The joint project was between Marina Girju and her research team at UT Dallas and Fritolay, the snack arm of beverage group PepsiCo.
The researchers developed DemoImpact, a consumption forecasting model and decision support system to predict demand in the US for more than 900 snacks and 80 snack categories.
DemoImpact method
The findings are generated by the DemoImpact method using population predictions from sources such as the US Census Bureau and other governmental agencies.
“DemoImpact lets the client analyse the overall demand for snacks as well as demand preferences among user-defined snack sub-categories,” said the researchers.
The team said the method extends the forecasts year over year for 15 years into the future highlighting the effects of the projected demographic trends.
The data has been collected from 30,000 consumers across the country between 2004 and 2010.
Gains for Fritolay
Michelle Adams a Frito-Lay executive said at a recent Marketing Practitioner Conference that the model had changed the company’s marketing and growth strategies.
Fritolay said the analysis helped the company focus its resources on high growth categories and innovate around new snack categories such as nuts.
“For example, thanks to DemoImpact Frito-Lay introduced a new product line of healthy nut clusters and crisps which the company said helped to identify the gap in consumers’ needs for the product,” said Fritolay.
The company claims that the Demolmpact method was instrumental in Frito-Lay gaining a “sizable” share of the $2.4bn nut category, which is growing at 4 per cent a year.
“Similarly, DemoImpact answered why some snack categories are stagnant or decreasing,” said the company.
Fritolay said DemoImpact has been used throughout the entire organisation since 2007.
“At first, it was meant as an additional tool to help the consumer Insights department understand the consumer and her consumption patterns better. But, as DemoImpact was used more extensively and the results were disseminated more broadly, interest increased.”
Additional analyses for grain snacks consumption led FritoLay’s Chicago based sister-company, Quaker, to use DemoImpact in its business strategy planning. During the past four years, PepsiCo also made the forecasting system an integral part in the company’s business review process.
Findings and predicitions
The DemoImpact model uses the relationships between consumption, demographics and other characteristics to forecast future US consumption trends.
Major findings of the 20 page study include: Residents of the Northeast and West of the US snack more often but in smaller quantities than people in the South.
Females snack more often than males, but consume less in volume over a two-week period.
Females also consume a higher volume of yogurt, veggie chips cookies, chocolates and meal-replacement snacks whereas men eat more crisps.
Households with children consume more salty snacks, salsa and cookies.
The study also made a series of predictions. For example, the US population will increase by 18 per cent between the ages of 2 and 75 and the population in the South and West will increase at the expense of the North and East.
Households with children will decrease from 30 to 21 per cent of the total.
The study also predicts that the obese population will increase from 34 to about 50 per cent.
Source: DemoImpact: Modeling, Review of Marketing Science
Published online ahead of print: http://www.bepress.com/romsjournal/vol8/iss2/art1/
Title: “Forecasting and Managing the Impact of Major US Sociodemographic Trends on Multi-Category Snack Consumption"
Authors: M. Marina, M. Adams, B. Ratchford