Taco Bell - Using Social Media to Target Millennials

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EXCERPTS

Unlike other large US food retailers, TACO never particularly focused on advertisements and promotions, until the 1990s. In contrast to its major competitors, it did not specifically target the kids market segment with specially made toys or space set aside for playgrounds, or by showcasing cartoon characters. When TACO eventually began advertising, it used innovative and lighthearted themes to promote the brand. The company used traditional media such as TV and radio spots, apart from newspaper ads.... PR FAILURE OF TACO BELL Between 2006 and 2007, TACO’s reputation took a beating after it suffered two PR disasters. In early 2006, there was an E.coli bacteria outbreak at TACO outlets across four US states that resulted in customers being hospitalized and cases of kidney failure being reported. The company claimed that the outbreak occurred due to faulty growing practices of a particular supplier of lettuce that was used in almost 70% of TACO products.

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The negative impact of the two PR disasters on TACO’s top line pushed the company to strive harder to create a strong and responsive online presence. Around the same time, the marketing managers of TACO realized the value of social media as a key marketing tool...

In its early days, TACO used to take content and commercials from other channels and modify them for social media consumption. Over a period of time, its social media team began maintaining a content calendar to post content for its social media channels...

TACO not only engaged with its fans in real time, but with other noteworthy brands as well. For example, in July 2012, it got into an online tussle with Old Spice on Twitter. It all started with Old Spice making fun of Taco Bell when it tweeted, "Why is it that “fire sauce” isn't made with any real fire? Seems like false advertising.” To which TACO immediately replied in kind: "OldSpice: Is your deodorant made with really old spices?" TACO’s saucy retort caused several twitter users to post their own comebacks for Old Spice’s tweet....

TACO believed that it was necessary to build authority in social media marketing. More and more people looked to others in their peer group before making a purchase decision rather than being influenced by traditional marketing messages. In particular, if a brand was lauded by a celebrity on social media, its image got an immediate boost....

PUTTING SOCIAL MEDIA TO A VARIETY OF USES

In 2011, TACO was faced with another PR crisis when a woman filed a lawsuit against it for false advertising. The lawsuit claimed that TACO was lying about the fact that it used 100% beef in its products. The incident again led to large scale negative publicity for the company and resulted in a fall in sales....

In 2011, TACO began utilizing social media as a recruitment tool. Millennials comprised a large proportion of TACO’s in-store employees (including store managers) and their primary hangout was social media such as Facebook. Subsequently, the company enhanced its online presence, especially Facebook, to attract potential employees.....

The TACO innovation team, made up of around 40 people, reviewed around 4,000 to 4,500 ideas every year. The ideas were garnered primarily from social media and competitors’ restaurants. While 350-500 ended up undergoing consumer tests, only 8-10 finally made it to the menu. A typical TACO product underwent almost 100 iterations of various characteristics such as shape, weight, thickness, and fillings before it was launched......

TACO used social media sites to announce new products and incentives for consumers, which then created hype. A month before the launch of DLT, TACO began a pre-launch Twitter campaign to generate interest about the product and gather feedback. It then utilized social media analytics from the campaign to estimate how much of the product it needed to produce for the official product launch.......

TACO was proactive in making the first move on fast emerging social media networks and emerging technologies. Brian Niccol, CEO at TACO, said, “You have to go to these other screens, because in the end, kids in college dorm rooms don’t even have TVs, they’re using laptops.......

Analysts believed that social media, if correctly used, could lead to an increase in company exposure and website traffic, apart from an improving online search rankings and reducing marketing expenses. The time, energy, and resources that TACO spent on increasing its popularity on social media paid off to a large extent. For example, in 2013, the company launched a new product in a test market without using any social media and PR. It then launched the same product nationally using PR and social media. TACO experienced a 67% rise in sales for the national market, when compared to the test market........

Most analysts agreed that TACO’s product innovation and social media focus were the prime reasons for the revival of the brand. The company saw same-store sales rise 8% in 2012 and 3% in 2013. In 2013, TACO also contributed about two-thirds–around US$ 451 million–of Yum! Brand’s US operating profit. In 2013, the average TACO store in the US had higher annual sales (US$ 1.3 million) than KFC or Pizza Hut. Moreover, it boasted high operational efficiencies that included low food, labor, and real estate costs, which meant that TACO’s operating margin was around 20%. Yum! Brands, as a whole had operating margins of just 16.9% in the US.........

Exhibit I: Information on Social Media Channels

Exhibit II: Information on Various Brands in Yum! Portfolio

Exhibit III: Information on Mexican Food Items