Remember Doritos Locos Tacos? Introduced in 2012, this one product increased Taco Bell’s revenues by a whopping $1 billion during its first year on the market. No wonder the fast-food restaurant company never stops cooking up ideas to change and expand its menu. Taco Bell’s research shows that adding new items, even those available for a limited time only, will bring consumers back to its 6,500 outlets again and again. That kind of brand loyalty is especially important in today’s competitive marketplace, which is why Taco Bell aims to launch a new product every five weeks. In recent years, the firm has used co-branding for new breakfast items like the “Chocoladilla,” a quesadilla stuffed with melted Kit Kats or Twix candies. It has also experimented with different ingredients and spices by introducing lunch and dinner items such as spicy, tortilla-wrapped DareDevil Loaded Grillers. 

The new-product process at Taco Bell begins with brainstorming, experimentation, and discussion. Top executives scan the overall marketing environment, including social-media sites, seeking inspiration for new flavor sensations or untraditional food combinations that will attract customer interest and fit with Taco Bell’s brand personality. Food experts from top suppliers regularly step into the company’s test kitchens to whip up innovative creations based on the latest food trends and consumer research. Taco Bell’s marketers nibble away, and as the conversation flows, they come away with ideas to shape into specific product concepts. Two Taco Bell restaurants near the company’s headquarters also serve as idea generators, by encouraging buyers to creatively customize their food orders. Marketers carefully analyze the frequency of requests for different combinations to gain insights into how consumers’ tastes are changing. Although Taco Bell’s customers often favor crunchy and cheesy products, the firm is always on the lookout for other ideas that will add a bit of variety to the menu.

Questions for Discussion

1. In terms of product differentiation, why does Taco Bell test-market its new products for months before deciding whether to introduce them in a wider area

2. What are the advantages and disadvantages of Taco Bell introducing a product simultaneously in all outlets nationwide rather than in stages through a rollout

3. Which product attributes or features does Taco Bell appear to be using to position the Quesalupa, and why