of the adult population in the United States are suffering from obesity. Many consumers are also facing health issues like diabetes, liver 23 disease, and osteoarthritis among others. By attaining a healthy body weight, consumers can greatly lessen the side effects of these diseases in many cases. Also, switching to lower calorie, plant-based or healthy lifestyle diets can aid in regulating blood sugar, cholesterol, and blood pressure. To combat the serious health issues plaguing many Americans, research on the state of the salty snack industry, shows that over 60 percent of consumers are looking for healthier chip options. Due to these trends, the demand for healthier snacks is anticipated to increase over the coming years.

Low-Calorie Offerings

Low-calorie snacks have increased in popularity due to the shifting behavior patterns of consumers. Americans especially are looking to satisfy hunger and support health through their snack choices. Rising consumer awareness of health and fitness, and growing health ailments like obesity, diabetes, and cardiovascular diseases, have caused consumers to opt for low-calorie snack options. These low-calorie snacks support healthy food habits and offer more nutrition for consumers. Low-calorie snack offerings fit in perfectly to the healthy diets that many consumers are aiming to achieve. With such a large push for healthy and low-calorie options, many major companies in the salty snack industry are aiming to fulfil this need of consumers and tap into the increasing sales attributed with it.

As consumers look for lower calorie snack options, one of the most prominent categories within the industry has been the popcorn industry. Popcorn is a simple and traditionally low- calorie option that is still tasty enough for consumers to enjoy. As companies adhere to consumer’s push toward healthier snacks, lighter and healthier popcorns have become a large 24 growth category for popular salty snack brands. Many of these offerings are made without any added chemicals and have very low calories per serving. These popcorn products are also typically organic and rich in fiber, and are free from dairy products, GMOs, and gluten. Health- conscious consumers have been driving an increasing in low-calorie popcorn products like

Skinny Pop, owned by Frito-Lay competitor Hershey. However, Frito-Lay also has a valuable stake in this category already, as they own popular Smartfood brand popcorn that is available in several health-conscious, low-calorie flavors. The latest innovation from the Smartfood brand,

Smart50, also already serves the growing popcorn audience. Its white cheddar and sea salt flavors boast low caloric densities at only 50 calories per cup. Trends and forecasting in the salty snack industry indicate that the popcorn category will continue to see tremendous growth.

Plant-based Products

Another healthy product trend in the salty snack category is an increase in less processed, plant-based products. Many consumers have begun to eat more plant-based diets. According to a study commissioned by DuPont Nutrition & Health, 52 percent of consumers claim to be eating more plant-based foods. As a prominent health and wellness trend, many industries are being impacted by this push for plant-based ingredients. The plant-based meat market is projected to grow from $4.6 billion in the U.S. in 2019 to $85 billion by 2030. However, the scope of plant- based product growth reaches far beyond the meat industry. Oat-based beverages and yogurts have become a trend, as well. Plant-based snack foods are also beginning to trend, as opposed to starch-rich and highly processed snacks made primarily from potatoes and other fried ingredients. Therefore, companies in the salty snack industry that are able to keep up with this 25 popular consumer trend will likely reap the benefits as the category continues to grow exponentially.

A less processed and healthier plant-based ingredient that stands out in this category is yuca, which is the root of the Cassava plant that can be used to make a chip alternative. Yuca roots are similar in size and shape to sweet potatoes. Yuca, or cassava, is a major staple food in developing nations. It has a sweet, mild and somewhat nutty taste. Many plant-based snacks have begun to use yuca roots as their base because it is a great source of manganese and vitamin C. It is also low in saturated fat, cholesterol and sodium. However, yuca roots are high in carbohydrates and have a high caloric-density. For many health-conscious consumers, the number of calories is a very important indicator of healthy snacks, therefore, I decided against using yuca as a base for a healthy snack offering.

Among this category, in the salty snacks sector, is the option to package freeze-dried or dehydrated vegetables. Although these options are not yet popularized in the salty snack category, they have a multitude of nutritional benefits and can be a great area for growth of plant-based snacks. They require less chemicals and less processing of ingredients. A great example of a dried plant-based snack is pre-packaged seaweed “chips”. Multiple brands have mastered the art of drying seaweed and adding different flavorings, like wasabi, as a plant-based snack for consumers. Dried seaweed is low in calories and fat, yet fiber-dense and full of vitamins and minerals. Using the same technology, these snack offerings can be expanded to include other popular dried vegetables. Freeze-drying or dehydrating vegetables could offer a new product category to health-conscious consumers. 26 Low-Carbohydrate Product Trends

Another health-centric trend has been a push toward low-carb products. Many consumers are looking for snack options that are lower in carbohydrates and higher in protein. This trend follows popular low-carb and ketogenic diet fads. According to market analysis and insights on the global low-carb diet market, the low-carb industry is forecasted to grow by 6.4 percent from

2020 to 2027. As more companies increase the availability of low-carb products, this market is expected to continue to grow. Data Bridge Market Research cites trends like the rising health awareness of consumers and rising obesity cases as likely causes to enhance the growth of the low-carb diet market in the coming years. Companies that enter this industry now will experience strong market growth through new product launches and the adjustment of current product offerings.

Within the low-carb diet industry, the ketogenic diet has been rapidly growing in popularity. The ketogenic, or keto, diet is a very low carb, high fat diet. It shares many similarities with popular Atkins and low carb diets. However, keto is often more restricting than a typical low-carb diet. It involves drastically reducing carbohydrate intake to put your body into a metabolic state called ketosis. On a keto diet, it is important to consume high amounts of fat in order to make up for the loss of carbohydrates. In ketosis, the body becomes more efficient at burning fat for energy. Ketosis is a metabolic state in which the body uses fat for fuel instead of carbs. This occurs when carbohydrate consumption is significantly reduced, limiting the body’s supply of glucose, which is typically the main source of energy for cells. The body also turns fat into ketones in the liver, which can supply energy for the brain. The body’s ability to burn fat reserves in the body for energy has been attributed to fat loss, although the long-term effects of this diet are still being disputed. Ketogenic diets can also cause significant reductions in blood 27 sugar and insulin levels and are often used to treat severe, hard-to-control epilepsy in children.

Keto dieters typically limit carb consumption to around 20 to 50 grams per day, making traditional snack foods like chips and pretzels off-limits. Therefore, the salty snack industry has a widely untapped market for keto-friendly snack options. Many companies are beginning to bring low-carb snack innovations to market, but with low-carb diet trends still on the rise, this category remains a great opportunity for brands.

Among other new low-carb product innovations in the salty snack category, Frito-Lay just released a new line of low-carb, keto-friendly tortilla chips. The Hilo Life brand chips are made from almond flour for more protein, marking the first major brand to introduce a keto- friendly, almond flour-based chip. The chips come in snack-size, 1-ounce bags. Each bag of Hilo

Life’s Almond Flour Tortilla Style Chips has 3 grams of net carbs, 9 grams of protein and 0 grams of added sugar. The chips come in three flavors: ranch, nacho cheese and spicy salsa.

Figure 5: Hilo Life Packaging

Source: HiloLife.com 28 Amanda Cheung, brand director for Hilo Life, said the brand connected directly with consumers following a keto lifestyle in launching this product. She said consumers wanted a carb-conscious chip that tastes like Frito-Lay’s popular snack products. “We recognized a delicious opportunity to innovate and bring our consumers a keto-friendly snack with the flavors and textures they crave,” Cheung said. “We also identified almond flour as a very popular ingredient and used that insight to develop something truly unique that delivers on protein content and 3g net carbs”.

Figure 6: Hilo Life Nutrition Facts

Source: HiloLife.com 29

Cheese Products Gain Popularity

Cheese snacks are another trend driven by consumers in the salty snack industry. In the first three months of 2020 alone, the cheese snack category posted an increase of almost $18 million in sales, as compared with 2019. This tremendous growth saw sales topping $2 billion for the 52 weeks ending June 14, 2020, according to IRI data on the U.S. snack market. This could be a result of a push for more indulgent snacks during the start of the COVID-19 pandemic.

With trends for healthier snacks at the forefront of the category, cheese snacks with real ingredients are recording large growth and upward sales trends. Baked cheese snack products are doing well with consumers, as opposed to processed cheese flavorings, according to IRI sales data. Frito-Lay’s Cheetos Simply brand increased dollar sales by 20.9 percent last year. Herr

Foods Good Natured Selects baked White Cheddar Puffs are made with real cheese and posted

9.1 percent growth, as well.

Of the real-cheese products that have been doing well with this growing trend, cheese crisps have also begun to enter the salty snack category. Whisps brand of cheese crisps is at the forefront of this trend. The flavored cheese crisp brand is sold in snack-size bags and has expanded from fried parmesan crisps to include flavors like bacon BBQ and tomato basil. These cheese crisps are relatively new to the salty snack category and could possibly indicate a new category of cheese snacks entirely.

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Chapter 4

Application of Logical Creative Thinking Methods

Before using Logical Creative Thinking Methods, it is important to conduct and document preparatory work, as demonstrated by the industry and trend analyses in the prior chapters. Based on my preparatory work, I knew I wanted to use LCT to find a healthier snack for Frito-Lay to add to their product portfolio that corresponds with the various trends in the salty snack industry. Based on the prominent consumer trends and market opportunities, I decided that

Frito-Lay should look into creating an innovative plant-based, low-calorie snack food that also taps into the low-carb and keto diet populations. With all of my preparatory work completed, I identified a starting point to begin the application of Logical Creative Thinking Methods.

Innovation through Replacement

In order to apply Logical Creative Thinking Methods to find a useful product innovation for Frito-Lay, I first had to establish a starting point, or SP. I used the reverse search method to transform an existing solution into a new and valuable innovation. The initial product that I used as a starting point was Frito-Lay’s existing product: Garden Salsa Sun Chips. In the case of reverse search, the starting point is referred to as the starting ending point because it qualifies as an ending point as it is an innovation, but it is being used as a starting point. I then deconstructed the product to identify components in order to focus on the most important key components. In 31 this process, it is important to ensure that search activities are manageable and meaningful and then focus on the most promising core components.

Figure 7: Garden Salsa Sun Chips Packaging

Source: FritoLay.com

Since I utilized the Tier 1 Method of Replacement, I deconstructed my existing solution of Garden Salsa Sun Chips. I deconstructed my starting point by its ingredients to establish important components, listed below:

INGREDIENTS: Whole Corn, Sunflower and/or Canola Oil, Whole Wheat, Brown Rice Flour,

Whole Oat Flour, Sugar, Tomato Powder, Salt, Natural Flavors, Maltodextrin (Made from

Corn), Cheddar Cheese (Milk, Cheese Cultures, Salt, Enzymes), Dextrose, Buttermilk, Onion

Powder, Whey, Yeast Extract, Romano Cheese (Part-Skim Cow's Milk, Cheese Cultures, Salt, 32 Enzymes), Whey Protein Concentrate, Corn Oil, Spices (Including Jalapeno Pepper), Citric

Acid, Paprika Extracts, and Lactic Acid.

Using replacement as the basis for developing an innovative product, I had to keep the structure of the starting point basically unchanged. From this starting point, I can replace one or more of the components in the original product with new elements that would work well with the rest of the components in the initial starting point to generate a new solution.

Applying Abstraction Methods

Abstraction is the second-tier method I used to examine replacing components of a starting point with similar components to produce higher value or efficacy. In replacing a component with a similar yet different component, one can identify new solutions. Usually, abstraction leads to ending points that satisfy the same customer needs as the starting point, but without undesirable side effects. In this case, there are three steps of the search algorithm: addressing omissions, backward generalization, and forward selection.

The first step is to deconstruct the starting point into its components, then explicitly state the implied components, and describe them in a statement. If possible, using mathematical symbols can help with this step. Using Garden Salsa Sun Chips as a starting point, mathematical symbols can be used to form the expression: Garden Salsa + Sun Chips. But in reality, broken down further, this is actually Garden Salsa seasoning + Sun (fried, rippled, multigrain) chips.

This can be broken down further into the actual ingredients of the seasoning and the chip itself to identify even more components. 33 Using the ingredients of the Sun Chip product as components and utilizing the mathematical expression above, I separated the ingredients into Garden Salsa Sun Chip’s two distinctive entities: the chip and the seasoning, as demonstrated below.

Chip: Whole Corn, Sunflower and/or Canola Oil, Whole Wheat, Brown Rice Flour, Whole Oat

Flour, Sugar, Salt, Natural Flavor, and Maltodextrin (Made From Corn).

Seasoning: Sugar, Tomato Powder, Salt, Natural Flavors, Cheddar Cheese (Milk, Cheese

Cultures, Salt, Enzymes), Dextrose, Buttermilk, Onion Powder, Whey, Yeast Extract, Romano

Cheese (Part-Skim Cow's Milk, Cheese Cultures, Salt, Enzymes), Whey Protein Concentrate,

Corn Oil, Spices (Including Jalapeno Pepper), Citric Acid, Paprika Extracts, and Lactic Acid

I then had my two starting points, an unflavored and unseasoned Sun Chip, and the

Garden Salsa seasoning that is usually used in the product. This step helps to identify all of the components of a given starting point in order to ensure that you are not overlooking anything that can be omitted to form a more valuable ending point. Using replacement as the basis for developing an innovative product, I had to keep the structure of the two starting points basically unchanged and replace one or more of the components with new components that can work well with the rest of the components in the starting point to generate a new solution. The final step is to then evaluate whether replacing the original component with the new component generates additional value in the ending point.

The next step in using abstraction as a method of innovation is backward generalization.

One must abstract a major component backward to a more general concept, of which the original 34 component is a special case. In the case of Garden Salsa Sun Chips, you can generalize backwards to identify the multigrain chip as a special case of a vessel for the chip seasoning.

Then it becomes a question of what to substitute for this component.

The next step is forward selection, where the explorer selects another special case within the parameters of the first. By substituting this new component for the original, a new solution is created. For example, continuing with my starting point of Garden Salsa Sun Chips, the multigrain chip can be substituted out for a different special case of a vessel for the chip seasoning. This new vessel could be dried vegetables, cheese crisps, or a combination of both.

Horizontal Extension

I used the horizontal extension method of abstraction to continue to develop my innovation. As discussed previously, this method replaces one component of a starting point with a different component, creating an alternative embodiment. This T3M substitutes an original component with an alternative component, creating a slightly different ending point with essentially the same functionality. This ending point should have similar quality and price to the starting point.

Using the search algorithm for this T3M, I carefully deconstructed the starting point of

Garden Salsa Sun Chips, as displayed in the previous sections. I also evaluated which components could be potentially substituted with a different component, with a similar functionality yet different non-functional dimensions.

Through backward generalization, I identified the multigrain chip in Garden Salsa Sun

Chips as a special case of a vessel for seasoning. From this point, it seemed like an interesting 35 innovation to substitute the chip for a different vessel with the same functionality. The process of forward selection further cemented my idea to use a different special case of vessel for the chip seasoning, leading me to draw ingredients from the seasoning list to use as a new vessel.

Therefore, the new product innovation would be Garden Salsa Sun Chips, with the same seasoning coating dried tomatoes, peppers, and cheese crisps.

36

Chapter 5

Product Innovation Recommendation

My finalized proposed product innovation from the utilization of Logical Creative

Thinking Methods are Garden Salsa Sun Chips without the “chip”. Instead Frito-Lay would use ingredients from the seasoning as the base. Taking the place of multigrain chips as the base of this salty snack would be dehydrated or baked jalapenos and tomatoes and baked cheese crisps.

The Garden Salsa seasoning would not be modified at all from the original formula. However, through market research and product testing, modifications can be made later on in the production process to ensure that the product is a cohesive and flavorful innovation. If the seasoning needs to be changed slightly to better pair with the jalapenos, tomatoes, and baked cheese crisps then alterations can be made. Additionally, it is important to note that the new product would be made with equal amounts of dehydrated tomatoes, dehydrated jalapenos, and

Romano cheese crisps.

The updated ingredient list is noted below:

Seasoning: Sugar, Tomato Powder, Salt, Natural Flavors, Cheddar Cheese (Milk, Cheese

Cultures, Salt, Enzymes), Dextrose, Buttermilk, Onion Powder, Whey, Yeast Extract, Romano 37 Cheese (Part-Skim Cow's Milk, Cheese Cultures, Salt, Enzymes), Whey Protein Concentrate,

Corn Oil, Spices (Including Jalapeno Pepper), Citric Acid, Paprika Extracts, and Lactic Acid

Chip: Dehydrated tomatoes, Dehydrated Jalapeno peppers, and Romano Cheese (Part-Skim

Cow's Milk, Cheese Cultures, Salt, Enzymes)

CONTAINS MILK AND WHEAT INGREDIENTS

Working Title

This proposed product innovation does not have a definitive name at this time. However, umbrella branding would likely positively impact sales of the product innovation. This marketing practice suggests using the single brand name of a product for the sale of two or more related products. Umbrella branding is typically used by companies with a positive brand equity. All products use the same identifiers. This marketing tactic works exceptionally well when one well- known product is used to increase sales for a new, or lesser-known product. Therefore, this product’s name should fall under the Sun Chips brand. Working names “Garden Salsa Sun Chip

Crisps” and “Sun Chips Veggie Crisps” can be used until a permanent name is chosen. These names reflect the similar flavorings of the product innovation to the existing product of Garden

Salsa Sun Chips. As with all Frito-Lay product innovations, research and development must be done to ensure that the title of this new product is an accurate representation of the product, as well as easily marketable toward consumers. Additionally, Frito-Lay’s legal team must give their approval of the finalized product name to ensure that it is free from prior intellectual property claims. 38 Rationale

As noted earlier, consumer trends within the salty snack category have a major impact on the success of new product innovations. In proposing this product innovation, it is important to ensure that it aligns with the significant consumer trends, as well as the forecast of the salty snack industry moving forward. Some of the most notable trends in the industry are healthier product options, including lower carbohydrates and lower calories. Consumers are also looking for plant-based salty snack options that are still flavorful.

Low-Carb Friendly

As mentioned previously, certain lifestyle diets like the keto diet have widely popularized low-carb snacks throughout the salty snack industry. By keeping the same flavoring as the original Garden Salsa Sun Chips, but removing the chip, consumers will be able to have Garden

Salsa Sun Chips without a high source of carbohydrates. Therefore, this proposed product innovation will fit well into many consumers’ diets, allowing them a healthier version of a popular Frito-Lay product. Many consumers following low-carbohydrate diets and lifestyles have very few options in the salty snack category so this will give them another option to choose from.

Plant-Based and Lower Calorie

According to a combined report from the World Health Organization and Food and

Agriculture Organization, it was recommended that a daily minimum consumption of 400 grams of fruits and vegetables may help to minimize the occurrence of chronic diseases along with the mitigation of micronutrient deficiencies. By removing the chip element of Garden Salsa Sun 39 Chips for a more plant-based and less processed vessel, this product will provide consumers with valuable nutrients that can help to eliminate many of the health issues plaguing the United States and beyond. In swapping the chip base to vegetables like tomatoes and jalapenos, this product will also decrease in calories. This allows consumers a product choice that is both plant-based and lower in calories, directly satisfying two very strong consumer trends in the salty snack industry at the moment. Furthermore, the increased amount of vitamins and minerals from the vegetable base will draw attention from consumers.

Strong Flavor Profile

Using the same ingredients from the original Garden Salsa Sun Chips product would bring out the flavors of the original seasoning. This follows consumer trends toward more intense flavors in salty snack products. This flavor profile has also already had proven success for the Sun Chips brand, cementing itself as a favorite of consumers. Additionally, using cheese crisps as an element of the product base will further add to the flavor profile of this salty snack.

The introduction of a strong cheese flavor to this already popular snack food will likely be successful with consumers, as well, due to the increase in interest in cheese products. This flavorful twist of a popular salty snack would surely be prosperous for Frito-Lay as a successful product innovation.

40

Chapter 6

Product Analysis

Although much of the details of the product will need to undergo further research, I have provided a brief product analysis to further delve into the proposed properties of this product innovation.

Potential retail prices and product sizes are suggested. Additionally, I gave an overview of the new ingredients that will be included in this product and their status both inside and outside of the salty snack industry right now. Also, I listed an overview of the potential production processes that can be used for the new ingredients in the proposed product.

Proposed Price Point and Product Size

Although there is not a salty snack product quite like this proposed innovation in the market currently, similar products should be evaluated in order to find an adequate price point for this product. A

7 oz bag of Garden Salsa Sun Chips typically retails for anywhere from $2.98 to $3.49. This product also comes in single serve, 1.5 oz variety packs of 30 that retail for anywhere from $24.99 to $40.98 online.

This means that each 1.5 oz bag would cost anywhere from $0.83 to $1.37, or $0.56 and $0.91 per oz of product, respectively. However, since this new product innovation will likely be more expensive to produce and uses healthier and more nutrient-dense ingredients, it can be sold at a slightly higher price point. Frito-Lay’s new keto Hilo Life chips are currently sold in 12-pack single serve bags at $19.99 per pack, or $1.67 per 1 oz bag. This proposed product innovation should be priced closer to the Hilo chips, as they are marketed toward a similar audience. As a preliminary recommendation, adopting the same price point as the 12-pack single serve bags of Hilo Life chips would be an appropriate choice. Single 41 serve bags could be a great product format to introduce this new product. Adopting the same retail price at Hilo Life chips, therefore, each bag of the new product would cost $1.67, with the 12-packs costing

$19.99.

Overview of New Ingredients

Jalapenos

Many pre-existing products both inside and outside of the salty snack industry support this proposed product innovation. Dehydrated jalapeno peppers do not seem to be commercially sold as a salty snack product. However, many recipes advise consumers to dehydrate or bake their own jalapeno peppers in their ovens at home. Other methods of dehydrating or baking jalapenos include using air fryers, dehydrators and even toaster ovens. Additionally, Crispy

Jalapeno Salad Toppers are sold both online and in stores to add a spicy crunch to salads or other meals and snacks. Fresh Gourmet has a line of Crispy Jalapenos that allow consumers to add heat and texture to meals like tacos, burgers, roasted potatoes, and casseroles, or sauces like guacamole, ranch or aioli.

As dehydrated jalapenos do currently exist in a separate market, Frito-Lay can either source this ingredient from another producer or obtain the necessary equipment to begin production on their own. This decision to produce the dried jalapenos either in-house or from a third party should be based on careful cost-benefit analysis.

42

Figure 8: Fresh Gourmet Crispy Jalapenos Nutrition Facts

Source: FreshGourmet.com

Tomatoes

Similarly, dehydrated tomatoes are not currently sold as a snack food, but they exist in other markets. Karen’s Naturals sells Just Tomatoes, a dehydrated tomato product. According to the product description on the company’s website, the product is made from “ripe, sun-warmed tomato, plucked straight from the vine”. The tomatoes are picked fresh and dried at low 43 temperatures to preserve flavor and nutrients. These dried tomatoes add flavor to meals, like salad and pizza, snacks, and dips. Since dehydrated tomatoes already exist in a separate market,

Frito-Lay can choose to source this ingredient from another producer or obtain the equipment to produce this item themselves. This decision to produce the dried tomatoes either in-house or from a third party should be based on careful cost-benefit analysis.

Figure 9: Karen's Naturals Just Tomatoes Packaging and Nutrition Facts

Source: iherb.com

Cheese Crisps

Although there are not currently many Romano cheese crisps in the market, Fresh

Gourmet sells them as a part of its line of cheese crisps. Although product information is still available about this type of cheese crisps, the official Fresh Gourmet website does not include 44 the product as one of the company’s offerings. Similarly, several websites sell the product, but do not have it in stock and lists it as unavailable, potentially suggesting that this product may be discontinued. However, the existing product information proves that it is possible to crisp

Romano cheese in a way that would create a chip-like snack for consumers.

Also, Fresh Gourmet does currently sell Parmesan Cheese Crisps, which is a very similar cheese to Romano cheese. Therefore, if the reason Romano Cheese Crisps are seemingly discontinued is because of issues with the cheese itself in production and Frito-Lay ran into those same issues creating their own Romano Cheese Crisps, they could always consider a different type of cheese.

Figure 10: Fresh Gourmet Romano Cheese Crisps Packaging and Nutrition Facts

Source: Marianos.com 45 Overview of Production Processes

When adding vegetables into non-perishable food items like chips, there are three main options for removing the moisture from the vegetables. These processes include dehydration, freeze-drying and powdering the vegetables. Because of the nature of the vegetables in this proposed product innovation, powdering would not make any sense. As the main vessel for the seasoning, powdering the vegetables would completely alter the product into a bag of seasoning, as opposed to a legitimate salty snack option. Therefore, the two main process options for this salty snack would be dehydrating and freeze-drying.

Vegetable Dehydration

Dehydrated vegetables are placed in a dehydrator that circulates heated air to dry them out. In dehydrating vegetables to be used in this new product innovation, it is important to note the caloric and nutritional effects it will have on the ingredients. Because this process uses heat, the vegetables tend to lose some of their vitamins in the process, however, overall this does not have a major nutritional effect. Dried vegetables lose very little of their nutritional value through the dehydration process, making it an optimal choice for the tomatoes and jalapenos in this product. The dehydrated tomatoes and jalapenos will retain most of the minerals and vitamin A.

Although the dehydration process does have an impact on the B-vitamin levels of some vegetables, research has proven that it will not diminish all of the B-vitamins.

Vegetables also shrink in size and harden during the dehydration process, meaning the volume of tomatoes and jalapenos prior to dehydration may seem a lot higher than after the process is finished. However, smaller sizes as a product of the dehydration process could lessen 46 the need for cutting the vegetables, potentially eliminating an entire step in the production process. Dehydration is also more cost-efficient than freeze-drying, making it a much more common practice than freeze-drying, as well.

Figure 11: Dehydrated Jalapenos

Source: dehydrate2store.com

Vegetable Lyophilization

Freeze drying, or lyophilization, is a popular technique for drying foods, like fruits and vegetables, that contain compounds that are thermally sensitive and prone to oxidation. The process operates at low temperatures and under high vacuum. Freeze-dried vegetables use a 47 refrigerated vacuum to remove the moisture from the vegetables. This process would minimize the loss of vitamins and minerals from the tomatoes and jalapenos. The process also keeps the same general shape, size, and texture of each vegetable intact. Therefore, the tomatoes and jalapenos would likely need to be cut into bite-size pieces beforehand to accommodate to the bite-size nature of many snacks in the industry and ease consumption for consumers.

Freeze-drying method is the better choice to dehydrate fruits and vegetables if the goal is to keep an optimized bio-compound content in the final product. However, that is not necessarily the goal of creating bite-sized, dried vegetables for the proposed product innovation. Freeze- drying requires long drying times and can be very expensive. Recently, research has been conducted to look into various processes to overcome the challenges associated with freeze- drying, pointing toward a promising future for the process. Intensification approaches have taken methods such as the pretreatment of samples and the use of infrared, microwave, and ultrasound energy through the freeze-drying process.

Figure 12: Lyophilized Tomato Slices

Source: shutterstock.com 48 Based on the differing impacts of dehydration and lyophilization, I believe that dehydrating the tomatoes and jalapenos to be used as a base for the new Garden Salsa Sun Chip product innovation. However, additional research should be conducted before the purchasing and acquisition of necessary equipment takes place to ensure that Frito-Lay chooses the best process for the production of this innovation. Additionally, the existence of products outside of the salty snack industry point toward the utilization of dehydration techniques as a useful tool to create crunchy and flavorful dried vegetables.

49 Chapter 7

Conclusion

In this dissertation, the value of utilizing Logical Creative Thinking Methods in the salty snack industry was demonstrated through new product innovation. Instead of relying on a person’s creative abilities and inefficient, unstructured innovation methods, Logical Creative

Thinking allows the innovator to follow a structured search process to identify novel, non- obvious, and valuable concepts. Inserting logical processes at the core of innovation, innovators can use Logical Creative Thinking Methods in an array of disciplines to derive benefits.

The method of abstraction is a great tool for innovation, especially within the consumer goods sector. Replacing components of a starting point with similar components to produce higher value or efficacy can help a company to identify new solutions. Furthermore, the third-tier method of horizontal extension allows innovators the tools to continue to develop valuable innovations. By replacing one component of a starting point with a different component and creating an alternative embodiment, companies are left with a new product innovation. This can create a product line extension, using an established product brand name for a novel product in the same product category.

Given the proposed product innovation, Frito-Lay should explore the logistics of offering a Sun Chips product that substitutes out the original multigrain chip for dried tomatoes and jalapenos, and cheese crisps, coated in their popular Garden Salsa seasoning. This product follows relevant consumer trends in the salty snack category. The proposed product innovation would directly align with a push from consumers toward healthier snack offerings, flavorful options, low-carbohydrate and plant-based snack choices, and cheese-flavored snacks. However, 50 the benefits of Logical Creative Thinking Methods stretch far beyond product innovation. There are countless advantages, both within the consumer goods sector and outside of it. Companies should consider utilizing Logical Creative Thinking Methods in all aspects of business. These methods can be used offensively to improve existing solutions and create new solutions. They can also be employed as a defensive strategy to develop long-term forecasts with regard to important factors like technology, social institutions, and culture, to form strategic plans. Logical

Creative Thinking Methods can provide a vast number of benefits to a company and should be considered by firms seeking novel and valuable innovations.

51

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ACADEMIC VITA

EDUCATION

The Pennsylvania State University University Park, PA Scholar in the Schreyer Honors College 2017 - Present • Marketing major, double-minoring in Journalism and the Legal Environment of Business • Recipient of the Provost’s Award and the Jane Perry Shoemaker Scholarship

Carmel High School Carmel, NY Alumna 2013 - 2017 • 4.0 GPA and member of the National Honors Society

RELATED WORK EXPERIENCE

PepsiCo – Frito-Lay Online Sales Management Intern June 2020 – Aug. 2020 • Learned PepsiCo's fact-based selling strategy to deliver exceptional customer service • Developed leadership skills from virtual trainings to coach, develop, and influence frontline associates • Practiced merchandising techniques unique to the salty snack industry • Leveraged technology to present reports, attend leadership and sales trainings, and connect with mentors

League Network Newark, NJ Public Relations Intern June 2019 – Sept. 2019 • Led a digital marketing campaign by researching, designing and promoting a series of sports-related webinars to help raise awareness for FundMyTeam, the fundraising arm of an award-winning company

VALLEY State College, PA Web writer April 2019 – Present • Web content creator for student lifestyle publication at Penn State • Skills include writing, editing, conducting interviews, creating story ideas, and collaborating

The Daily Collegian State College, PA Reporter Aug. 2017 – Aug. 2019 • Recognized as a top journalist in the Features and Investigations beat at The Daily Collegian

ADDITIONAL WORK EXPERIENCE

Peapod Danbury, CT Personal Shopper June 2019 – June 2020 • Responsible for the accurate scanning and packing of home delivery customer purchases • Developed a heightened attention to detail, people skills and the ability to work in a fast- paced environment

ACTIVITIES

THON State College, PA OPPerations Committee Historian Sept. 2019 - Present • Assisted in logistical planning for all THON events to maintain a safe and healthy environment for the event

Sigma Kappa State College, PA Public Relations Committee Member Jan. 2018 - Present • Active with nationally recognized sorority dedicated to personal growth, service and scholarship

Relay for Life Patterson, NY Team Founder and Captain 2013 - Present • Started Candy for the Cure, a Relay for Life team dedicated to fundraising for the American Cancer Society