Lunchables: An Oscar Meyer Case Study

The past two weeks have been all about operations. Lean manufacturing, tracking KPIs, hitting targets, kaizen and the Toyota process…the choices and possible models to illustrate and define operations are staggering. A few themes have stood out to me however, the main being the need to define a clear vision for what a company or product needs to achieve, and then the thought, design, and operational processes that make it an actuality.

We were introduced to the idea of setting “target conditions”, not end result “targets” in a lecture by Tom Johnson (author of Profit Beyond Measure, 2008). This concept  really appealed to me. The idea of setting out with a vision of service, what problem a product or offering could solve, rather than designing something that did “X”. This concept is much more creative, and offers the ability to achieve greater impact because the confines of a pre-defined outcome are no longer there.

I was reading an article in the New York Times online discussing The Extraordinary Science of Addictive Junk Food. Within this monstrous and fascinating article included many mini case studies about the addition of sugar and other addictive substances to our food to make it more appealing. The Oscar Meyer case study in particular caught my eye, because I remember as a kid, loving the very rare treat (seriously, like only twice in my life did my mom buy them for us) of the pizza lunchables.

It was interesting to read through this case and apply concepts from our coursework that allowed me to name and identify business strategy processes happening as Oscar Meyer continued to evolve this offering.

Initial Company Problem (Oscar Meyer): not selling much processed lunch meat (ie bologna)

Customer Problem: time challenge for mothers to provide kids with easy, nutritious lunch

Target condition to satisfy: Create easy to serve lunch product featuring lunchmeat

Solution: Lunchables!

As with any new product line, Oscar Meyer experience some product evolution that included customer challenges and the need to pivot. 

Problem #1: expensive to make, no profits were to be had even though it was wildly popular

Solution #1: trim production costs, including using lower nutritional “cheese food”, merge with Kraft to help source this “cheese food” at cost rather than purchasing from Kraft as a vendor

Problem #2: Profits coming in, but facing challenges of how to continue growing

Solution #2: add sugar, promote product with customers that had become bored with product

Problem #3: health concerns with products (Maxed Out line)

Solution #3: reduced sugar, salt and fat content, began producing healthier lines featuring fruit

Problem #4: this did not help the criticism since

Solution #4: market research to unpack new concept: “that kids are in control — would become a key concept in the evolving marketing campaigns for the trays. In what would prove to be their greatest achievement of all, the Lunchables team would delve into adolescent psychology to discover that it wasn’t the food in the trays that excited the kids; it was the feeling of power it brought to their lives.” As the focus swung toward kids, Saturday-morning cartoons started carrying an ad that offered a different message: “All day, you gotta do what they say,” the ads said. “But lunchtime is all yours.”

This shift in marketing was key to the success of Lunchables. Profits boomed and competitors started offering similar pre-packaged lunch options for kids. However, since this market was kid-focused, healthfulness of the product no longer appeared as a focus for the target customer.

Now what if their focus from the beginning had been a “target condition” that put a higher value on healthfulness from the beginning? What if Lunchables would have been a product designed that served both the mother’s need to provide a quick, time efficient lunch, and one that would actually be nutritious? This visioning of a different product with a slightly larger goal could have alleviated some of the growing pains the product experienced when parents began to complain. To do this however, Oscar Meyer would have had to a much larger sweep of planning that would include supply chain (like the cheese…and if nutrition and/or quality had been a priority I would venture to guess that “cheese food” would not have made the cut).