Infographic: Kellogg keys on 'Ds'
Feb. 7, 2014
by Eric Schroeder
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BATTLE CREEK, MICH. — The primary goal of Project K — the Kellogg Co.’s efficiency-and-effectiveness program — is to enable the company to invest behind the business. Executives previously said the four-year efficiency program will require the company to rebuild brands in four key areas: cereal, snacks, frozen foods and emerging markets. To achieve that goal, John Bryant, president and chief executive officer, said the company is thinking of the purchase model in three distinct phases: Desire, decide and delight.
Mr. Bryant in a Feb. 6 conference call with analysts described “desire” as the area of investment normally associated with advertising investment.
“We will invest back behind our brands and specifically to address some of the category issues we see today,” he said. “This is not about more money behind the existing work. It’s about better allocating investment and adding additional resources as part of Project K behind an initiative designed to restimulate category growth. We will do this by leveraging the strongest brand in the category worldwide, and that is the Kellogg brand itself.”
Mr. Bryant said Kellogg has spent the past six months working to create a calendar of initiatives, including a campaign to reinforce the values of cereal and the role Kellogg plays in bringing that to the consumer.
“We will be initiating campaigns in our core markets by the second quarter under the idea of Kellogg’s see you at breakfast,” he said. “We are excited by these ideas and the work we’ve seen so far.”
The second phase, “decide,” is about “winning in store,” Mr. Bryant said, and it includes engaging consumers at the shelf, packaging, assortment and in-store merchandising. He described it as the “conversion of the shopper in the store.”
“This includes investment in things like packaging, shopper programs, mobile, in-store ads, and display,” he said. “We currently have brands that respond well to display and in-store theater, and we’re working to improve our vehicles for better presentation to the shopper. We have some industry-leading in-store partnerships with ESPN GameDay, the Olympics and key movie properties. In addition, as part of Project K, we’re increasing our investment in our coverage model for D.S.D. (direct-store delivery) and our U.S. snacks business, including investing in better technology for our reps.”
Finally, there is “delight,” which Mr. Bryant said “closes the loop” and is largely about Kellogg’s product offerings and quality.
“We realized the ground continues to shift rapidly in consumer sentiment around nutrition and the values being placed on food,” he said. “So we will continue to develop new foods that address these evolving consumer requirements, like Raisin Bran with omega-3s and Special K Nourish with quinoa. We will constantly strive to maintain and improve the quality of our products. We’ll do more with our packaging, and we’ll develop new ideas like our new granola in resealable bags.”
Mr. Bryant acknowledged that while investing in advertising, in-store execution and the design and quality of food is difficult for the investment community to track, each of the areas “will help drive future returns and are the right places for us to focus.”