The ready-to-eat cereal category is extremely competitive and not without its challenges. Commodity pricing pressures have forced many
companies to offset costs by raising their own prices. And as if the competition from other branded products wasn’t enough, private-label cereals have become an attractive alternative to price-conscious consumers. Meanwhile, cereal brands have long been criticized for being high in sugar and salt and boasting little nutritional value.
Kellogg Co., maker of such iconic brands as Special K, Mini Wheats and Corn Flakes, is no stranger to these challenges, itself having to raise prices amid rising commodity costs and recently reporting a net sales decrease of 1.3% in the first quarter. Revenues are expected to increase only 2% to 3% in 2012 versus an average of 6% annually over the past decade. Most recently, consumers have taken to social media to voice their anger at Kellogg’s natural-cereal brand Kashi’s use of GMOs.
But the world’s largest cereal maker by sales, which spends more than $1 billion annually on brand advertising and marketing and is an official sponsor of the U.S. Olympic and Paralympic Teams, is fighting back with product innovation, an expected purchase of Pringles that should expand its global footprint in the snacks category and now, a major brand overhaul.
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Its latest effort—dubbed “Project Signature” internally—is its most significant in the company’s 106-year history, said Kellogg Co. CMO Mark Baynes: A year of research and work with Interbrand informed the changes across the Kellogg’s portfolio, including an updated logo, identifying the Kellogg’s brand’s core purpose, incorporating the “masterbrand” into all Kellogg’s marketing campaigns, consolidating 42 company websites around the world to one, and the new tagline, “Let’s Make Today Great.” Creative agency Leo Burnett and digital agency VML have helped execute the brand strategy and identity system, and the overhaul was driven by an acknowledgement that consumers “want to be more engaged today with brands they care about,” Baynes said. It also is evidence that the company, which spends more than 20% of its North American marketing budget on digital, is keeping pace with today’s consumers, putting digital and social at the core of its engagement efforts, and highlighting a very valuable heritage, he said.
He shared with me the backstory of the brand refresh, the necessity that Kellogg’s find its purpose and guiding identity, the work that went into it, and what he hopes it all will yield for Kellogg.
Tell me a bit about the rationale and the work that’s been going on leading up to this.
There were probably two or three elements that converged that recognized there was an opportunity to refresh the Kellogg’s brand. On one end, we’ve been a sub-brand organization. We support our powerful brands like Special K, Mini Wheats. That’s been our traditional architecture and investment mode. And what we have in Kellogg’s is a truly iconic brand with Olympic status around the world. It’s been a significant, underleveraged asset. And I think as consumers want to be more engaged today with brands they care about, Kellogg’s really has a powerful and strong relationship in the role it plays in people’s lives, particularly with moms. We felt that having a stronger brand, driving a stronger point of view, a more powerful identity and have at the center an umbrella to talk about our portfolio more holistically, to talk about the power of breakfast, to talk about the value of cereal—it sort of became a much bigger platform to capture our thoughts about how we wanted to build a bigger relationship with them. The second point of convergence was in the last six, nine months we’ve refreshed our company strategy. If you look at our portfolio we have a number of masterbrands: We have Kellogg’s as a masterbrand, we have Keebler, we have Kashi, we have Morningstar and hopefully soon we’ll have Pringles, and we had to start separating out the Kellogg’s brand from the Kellogg company. And just as we did effectively a brand refresh of the Kellogg company, and what it stood for provided a north star for the aggregate of the masterbrands in the company, we then needed to be very clear about what Kellogg’s the brand stood for and provide the north star for all the sub-brands that kind of sat underneath it. It was both necessary from an architecture standpoint within the company, and it was also a tremendous opportunity to start leveraging what is truly a well-loved brand, trusted brand as a platform for activity.