Kraft and General Mills Will Not Back Down
In today’s society, many individuals, small business owners, and even large companies including Kraft and General Mills are affected by the declining economy. However, Kraft and General Mills are not letting these conditions affect the investments in their brands.
No matter what the economic situation may be, companies need to continue moving forward and not only concentrate on their quarterly profit margins, but also consider their consumers’ buying habits. When the country is in a recession, shopping may decrease regarding the “wants” in one’s life, but the “needs” still have to be satisfied. In doing so, companies may have to fluctuate their pricing to accommodate consumers’ purchasing traits.
Many may think the only way companies can keep consumers buying is by lowering prices, offering discounts, or possibly by accepting a loss that quarter.
On the other hand, Kraft and General Mills did just the opposite. They increased their prices, spent more money on advertisements (to attract those who are on a budget) and increased their consumer spending.
The goal: keep the brand growing despite the recession and commodity costs.
A possible reason Kraft and General Mills experienced positive results is because of their consumers. Accomplishing the goal can be done by continuing to make the brand loyal customers satisfied and to keep in mind the characteristics of impulse buyers.
What did Kraft and General Mills do to overcome the pressure the economy forced upon them? Were their strategies successful?
In the article, Kraft, General Mills Hold the Line on Marketing in Tough Environment, E.J. Schultz discussed the various way in which these two packaged-food marketers will uphold their prestigious brands, without lowering their marketing budget.
In fact, their strategies are what kept Kraft and General Mills ahead of their competitors.
Managing “input costs, prices, promotional activity and volume is proving to be as challenging as we expected,” said General Mills CEO Ken Powell. “We generally see our business performing as expected and we intend to maintain the consumer-marketing initiatives we planned for the remainder of this year,” he added.
However, Kraft experienced a net revenue growth of 6.6% to $14.7 billion and met its fourth-quarter earnings targets. This being accomplished after “…the company raised prices on brands in categories such as coffee, natural cheese, bacon and nuts,” in 2011.
Wall Street analyst firm Bernstein Research explained, “We see increased bifurcation in consumer behavior — while some are trading back out to restaurants, which will likely put pressure on packaged food, others are continuing to trade down to private label and boosting its market share at the expense of branded players.”
Executives said, “Kraft plans to split in two companies by the end of the year, a North American grocery business worth about $18 billion and global snacks business valued at $35 billion.”
Although General Mills realized how input costs, promotions and advertising can cause a challenge to its company and Kraft, despite net growth, took “moderate share losses,” each company continued to keep the brand growing and stood out among competitors.