Management Strategy for Value Creation at “Pringles” (Crisps)

Management Strategy for Value Creation at “Pringles” (Crisps)

Executive Summary

Pringle is one of the largest companies that manufacture savory snacks and it its products are found in more than 140 countries across the globe. The company was initially owned by Procter and Gamble, but it was sold to Kellogg in May, 2012. Pringles manufactures unique potato chips that come with different taste and flavors and it also has a unique packaging style that gives it a competitive advantage in the market. The company has been able to meet the expectations of consumers and stakeholders by manufacturing convenient products that are needed by consumers. Pringles are also regarded as one of the most innovative fast food companies because it uses an open innovative approach to improve the quality of its products and to improve the experience of its customers. Therefore, it uses an open innovation approach to manage innovation in the dynamic business environment.

Quality and improved experience of consumers through innovation, therefore, can be the most appropriate them that can be associated with the Pringles. It uses various innovations like packaging styles and Pringle Prints to improve the quality of its products and the experience of consumers. It uses quality and improved experience of customers to have a competitive edge in the fast food industry. However, the company can only improve its performance and productivity by engaging in the strategic thinking that will ensure that it comes up with rational and realistic decisions and actions. It is recommendable for the company to come up with products that meet specific needs of consumers and to only adopt external innovations that are in line with its organizational culture.

Introduction

Pringles is rated as the second largest company manufacturing savory snacks in the whole world. The company is estimated to be making about $1.5 billion in sales across the 140 countries where its products are sold. The company was initially owned by Procter and Gamble, the founder, but it was sold to Kellogg in May, 2012.  The company manufactures unique potato and wheat based crisps, which has given it a competitive advantage in the market. Its products are easily identified by their peculiar saddle shape and unique canister packaging, which come in a variety of flavors. The unique shape, quality, and flavor have made Pringle snacks to dominate the market for the last four decades.

The company got an upper hand in the market when it came up with the strategy of solving long standing grievances that consumers of potato crisps had initially. The consumers were not happy with the easily broken, greasy, and stale snacks that were packed in small packets. Pringle solved the problem by coming up with a superficial packaging style, which makes it the only company that sells crisps stacked in a paperboard instead of air-filled packets that make them break. The company has always been managing its values by comparing its products with the ones available in the market and it is also keen in introducing taste and flavors that suit the needs and preference of the consumers in the countries it operates across the world. Therefore, the company has been guided by open innovations that ensure that it meet specific needs of consumers in the market.

The Company’s Strategy of Meeting Consumers’ and Stakeholders Expectations

The company’s products faced a number of challenges when it was first introduced in the market. Initially, the product was associated with a number of health hazards due to the way it was manufactured by the media leading the argument that the Pringles products were over processed, which disqualifies them to be called potato chips. The initial test confirmed that the products indeed contained Acrylamide, a cancer-causing chemical, beyond the required limit. However, the company was forced to fight the challenge by confirming to consumers and the public that their products are safe for human consumption. Therefore, in order to meet the expectations of both consumers and stakeholders, Pringle produces high quality products with a variety of unique flavors beyond those offered by their competitors. In addition, Pringle has ensured that it is the only company in the market that sells stacked potato chips required by consumers (Bailey, 1994). The variety of tastes and flavors and stacked chips have made consumers across the globe to prefer Pringles potato chips to those offered by the competitors in the market.

Pringle manages the expectations of consumers by creating convenience in the consumption and use of its products. First, the company has created convenience through its superficial packaging style that ensures that Pringle potato crisps are mess free due to its easy pour top. Traditional dips used by other players can easily mess up consumers because they make crisps to break into small pieces when consumed by customers. At the same time, the wide mouthed jars are risky because they can lead to the contamination of the crisps, which can pose some health risks. It also creates convenience through the high quality of its products that come with great-tasting experience (Lancaster, 1999). Therefore, the company has come up with ways of creating convenience through packaging, taste, and flavors that ensure that consumers are comfortable when consuming its products.

In order to meet the expectations of consumers and key stakeholders, Pringle has come up with attractive features of its products. First, it is using healthy and quality ingredients to manufacture its products. Some of the fresh ingredients that it includes in its products include French onion, cheese and Ranch that improves the health standards of its products. It also offers family-size and single-size serving to its consumers, which it uses to ensure that its products can be consumed by families and single individuals. The variety of serving style is important in ensuring that it meets the demand and expectations of different consumers with different needs and expectations. The Pringles also ensures that its products are attractive to consumers by coming up with bright, colorful labels with a broader brand logo. The current consumers are more sensitive to health standards of the foods that they consume due to increase obesity concerns and they expect healthy brands in the retail shops (Carlzon and Lööb, 2015). At the same time, many families like taking meals together to increase the social bond between family members (Chow et al., 2013). Therefore, Pringle manages the expectations of consumers by producing healthy products that accommodate both families and individual consumers.

The company is also using skimming pricing strategy to create the perception among its consumers and stakeholders that its products are of high quality and are convenient for consumption. Consequently, Pringles charges higher prices compared to the alternative products offered by the competitors because it follows differentiation strategy. Consumers always perceive products with high prices to be of higher quality compared to those with low prices (Huimin and Hernandez, 2011). Therefore, the skimming pricing strategy through differentiation is used to maintain the perception of consumers on the high quality of Pringles products (Spann, Fischer and Tellis, 2009) The Company positions its products to be of high quality, more convenient, and with better tastes and favors. Apart from skimming pricing strategy, it also uses market penetration pricing strategy to boost its brand image and to increase the sales of its products.

In order to reduce the fear over its products, the company has engaged in number corporate social responsibilities and is striving to improve the health standards of its products. The company is in the process of coming up with fruit based chips to assure consumers and the general public that its products are safe for consumption. The company is also using a lot of organic and umami ingredients in its products. Increased health concerns have made more people prefer organic food over inorganic food. Therefore, in order to meet the expectation of consumers, the company is including organic ingredients in its chips. In addition, to meet the demand for children, the company is also adding more saltiness, as more children prefer salty taste. Therefore, the company is sensitive to the demand and expectations of its consumers and stakeholders and it is striving to meet them.

In addition, in order to ensure that its customers easily access its products whenever they need them, Pringles uses intensive distribution strategy. It also uses intensive distribution because its products have a relatively shorter life cycle. It, therefore, distributed its products through grocery stores and other retail outlets that can easily be accessed by consumers. Potato crisps are always consumed on a daily basis and consumers would like to easily access them in the retail shops that they frequently visit. Therefore, using intensive distribution enables consumers to easily access the products (Green and Lomanno, 2012). Using groceries and retail shops also ensure that Pringles products are within the reach of consumers.

Pringles, therefore, uses convenience, attractive features of its products and skimming pricing strategy to meet the expectations of its customers and stakeholders. It makes it more convenient for consumers to use its products while at the same time it maintains the high quality of the products. It also charges high prices to maintain the perception among consumers that the products are of high quality. Pringles also meet the expectations of consumers and stakeholders by increasing the accessibility of its products in the market. As a result, Pringles has succeeded in meeting the expectations of both stakeholders and consumers to maintain a competitive advantage in the market.

Managing Innovations in a Dynamic Environment

Pringle is one of the most innovating companies in the fast food industry because it has managed to come up with some of the sustainable innovations that have given it a competitive edge among the competitors. The company has initiated some of the notable innovations in the industry like printing texts and designs on the potato crisps and a unique packaging style that keeps crisps stacked. Despite the fact that the company still relies on the internal innovations, it prefers to engage in the open innovations, which is more beneficial and cost effective. Therefore, it relies much in open innovations while at the same time it encourages internal innovation (Chesbrough and Appleyard, 2007).

In order to manage open innovation, Pringle has developed a technology brief that has the ability to define the problem that needs to be solved. After defining the identified problem, the company circulates the defined problem through its global networks to determine if there are anyone or institutions that has the readily available solution to the problem (Chesbrough and Appleyard, 2007). Open innovation through its global networks enable the company to spend less time and resources developing an innovation. Consequently, the company has managed to achieve a steady growth in a competitive environment.

Pringles relies on small and midsize companies that have become increasingly innovative to accomplish its innovation process (Chesbrough and Appleyard, 2007). A number of small and midsize entrepreneurial companies are always willing to sell out their intellectual property to other large companies at a profit. Therefore, Pringles has found it cheaper and more convenient to buy innovations from such companies due to the high increase of internal innovation cost. However, in order to also encourage internal innovation, the company has undertaken to ensure that half of its innovations are internal while the other half is external. Pringles used connect and develop strategies to enhance its innovations where it collects good ideas outside the company and then being them into the company to improve and capitalize on the internal capabilities of the internal personnel (Chesbrough and Appleyard, 2007). The company achieves this by collaborating with experts and organizations to find technologies and innovations that they can use to enhance the quality of its products.

Open innovation has proven to be beneficial and it is working for the Pringles. For instance, when it came up with the idea of printing texts and designs on its products, the company uses open innovation to actualize the idea. Even though one of its employees demonstrated the idea by making a thin potato crisp and HP printer to demonstrate that the idea was viable, the company needed edible dyes that were not available internally. Through its innovation networks in Europe, the company managed to get the professor in Bologna that had created edible dye that it could use to print its crisps (Chesbrough and Appleyard, 2007). The company was able to launch Pringles Print in a span of eight months after licensing the IP from the professor. However, it took Pringles one year to negotiate IP with the large company that was readily available, which ended up unsuccessful because the negotiation collapsed. Therefore, it turned out that open innovations by working with small and midsize entrepreneurial companies is the best way to manage innovations in a dynamic and competitive environment.

Therefore, Pringles manages its innovations through networks. The company relies on the proprietary networks like technology entrepreneurs and suppliers to enhance connect-and-develop innovation strategy (Chesbrough and Appleyard, 2007). The company connects with more than seventy technology entrepreneurs across the globe and its top 15 suppliers to promote innovations. The company also uses open networks to complement the proprietary networks.

However, in order to effectively manage the connect and develop innovation strategy, the senior management team in the company must spearhead the innovations (Cândido, 2012). Pringles has given full responsibility of the innovation process to the vice president for innovation and knowledge who works closely with other unit managers. It is the responsibility of the VP to manage the innovation networks across the world to facilitate faster flow of ideas and thoughts that can lead to beneficial innovations. The VP of innovation and knowledge also coordinates internal research and developments within the company to encourage internal innovations.

Due to open innovation, Pringles has managed to come up with innovation that create more values to its customers and give it competitive advantage in the fast food industry across the globe (King and Lakhani, 2011). First, Pringles Print has enabled the company to come up with interactive products that inspires and crease amusement among consumers. Pringles Print, therefore, is one of the innovations that have enhanced consumer experience whenever he or she is taking Pringles crisps. Open innovation also enabled the company to come up with a unique packaging style that enables the crisps to stack. The Pringles cardboard tube was invented to maintain the alignment of crisps when they are packed.

Adopting open innovation without interfering with internal creativity and innovation has made Pringles the most innovative company in the fast food industry (Randhawa, Wilden and Hohberger, 2014). The company is not afraid of advertising its R&D needs to the outsiders and it is not so much worried about competitors adopting the ideas. At the same time it relies on the small and middle size innovators to come up with innovative ideas that can help it improve the quality of its products (Coras and Tantau, 2014). It relies on the external networks to connect with the outside world to find solutions to some of the challenges it faces and to actualize the innovative ideas.

An appropriate Strategy Theme

The most appropriate theme for Pringles is the deliverance of quality products and great experience through innovations. Pringle is striving to manufacture quality crisps that enhance the experience of consumers by coming up with various innovations. It has tried to enhance the quality of potato crisps by solving some of the problems experienced by consumers like the manufacturing of stacked crisps and packaging styles that promotes the experience of consumers. It has managed to achieve the production of quality products by coming up with a number of innovations.

First, the company has been striving to solve some of the problems that consumers of crisps have been experiencing for a long period of time by coming up with the most convenient packaging (Simpson, 2012). For quite a long time players in the fast food industry have been struggling to keep chips fresh and to prevent them from getting crushed in the packets. However, with the introduction of Pringles in the market, the company used the opportunity to create a difference by coming up with the most convenient and effective packaging style. It came up with a cylindrical can that is able to prevent crisps from crushing and it enables consumers to eat the chips and crisps almost everywhere. The desire to improve the experience and to solve the problems of consumers motivated Pringles to invent the packaging style. The packaging style has also enabled the chips to remain stacked, which has improved their quality. Therefore, the vision of the company is in line with the improved quality of its products (Davies and Konisky, 2000).

The company also wants to enhance the experience of consumers of its products.  Even though this was partly elevated by coming up with the most convenient packaging of chips, it went further to manufacture Pringles Print that came up with a new experience (Vanti et al., 2008). The printing types and designs in the Pringles potato chips enable the interaction between consumers and products, which is important in improving the experience of consumers. The company was able to come up with a human centered design approach that enhance consumer experience, as each Pringles tube has about one hundred interesting messages and image that are amusing and entertaining. Pringles, therefore, uses consumers experience to increase the sale and reception of its products in the market. Pringles Prints increased the sales of the products, as more people came to identify with the unique crisps.

Therefore, the company has been able to manufacture quality products and to enhance the experience of consumers through innovations. In order for any company to improve the quality of its products, it must carry out intensive research to come up with appropriate innovations. Pringles have come up with a number of innovations, which show it engages in internal and external R&D to come up with products that can meet the specific needs of consumers. It uses both internal and external expertise, knowledge, and ideas to come up with unique products that can give it competitive advantage in the market.

Critical Assessment of Strategic Thinking

Strategic thinking basically means a big picture view of all sectors and aspects of an organization and it focuses on doing the right thing instead of doing things the right way (Zarei and Paghaleh, 2009). It incorporates the synthesis of available information in order to identify critical issues and their interconnections, and various patterns in a business environment. Therefore, strategic thinking is about analyzing emerging issues and trends, and to identify if such issues and trends have some opportunities or risks to the goals and objectives of a business  (Zarei and Paghaleh, 2009). Strategic thinking enables the management and other leaders in an organization to capitalize on the potential opportunities and to find effective ways of mitigating the risks that come with trends in a business environment.

Change is always inevitable and it is always non-linear, which makes it uncertain and full of surprises. Therefore, strategic thinking should not be episodic, but should be a continuous process to enable accurate identification of trends in the industry (Zarei and Paghaleh, 2009). As a result, any organization that wants to take advantage of emerging opportunities and to mitigate hazards must engage in a continuous strategic thinking. Such organization will be in a better position to have a competitive advantage and enhance its performance and productivity.

There are a number of reasons why an organization should engage in strategic thinking. The main reason is the fact that the resources available are limited and an organization needs effectively use its resources to achieve the set objectives. It is through strategic thinking that a business can be in a position to avoid costly mistakes that can hinder its success. Strategic thinking also enables a business to match competitors by evaluating its strengths and weaknesses against those of the able competitors to gain a competitive advantage (Zarei and Paghaleh, 2009). In addition, strategic thinking creates innovation in an organization as it learns to do the same things in a different way to improve the quality of its products and services. Therefore, strategic thinking can improve the organization’s strategic capability, performance, productivity, and pursuit of value.

Despite the fact that fast foods are perceived to be recession-proof, there are some emerging issues that required that players in the industry to engage in strategic thinking. Consumer taste and preference are changing so fast, especially to increased concern over obesity and other diseases associated with fast food. At the same time, there is stiff competition in the fast food industry as key players are struggling to control the market. Therefore, companies like Pringles must engage in the strategic thinking to improve their chances of survival. It must be keen to trends in the industry and find out effective ways of gaining a competitive advantage in without constraining its resources.

With the increased changes in the fast food industry, any company that needs to have a competitive advantage over other player must open up to innovation. It is only through the innovation that companies are able to come up with products that are in line with the needs and taste and preference of consumers. Due to economic and social changes, the current consumers want convenient products and they also need immediate satisfactions (Kim and Hahn, 2012). Therefore, having a strategic theme that emphasizes the quality of products and experience of consumers will improve the performance of the Pringles and pursuit of value.

Currently, the majority of people consuming Pringles potato chips fall under the Generation Y who value quality, convenience, and entertainment (Regine, 2011). It is also the same generation that has the highest purchasing power in the current society (Zhao, 2014). Therefore, producing quality products that also improve the experience of consumers are more likely to give Pringles a competitive advantage because it will attract more customers. However, the company will only be able to achieve the objectives by engaging in the strategic thinking, which will enhance its decision-making and effective use of the available resources. Strategic thinking is important in ensuring that the company comes up with decisions that are futuristic and sustainable (Bruche, 1999). Therefore, by considering the trends and emerging issues in the market, the company will be able to improve its performance and create meaningful value to all its stakeholders.

Strategic thinking will enable the company to increase its productivity and performance and create value because it will be in a better position to identify potential opportunities and risks in the industry (Switzer, 2008). At the same time, it will ensure strategic allocation of resources and to come up with effective frameworks that can guide the smooth operations of the company (Henden, 2004). Therefore, strategic thinking towards improving the quality of products and experience of consumers can be beneficial to Pringles Company.

Conclusion and Recommendations

Pringle has effectively managed to meet the expectations of consumers and stakeholders by coming up with products that are tailor-made to meet the specific needs and experience of consumers. The company has created convenience in the consumptions of its products through packaging, high quality of products and the variety of taste and flavors. Its distribution channels are also effective and accessible o the final consumers, as it uses grocery store and retail outlets to distribute its products. To ensure that its innovations are beneficial and cost effective, Pringles has adopted open innovation strategy where it utilizes the expertise, knowledge and ideas that are generated internally and externally. Consequently, it has managed to come up with the best innovations at a relatively cheaper cost. Therefore, the suitable strategic theme for Pringles is the deliverance of high quality and enhanced experience of consumers through innovation. However, the company can only achieve its goals and objectives by engaging in strategic thinking, which will enable it to come up with realistic and sustainable decisions and actions.

Therefore, in order to effective mange strategy for value creation, it is recommendable for Pringle to come up with products that are geared towards meeting the specific needs of consumers that might have been ignored by the competitors. A number of consumers are now sensitive to the health standards of the food that they use and they prefer organic food. They also fear consuming foods containing too much fat or sugar. In addition, as much as the company is involved in open innovation, it should ensure that external ideas that are brought in the company are in the line with the line with its organizational culture top reduce internal conflict. Despite the fact that a company can import innovations and ideas from outside, it still need internal employees to implement such innovations. Therefore, open innovation should not create conflict in the organization, but should boost creativity, performance, and productivity of internal employees.

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